UK’s AI Hardware Plan welcomed by industry as government bets big on domestic chip capabilities

The UK government is continuing its push to boost the country's AI infrastructure capabilities with a £1.1 billion plan to back home-grown chip firms.

The new AI Hardware Plan, announced by technology secretary Liz Kendall at London Tech Week, will see £750 million allocated for the development of a new national AI supercomputer.

This includes £400 million for next-generation AI chips, of which £150 million is an advanced commitment to buy novel chips from both existing British firms and innovative startups.

"AI is the defining currency of economic and hard power in today’s world and the countries that control the hardware behind it will hold the keys to the future," said Kendall.

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"The UK is already a global leader in chip design, and I believe this is a race Britain can win. To do that, we must back more British AI – and that means investing in the chips, computing power and skilled people behind it."

The new national AI supercomputer will be one of the most advanced in the world when deployed in 2030, based on a heterogeneous mixed chip system using both proven and next-generation processors.

The government hopes to see British-designed chips used in the system, which will form part of the UK’s AI Research Resource for researchers, startups, and public services.

£150 million will go to buy next-generation inference chips, with a further £250 million for more specialized chips, Downing Street confirmed. An additional £120 million will fund a new AI Hardware Innovation Programme to help British companies design, develop, and test innovative novel chips.

At least £20 million will be used to expand the Scaling Inference Lab, delivered by ARIA and CommonAI, to help companies prove their technology, attract investment, and secure partnerships with global tech firms.

Elsewhere, £45 million has been pledged to build skills capabilities, including doctoral training and undergraduate bursaries to train more engineers, chip designers, and technicians.

Finally, a new fund led by Silicon Valley investors Playground Global and backed by up to £150 million from the British Business Bank - its biggest investment ever - will invest in UK-based AI hardware companies.

AI Hardware Plan welcomed by industry

The announcement by Kendall came after prime minister Keir Starmer announced a £400 million investment for specialist AI chip purchases.

The two announcements have been welcomed by industry stakeholders as a positive step toward bolstering the country’s infrastructure capabilities – a focus that will be vital if the country is to position itself as a leading AI economy in the future.

Andy McLean, CEO of the UK Semiconductor Centre (UKSC), said semiconductors are the “foundation on which AI is built”, adding that the UK has a “significant opportunity” to play a leading role in global research and development.

“The UK’s semiconductor strengths are well aligned to opportunities across the AI stack, and we are already seeing substantial private investment in UK semiconductor companies operating at the forefront of these technologies,” he said.

“It is encouraging to see the government matching that ambition with new investment and a clear focus on accelerating knowledge, skills, scale, and deployment."

Steve Brierley, CEO and founder of Riverlane, echoed McLean’s comments, noting that the focus on skills will be critical.

“The government's commitment to supporting high-growth technology companies recognizes that breakthrough innovation alone is not enough. Alongside access to capital and specialist skills, the government can play a powerful role as a smart buyer, helping to create markets, accelerate innovation and strengthen the wider technology ecosystem,” he said.

“Ensuring the UK has the infrastructure, talent and expertise to bring these capabilities together will be critical to ensuring the UK captures the full value of its investments and strengthens its position as a leader in advanced computing.”

Looking ahead, Brierley said the UK must adopt a “holistic view of the future of computing”, focusing on how high-performance computing (HPC), AI, and quantum technologies can work together effectively.

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