The hole in the sanctions: how Putin increases the import of Western chips for the war against Ukraine

Dmytro Petrovskyi13:08, 09/08/23

5 min.1214

Despite the sanctions, more and more Western-made components are entering Russian military equipment.

The Russian Federation is increasing its import of critical microcircuits for the war against Ukraine.

According to Foreignpolicy , about 98% of transistors, microchips and more specialized microprocessors pass through third countries to Russia. A year earlier, this indicator was equal to 54%. Now this electronics is appearing in military equipment, starting from the Kalibr missiles and ending with the T-72 tanks. 

“Companies such as Intel suspended direct shipments to Russia at the start of the war due to a wave of business exodus, but they did little to prevent their products from being re-exported to Russia via third countries,” the report said.

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At the same time, in 2022, Intel observed an increase in exports of critical components to Russia to 700 million dollars against 500 million dollars in the previous year.

Also, in late February and early March of last year, Texas Instruments sent 36 shipments directly to Russia and six additional shipments through one of its authorized distributors. But almost 1,300 more shipments made by intermediaries were also discovered.

According to the Royal Joint Forces Institute, the Russian military uses more than 450 different types of foreign-made components, and only 80 of them are subject to US sanctions.

“One legal loophole allows Russia to acquire these goods under the guise of dual-use — both civil and military goods — whereby foreign-made components are deployed in a supposedly ‘peaceful’ space exploration project at Roskosmos. This is just one of many of the methods that the Russians use to import advanced electronics,” the report said.

China accounted for more than 87 percent of Russia’s semiconductor imports in the fourth quarter of 2022, a stunning jump from 33 percent in the same period in 2021, the publication noted. However, more than half of these components are not Chinese. 

“Redirected through intermediaries in Hong Kong and mainland China, shell companies such as Agu Information Technology, created only in 2022, shipped chips worth more than $18 million to Russia,” the report said.

Overall, US chip exports from Hong Kong and China to Russia increased tenfold between the pre-invasion period in 2021 and the post-invasion period in 2022, reaching approximately $570 million that year. 

Kazakhstan is also a key player in the scheme of supplying electronic chips to Russia. Thus, in 2022, Kazakhstan exported advanced microcircuits worth USD 3.7 million, compared to USD 12,000 the previous year.  

The United Arab Emirates (UAE) is also following the supply of microcircuits to the Russian Federation. Reports show that exports of electronic parts from the UAE to Russia have grown sevenfold year-on-year to nearly $283 million in 2022, while microchip exports have grown fifteenfold to $24.3 million.

In addition, the Turkish firm Azu International supplied Russia with at least $20 million worth of components, including the coveted American-made microchips.

“While we cannot be certain that US-made chips are in the macro-level export statistics, it would be foolish to assume that a sudden increase in US chip imports to Armenia by 515 percent compared to 2021, and no less an impressive 212 percent increase from the EU is a sign of Silicon Valley’s work in Yerevan,” the publication concluded. 

Shortage of Russian weapons

On August 23, 2023, it became known that almost 70% of foreign components found in Russian UAVs come from Western countries. At the time, it was noted that Russia is still very dependent on components of foreign production, in particular microelectronics.

On September 6, the representative of the Main Military Intelligence Directorate (GUR) of Ukraine, Andriy Yusov, reported that Russia is capable of producing only dozens of Kalibr cruise missiles and an even smaller number of Iskander missiles per month. It follows that Russia will not be able to restore its reserves until 2022. He then also emphasized that the Russian Federation receives modern optical equipment, electronics, chips and circuits from abroad, but “grey imports” and smuggling cannot fully cover the needs.

(C)UNIAN 2023

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