South Wales cluster supports £436m for Welsh economy
The latest annual report from CSconnected confirms that the compound semiconductor cluster in South Wales continues to expand its economic contribution, now supporting £436 million of Gross Value Added (GVA) and 3,140 jobs across Wales.
The independent report, produced by the Welsh Economy Research Unit (WERU) at Cardiff University, assesses the cluster’s performance in 2025 and tracks its development since 2020, when UK Research and Innovation’s Strength in Places Fund (SIPF) programme began.
In 2025, the cluster directly employs 1,914 people, with a further 1,226 jobs supported across Wales through its wider economic footprint.
Total Welsh employment linked to the cluster has increased from 2,748 in 2024 to 3,140 in 2025, a 14% year-on-year rise.
The sector generated £267 million in direct GVA, with an additional £169 million supported elsewhere in Wales, bringing total Welsh GVA impact to £436 million, up 19% on last year.
This growth has been achieved during a period marked by global semiconductor volatility and continued pressure on UK manufacturing employment.
Max Munday of Cardiff University, lead author of the report, said: “The compound semiconductor cluster continues to show resilience and sustained growth. While other parts of manufacturing have faced considerable challenges, this sector has expanded employment, increased productivity and strengthened its wider economic contribution. The modelling shows both direct growth and a deepening of economic effects across Wales.”
Exports remain central to the cluster’s contribution. In 2025, companies recorded £480 million in exports, accounting for over 90% of industrial output and representing approximately 2.8 percent of total Welsh goods exports. Annual sales reached £531 million.
Because most sales are made internationally, the cluster brings significant external revenue into Wales. This supports further activity across supply chains and local services.
Over the past five years, export intensity has remained above 90%, ensuring that sector growth translates into sustained economic value for Wales.
Average salaries remain high at approximately £66,000, well above the Welsh average, with more than 95% of employment full-time.
Five years of measurable progress
Since 2020, the cluster has expanded significantly. Total Welsh jobs supported by the cluster have risen from 2,085 to 3,140 (+51 percent); and total Welsh GVA supported by the cluster has increased from £172m to £436m (+153 percent).
These figures demonstrate not only growth in core activity, but a strengthening of the cluster’s wider economic footprint across the region.
While the cluster’s core footprint is in South Wales, its economic influence extends across the UK.
In 2025, activity linked to the cluster supported: £567 million of GVA across the UK economy, up from £434 million in 2024 (+31 percent) and around 4,392 jobs across the UK
Around 77 percent of this GVA remains in Wales, up from 59 percent in 2024, showing that a growing share of value is being retained within the Welsh economy.
Each direct job in the cluster now supports a further 1.29 jobs across the UK, contributing to a total of 4,392 jobs nationwide.
Transitioning to the next phase
2025 marks the completion of the original UKRI Strength in Places funding period for CSconnected. Over five years, the programme has strengthened collaboration between industry and academia, supported investment and accelerated cluster growth.
Wyn Meredith, Chair of CSconnected and the SIPF programme, said: “Five years on from the launch of the Strength in Places investment, the results are clear. Employment has grown, productivity has increased and the cluster’s economic impact has nearly doubled. We’ve built a stronger and more connected cluster, with real economic impact across Wales.”
CSconnected’s ambition to 2030 includes growing cluster revenue to £1 billion; expanding skilled employment to 6,000 people; and capturing greater value across the regional supply chain.
Howard Rupprecht, managing director of CSconnected, said: “The progress we’ve seen over the past five years gives us a strong foundation for the next phase. Our focus now is on scaling capacity, strengthening regional supply chains and developing the skills needed to support long-term growth. The opportunity ahead is significant, and we want to ensure Wales captures as much of that value as possible.”
With global demand for advanced semiconductor technologies continuing to grow, South Wales is well placed to build on its foundations and increase its contribution to both the Welsh and UK economies. Initiatives such as the Local Innovation Partnership Fund (LIPF) and the South Wales Investment Zone are expected to support this next phase, particularly in areas such as supply chain development, skills and regional value capture.
The full report can be found here.
