South Wales Semiconductor Cluster Supports Thousands of Jobs, Boosts Economy

The compound semiconductor sector in South Wales, with a significant concentration in and around Newport, is a substantial economic driver, supporting 3,140 jobs across Wales in 2025. This represents a 14% increase from the previous year's figure of 2,748 jobs, according to an independent report for CSconnected by Cardiff University's Welsh Economy Research Unit.

Of the total jobs supported, 1,914 are direct positions within the industry, primarily located in Newport and along the M4 corridor. The sector also offers competitive salaries, with average annual earnings around £66,000, significantly higher than the UK median annual pay of approximately £31,884.

Companies like IQE, which has been in production in Newport since 1988, have seen increased demand for their chips due to the boom in artificial intelligence. These semiconductors are integral components of the physical architecture within data centers, underpinning AI operations. While not directly involved in AI algorithms, the hardware they enable is crucial.

IQE experienced a period of volatility but saw its share price increase as its role in data center computing power gained recognition. This allowed the company to reduce debt and expand its workforce. This growth contrasts with some larger tech firms that have reduced staff globally, such as Oracle, Amazon, and Meta, as they reorient their businesses around AI technologies.

To foster future talent, Bassaleg School in Newport has introduced a semiconductor qualification for its students. Head teacher Victoria Lamb highlighted the importance of community collaboration in providing pupils with opportunities in a burgeoning local industry. Students like 15-year-olds Grace and Evan have found the practical aspects of the course engaging, with Evan noting the relevance of semiconductors to his interest in electro-mechanical fields and robotics.

Beyond the semiconductor industry, AI is also making inroads into other sectors by reducing administrative burdens. In the Vale of Glamorgan, social workers are piloting Beam Notes transcription software, which summarizes client interactions. This technology helps reduce paperwork, allowing social workers to focus more on their clients. Social worker Sian Palmer described the tool as a time-saver and particularly beneficial for individuals with conditions like dyslexia, ensuring detailed and accurate information capture.