On 8 June 2026 the UK Government’s Department for Science, Innovation & Technology published its policy paper on the UK AI Hardware plan.
The plan explains that the Government is positioning semiconductors and data centres as strategic assets tied to economic growth and national security. It explicitly aims to develop, deploy and scale domestic ‘AI hardware capabilities’, which are understood to be the chips and semiconductor technologies that underpin AI. This hardware is required to enable capability across data centre systems.
The plan emphasises a commitment to back British companies to develop new technology. The Government has set aside £120 million to fund a new AI Hardware Innovation Programme, which gives British companies funding security to design, develop and test innovative novel chips.
For example, British AI company Oriole Networks, collaborating with AMD, will deploy the world’s first large-scale AI system that uses light rather than electrical signals to move data between chips. This innovation will boost the performance of UK data centres.
The UK Government sees AI hardware as a major economic opportunity. It is one of the fastest-growing segments of the global economy, so focusing on this area will help to carve out the UK’s long-term position in AI and its role in global supply chains.
What does this mean for the disputes landscape around data centres?
The UK AI Hardware plan places procurement at the centre of the UK’s AI strategy. Government procurement of AI chips may lead to disputes around tender challenges, specification disputes, delivery failures, performance guarantees, and termination and step-in rights.
Further, to achieve the plan, there is likely to be collaboration with and investment from overseas entities, despite the strong focus on domestic businesses. This could lead to joint ventures and cross-border licensing arrangements. Parties often favour arbitration for disputes in these areas, and we may see parties making use of emergency relief for supply disruptions.
As more data centres are built, and new technologies to improve performance emerge, we may see disputes over delay and disruption. Data centre projects sit at the intersection of construction, energy, technology and regulation, meaning that disputes can arise from delayed grid connections, long lead times for specialist equipment, commissioning failures and difficulties integrating multiple contractors and systems.
The expansion of data centre infrastructure may also generate an increase in planning and environmental disputes. Recent legal challenges have focused on whether the environmental effects of major data centre developments have been adequately assessed, particularly in relation to energy demand and climate impacts. As AI Growth Zones accelerate development, developers, investors and public authorities may face greater scrutiny from local communities, environmental groups and other stakeholders, increasing the prospect of judicial reviews and planning-related litigation.
In addition, competition for access to power, water and connectivity may itself become a source of disputes. The allocation of responsibility for securing utility connections, the consequences of delays outside the parties' control, and the adequacy of contractual protections against infrastructure constraints are likely to become increasingly important issues in project documentation and subsequent disputes.
What’s clear is that there will be a massive expansion in private sector-led onshore AI data centres through AI Growth Zones. So far, £28 billion of private investment is confirmed (see Digital and Technologies Sector Plan: Year One Update published 10 June 2026). As the UK seeks to secure its place in the AI boom, novel disputes are likely to arise.
