Fractile commits £100m UK expansion as it ramps up AI chip development

UK semiconductor start-up Fractile has announced a £100 million expansion of its British operations, scaling up in London and Bristol as ministers intensify calls for greater domestic ownership of critical artificial intelligence technology.

The investment, to be deployed over the next three years, will fund a new industrial hardware engineering facility in Bristol, alongside the expansion of Fractile’s existing UK sites and a significant increase in its domestic workforce.

The company is focused on developing AI chips optimised for inference, the stage at which large language models generate outputs, an area of growing strategic importance as demand for real-time AI applications accelerates.

Engineers at the new Bristol facility will work on integrating Fractile’s chips into full AI systems and will operate a specialist software testing lab, allowing the company to develop and validate hardware and software in tandem.

The announcement comes as Kanishka Narayan, the government’s AI minister, prepares to urge Britain’s technology founders and investors to “embrace risk” and back home-grown innovation in a speech to the UK’s AI sector. He is expected to stress that British ownership of foundational technologies will be critical if the UK is to shape the future direction of AI.

Founded in 2022, Fractile is developing in-memory computing chips designed to run powerful AI models faster and with significantly lower energy consumption than conventional hardware. The market for AI inference chips is currently dominated by Nvidia, but is increasingly attracting start-ups and hyperscalers seeking more efficient and lower-cost alternatives.

Fractile is backed by the NATO Innovation Fund and has raised more than $35 million (£25.5 million) to date. The company says its technology could dramatically reduce both the cost and power required to run large AI models, an increasingly pressing constraint as data centre demand surges globally.

The expansion is being viewed as a vote of confidence in the UK’s ambitions to build a domestic AI hardware ecosystem, alongside continued investment in software, data and infrastructure. Ministers have identified “sovereign” computing capacity as a national priority, amid rising concerns over supply chains, ownership and national security.

Fractile said the £100 million commitment underlined its long-term intention to build and scale advanced semiconductor hardware on home soil, as scrutiny intensifies across the UK tech sector over who controls critical digital infrastructure.

The move follows a strong year for government-backed AI initiatives, with tens of billions of pounds of private capital pledged to UK AI projects and thousands of jobs expected to be created under the government’s year-old AI Opportunities Action Plan.

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Fractile commits £100m UK expansion as it ramps up AI chip development