TL; DR
The UK will make “strategic purchases” from British firms to keep its AI chips in the country. Kendall aims to build a £37bn chip industry with a 5% global share.
The UK government will offer to buy AI chips directly from British technology companies to keep them in the country. Technology Secretary Liz Kendall will announce the plans.strategic acquisitions” of UK-based semiconductor equipment firms at London Tech Week this week, the Telegraph reported.The initiative includes access to taxpayer-backed funding and investment in skills to keep the workforce in Britain.
The announcement is part of a wider AI hardware plan targeting 5% of the global chip market, which represents around £37 billion in revenue and tens of thousands of jobs. The government has already committed £100m through ARIA’s scale computing programme, including £50m for a scale-out lab where British start-ups can test and demonstrate their hardware working.
The urgency is clear. Britain continues to lose top chip companies to foreign buyers. SoftBank bought Graphcore In 2024, Qualcomm bought Alphawave IP last year for $2.4 billion. Arm, the UK’s most valuable chip designer, has chosen New York for its 2023 main listing. Each move weakened the likelihood that Britain could sustain its semiconductor industry.
“It is a very important technology to be completely dependent on other countries, especially in areas such as defense, financial services and healthcare.Speaking to Bloomberg in January, Kendall announced £1 billion in funding to expand the UK’s AI research computing capacity by 20 times.
Chip-buying would make the government a customer rather than just a regulator, providing guaranteed demand for British firms. Six UK companies have already gained access to government-funded supercomputers to develop their own AI models, and the government reserves the right of first refusal for future investments. FragileThe British inference chip startup, which recently raised $220 million and is reportedly in talks with Anthropic, is among the firms the strategy aims to support.
The plans also address concerns about overdependence on government procurement. A recent parliamentary report warned that US firm Palantir should not play such a significant role in the UK’s public sector and pointed to increased reliance on Microsoft and AWS. The HMRC’s £175m AI contract With London-based Quantexa, it was an early signal of the government’s preference for local providers.
Whether strategic acquisitions alone will prevent the next Graphcore sale remains an open question. Britain has the engineering capacity and research base. What’s missing is the domestic demand and patient capital to keep the companies scaling in-house rather than selling them to SoftBank or Qualcomm in the first serious bid.
