diff --git a/.circleci/config.yml b/.circleci/config.yml
index 7ac10195c75a9..5c314d4e6e5c1 100644
--- a/.circleci/config.yml
+++ b/.circleci/config.yml
@@ -113,7 +113,7 @@ jobs:
     docker:
       - image: circleci/python:3.7
     environment:
-      - XLA_VER: 1.9
+      - XLA_VER: 1.12
       - PYTHON_VER: 3.7
       - MAX_CHECKS: 1000
       - CHECK_SPEEP: 5
diff --git a/.github/workflows/README.md b/.github/workflows/README.md
index d67bf92d6c048..8b9e7d173b03c 100644
--- a/.github/workflows/README.md
+++ b/.github/workflows/README.md
@@ -13,7 +13,7 @@
 | pytorch-lightning (HPUs)   | .azure-pipelines/hpu-tests.yml      | Run only HPU-specific tests.                                                                                                                                                | HPU           | (3.8, 1.10)                                      | linux               |
 | pytorch-lightning (GPUs)   | .azure-pipelines/gpu-tests.yml      | Run all CPU and GPU-specific tests, standalone, and examples. Each standalone test needs to be run in separate processes to avoid unwanted interactions between test cases. | GPU           | (3.9, 1.12)                                      | linux               |
 | PyTorchLightning.Benchmark | .azure-pipelines/gpu-benchmark.yml  | Run speed/memory benchmarks for parity with pure PyTorch.                                                                                                                   | GPU           | (3.9, 1.12)                                      | linux               |
-| test-on-tpus               | .circleci/config.yml                | Run only TPU-specific tests.                                                                                                                                                | TPU           | (3.7, 1.9)                                       | linux               |
+| test-on-tpus               | .circleci/config.yml                | Run only TPU-specific tests.                                                                                                                                                | TPU           | (3.7, 1.12)                                      | linux               |
 
 - \*Accelerators used in CI
   - GPU: 2 x NVIDIA Tesla V100
diff --git a/.github/workflows/cicd-pytorch_dockers.yml b/.github/workflows/cicd-pytorch_dockers.yml
index b037c798bc8ee..c693dade2b2db 100644
--- a/.github/workflows/cicd-pytorch_dockers.yml
+++ b/.github/workflows/cicd-pytorch_dockers.yml
@@ -51,7 +51,7 @@ jobs:
       matrix:
         # the config used in '.circleci/config.yml`'
         python_version: ["3.7"]
-        xla_version: ["1.11"]
+        xla_version: ["1.12"]
     steps:
       - uses: actions/checkout@v2
       - uses: docker/setup-buildx-action@v2
diff --git a/dockers/base-xla/Dockerfile b/dockers/base-xla/Dockerfile
index 977aee878ffcd..3cc43e6e1a4f3 100644
--- a/dockers/base-xla/Dockerfile
+++ b/dockers/base-xla/Dockerfile
@@ -19,7 +19,7 @@ LABEL maintainer="Lightning-AI <https://github.com/Lightning-AI>"
 # CALL: docker image build -t pytorch-lightning:XLA-image -f dockers/base-xla/Dockerfile . --build-arg PYTHON_VERSION=3.8
 ARG PYTHON_VERSION=3.9
 ARG CONDA_VERSION=4.9.2
-ARG XLA_VERSION=1.11
+ARG XLA_VERSION=1.12
 
 SHELL ["/bin/bash", "-c"]
 # for skipping configurations
@@ -92,6 +92,10 @@ RUN \
     python --version && \
     cd pytorch-lightning && \
     pip install -q fire && \
+    # Pin mkl version to avoid OSError on torch import
+    # OSError: libmkl_intel_lp64.so.1: cannot open shared object file: No such file or directory
+    # https://github.com/pytorch/xla/issues/1666
+    pip install mkl==2021.4.0 && \
     # drop packages installed with XLA
     python .actions/assistant.py requirements_prune_pkgs torch,torchvision && \
     # drop unnecessary packages