Government hands Chinabacked chip company £3m

CRRC, owner of Lincoln chip business, has been blacklisted by the US over alleged military links

A MICROCHIP maker whose owner is alleged to have links to the Chinese military has been awarded millions in UK government grants, The Sunday Telegraph can reveal.

Lincoln-based Dynex Semiconductor, a company ultimately owned by the Beijing-headquartered CRRC Corporation, was handed £3m in grants and support from the Government over the last decade.

CRRC was in October accused by the Pentagon of being a “Chinese military company” and placed on a blacklist.

The US has accused China of trying to modernise its army by “ensuring its access to advanced technologies and expertise” through what “appear to be civilian entities”, naming CRRC among them.

Concerns have been raised in the past that Dynex’s technology may have been transferred to China.

Chris Cash, director of the China Research Group of backbench Conservative MPs, said the disclosures around grants raised a “question of whether UK Research & Innovation (UKRI) funding should be subject to more rigorous national security scrutiny”.

CRRC acquired a 75pc stake in Dynex, which makes microchips, in 2008 to little fanfare. In 2019, it bought the remaining shares in the company.

Dynex’s technology includes high power semiconductors and switches destined for trains, electric cars and industrial machines.

Its technology also has applications for hydrogen power and nuclear fusion. CRRC, which has a public listing in Shanghai, is the world’s largest rolling stock manufacturer with a market value of $20bn (£16bn). It has 180,000 employees and investments.

The company is majority owned by an arm of the Chinese state, according to Chinese company filings analysed by Datenna.

Under CRRC ownership, Dynex has applied for, and been given, millions of pounds in research grants from the British Government to build advanced semiconductor technology. Its most recent grant funding was secured in February 2022 and runs until 2024.

The majority of the Government funding was awarded by the Innovate UK agency, which receives taxpayer cash. The contracts include multiple research agreements with UK universities to study new types of semiconductors for electric vehicles, batteries and renewable power generation.

After acquiring Dynex, in 2014, Dynex and CRRC announced they had built a factory in Zhuzhou that would develop “insulated gate bipolar transistors” in China.

In 2018, The Sunday Times reported on concerns that the semiconductor company’s technology had been transferred to China.

In 2021, the Commons defence select committee warned CRRC could have used know-how from the acquisition to develop “Chinese navy railguns”.

Railguns use electromagnets instead of explosives to fire projectiles hundreds of miles 50pc faster than traditional guns.

A spokesman for Innovate UK said: “Innovate UK/UKRI carries out due diligence and risk assessment of applications for funding. 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.”

Dynex and CRRC did not respond to requests for comment.