London-based AI chip start-up Fractile said it has raised $220 million (£165m) in Series B funding to help produce its first processors aimed at AI inference.

The round was led by Accel, Factorial Funds and the Founders Fund, with additional funding from investors including Conviction, Felicis and 8VC.

The round gives Fractile a post-money valuation of around $1bn, Bloomberg reported, citing unnamed people familiar with the deal.

Founded in 2022, Fractile is aiming at what it calls the bottleneck of AI inference processing running in data centres, saying its architecture can speed up the number of tokens per second that can be processed.

The issue is becoming more important with the increasing complexity of models and the shift away from training toward inference, Fractile argues.

It also says its chips can significantly lower the costs and energy associated with current GPU systems.

Fractile competes with a large number of chip start-ups that are targeting both training and inference workloads, none of which have so far gained significant market share against dominant Nvidia.

AI minister Kanishka Narayan said the deal was “a strong vote of confidence in British AI” and showed UK companies are on the cutting edge of the technology.

UK-based Isomorphic Labs also this week announced a $2.1bn Series B round to expand its AI-powered drug discovery platform.