The UK government will make strategic, first-price purchases of AI chips from UK-based firms to keep production domestic and reduce reliance on foreign suppliers.

Officials aim to be an early buyer of domestically produced AI inference chips, committing up to £100 million for public compute once British suppliers meet benchmarks, with the goal of reducing dependence on Nvidia and other overseas providers.

The plan targets roughly 5% of the global AI chip market, translating to about £37 billion in revenue, by directing procurement to UK companies and safeguarding a domestic chip industry.

The strategy complements existing UK funding, including £100 million for ARIA’s scaling compute programme and £50 million for a scaling inference lab to help startups test hardware viability.

London-based Fractile, building SRAM-based inference chips, is a key potential early supplier, claiming dramatically faster and cheaper inference, though real-world validation is pending.

The initiative focuses on inference rather than training, recognizing that ongoing query and task execution drive AI compute costs and that affordable, efficient chips are essential for broad deployment.

Graphcore has secured over $450 million in new backing from SoftBank, signaling continued investor support for UK chip design despite prior challenges.

The government has signaled a substantial investment—about £1 billion—to expand UK AI research resources, including free public compute for businesses and researchers, announced earlier this year.

Proposals include securing funding access and investing in skills to preserve Britain’s AI hardware workforce and capabilities.

Overall, the push aims to secure sovereign AI capability and reduce strategic risk in sectors like defense, financial services, and healthcare.

The plan seeks to cut reliance on foreign suppliers in public procurement, addressing parliamentary concerns about dependence on US cloud providers, while highlighting domestic options and a right of first refusal for future investments.

Unlike broader CHIPS acts elsewhere, the UK plan emphasizes selectively backing existing strengths—chip design, AI systems, memory, and specialized inference hardware—rather than recreating a full domestic supply chain.