UK government gives £3m to Chinese-owned microchip firm based in Lincoln

Dynex Semiconductor Image credit: Yuriy Boyko_Ukraine via Shutterstock

Dynex Semiconductor, a Lincoln-based microchip company owned by a Chinese corporation, has received £3m in UK government support over the past decade.

As revealed by The Telegraph, the British chip firm is ultimately owned by Beijing-headquartered company CRRC Corporation. CRRC is majority owned by the Assets Supervision and Administration Commission, which itself is controlled by the Chinese state. In October last year, the Pentagon blacklisted CRRC, accusing it of being a “Chinese military company”.

The majority of the financial support for Dynex came from Innovate UK, the government’s national innovation agency, which is funded in part by public money. Dynex Semiconductor has also participated in research contracts with universities in the UK. It secured its most recent Innovate UK funding in February last year.

The Lincoln-based firm specialises in semiconductors for trains, electric vehicles, and industrial machines. CRRC has owned a majority share in Dynex since 2008. It took full ownership of the chip company in 2019.

UKTN has reached out to Dynex, CRRC and Innovate UK for comment.

A spokesperson for Innovate UK told The Telegraph that the agency “carries out due diligence and risk assessment of applications for funding”.

The spokesperson added: “Where risks are identified appropriate controls are applied, including seeking advice within the wider government if required to make an informed decision to award or not.

“Innovate UK has reinforced existing terms and conditions for business-led innovation grants, including the development of grant portfolio tools to enable appropriate company monitoring, for example to identify potential foreign ownership issues.”

Politicians have been on high alert over Chinese-linked British microchip companies ever since the blocked sale of Newport Wafer Fab to Nexperia.

Members of the government have argued that Chinese involvement in strategically important tech sectors like semiconductors poses a risk to national security.

Earlier this month, UKTN revealed that a Chinese state-connected holding company based in Shanghai acquired the British chip designer Flusso.

Conservative MP Alicia Kearns responded to the news by calling for a national security review of the acquisition and said the takeover “didn’t pass the smell test”.