UK government commits £1.1 billion to chip startups in bid to build domestic AI hardware sector

The UK government just placed a very large bet that it can grow its own silicon. Announced during London Tech Week on June 8, the £1.1 billion ($1.47 billion) AI Hardware Plan is designed to do something Britain has struggled with for decades: turn promising chip startups into globally competitive semiconductor companies before they get acquired by foreign buyers or simply relocate. The centerpiece is a £750 million allocation for a national AI supercomputer, paired with £400 million dedicated to developing next-generation AI chips. But the most immediately interesting piece is a £150 million advance purchase commitment, where the government will buy inference chips directly from emerging UK firms. Where the money is going Two startups sit at the center of the initiative: Olix and Fractile. Olix, founded in 2024 by James Dacombe, builds photonic AI inference chips, a technology that uses light instead of electrical signals to process data. Together, Olix and Fractile had raised over £320 million ($440 million) before the government’s announcement. The government’s Sovereign AI Fund, launched in April 2026, has already put its money where its policy documents are. The fund participa...