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Russia bought chips worth over $1 billion from U.S. and Europe last year

Russia bought chips worth over $1 billion from U.S. and Europe last year Over the past year, Russia purchased chips from the United States and Europe for over $1 billion (Photo:
Author: Daria Shekina

Last year, Russia imported advanced American and European chips totaling over $1 billion. This happened despite the sanctions imposed by Western countries, reports Bloomberg.

Classified data from the Russian customs service, obtained by Bloomberg, reveals that more than half of the imported semiconductors and integrated circuits in the first nine months of 2023 were manufactured by American and European companies.

Among them were:

  • Intel Corp
  • Advanced Micro Devices
  • Analog Devices Inc
  • Infineon Technologies AG
  • STMicroelectronics NV
  • NXP Semiconductors NV

"There’s no suggestion the companies breached sanctions laws and the data doesn’t indicate who exported the technologies to Russia, from where they were shipped and when the goods were manufactured," the material states.

The companies have stated that they fully comply with sanction requirements, ceased operations in Russia when the war broke out, and have implemented processes and policies to control compliance with sanctions. They have claimed to work on combating illegal diversion of goods, including in collaboration with relevant authorities.

How Russia acquires foreign chips

Bloomberg points out that this trade underscores the challenges faced by the United States and the European Union in halting the supply of high-tech military-related technologies to Russia due to repeated rounds of sanctions.

This allowed Russia to continue manufacturing combat tanks and other weapons, including missiles. The majority of technologies reach Russia through re-export from third countries, including China, Türkiye, and the United Arab Emirates.

The U.S. and EU are working to block these routes, focusing on a list of high-priority dual-use items and advanced goods identified in Russian weaponry in Ukraine or crucial for its production.

What is known about chip supplies bypassing sanctions

The EU is currently working on a new package of sanctions, and several member states are pushing the bloc to do more to curb companies in third countries and trade operations taking place within the bloc under these proposals.

Distributors control a significant portion of semiconductor industry sales, and they, in turn, have multiple suppliers. Manufacturers are not always obligated to trace where their products go after selling to these companies, although some specific military-purpose chips must be documented and tracked.

Overall, customs data revealed that in the first nine months of the past year, Russia imported chips amounting to $1.7 billion, with approximately $1.2 billion attributed to a total of 20 companies.

"Smaller producers, including some from Europe and the US, are likely to account for the remaining $500 million of chips," Bloomberg writes.

Sanctions partially effective

The top 20 also included a small number of Chinese manufacturers, and the Taiwanese company Realtek Semiconductor Corp. Russia imported the products of the latter for about $17 million.

There are no indications that the Taiwanese company directly exported chips to Russia or was aware that its goods ended up there.

The customs value of trade in high-priority items possibly slightly decreased in the second half of last year, suggesting that the efforts of the US, EU, and G7 allies to ensure compliance with sanctions against Russia may be starting to yield results, although they remain higher than the pre-war level.

How chip manufacturers justify their actions

Intel states that it adheres to all applicable export rules and sanctions, and its contracts require customers and distributors to comply with the same rules. The company has zero tolerance for circumventing its requirements.

A representative from AMD states that the company implements programs to prevent and remedy the post-sale movement of AMD products into illegal channels. It will act promptly in response to any information about sales in restricted areas and will compel distributors and customers to do the same.

Texas Instruments declares that any shipments of its products to Russia are illegal and unauthorized. A special control group oversees the sale and shipment of products, and the company takes action if it learns that distributors and customers are not complying with export control laws.

Russia bypasses sanctions

In early January, Zelenskyy already claimed that Russia had learned to bypass Western sanctions imposed against Moscow for its full-scale invasion of Ukraine.

Politico also reported that Russia was largely successful in circumventing technology-related sanctions. This enabled Moscow to manufacture weapons and continue the war against Ukraine.

Recently, five countries, in collaboration with European law enforcement, exposed a network of Russia's evasion of export sanctions. As a result of the operation, three individuals were arrested.