British Firms Poised to Seize a Major Share of the AI Chip Market | John Brown

TThe UK holds a unique and advantageous position to contribute significantly in the new era of artificial intelligence, provided it seizes the chance to establish the production of millions of computer chips, an area that is often misunderstood.

AI technology demands a vast quantity of chips, and a collaborative national initiative could fulfill up to 5% of the global requirement.

Our legacy in chip design is unparalleled, beginning with the first general-purpose electronic computer, the initial electronic memory, and the first parallel computing system. Presently, Arm, based in Cambridge, is a prominent player that designs over 90% of the chips found in smartphones and tablets worldwide.

Given this background, it is certainly plausible that British companies can capture a notable share of the AI chip market. A target of 5% is both conservative and achievable. Our distinguished universities, a flourishing foundational AI company like DeepMind, and a strong innovation ecosystem equip the UK with the tangible resources necessary to compete.

The potential gains are tremendous. The global market for AI chips is expected to soar to $700 billion (£620 billion) annually by 2033, surpassing the entire current semiconductor market. Achieving that 5% share would translate to an influx of $35 billion in new revenue and the creation of thousands of high-paying jobs.

AI is set to transform not only the economy but also societal structures and security. Unfortunately, many do not grasp where its true value and strategic influence lie.

In this contemporary gold rush, real wealth is accessible not only to those mining digital gold but also to those who provide the tools for the task. I witnessed this firsthand from 1997 to 2006 when Gordon Moore and Andy Grove helped establish Intel’s board and founded the company in California. They set the groundwork for the first technology revolution, much like Nvidia is doing today on an even larger scale.

UK engineers, intellects, businesses, and investors excel in this domain. However, government collaboration is crucial.

While consumers are captivated by the generative marvels of OpenAI, the true market winner is Nvidia, the entity that provides the advanced chips facilitating such achievements. OpenAI’s estimated value stands at merely 1/10th that of Nvidia. AMD, a semiconductor design company, holds a distant second place, while emerging firms like Cerebras and TenTrent strive for a share of the market.

All AI models and applications, ranging from autonomous robots to real-time translation services, depend heavily on advancements in chip technology. Chips are the new oil of the digital economy, dictating the speed and efficiency with which future applications can be developed. Currently, the only major players in the AI field seeing true profitability are chip manufacturers.

Concerns have arisen that China may commoditize AI chips similar to its approach with solar technology, leading to dramatic price fluctuations and undercutting existing companies. The situation is more complex. U.S. export controls will restrict China’s access to advanced chip manufacturing technology for the next decade, significantly curtailing its capacity to dominate the high-end AI chip arena. This reality positions the U.S. as a key player and creates a substantial opportunity for its closest ally, the UK, which excels in chip design.

The UK has already birthed several companies in this sector, such as Fractile, Flux, and Oriole. However, we lack the necessary scale to capitalize on the opportunity. Instead of competing with Nvidia in data center computing, we should focus on specialized applications that usher in innovation, like robotics, factory automation, medical devices, and autonomous vehicles.

These domains offer ample opportunities for inventive architectures and new competition.

Too frequently, Britain’s industrial strategy is impeded by national insecurity and a lack of confidence. This must change. Primarily, governments must advocate decisively for our intent to excel in AI chips.

Secondly, we should aim to double our chip design workforce from the current 12,000 within a decade and encourage more talented individuals to pursue electrical engineering and computer science through generous scholarships. A target of 1,500 new students each year is achievable. Universities must offer relevant courses, and governments need to enhance financial support.

Thirdly, the UK should fully utilize its investment instruments: the Sovereign AI Fund, the British Business Bank, the National Wealth Fund, and the Ministry of Defence’s initiatives to ‘buy British’.

Fourthly, the UK-US strategic partnership must serve as a foundation for greater collaboration with leading US chip manufacturers and facilitate access to their state-of-the-art sub-3 nanometer manufacturing technologies. Collaborating with our U.S. partners to develop a robust supply chain and innovation pipeline is essential.

If the UK commits fully, the emerging age of AI could be characterized not only by code but also by silicon, leaving a distinctly British legacy.