Illegal chip flows to Russia through China and Hong Kong slows - Reuters
Photo: China and Hong Kong illegally supply microchips to Russia (Getty Images)
Shipments of semiconductors and other banned goods through China and Hong Kong for Russia's military needs have dropped by a fifth this year, but Hong Kong remains a point of evasion from sanctions, Reuters reports.
According to a representative of the US Department of Commerce, transit shipments through Hong Kong of Common High Priority (CHPL) goods - modern components, including microelectronics, which, according to the United States and the European Union, could be used in Russia's war against Ukraine - decreased by 28% between January and May.
According to the official, during the same period, transit shipments of these goods through mainland China, excluding Hong Kong, decreased by 19%.
This is the first time Reuters has published figures that have not been previously disclosed.
In response to a question about the supply of dual-use goods from China to Russia, the Commerce Department referred to earlier statements describing efforts to limit Russia's access to technology and other goods it needs to wage a brutal war against Ukraine.
The US government sees Hong Kong and China as key global hubs for Russia's supply of materials for its military, including semiconductors and drone parts.
“I think there's some cause for being at least optimistic that we have been able to slow down some of this trade,” the official says, but added: “China is still our number one concern.”
The official, who spoke on condition of anonymity, said that the reduction in illicit flows was the result of several factors, including aggressive measures by US authorities, as well as interaction with companies whose products are transshipped.
“We are talking to any company whose items are showing up on the battlefield,” the official says, without naming names.
The official declined to provide Reuters with the full data set, citing the need to protect the agency's access to information. “What I can say is we have confidence in the source related to imports into Russia.”
High-quality chips
Data outlined in a report by the Committee for Hong Kong's Freedom (CFHK) and reviewed by Reuters showed that between August and December 2023, $750 million worth of CHPL goods were shipped through Hong Kong, ranging from high-performance chips from Nvidia and France's Vectrawave to low-cost chips from Texas Instruments and Intel.
According to the CFHK, some of these banned goods were sent to Russian firms under sanctions.
In response to Reuters' questions, Nvidia said it stopped selling to Russia in March 2022 and requires its customers to comply with all US laws.
Texas Instruments told Reuters that it strongly opposes the use of its chips in Russian military equipment and the illegal diversion of its products to Russia.
Intel says it operates in strict compliance with US export regulations and sanctions and requires suppliers and distributors to meet the same standards.
Vectrawave did not respond to a request for comment.
“Our research has highlighted numerous instances where Hong Kong-based companies have facilitated the transfer of sensitive technologies and commodities, undermining international security and stability,” says Samuel Bickett, a lawyer and author of the CFHK report.
The United States and its allies have accused China of supporting Russia's war in Ukraine, in particular by exporting parts and equipment needed by Moscow's arms manufacturers.
The US State Department and the Treasury Department have imposed several rounds of sanctions on organizations around the world that have commercial ties to the Russian military, including shell companies in Hong Kong that were involved in semiconductor trafficking.
