Backed by the National Wealth Fund, the British Business Bank and M&G, Pragmatic Semiconductor is using a modular, low-capital model to scale flexible chip production at a pace Asia and the US would struggle to match.

On the Meadowfield industrial estate outside Durham, a 55,000 sq ft warehouse that spent a decade gathering dust, and the droppings of nesting seagulls, has been transformed into one of the more intriguing bets in British manufacturing. The gulls have been seen off by a hawk called Buzz; the drains have been cleared; and inside what was once a PVC piping factory, the UK’s most ambitious volume chipmaker is now in full production.

Pragmatic Semiconductor is twelve months into shipping its first commercial orders, the culmination of 14 years of work that began as a Cambridge science project. By year-end, the company expects billions of its ultra-thin, 300mm flexible chips to be leaving the Durham site bound for customers in pharmaceuticals, consumer electronics and fast-moving consumer goods. At that point, management believes Pragmatic will be the UK’s largest semiconductor manufacturer by volume.

The timing is pointed. The European Commission is this week expected to publish a refreshed Chips Act, the latest leg of Brussels’ attempt to wean the bloc off American and Asian silicon by backing home-grown semiconductor capacity. Westminster, too, has put domestic chipmaking near the top of its modern industrial strategy, with advanced manufacturing earmarked as a sector in which Britain has what ministers call a “genuine right to win”.

A different kind of chip, and a different kind of fab

Pragmatic’s edge is that it does not play the same game as TSMC, Samsung or Intel. Its proprietary thin-film transistor technology dispenses with silicon altogether, producing FlexICs, flexible integrated circuits, capable of tracking individual items through complex supply chains and giving consumers verifiable provenance in a way QR codes simply cannot. A bottle of wine can carry its full origin story; a packet of medication bought on Temu or Amazon can be authenticated as the real thing rather than a counterfeit. In time, the chips will power continuous glucose monitors and other slim, flexible medical devices used in the prevention of type-2 diabetes.

The contrast with the conventional fab model is just as striking. Where a Taiwanese or Korean facility can cost tens of billions and take months to push a wafer through its production cycle, Pragmatic’s modular plant requires materially less capital and turns chips out in days. Inside the 30-by-20-metre clean room, robots glide along ceiling tracks shuttling glass-backed substrates between a metal-oxide deposition machine, a photolithography rig that imposes the circuit image, and an etching station that chemically carves out each layer. The finished wafers, each carrying up to 50,000 chips, pass to an assembly room where they are diced and bonded to antenna-bearing circuits. The result emerges from the line looking, disarmingly, like a translucent roll of snowflake-patterned Christmas paper.

An IPO in the cross-hairs

Chief executive David Moore, who relocated from Idaho-headquartered Micron in 2023, is unambiguous about ambition. “Our goal is to be one of the largest semiconductor companies in the world,” he says. Pragmatic’s “north star”, he adds, is “a potential IPO”.

In June he is in Europe and China to meet customers, before turning to the US in July. The reception, he says, is warm. “We engage with the CEOs and chairmen of those customers. They see it as something very strategic and don’t look at us as some outlier UK-based semiconductor company. They see us as a world leader in FlexIC technology. It is now all about orders and shipping.”

Moore is, however, careful to temper near-term expectations. Each new fabrication facility, even with Pragmatic’s simplified processes, will take 12 to 14 months to bring online. The Durham site has space for seven more lines, equating to “capacity for tens of billions of ICs per year”. Significant revenues are expected this year for the first time, with a “milestone-based” path to gross margin, break-even and ultimately free cashflow.

Capital, and the british industrial strategy in action

The funding base behind that journey is unusually domestic. Pragmatic’s December 2023 raise remains the largest semiconductor venture round in European history, with around 70 per cent of the £162 million coming from UK pools of capital, the National Wealth Fund, the British Business Bank, the public/private Northern Gritstone fund and M&G’s Catalyst fund among them. A subsequent extension lifted the round to £179 million. It is precisely the sort of patient, blended-capital deployment that ministers have been pointing to as evidence the £1bn government commitment to the UK microchip industry is starting to bite, alongside earlier schemes that supported a wave of British chip start-ups.

In March 2024, HRH The Princess Royal formally opened Pragmatic Park, home to the UK’s first 300mm wafer fab, with the company committing to 500 highly skilled new jobs over five years.

Ciaran Mulligan, chief investment officer at M&G Life, who oversees £188 billion of client assets, says the case for institutional money is straightforward. “Our scale enables us to invest into private companies, opening up opportunities you simply don’t see in public markets. By sourcing these investments directly through our asset management teams, we can back businesses that are growing, creating jobs and driving innovation.”

The team behind the technology

Founded in Cambridge in 2010 by Richard Price and Scott White, Pragmatic has worked with the Centre for Process Innovation in Sedgefield, County Durham, since 2012. Its workforce now stands at 350, weighted heavily towards PhD-level researchers across the Sedgefield, Durham and Cambridge sites. The chair is Peter Herweck, the former chief executive of Schneider Electric and, before that, of the FTSE 100 software group Aveva, which Schneider bought for £9.5 billion in 2023. The board also includes former Intel chief engineering officer Murthy Renduchintala.

Talent retention in the North East is a quietly significant part of the story. Heather Flint, 31, moved from Lincoln to study in Newcastle, stayed on for a PhD in physical chemistry, her research was on translucent solar cells designed to be embedded in windows, and was contemplating a move south to Cambridge or overseas when she came across Pragmatic. “Staying up north was quite important to me. I just love it,” she says. The R&D team built a role around her. Three years and three promotions later, she has moved from device development to lead design scientist and now into project management. “There is something new every day.”

The company actively recruits postgraduates into its research and technical roles and apprentices into technician roles. Its youngest team member, based in Cambridge, is 21. “In the evening he builds robots for fun,” a spokeswoman noted.

The bigger picture

Whether Pragmatic ultimately lists in London, New York or both will be one of the more closely watched decisions in British technology over the next 24 months. What is already clear is that, by combining a genuinely novel product, a capital-light manufacturing model and an unusually British shareholder register, the company has handed Westminster a rare worked example of its industrial strategy actually working — and quietly assembled the sort of platform from which a UK national champion could, plausibly, take on the giants of Hsinchu, Pyeongtaek and Phoenix.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.

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