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

UK semiconductor start-up Fractile has announced a £100 million expansion of its operations in Britain, ramping up in London and Bristol as ministers step up calls for more domestic ownership of key artificial intelligence technologies.

The investment, to be used over the next three years, will fund a new hardware engineering center in Bristol, as well as the expansion of Fractile’s existing UK facilities and a significant increase in domestic staff.

The company focuses on developing AI chips optimized for interpretation, the stage where large-scale linguistic models produce results, an area of ​​increasing strategic importance as the 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 use a dedicated software testing lab, allowing the company to develop and verify hardware and software in tandem.

The announcement comes as Kanishka Narayan, the government’s AI minister, prepares to encourage British tech innovators and investors to “embrace risk” and bring back home-grown innovation in a speech to the UK’s AI industry. He is expected to stress that Britain’s ownership of basic technologies will be critical if the UK is to shape the future of AI.

Founded in 2022, Fractile develops in-memory computing chips designed to run powerful AI models faster and with much lower power consumption than conventional hardware. The market for AI chips is currently dominated by Nvidia, but it 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 over $35 million (£25.5 million) to date. The company says its technology can significantly reduce the cost and power required to run large-scale AI models, a pressing hurdle as data centers expand globally.

The expansion is seen as a vote of confidence in the UK’s ambitions to build a domestic AI hardware ecosystem, as well as continued investment in software, data and infrastructure. Ministers have identified “independent” computing power as a top national priority, amid growing concerns about supply chains, ownership and national security.

Fractile said the £100 million commitment underlined its long-term aim to build and scale semiconductor hardware on home soil, as scrutiny grows across the UK technology sector over who controls key digital infrastructure.

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