The boss of one of the UK's leading microchip firms is calling for the Government to invest hundreds of millions of pounds in the sector.
Millions of products from cars to washing machines and mobile devices rely on microchips, also called semiconductors.
Scott White, CEO of Pragmatic Semiconductor, claims that without a huge funding boost British firms will go abroad.
The UK Government said it would soon publish its strategy to improve access to skills, facilities and tools.
It comes as a new report says Westminster "must act now to secure the future of the vital UK semiconductor industry".
Mr White said the government "can't just spend a few tens of millions of pounds" on the semiconductor sector, as "that isn't enough to move the needle".
Substantive difference
"It has to be hundreds of millions, or even more than £1billion, to make a substantive difference," he told the BBC.
"It is not about unfair subsidies - it is about having a level playing field with other countries around the world."
Mr White said that other governments were "investing substantially" in their microchip industries, and that the UK had to follow suit.
Pragmatic Semiconductor employs 200 people across its headquarters in Cambridge and at two production sites in Country Durham.
Mr White added that, while the company wanted to keep manufacturing in Britain, "that only makes sense if the economies are justified compared to elsewhere".
A joint report published today by the Institute of Physics and the Royal Academy of Engineering found "skills shortages, high costs and low public awareness threaten the UK's position in the vital semiconductor race".
Global shortage
The study follows a global shortages of microchips in recent years which temporarily halted production of everything from games consoles to cars.
The UK's semiconductor sector is valued at £11billion, according to one recent estimate. That might sound like a lot, but the global industry is said to be worth £490billion.
Meanwhile, a parliamentary report last autumn said that the UK only produced 0.5% of the world's semiconductors.
FTSE 100
The UK's top share index, the FTSE 100, was down 35 points at 7,894 shortly after opening this morning, following yesterday's 10-point gain.
Brent crude futures slipped 0.23% to $82.47 a barrel.
Companies reporting today
- Full-year results: Aviva, Domino’s Pizza, Entain, Hammerson, Harbour Energy, Informa, M&G.