London-based AI chip start-up Fractile has raised $720 million (£542m) in a Series C funding round backed by the UK’s Sovereign AI Fund and venture groups, as it prepares to launch its first production chip next year.

The round valued the company at more than £5bn, or about $6.6bn, according to the UK government, in line with reports by the and Reuters indicating a $7bn valuation.

The valuation is more than six times the company’s value as of its previous funding round in May, making Fractile one of the UK’s highest-valued start-ups.

UK investment

The May Series B round, which reportedly brought in $220m, valued Fractile at about $1bn.

The UK government said the investment had the aim of “ensuring the UK has a greater stake in the hardware that will underpin its future economy”.

Thrive Capital, Founders Fund, Lightspeed Venture Partners, Redpoint and others participated in the round.

Fractile is now one of the most richly funded companies that are developing custom AI chips, alongside the likes of Axelera, Etched and OLIX.

Inference chips

The start-up’s chips aim to reduce bottlenecks in inference computing, focusing on chip designs that integrate DRAM memory into the processor.

Nvidia last year bought Groq, another chip start-up making inference processors, and introduced its own inference chip in March.