1. The big hardware push
The government announced a £1.1bn investment into AI hardware – the cutting-edge semiconductor chips on which AI models such as ChatCPT and Claude run. The ambition of this spend is significant: “Build globally competitive AI hardware companies in the UK.”
The reality will be more complex. Right now, almost all advanced AI chips are made by one producer: Taiwan Semiconductor Manufacturing Corporation (TSMC). US companies such as Nvidia or Google do not produce AI chips themselves – they send hi-tech chip designs to TSMC, which carves these into silicon wafers using, among other things, deep ultraviolet lasers. It costs TSMC tens of billions to build a single chip foundry, and £1.1bn will not suffice to construct one on UK shores.
What the money could do is bolster domestic chip designers. Arm Holdings, based in Cambridge but listed in New York, is one of these – the government vaguely says it will have a “strategic industry partnership” with the company. The strongest component of the spending package appears to be a £400m procurement opportunity for UK chip makers – an encouraging sum, but industry experts say that a large part of this money was already announced in previous years. The announcement is carefully worded; the money will create opportunity, “including” for UK firms.
“It’s genuinely encouraging to see government treating AI compute as national infrastructure and putting real procurement weight behind it,” said Mark Boost, the chief executive of Civo, a UK-based cloud computing platform.
“My concern is that beneath the sovereignty language, the default flow of this money is likely to go to the usual suspects. Unless the contracts are structured deliberately, we’ll have spent a billion pounds building British-branded infrastructure on somebody else’s silicon, integrated by the established overseas vendors and rented from hyperscalers.”
2. AI skills and company adoption
The government made announcements on up-skilling – helping people learn how to use AI in their jobs – and getting companies to integrate AI systems into how they operate. This included committing £20m to an effort to map how AI is changing entry-level work, and developing practical advice for businesses to redesign roles.
A “bridge AI” scheme will give British companies funds to buy Uk-developed AI products, while there will also be an expansion of the UK’s “tech town” programme which has been pioneered by Barnsley. The government published bespoke plans for important sectors such as advanced manufacturing and the creative industries to adopt AI.
Bouke Klein Teeselink, an academic at King’s College London, says: “Very few people I know are using these tools to their full potential. So there is clearly a lot of productivity that has been left on the table in the UK.”
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