Fractile raises $720 million for British AI chip push

The funding round was led by Thrive Capital, Founders Fund, Lightspeed Venture Partners and Redpoint. The valuation could equate to about $7 billion, a figure reported by the Financial Times and a Reuters source. The government said its investment aims to ensure the U.K. has a greater stake in the hardware underpinning its future economy.

Fractile is among the best-funded startup contenders building purpose-designed AI chips, alongside Axelera, Etched and OLIX. The chips are one approach to cutting the cost of inference: running increasingly demanding AI models in production. Fractile is also developing a machine learning compiler intended to maximize the speed of large language models on its hardware, presenting itself as a frontier AI company with a full-stack offering.

Its hardware design is the company’s main potential differentiator. Following a pivot, Fractile’s chips use DRAM—the most common type of RAM—stacked on top of each chip. The company hopes this arrangement can sidestep the usual tradeoff between memory and capacity.

That constraint has become more pressing as companies use agentic AI to run longer sequences of tasks with large models while trying to maintain speed. Fractile CEO Walter Goodwin wrote on LinkedIn that “there is still a lot of work ahead.” He said the new funding would allow the startup to “ship [its] first chips and systems next year.”