1994 Volkswagen Jetta key chip or computer issue?

i bought my son a '94 Jetta. It began starting hard - turning over, but requiring a lot of cranking before catching. He then lost the ignition key.
I had a new key cut by the dealer; however the car will now not even turn over. Lights work, all electrical works, security system works - doors lock / unlock.
Car will just not crank.
I've been told different stories - the dealer says that there is no chip in the ignition switch / key - and its probably that the computer needs replaced. My mechanic says that he 'thinks' there is supposed to be a chip in the key and the dealer is incorrect.
Could you confirm, one way or another whether this VW has a chip in the ignition key or if it's most likely a computer failure?

Thanks.