There’s disagreement on what it would take to turn the United Kingdom into an artificial intelligence powerhouse.
Nvidia, the world’s largest supplier of graphics processing units (GPUs), has called on the UK to boost hardware investment to catch up with the United States and China in the global AI race.
During his recent visit to the country, Jensen Huang, co-founder and chief executive of Nvidia, told UK Prime Minister Keir Starmer that the UK could become the world’s third-largest AI ecosystem.
“The UK has the third-largest AI venture capital (VC) investment in the world. The two largest are the US and China, which is fairly obvious,” Huang said in a panel discussion with Starmer at the London Tech Week on Monday.
“The UK has one of the richest AI communities anywhere on the planet, the deepest thinkers, and the best universities … and you’re rich with great computer scientists. It’s a fantastic place for venture capital to invest.”
He said the UK is in a “Goldilocks circumstance” or a “just right” situation where the country has both investors and scientists to develop AI. (For any reader who doesn’t know the children’s story “Goldilocks and the Three Bears,” a young girl named Goldilocks wanders into the home of three bears and finds that one of the bowls of porridge on the table is too hot, another too cold – but the bowl for the small bear is at the right temperature.)
Then Huang pointed out that the UK lacks the hardware infrastructure to create an AI ecosystem that can compete with the US and China.
“If you are a particle physicist, you need a linear accelerator. If you are an astronomer, you need a radio telescope,” he said. “If you’re in the world of AI, you can’t do machine learning without a machine.”
Huang said he was among a group of technology entrepreneurs, including Google’s former Chief Executive Eric Schmidt, Wayve’s Chief Executive Alex Kendall and executives of Synthesia and Elevenlabs, at an event hosted by Starmer on June 8. He said the UK government is committed to AI development.
“We’re going to invest in helping start the AI ecosystem” in the UK, he said. “Infrastructure will enable more research, breakthroughs and companies.… Then the flywheel will start taking off. It’s already quite large, but we’ve just got to get that flywheel going.”
On Monday, on the same stage, Starmer announced an additional £1 billion ($1.3 billion) of funding to boost the country’s AI compute power by 20 times. He also announced the government’s plan to invest £185 million and partner with 11 companies to train 7.5 million UK workers, one-fifth of the country’s workforce, in essential skills to use AI by 2030.
In January this year, the Labor government unveiled the AI Opportunities Action Plan, saying it would set out a long-term plan for the UK’s AI infrastructure needs, backed by a 10-year investment commitment. It said it had attracted £39 billion of private investment to the AI sector since it took office in July 2024.
The Joint Academic Data Science Endeavour (JADE) consortium, comprising 20 UK universities and the Turing Institute, uses Nvidia’s technologies for its AI development. For example, the University of Manchester uses the Nvidia Earth-2 platform to develop pollution-flow models. The University of Bristol’s Isambard-AI supercomputer focuses on climate modeling and next-generation science.
A different diagnosis: lack of growth funds
While Huang says insufficient hardware facilities are the main obstacle to forming the UK’s AI ecosystem, a research report published by Tech Nation, a unit of the Founders Forum Group, said the problem lies in the lack of growth funds and exit opportunities.
The report said the UK is home to more than 17,000 VC-backed startups. It said UK technology startups have raised over $7 billion in VC investment so far this year, 43% of which originated from funds in the US.
“UK founders rate the UK as a good place to start a tech company, but they are less positive about scaling or exiting their companies in the UK,” the report said, citing its survey on more than a thousand UK technology firms.
It said 43% of UK founders it surveyed are considering relocating their company’s headquarters outside the UK.
“Almost all of the founders we surveyed who are considering relocating are targeting the US,” it added. “Of those, more than one in three are looking for better funding availability, exit opportunities and access to a larger market outside the UK.”
According to the survey, half of the founders surveyed suggested that the UK government provide them with tax credits or use a sovereign wealth fund or a co-investment fund to support the growth of their businesses.
The National Wealth Fund, the UK’s sovereign wealth fund, mainly invests in green hydrogen, carbon capture, ports, gigafactories, and green steel sectors.
Balderton Capital, a UK-based venture capital firm, said AI startups in the UK raised $15.9 billion last year, compared with $3.1 billion four years ago.
According to PitchBook Data, AI startups in the US raised a record $97 billion last year. VCs poured $209 billion into US startups in 2024, compared with $61.6 billion in Europe and $75.9 billion in Asia.
It’s unclear how the Starmer administration’s £1 billion long-term funding can help the UK change the game in the global race.
Meanwhile, China seems to be in another extreme – too much investment but too little experience.
A study by the Stanford Center on China’s Economy and Institutions showed that China’s government VC funds had actually invested $912 billion in startups in the country from 2013 to 2023, about 23% of which were directed to 1.4 million AI-related firms. That amounted to $209 billion in total, or $150,000 each.
The study said 4,115 AI firms received government and private VC investments from 2000 to 2023. Most of these firms initially received government VC investments and sought private investments.
A report published by the MIT Technology Review in March this year said that China had built hundreds of AI data centers in recent years, but many of them have become “distressed assets” after many AI projects failed.
Read: US Trojan horse alarms pushing China’s robots to Europe
