Given the technological successes achieved by Ferranti up to the early-1970s, it is clear that British firms were capable of keeping up with the American pioneers like Fairchild, Texas Instruments and Motorola. Indeed, with specific regard to the CDI process, Ferranti was ahead of the firm that had originally developed this highly sophisticated IC production process, giving them a significant competitive advantage over its European rivals. On the other hand, Ferranti were not only forced to concentrate on the specialised chip market, bringing out its highly novel ULA concept as an alternative to a standardised product, but also little money was ever made by this operation up to the 1970s. This reflects the difficulties British microelectronics firms were having in keeping pace with an industry that was being driven by American governmental and corporate forces. Furthermore, as we have already stressed, apart from Ferranti and Plessey by the late-1970s there was only a token British presence in the European microelectronics market, American-owned operations having come to dominate the sector, especially after they had established production facilities in several overseas markets.
It is consequently apparent that British industry had failed to grasp the opportunities offered by the new microelectronics age. This view was given official sanction by the 1978 report of the Advisory Council for Applied Research and Development (ACARD), which noted that:

It was also in 1978 that the Labour government's National Enterprise Board (NEB) created and funded a British 'national champion' in the microelectronics field, Inmos. Using American technology, as well as American managers, Inmos was regarded as the most effective way of sustaining Britain's presence in the mass-production of standardised chips. It was provided with £ 50 million of public money, offering the prospect of a sustained existence. However, in 1984 the Thatcher government sold Inmos to Thorn-EMI, as part of its dismantling of the NEB's interventionist policies. Neither did Inmos ever achieve any of its initiators' aims, especially in terms of market share, because by that time the market for microprocessors and memory chips had also been invaded by highly competitive Japanese firms like NEC, Hitachi and Toshiba. While the Thatcher government was also responsible for starting the ALVEY programme, a scheme launched in 1984, this microelectronics support scheme can only be regarded as a case of 'too little, too late'.
Or was it? Was ALVEY simply an extension of the earlier programmes? Like many of the government-sponsored microelectronics schemes of the previous thirty-five years, ALVEY was aimed at establishing a British presence in a fundamental area of research, in this case the so-called 'fifth generation' of artificial intelligence, and catch up on American and Japanese firms in vital production techniques. Certainly, it was also of some benefit to the British firms (Ferranti, Plessey and GEC) that retained a presence in this highly competitive area. Just like its predecessors, however, it failed to create the right kind of conditions that might have stimulated a revival in British microelectronics. This failure again reflects a theme that has been sustained throughout this paper, namely, that the orientation of government-inspired programmes towards fundamental research ensured that British firms devoted most of their microelectronics resources (technical and managerial) to imitating what the American pioneers had already achieved. Admittedly, it was vital to understand the basic production processes involved, especially the diffusion and planar techniques. On the other hand, American firms like Texas Instruments and Fairchild achieved such a competitive advantage in manufacturing cheap, reliable IC's that one might regard it as folly for British licensees to try and take on these powerful corporations. In simple terms, while the US firms would always been capable of cost leadership in this sector, Porter's alternative generic strategies associated with differentiation, linked with a dedicated policy of technology followership, would have been more successful.
In discussing this issue, one inevitably must note that market factors have frequently been identified as the key reason why British firms were never capable of achieving the kind of economies of scale that American firms enjoyed up to the 1970s. At the same time, while the British market was undoubtedly much smaller than its American counterpart, there were niche markets that could have been effectively exploited. To substantiate this point, one need only refer to the Ferranti experience, because having launched the ULA in the early-1970s and struggled to create a new market for customised chips, it is a matter of record that by the early-1980s this division was the most profitable microelectronics activity in the Western world. While by the mid-1980s Japanese and American rivals had swamped this sector with their own products, undermining Ferranti profitability to such an extent that the microelectronics operation was sold to Plessey in 1988, their earlier success indicates that had a more focused approach been taken to this sector from the 1950s, then British firms could well have been more successful. Product differentiation and technology followership would have been a more effective use of public money, rather than buying American technology largely with the aim of achieving exactly what the licensees had already done. In addition, much greater effort should have been expended in creating the kind of clustering that clearly benefited American microelectronics efforts, given the enormous advantages derived from having Silicon Valley. Instead, until recently the British effort has remained highly dispersed, while only large, diversified firms were encouraged to venture into microelectronics, in contrast to the smaller, dynamically-focused operations that characterised the US industry. This reveals how public money was largely dissipated in establishing a British microelectronics industry that could never have competed against its much larger rivals in the USA and Japan.
The transfer of American microelectronics technology was consequently wasted on an excessive desire to pursue fundamental research, ignoring the alternative strategies that could well have done more for the firms that ventured into this technology in search of a radical approach towards componentry and circuit design. This failure was also part of a general British problem that was linked to successive governments' desire to maintain a strong military-political-industrial position on the world stage, a mission that distracted planners from the need to be more realistic when fashioning macro- and micro-economic strategy.

References

1. I am grateful to the Dr. Sebastian de Ferranti Centenary Fund for supporting my research on this topic, and in particular to Sebastian de Ferranti for allowing me access to his firm's archives.
2. For details on this trend, see Richard N. Langlois, Thomas A. Pugel, Carmela S. Haklisch, Richard R. Nelson & William G. Egelhoff, Micro-Electronics: An Industry in Transition, Unwin Hyman (1988), pp.64-100.
3. The phrase 'Electronics War' was used by Sebastian de Ferranti in an interview with the Financial Times, 16 March 1966.
4. This section is based on Langlois et al., Microelectronics, pp.8-25, Braun, E., 'From transistor to microprocessor', in Forrester, T. (ed.), The Microelectronics Revolution. The Complete Guide to the New Technology and Its Impact on Society, Basil Blackwell (1980), and Golding, A.M., The semiconductor industry in Britain and the United States: a case study in innovation, growth and diffusion of technology', Sussex D.Phil (1971).
5. The main source for this is John F. Wilson, Ferranti. A History. Building a Family Business, 1882-1975, Carnegie Publishing (2001).
6. For the key Porter references, see Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors, The Free Press (1980), idem., Competitive Advantage: Creating and Sustaining Superior Performance, The Free Press (1985), and idem., The Competitive Advantage of Nations, Macmillan (1990).
7. Golding, Semiconductor Industry, pp.211-2. Sciberras, UK Semiconductor industry', pp.68-70, is equally convinced that Ferranti led the European microelectronics industry.
8. Financial Times, 9 Nov. 1966.
9. Sciberras, UK semiconductor industry, p.82
10. Sciberras, UK semiconductor industry, p.82.
11. Quoted in Aris, GEC, p. 147.