On January 27th, it was reported that despite strict export controls imposed by the United States, its allied nations, and pro-American countries and regions due to the Russia-Ukraine conflict, especially restrictions on the export of critical chips to Russia, Russia has still managed to import chips worth $2 billion in the past year through various channels.
According to Bloomberg, confidential customs data reveals that Russia imported chips worth over $1.7 billion from American and European companies in the first 9 months of 2023. Some of these chips were designed for client computers, while others could be used by Russian intelligence agencies, and the rest could be used for military purposes. The report states that over half of these chips came from American and European tech giants.
Based on the confidential customs data seen by Bloomberg, among the $1.7 billion worth of chips, approximately $1.2 billion worth of chips were produced by a total of 20 companies, including manufacturers from Europe and the United States, and an estimated $500 million worth of chips may have been produced by smaller-scale manufacturers.
Prominent brands involved in this include AMD (including Xilinx), Analog Devices, Intel (Altera), Infineon Technologies, Macom, Marvell, Microchip Semiconductor, NXP Semiconductors, STMicroelectronics, Realtek, and Texas Instruments.
It is reported that although Russia’s chip imports decreased in the fourth quarter, the country is likely to have purchased various chips worth over $2 billion in 2023.
The report suggests that a significant portion of these restricted chips reached Russia through third countries, including its largest neighbors, Turkey, and the United Arab Emirates, among others.
The United States and the European Union have been actively trying to block these alternative supply routes, but so far, their efforts have not been very successful. They are particularly focused on preventing the flow of dual-use and advanced goods, which have been identified as crucial for military or production purposes.
Major companies such as AMD, ADI, Intel, Infineon, Marvell, Microchip, NXP, STM, and Texas Instruments have all told Bloomberg that they are complying with sanctions. They have stated that they ceased operations in Russia following the Russia-Ukraine conflict and have implemented strict procedures to ensure compliance. Additionally, they have emphasized their commitment to preventing the illegal transfer of their products (specifically, they explicitly prohibit their products from being re-exported to Russia and Belarus) and have stated that they are closely collaborating with relevant authorities to monitor and control the distribution of their chips.
It should be noted that a significant portion of chip sales in this industry is handled by distributors, who in turn have multiple dealers. The nature of this distribution chain means that manufacturers are not always able to track where their products ultimately end up after being sold to these companies, although certain specific military chips require stricter tracking requirements.
This situation highlights the challenges that the United States and the European Union face in attempting to cut off the supply of advanced technology to Russia. Sanctions are aimed at impeding Russia’s ability to maintain or enhance its military capabilities. However, the continued import of these chips suggests that Russia has been able to sustain its production of military hardware, undermining the expected impact of sanctions.
Meanwhile, the European Union is in the process of formulating new sanctions. Some member states are advocating for stricter measures, especially against companies from third countries involved in this chip trade and those originating from within the European Union itself.
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