UK AI chips start-up Fractile could raise $600m

Fractile was founded in 2022 and operates from two primary locations in London and Bristol.

UK AI hardware start-up Fractile is in talks to raise funding of around $600m at a pre-money valuation of $6.5bn, according to Bloomberg.

The new valuation is estimated at more than six times that of the company’s last funding round in May, when it raised $220m.

The new funding is set to be co-led by Lightspeed Venture Partners and Redpoint Ventures, with the possible involvement of  Thrive Capital and Founders Fund, according to Bloomberg’s sources.

Fractile aims to enable the scaling of cheaper AI token processing for faster model reasoning by building hardware that offers “low latency and high throughput”, with its operations spanning “transistor-level circuit design up to cloud inference server logic”, according to the company.

The start-up has also reached an initial deal to sell around $250m of its chips to Anthropic for deployment in 2027, with an intention to expand the contract in the future, according to Bloomberg.

Proceeds of the May funding round – which was led by Accel, Factorial Funds and Founders Fund, with participation from Conviction, Gigascale, 01A, Felicis, Buckley Ventures and 8VC, alongside existing backers – were to be used by Fractile “to accelerate the path to getting our first chips and systems into customers’ hands”, it said at the time.

Fractile was founded in 2022 by CEO Walter Goodwin, who has a University of Oxford PhD in AI. It operates from two primary locations in London and Bristol but has previously also hired in Taiwan and San Francisco.

Global demand for AI chips of higher speeds and in greater quantities is ever-growing, with chipmakers surging in value, while shortages sparked by unprecedented demand continue to threaten supply chains across the tech world.

This week, AI inference start-up Etched raised $700m in a new funding round led by US trading firm Jane Street, which the company said boosted its valuation to $21bn.

ChangXin Memory Technologies, a Chinese manufacturer of dynamic random-access memory chips, recently replaced Tencent as the world’s most valuable Chinese company.

Earlier this month, AI giant Anthropic confirmed previously rumoured plans to design its own chips in response to a worldwide shortage and increased pressure to develop faster, more advanced AI systems.

Meanwhile, in Ireland, tech giant Intel recently announced a major €5bn investment in its Kildare facility, which the company said will strengthen Ireland’s semiconductor ecosystem.

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