The UK is in a uniquely promising position, far too little understood, to play a lucrative role in the coming era of artificial intelligence – but only if it also grabs the opportunity to start making millions of computer chips.
AI requires vast numbers of chips and we could supply up to 5% of world demand if we get our national act together.
Our legacy in chip design is world-class, starting with the first general-purpose electronic computer, the first electronic memory and the first parallel computer. Today we have Cambridge-based Arm, a quiet titan designing more than 90% of the chips powering phones and tablets globally.
With such a pedigree, it is not idle daydreaming for British companies to win a significant chunk of the AI chip market; 5% is a conservative, achievable ambition. World-class universities, a thriving foundational AI company in DeepMind, and a robust ecosystem for innovation give the UK the practical tools it needs to compete.
The rewards of success are staggering. By 2033, the global AI chip market is projected to reach $700bn (£620bn) a year, outstripping the whole of today’s semiconductor market. Capturing that 5% means $35bn in new revenue and thousands of high-paying jobs.
AI will reshape not only our economy but also our society and its security. Yet so many misunderstand where its true value and strategic power lie.
In today’s gold rush, the real fortunes belong to those who build the shovel, not just those digging for digital gold. I saw this first-hand when I was on the Intel board in California between 1997 and 2006 as Gordon Moore and Andy Grove built that company. They built the “back end” of tech’s first revolution just as Nvidia is building the much bigger “back end” now.
British engineers, British brains, British business and British investors are world-class at this stuff. But we will need the government to get on board.
Consumer eyes are dazzled by OpenAI’s generative marvels. But it really is Nvidia, the company that supplies the advanced chips that make such feats possible, that reaps the market’s largest rewards. OpenAI looks as if it’s worth only a 10th of Nvidia. AMD, a semiconductor company that designs chips, is a distant second, while startups such as Cerebras and Tenstorrent jostle for a small piece of the pie.
Every AI model and application, from autonomous robots to real-time translation tools, depends on advances in chip technology. Chips are the new oil in the digital economy, determining how quickly and efficiently future applications come to life. At present, the only truly profitable giants in the AI sector are chipmakers.
Some fear that China will commoditise AI chips just as it did with solar technology, causing prices to crater and incumbents to fall. The reality is more nuanced. US export controls prevent China from accessing the world’s advanced chip manufacturing technology for the next decade, severely limiting the country’s capacity to dominate high-end AI…
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