Fractile, a British start-up developing AI chips, has raised $720 million in Series C funding with support from the UK’s Sovereign AI Fund, the government said, in hopes of “ensuring the UK’s stake in the hardware that powers the economy of the future”.
This makes Fractile one of the most-funded startups in the dedicated AI chip race, along with the likes of Axelera, Etched and OLIX. Such chips are one of several avenues being considered to reduce the cost of inference. That means using increasingly demanding AI models in production.
However, Fractile is looking to go beyond hardware with a full-stack approach that also includes a machine learning compiler that maximizes the speed at which LLM runs on chip.
As a result, the company is positioning itself as a frontier AI company, and the latest round led by Thrive Capital, Founders Fund, Lightspeed Venture Partners, and Redpoint was priced accordingly. According to the British government, its valuation is “more than £5 billion” and likely $7 billion, figures reported by both the Financial Times and Reuters sources.
Still, Fractile’s main differentiator is probably its hardware design. After a pivot, the company’s approach now revolves around DRAM, the most common type of RAM, but stacked on top of each chip in a way it hopes will avoid the usual tradeoffs between memory and capacity.
The rise of agent AI has made this trade-off even more problematic, as companies seek to use larger models to run longer chains of tasks without sacrificing speed. As computing power struggles to keep up, expectations for AI chips are rising, despite their limited availability so far.
Fractile CEO Walter Goodwin said in a LinkedIn post that the company “still has a lot of work left to do” and that the new funding will allow the company to “ship our first chips and systems next year.”
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