UK bets $720 million on homegrown AI chip startup Fractile

British AI chip startup Fractile has landed a massive $720 million Series C funding round, led by Thrive Capital, Founders Fund, Lightspeed Venture Partners, and Redpoint. The investment, which reportedly values the company at around $7 billion, is backed by the UK government's Sovereign AI Fund, aiming to secure a stake in the hardware underpinning the future economy. Fractile is developing specialized chips designed to run large language models more efficiently, focusing on reducing the cost of AI inference.

Fractile differentiates itself with a full-stack approach that includes both custom hardware and a machine learning compiler. Its chip design innovates by stacking DRAM memory directly on the processor, aiming to bypass the traditional performance bottleneck between memory capacity and processing speed—a critical problem as AI agents perform longer, more complex tasks. The company plans to ship its first chips and systems next year, positioning itself as a UK contender in the global race for AI hardware.