Britain bets on chips to power its AI ambitions

Britain's new government is wagering that silicon, not software alone, will determine its place in the global AI race. Prime Minister Andy Burnham's administration is folding chip manufacturing, drone technology and artificial intelligence into a single industrial strategy, one that ties economic growth to national security.

The drive to reindustrialise Britain centres on building AI chips at home, Kanishka Narayan, the AI minister, told the Financial Times. It’s not just algorithms but hardware that he argues has the real economic leverage in AI supply chains.

The government has already made a pledge of £1.1bn for AI hardware, including £150m set aside to buy chips directly from UK companies, providing early customers for domestic suppliers as they try to scale.

Narayan says he is pushing for more than money. He wants visa reform to attract top engineers, faster planning approval for infrastructure, and continued state investment to accelerate the sector. 

Britain's chip manufacturing base remains limited, he acknowledges, but he believes the country's strength in chip design gives it a credible foothold to build from.

Alongside the investment push, Narayan says the government will regulate to address AI's risks to jobs and national security, rejecting what he calls tech boosterism.

He links the urgency to a tenser geopolitical climate, pointing to Washington's export controls on Anthropic's Mythos model last month as evidence that AI has become a geopolitical fault line.

He also flagged concern over British assets like Arm, the Cambridge-designed chipmaker now owned by Japan's SoftBank, saying he wants value from British-founded tech to stay in Britain, even as the government scraps the Department for Science, Innovation and Technology to fold its remit elsewhere.