China Tightens Grip As UK Semiconductor Factory Halts Production

Dynex Semiconductor, a cornerstone of the British microchip sector based in Lincoln, has ceased production of its high-voltage semiconductors. Company filings reveal this strategic manoeuvre, which deepens Chinese influence over the UK’s vital electronics industry, follows mounting pressure from Beijing to concentrate the world’s supply of high-tech components within its own borders.

Owned by the Chinese state-run rail conglomerate CRRC since 2008, Dynex has stood as one of Britain’s leading producers of IGBTs—key devices for controlling high-power electrical loads in electric vehicles and trains. The factory’s closure marked the end of an era for domestic chip manufacturing, signalling an increased reliance on foreign supply chains and causing alarm among stakeholders in the British and European technology landscape.

The company issued a nine-month production notice to its clients last October, indicating chip-making activity in Lincoln would shutter in the summer. Despite this, Dynex announced it would continue to “finish” or package semiconductor devices in the UK, shifting the initial manufacturing stages elsewhere within CRRC’s global network.

Meanwhile, CRRC has escalated domestic investment, debuting a third high-voltage chip production line inside China. These actions have thrown the spotlight once again on concerns of technological transfer, as Western nations scrutinise how expertise developed in the UK could bolster Chinese ambitions and even support military applications.

The global impact is already being felt beyond the UK. Last week, Nexperia, another Chinese-owned chipmaker, faced accusations of technology transfer from Manchester, leading to a major international dispute and a temporary export block on its products—causing disruption in automotive manufacturing worldwide. Recent diplomatic efforts have suggested China might relax its ban, restoring supply lines crucial to car production.

Semiconductors and the expertise underpinning their design and manufacture have become a flashpoint in the economic rivalry between China and Western economies. Beijing’s strategy to centralise semiconductor manufacturing capacity demonstrates a resolve to break historical dependencies on foreign suppliers and strengthens its position in ongoing negotiations over technology and trade.