UK chip startup Fractile announced a £100 million ($136 million) expansion of its UK operations over the next three years. The investment will fund a new industrial hardware engineering facility in Bristol and expand existing sites in London.
Britain's AI Minister Kanishka Narayan announced the investment on Tuesday, calling it a demonstration of British tech innovation.
"I am setting Britain's AI leaders a challenge - bang the drum for start-ups, spread the opportunities to every corner of our country, and embrace risk," Narayan said. "By investing in British tech innovation, just as Fractile is doing today, we can reinforce our leadership in AI and boost our influence on the global stage."
The new Bristol facility will assemble Fractile's chips into complete AI systems and host a testing lab for software designed for future compute technologies. Engineers at the site will work on next-generation systems capable of running advanced AI models faster than current hardware.
Founded in 2022 by Dr. Walter Goodwin, a former Oxford Robotics Institute PhD student, Fractile emerged from stealth in July 2024 with $15 million in seed funding. The company's backers include the NATO Innovation Fund, Kindred Capital, Oxford Science Enterprises, and Arm co-founder Hermann Hauser. Former Intel CEO Pat Gelsinger also invested in the startup earlier this year.
Fractile focuses on AI inference chips that the company claims work more efficiently, quickly, and cheaply than Nvidia's GPUs. The startup's technology uses in-memory computing to run AI inference tasks directly on-chip, eliminating the need to move data between separate memory and processors. This architecture could allow inference tasks to run 100 times faster and 10 times cheaper than on rival chips, according to the company.
The expansion comes as the UK government pushes to strengthen the country's position in advanced computing. Britain's tech sector is now valued at over £1 trillion, and the government has pledged £1 billion to increase the country's compute capacity 20-fold by 2030.
Fractile's announcement follows Nvidia's commitment last year to invest up to £11 billion in Britain's AI ecosystem, which will establish the UK as home to Europe's most substantial GPU cluster. The Bristol location is strategic, as the city is home to Isambard-AI, the UK's most powerful supercomputer.
The £100 million investment will fund a larger UK-based engineering team.
Fractile's journey has faced challenges, including the departure of co-founder and former CTO Yuhang Song in 2024 due to concerns over his ties to China's Beihang University, which has connections to the People's Liberation Army. The company said Song left to pursue other technical and business interests, describing such moves as common in technology companies.
The startup reportedly secured an additional $22.5 million in funding earlier this month, according to company filings. Britain's Department for Science, Innovation, and Technology said the investment reflects confidence in the UK's tech sector, which has created AI growth zones to hasten planning approvals for new data centers. The company plans to begin chip fabrication in the second half of 2026.
