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The Council for Science and Technology had previously emphasized the importance of building a sovereign AI chip design sector in the country
In sum – what to know:
New national plan – The UK government will launch an AI Hardware Plan aimed at strengthening domestic capabilities in chips and semiconductor technologies.
Focus on design, not fabs – Policy direction points toward AI chip design and ecosystem support rather than large-scale manufacturing.
Global competition backdrop – The move comes as the US and Taiwan dominate advanced chip production and investment in semiconductor capacity accelerates.
The U.K. government is preparing to launch a national AI Hardware Plan aimed at strengthening its position in semiconductor technologies, as global competition in AI infrastructure intensifies.
Technology Secretary Liz Kendall said the initiative will be unveiled in June alongside London Tech Week, positioning it as a step toward securing domestic capabilities in AI chips and related technologies. The plan comes as the global AI chip market continues to expand rapidly, with projections pointing to significant growth over the next decade.
“The global AI chips market is growing at an annual rate of 30% and is expected to reach one trillion dollars in the early 2030s,” Kendall said. “If Britain could secure just five percent of this market, it would bring fifty billion dollars in revenue to the U.K. with tens of thousands of high-paid jobs in tech.”
Alongside the broader strategy, the government will allocate £100 million ($135 million) to a Scaling Compute program led by ARIA, including £50 million for a Scaling Inference Lab designed to help startups test and develop AI hardware technologies.
The initiative reflects a strategic choice about where the U.K. can compete. While Taiwan and the U.S dominate advanced semiconductor manufacturing, policymakers are increasingly focusing on areas such as chip design and specialized AI hardware development.
Kendall rejected the idea that the U.K. cannot compete in the global hardware race, pointing to companies such as Arm as examples of domestic capability, even as much of the manufacturing remains overseas.
Recent recommendations from the Council for Science and Technology have also emphasized the importance of building a sovereign AI chip design sector in the country.
The report, titled ‘Building a sovereign AI chip design industry in the UK,’ highlights semiconductors as a key priority for the country, noting their importance in supporting a wide range of strategic objectives across multiple sectors.
At the same time, the council describes the U.K’s chip sector as “niche and highly specialized,” warning that a broad, generalized strategy would not be sufficient to close the gap with leading global players.
Instead, it argues that progress will depend on targeted investment in areas where the U.K. can build a competitive edge—particularly AI chip design.
The U.K. government is carrying out initiatives to strengthen sovereign AI capabilities in the country, a growing priority as governments seek greater control over critical digital infrastructure. Sovereign AI typically refers to the ability to develop, deploy, and operate AI systems within national borders, ensuring that data, compute, and operations remain subject to local laws and governance frameworks.
U.K. telecom operator BT and AI infrastructure firm Nscale have announced plans to develop sovereign AI data centers in the United Kingdom, aiming to expand domestic compute capacity and support growing demand for artificial intelligence workloads.
Under the terms of the agreement, Nscale will deploy up to 14MW of AI data center capacity across three existing BT sites in the U.K. BT will provide the underlying infrastructure and connectivity, although specific locations have not been disclosed.
