The funds, sourced through taxpayer money, will be used to build a national AI resource in Britain, and be ordered through major chipmaking companies such as Intel, AMD and Nvidia.

It was also revealed that the government is already in advanced stages of an order of up to 5,000 graphics processing units (GPUs) from Nvidia. The GPUs, also known as graphics cards, play a crucial part of a chip’s capacity for processing: vital for performing complex actions such as those required by AI.

Steven Mooney, CEO of FundMyPitch, said: “It’s encouraging to see a substantial investment being made in AI, at a time when the technology is set to completely reshape the way businesses operate. However, not enough is being done to support the UK’s home grown tech talent, with far too many ambitious entrepreneurs and innovators struggling to obtain funding, despite producing industry-leading products.

The reality is that for many AI startups, getting the opportunity to secure a credible valuation and attract the attention of investors is an almost impossible task. This needs to change immediately if we want to play a leading role in the AI industry.”

An official who was briefed on the plans also added that the £100m is relatively low in comparison to investments compared by the US, EU and China.

Fears that the Government’s action may prove too little, too late are rising in both industry and Whitehall as the UK currently only accounts for around 0.5% of semiconductor sales globally.

In May, Rishi Sunak’s government revealed plans to invest £1 billion over the next decade in semiconductor research, design and production, but was a step dwarfed by the US’s $52 billion (£41 billion) Chips Act, and EU subsidies of €43 billion (£37 billion.)

The relatively weak investment could stunt progress and potentially leave the UK exposed amid increasing geopolitical tensions over AI chip tech development.

However, Sunak’s focus on regulation has sought to viewing the UK as the potential bridge between US and China following the White House’s ban on US investments in advanced Chinese semiconductors earlier this month.

To further strengthen the UK’s stance on AI, the government is set to hold an AI summit this autumn in Bletchley Park to help establish shared standards and regulation.

A government spokesperson said: “We are committed to supporting a thriving environment for compute in the UK which maintains our position as a global leader across science, innovation and technology.

“The additional money being delivered through UKRI will complement the separate £100m investment to establish the Foundation Model Taskforce. Announcements on the AI Research Resource will follow in due course.”