The British government has announced it will develop a UK AI Hardware Plan to secure the nation's capability in chips and semiconductor technologies, as Technology Secretary Liz Kendall warned that countries which fail to master artificial intelligence risk losing control over their economic and security futures.
In a landmark speech at the Royal United Services Institute (RUSI), Kendall set out why AI is key to the country's economic prosperity and national security. She argued that the UK must build up its AI sector and work with allies or risk losing out in the race for the future.
AI as the 'defining currency' of the age
Drawing on historical comparisons, the Technology Secretary said nations that pull ahead are those that master the technologies of their age, from naval power and railways to electricity grids. Today, she said, that role is played by artificial intelligence, semiconductors and compute, which increasingly underpin both economic competitiveness and "hard power".
"History shows that the countries which pull ahead are those that master the defining currency of their age - from navies and railways to power grids," Kendall said. "Today, that currency is technology: chips, computing power and artificial intelligence, which are increasingly becoming engines of both economic power and hard power".
The Tech Secretary noted that 70 per cent of global AI compute is now controlled by just five companies. Control over where AI systems are built, how they operate and who ultimately controls them is now fundamental to economic security, energy security and defence security.
A decisive move towards British tech
Kendall said there must be a "decisive move" towards backing more British tech companies as AI reshapes global power, security and prosperity. The UK not only has a $1 trillion tech sector and world-leading universities and research institutions, but is also home to globally influential institutions such as the AI Security Institute (AISI), which is shaping international approaches to AI safety and security.
As part of a more muscular approach, the UK government will back British strengths in the parts of the AI stack where the UK can build real leverage. This means focusing on a few select things that the country does better than anyone - so crucial that the UK can never be cut out - from frontier research and companies to compute, skills and infrastructure.
The AI Hardware Plan: securing Britain's future capability
To strengthen the UK's position in this race for the future, the Technology Secretary announced that the government will develop a UK AI hardware plan to secure Britain's capability in chips and the semiconductor technologies that underpin the full AI hardware stack.
Kendall stressed that this is not about isolation or trying to build everything alone, but about ensuring Britain is indispensable in the technologies that will define the future - a keystone in the global AI architecture rather than a bystander to decisions taken elsewhere.
"This government believes AI Sovereignty is not about isolationism or attempting to pull up the drawbridge and go it alone," Kendall said. "We will continue to use the best technology and welcome inward investment because that's what our public services and economy demand. For Britain, AI sovereignty is about reducing over-dependencies and increasing resilience in key national strategic priorities".
A $1 trillion market opportunity
The global AI chips market is growing at an annual rate of 30 per cent and is expected to reach one trillion dollars in the early 2030s. Kendall argued that if Britain could secure just five per cent of this market, it would bring fifty billion dollars in revenue to the UK with tens of thousands of high-paid jobs in tech.
The Technology Secretary said she would not accept "defeatism" from those claiming the race has already been lost to the United States and Taiwan. She named Arm as an example of a UK success story. British companies - from Arm, whose chip designs are used in everything from smartphones to AI data centres, to startups like Fractile and Olix - are already leading the next generation of AI hardware.
Investment in ARIA's Scaling Compute program
In addition to announcing the AI Hardware Plan, Kendall said the government would be investing £100 million ($135 million) in a Scaling Compute program** being run by ARIA, the UK's advanced research and invention agency. This includes **£50 million ($68 million) for its Scaling Inference Lab, which will allow British startups to test and showcase their AI hardware.
'Britain is uniquely placed to flourish'
The Technology Secretary said the UK is uniquely well placed to succeed if it acts with confidence. She highlighted the strength of the UK's $1 trillion technology sector, world-leading universities and research institutions, and internationally influential bodies such as the AI Security Institute, which is shaping global approaches to AI safety and governance.
She also pointed to Britain's deep international alliances as a critical asset in shaping a shared global AI ecosystem, whilst rejecting calls to halt or pause AI development, describing such a move as a "double betrayal" of British talent and national interest.
Kendall warned that retreating from technological progress would mean retreating from the world, arguing that the real choice facing the UK is not between a world with AI and a world without it, but between a Britain that actively shapes its AI future, or one that is left at the mercy of decisions made by others.
Launch at London Tech Week
The AI Hardware Plan is scheduled to launch in June to coincide with London Tech Week. According to the government, the plan will set out how the UK will develop, demonstrate, deploy and scale the chips and semiconductor technologies that underpin AI.
The announcement comes eight months after the Council for Science and Technology (CST) published a report recommending that the UK government establish a sovereign AI chip design industry in the country. The report, titled 'Building a sovereign AI chip design industry in the UK', stated that semiconductors have "rightly been identified by the government as a priority technology for the future of the UK".
Industry reaction
The development of a UK AI hardware plan has been welcomed by industry figures as "clear recognition that leadership in AI cannot happen without semiconductors and associated technologies".
The government's approach represents an evolution in how it supports the UK semiconductor sector to harness its strengths in AI hardware - moving from a set of individually strong but fragmented activities to a more coherent, system-level strategy.