UK government to support local industry in £100m AI hardware purchases

But industry watchers are sceptical

The government’s new package of reforms and investment is intended to put AI at the heart of its mission.

One of the standout measures just announced is a “first customer” promise, modelled on the way the government bought Covid vaccines. It is intended to support UK startups who are building AI hardware but struggle to scale.

The new £100 million advance market commitment will support British businesses looking to scale. Liz Kendall, the Secretary of State for Science, Innovation and Technology, admitted that the figure “sounds small compared to the billions being spent” elsewhere in the world, but said it was about the government “showing leadership in the areas where we think we will be absolutely world-leading."

“Our goal is to see British chips deployed alongside established vendors,” the government wrote in its announcement of the programme.

Still, there’s a long way to go: private investment in the UK’s AI market was $4.5 billion last year, a paltry sum compared to the $109.1 billion invested in the USA over the same period.

While Kendall didn’t give specifics on how the programme will work, she said the government will tell “cutting-edge [UK] chip companies” that it will buy their technology when it reaches “a certain standard.”

The government hopes to use AI to power the UK’s existing strengths in areas like “life sciences, financial services, the defence sector and the creative sector,” Kendall told The Financial Times.

Alongside the advance market commitment, the government announced a new AI Growth Zone in South Wales, with support of companies including Vantage Data Centers and Microsoft. The Zone will receive £10 billion of investment, and the government foresees it unlocking “at least” 5,000 jobs. The government itself will put in £5 million, as it is for other AI Growth Zones.

As an additional part of the new package of AI measures, venture capitalist James Wise was announced chair of the £500 million Sovereign AI Unit, which is intended to help build and scale British AI capability.

However, not everyone is convinced. While the announcements are welcome, the amounts involved have been called into question. Sam Hields, partner at VC firm OpenOcean, said:

“£500 million for the Sovereign AI Unit is by no means nothing – but capital investment in AI infrastructure is measured in the billions. Especially if the government means to ‘help build and scale AI capabilities on British shores’ in any significant sense; that type of project involves significant, protracted investment in compute capacity and other foundational infrastructure.”

Finally, more government funding was announced in the form of £137 million marked for AI in drug and treatment research; and £250 million to provide free compute for British researchers and companies to train AI models.

Sam Hields again:

“Again, £250 million being spent on free compute is very welcome, but you have to question how far that will go when divided amongst the thousands of researchers and early-stage startups who will be clamouring for access.

“Finally, when it comes to just £5 million of support for each AI Growth Zone, that’s hardly going to set the world on fire.”