The government has set out a £1.1bn AI Hardware Plan designed to strengthen British chip design, compute infrastructure, semiconductor skills, procurement routes, and investment into next-generation AI hardware companies.
Announced at London Tech Week, the plan shifts AI policy beyond software adoption and model development toward the physical infrastructure needed to train, deploy, and scale advanced systems. Ministers said the package will support British companies developing the chips and computing power behind AI, while investing in the scientists, engineers, and technicians needed to turn research into commercial products.
The largest component is £750m for a new national AI supercomputer, including £400m to purchase next-generation AI chips. Of that, £150m will be used as an advance commitment to buy novel chips from innovative startups and British companies working at the frontier of chip design.
A further £120m will go into an AI Hardware Innovation Programme, which will support UK-based companies through prototyping, collaborative research and development, early-stage grants, and mission-driven programmes. An expanded Scaling Inference Lab will receive at least £20m in additional funding, while an £18m hardware security R&D programme will focus on secure deployment and scaling of AI hardware.
A new UK fund led by Silicon Valley investors Playground Global will be backed by up to £150m from the British Business Bank. The government said it is the largest fund investment the bank has ever made, with the money intended to help UK-based hardware companies scale.
Technology Secretary Liz Kendall said: “AI is the defining currency of economic and hard power in today’s world and the countries that control the hardware behind it will hold the keys to the future.
“The UK is already a global leader in chip design, and I believe this is a race Britain can win. To do that, we must back more British AI – and that means investing in the chips, computing power and skilled people behind it.
“That is exactly what this plan does, backing the British firms developing the next generation of AI hardware, so we get more jobs, more growth, and more control over the technologies our future depends on. We are backing Britain because we believe in Britain.”
The plan positions AI hardware as a matter of economic competitiveness and national resilience. The government said the global AI chips market is expected to reach $1tn in the early 2030s, and argued that a 5% UK share would generate $50bn in revenue and tens of thousands of highly paid technology jobs.
British capability in this market is already anchored by companies such as Arm, Fractile, and Oriole Networks. Arm, whose global headquarters are in Cambridge, has agreed a strategic industry partnership with TechFirst to support the semiconductor skills pipeline and align training with real-world chip design needs.
The government will fund a new £12m Centre for Doctoral Training in Chip Design, expand semiconductor bursaries from 300 this year to 400 next academic year and 500 the year after, and increase the total semiconductor skills programme budget to £48m. A £20m expansion of TechFirst will support 500 additional UK PhD students in strategically critical fields including chip design and AI hardware.
The hardware plan arrives alongside a more interventionist technology policy. Ministers are already preparing to take larger stakes in UK technology scale-ups, reflecting concern that Britain has strong research and company creation but often loses economic upside when high-growth companies seek deeper capital overseas.
That scale-up problem is particularly acute in hardware. Chip development is capital-intensive, slow, and technically risky. Companies can spend years moving from design to working prototype before customers or investors have enough evidence to commit. Public procurement, advance purchase commitments, prototyping support, and dedicated investment funds are intended to reduce that risk and make the UK a more credible place to build hardware companies beyond the research stage.
Supply-chain resilience is another strand running through the plan. Britain is not trying to replicate the full semiconductor supply chain domestically, but the government wants a stronger position in design, system validation, security, specialist components, and trusted manufacturing partnerships. Those capabilities are becoming more valuable as AI infrastructure turns into a strategic asset.
Timing remains difficult. The UK is seeking position in a market dominated by US and Asian hardware giants, hyperscalers, and deep global supply chains. Public commitments will need to translate into commercial demand quickly enough for domestic companies to secure customers, talent, and investment before the next generation of AI infrastructure standards is set elsewhere.
The policy direction is now more coherent: adoption support, sovereign compute capacity, chip design skills, and scale-up finance are being treated as connected parts of the same industrial system. Whether that produces global hardware companies will depend on procurement discipline, patient capital, and the ability to retain specialist talent in a market where AI infrastructure has become one of the most contested parts of the global economy.
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