Wednesday 13 May 2026 18:36
| Updated:
Wednesday 13 May 2026 18:45
British AI chip startup Fractile has raised $220m (£165m) in fresh funding. The government points to the deal as proof that the UK can produce a globally competitive AI infrastructure company.
The London-founded company, which is developing next-generation chips designed to accelerate AI inference – what AI models use to generate responses – said its Series B round was led by Accel, Factorial Funds and Peter Thiel’s Founders Fund, with backing from investors including Conviction, Felicis and 8VC.
This increase comes amid increasing global competition to build hardware that supports AI systems, with investors increasingly focused on inference, rather than simply training larger models like ChatGPT.
AI Minister Kanishka Narayan called the deal a “strong vote of confidence in UK AI”. “This shows that the UK’s leading companies are attracting global investment while retaining high-value jobs and skills at home,” he said.
“AI will be critical to the UK’s future prosperity and security, and next-generation AI chips like Fractile’s are a vital part of making that happen.”
The government is expected to publish its AI hardware plans later this year as ministers seek to strengthen the UK’s position in the technology infrastructure.
Funding is fragile as competition increases
Founded in 2022 by Oxford-educated engineer Walter Goodwin, Fractile seeks to address the cost and speed of producing AI output at scale.
Goodwin said: “We are betting everything on a logical conclusion: that the only way to truly unlock this latent value, to make speed achievable at scale, is to radically reinvent the hardware we use to run our leading AI models.”
The company argues that chipmakers are currently struggling to cope with the demands of increasingly complex AI workloads.
“At the rate of around 40 tokens per second that these models tend to run on existing chips, a single output of this magnitude would take a month to complete,” Goodwin said.
Fractile is developing a chip intended to reduce that bottleneck by redesigning the way memory and power interact within these AI systems.
The company claims its approach can significantly increase speed while lowering costs and energy usage compared to traditional GPU systems.
This funding round adds momentum to the AI startup’s growth in the UK, coming on the same day Isomorphic Labs announced $2.1 billion in Series B funding to expand its AI-powered drug discovery platform.
The investment surge reflects growing demand for alternatives to dominant AI infrastructure providers like Nvidia, whose chips remain central to the current AI boom, but face growing pressure from supply, energy use and cost constraints.
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