The UK government has announced plans to develop a domestic AI hardware initiative to “secure Britain’s capability in chips and the semiconductor technologies.”

Speaking at the Royal United Services Institute (RUSI) on April 28, Technology Secretary Liz Kendall said the plan will launch in June to coincide with London Tech Week.

“The global AI chips market is growing at an annual rate of 30 percent and is expected to reach one trillion dollars in the early 2030s,” Kendall said during her speech. “If Britain could secure just five percent of this market, it would bring fifty billion dollars in revenue to the UK with tens of thousands of high-paid jobs in tech.”

It is unclear whether the UK government is looking to shore up domestic chip manufacturing or simply support hardware companies in their design and development efforts. In addition to announcing the AI Hardware Plan, Kendall said the government would be investing £100 million ($135m) in a Scaling Compute program being run by ARIA – a UK R&D funding agency. This includes £50 million ($68m) for its Scaling Inference Lab, which will allow British startups to test and showcase their AI hardware, she said.

At present, Taiwanese chip companies produce about 60 percent of the world’s chips, but more than 90 percent of leading-edge chips, including Nvidia’s data center GPUs. Additionally, since the start of his second term in office, US President Donald Trump has made it a priority to boost domestic chip manufacturing in the United States, with companies like Apple and TSMC pledging hundreds of billions of dollars to support US-based semiconductor manufacturing efforts.

However, Kendall said she would not accept such “defeatism” from those claiming the race has already been lost to those countries, name-checking Arm as an example of a UK success story.

While Arm’s CPU architecture is a dominating market force, until recently, the company has only licensed its designs to other companies, as opposed to producing and selling its own physical chips. The company’s recently announced data center AGI CPU – its first chip offering – will be manufactured by TSMC, which only has chip fabrication sites in the US and Asia.

The announcement comes eight months after the Council for Science and Technology (CST) published a report that recommended the UK government establish a sovereign AI chip design industry in the country.

In its opening summary, the report, titled ‘Building a sovereign AI chip design industry in the UK,’ states that semiconductors have “rightly been identified by the government as a priority technology for the future of the UK,” with their development underpinning many of the government’s strategic goals across a variety of different sectors.

Despite this, the council acknowledges that the UK’s chip industry is “niche and highly specialized” and that a “broad, generalized approach” will not allow the country to sufficiently catch up to the current front-runners.

Instead, CST says strengthening the UK’s semiconductor industry will require investment and activity in areas where the country can achieve the greatest strategic advantage, namely in AI chip design – which it labels as one of the fastest growing industries in the world, and says should not be conflated with the chip manufacturing sector.