Co-founder Yuhang Song’s departure from British AI chip startup Fractile underscores the increasing scrutiny faced by technology companies with links to China, as national security concerns intensify across the UK’s strategic tech sector. Song left the business in May 2024 following internal discussions regarding his academic background and prior affiliations with Chinese institutions, according to reports.
Fractile, founded in 2022, is focused on developing next-generation chips for AI inference – the process by which large language models generate outputs. The company has positioned its technology as a more efficient and cost-effective alternative to hardware produced by industry leaders like Nvidia.
The startup has successfully attracted significant investment, raising $15m in 2024 and subsequently securing an additional $22.5m, demonstrating investor confidence in its technology and market potential.
Red Flags and Academic Ties
The concerns surrounding Song’s departure center on his previous studies at Beihang University in Beijing. Beihang is identified as one of China’s ‘Seven Sons of National Defence,’ a group of universities closely linked to the Ministry of Industry and Information Technology and heavily involved in the country’s defence research. The university is currently listed on the US Commerce Department’s entity list, which restricts organizations deemed to pose national security risks, though it is not currently subject to UK sanctions.
Estimates suggest that approximately 60 percent of Beihang University’s research budget is allocated to defence-related projects. While there is no indication of any wrongdoing by Song or any transfer of intellectual property, his connection to the institution raised concerns within Fractile.
Fractile has stated that Song “left to pursue other technical and business interests in 2024,” characterizing the move as a natural progression for a founder as the company matures. Song himself has not publicly commented on the matter.
Growing Security Scrutiny in the Tech Sector
Song’s exit from Fractile is indicative of a broader trend of increased scrutiny surrounding security risks within the UK’s technology sector. Ken McCallum, the director general of MI5, warned at the end of last year that China presents a daily national security threat, and government officials have repeatedly emphasized the vulnerability of academic research and startups to foreign state influence.
A government-commissioned review of academic security in 2024 followed warnings about the potential risks associated with Chinese-linked funding of sensitive technologies. A subsequent parliamentary intelligence report concluded that UK universities and research institutions are susceptible to the transfer of intellectual property.
Suki Fuller, a fellow at the Council of Competitive Intelligence Fellows who advises startups and NATO-backed programs, highlighted the challenges faced by founders with ties to certain Chinese universities when seeking funding. “If a company has any co-founders or senior executives who studied at one of these universities, US funding is effectively off the table,” she stated. Funds with state-linked limited partners are also likely to withdraw their support.
Fuller added, “It’s a brutal reality. People can lose control of something they helped build because of where they studied, not because of anything they’ve done wrong.”
The situation at Fractile reflects a growing tension between the pursuit of innovation and the need to safeguard national security interests. As geopolitical risks continue to escalate, technology companies operating in sensitive sectors will likely face increasing pressure to demonstrate transparency and mitigate potential security vulnerabilities.