Government increasingly concerned about promising businesses relocating overseas
The UK government is preparing to purchase AI hardware from British technology companies as part of a new strategy aimed at preventing promising firms from relocating overseas.
The initiative, expected to be unveiled at London Tech Week, would see ministers use public sector contracts and targeted procurement to support domestic semiconductor and AI infrastructure businesses.
As reported by The Telegraph, technology Secretary Liz Kendall is set to outline what government sources describe as an “AI Hardware Plan”, designed to help British companies scale up while keeping jobs, expertise and intellectual property in the UK.
British firms sell abroad
The proposal comes amid growing concern that some of Britain’s most successful chipmakers have been acquired by foreign buyers or have chosen to expand elsewhere.
In recent years, AI chip specialist Graphcore was purchased by Japan’s SoftBank, while communications chip company Alphawave IP agreed to a multi-billion-dollar takeover by US giant Qualcomm.
Arm, widely regarded as the UK’s most successful semiconductor company, opted to list its shares in New York rather than London.
Government officials argue that maintaining a domestic semiconductor sector has become increasingly important as AI technologies become embedded across the economy, from healthcare and finance to defence and public services.
One executive at a British AI company said ministers had become increasingly concerned about the prospect of promising businesses relocating overseas.
“They are terrified about us leaving,” the executive said.
Purchasing domestic hardware
Under the proposals, public bodies could purchase processors, networking equipment and other AI-related hardware developed by UK firms.
The equipment may be deployed in government services or incorporated into national AI computing facilities that would be made available to researchers and businesses.
Officials believe such guaranteed demand could help emerging companies attract investment and remain headquartered in Britain.
Several British start-ups are developing alternatives to technology supplied by US-based chip giant Nvidia, whose processors dominate the global AI market.
Industry executives have warned that access to advanced computing infrastructure is increasingly becoming a strategic issue as geopolitical tensions rise.
The government’s plans also include measures to improve access to financing and specialist skills, with the aim of creating a more supportive environment for high-growth technology firms.
Expanding AI computing capacity
The announcement follows a wider government commitment to invest more than £1 billion in expanding Britain’s AI computing capacity.
Existing public research infrastructure has largely relied on hardware supplied by American companies, including Nvidia and Intel.
Ministers hope that directing a greater share of future spending towards domestic suppliers will help establish a stronger national semiconductor ecosystem while reducing dependence on overseas technology providers.
The strategy also reflects broader concerns about foreign dominance in government technology procurement.
A recent parliamentary report questioned the extent of Palantir’s involvement in UK public services and warned of the reliance on Microsoft and AWS.
Dame Chi Onwurah, the committee chair, said achieving the government’s ambition of a “truly digital state” would require greater technological sovereignty and a clearer strategy for reducing dependence on overseas suppliers.
She called for stronger backing for UK technology firms through government procurement, warning that excessive reliance on foreign providers could leave the UK exposed.
The committee said those concerns should be resolved before major new programmes move ahead.
Leave a comment