TL;DR
The United Kingdom will make “strategic purchases” of AI chips from British companies to keep them in the country. Kendall aims to build a £37bn chip industry with a 5% global share.
UK government will offer to buy AI chips directly from British technology companies in a bid to keep them in the country. Technology Secretary Liz Kendall will outline plans to “strategic purchases” of semiconductor equipment from UK-based companies at London Tech Week this week, the Telegraph reported. The initiative includes access to taxpayer-backed funding and investment in skills to retain the workforce in Britain.
The announcement is part of a broader AI hardware plan that targets 5% of the global chip market, which would translate into around £37bn in revenue and tens of thousands of jobs. The government has already committed £100m through ARIA’s scalable computing programme, including £50m for a scalable inference lab where British startups can test and prove their hardware works.
The urgency is clear. Britain continues to lose its best chip companies to foreign buyers. SoftBank acquired Graphcore in 2024. Qualcomm bought Alphawave IP for $2.4 billion last year. Arm, the UK’s most valuable chip designer, chose New York for its primary listing in 2023. Each departure weakened the argument that Britain can retain a semiconductor industry of its own.
“It is too important a technology to depend entirely on other countries, especially in areas such as defence, financial services and healthcare.”Kendall said in a speech on Bloomberg in January, when he announced £1bn funding to expand the UK’s AI research computing capacity by 20-fold.
Chip purchases would turn the government into a customer, not just a regulator, giving British companies guaranteed demand. Six UK companies have already gained access to government-funded supercomputers to advance their AI models, with the government retaining the right of first refusal for future investments. fractileA British inference chip startup that recently raised $220 million and is reportedly in talks with Anthropic, is among the companies the strategy aims to support.
The plans also respond to concerns about foreign dependence in public procurement. A recent parliamentary report warned that US company Palantir should not play such a large role in the UK public sector and pointed to a growing reliance on Microsoft and AWS. He HMRC’s £175m AI contract with London-based Quantexa, was an early sign of the government’s preference for domestic suppliers.
Whether strategic purchases alone can prevent the next Graphcore from being sold abroad remains an open question. Britain has the engineering talent and research base. What it has lacked is the domestic demand and patient capital to keep companies scaling at home rather than selling to SoftBank or Qualcomm at the first serious offer.
