British semiconductor start-up Fractile has announced a £100m expansion of its UK operations, including expansion in London and Bristol, as ministers raise increasing calls for more domestic ownership of critical artificial intelligence technology.
The investment, to be delivered over the next three years, will fund a new industrial hardware development factory 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 optimized for inference, the phase in which large language models generate output, an area of growing strategic importance as demand for real-time AI applications increases.
Engineers at the new Bristol factory will work on integrating Fractile’s chips into complete AI systems and operate a dedicated software testing lab, allowing the company to develop and validate hardware and software simultaneously.
The announcement comes as Kanishka Narayan, the government’s AI minister, prepares to urge UK tech founders and investors to “take the risk” and support homegrown innovation in a speech to the UK’s AI sector. He is expected to emphasize that the UK’s ownership of enabling technologies will be crucial if the UK is to determine the future direction of AI.
Founded in 2022, Fractile develops in-memory computing chips designed to run powerful AI models faster and with significantly less energy consumption than traditional hardware. The market for AI inference chips is currently dominated by Nvidia, but is increasingly attracting startups and hyperscalers looking for more efficient and cost-effective 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 energy requirements of running large AI models – an increasingly pressing issue as demand for data centers increases worldwide.
The expansion is seen as a vote of confidence in the UK’s ambitions to build a domestic AI hardware ecosystem while investing in software, data and infrastructure. Ministers have identified “sovereign” computing capacity as a national priority as concerns grow over supply chains, ownership and national security.
Fractile said the £100 million commitment underlines its long-term intention to build and scale advanced semiconductor hardware on home soil as scrutiny over who controls critical digital infrastructure intensifies across the UK tech sector.
The move follows a strong year for government-backed AI initiatives, with tens of billions of pounds of private capital committed to UK AI projects and thousands of jobs expected to be created under the government’s year-old AI Opportunities Action Plan.
