UK-backed AI chip startup Fractile hits $7 billion valuation in funding round

By Sam Tabahriti

LONDON, Nov 11 (Reuters) - AI chip startup Fractile was valued at $7 billion in its latest fundraising round, which included backing from the British government, a person involved in the deal said on Wednesday, making it one of Britain's most valuable technology startups.

The London- and Bristol-based company is developing chips designed to improve AI inference, the process through which AI models generate responses. Fractile says its technology can deliver faster performance while cutting energy use and costs.

The company raised $720 million in a Series C funding round led by Thrive Capital, Founders Fund, Lightspeed and Redpoint, it told Reuters.

Other investors included Google's venture arm CapitalG, BlackRock, DST Global, Elad Gil, Balderton, SV Angel, Britain's Sovereign AI fund and the British Business Bank.

BRITAIN'S AI AMBITIONS

The investment marks a major vote of confidence in Britain's efforts to build domestic AI infrastructure, rather than solely relying on overseas suppliers for the computing power that underpins the technology.

It also highlights growing investor interest in companies developing the hardware behind AI, a market dominated by Nvidia and a handful of Asian semiconductor manufacturers.

Britain has made becoming an AI superpower a key part of its economic strategy, seeking to build on strengths in AI research and chip design while retaining more of the jobs, investment and economic value generated by the technology.

"For too long, Britain has produced some of the world's best scientific ideas, only to see too much of the technology, industry and wealth they create built elsewhere," AI Minister Kanishka Narayan said in a statement on the funding round.

"We are determined to change that."

Britain is home to chip designer Arm, whose technology is used in billions of devices worldwide, but its semiconductor manufacturing industry remains small compared with those in the US and Asia.

Fractile plans to launch its first commercial chip next year.

($1 = 0.7492 pounds)

(Reporting by Sam Tabahriti. Editing by Adam Jourdan and Mark Potter)