top of page

The Impact of US Microchips in Russia's Military Amid Sanctions

Lanon Wee

Analysis has revealed that Western microchips that are typically employed in smartphones and laptops are being brought into Russia and used to bolster its military arsenal. CNBC examined trade data and manifests which showed that Russia has been obtaining an escalating amount of modern Western technology via intermediary countries, such as China. In 2022, when Moscow began its large-scale offensive against Ukraine, Russian imports of semiconductor technologies had risen to $2.4 billion from $1.8 billion in 2021. Analysis has revealed that Western-made microchips used in the operation of smartphones and laptops have been infiltrating Russia and strengthening its military arsenal.Trade documentation and manifests, inspected by CNBC, signify that Moscow has taken advantage of external countries such as China to acquire more hi-tech semiconductors and other Western technologies.In 2022, the revenue from these imports amounted to a total of $2.5 billion, a substantial increase compared to the $1.8 billion in 2021.Microprocessors and microchips are critical parts of contemporary warfare, as they are involved in the operation of weapons like drones, radios, missiles, and armored machinery. Analysis from the KSE Institute, an analytical center at the Kyiv School of Economics, found more than 1,000 foreign components, especially Western semiconductor technologies, in 58 pieces of Russian military equipment recovered from Ukraine's battlefields. These components are typically subject to export controls, yet analysts CNBC contacted suggested that intricate trade networks from China, Turkey, the United Arab Emirates, and elsewhere, are permitting them to still make their way into Russia's pre-war reserves. Elina Ribakova, a senior fellow at the Peterson Institute for International Economics and one of the authors of KSE Institute's report, remarked that even with sanctions, Russia is still capable of importing all the mandatory Western-produced vital components for its military. She added that sanctions evasion and avoidance is currently happening in a very open way. Not all advanced technologies are exempt from Western sanctions against Russia. Many of these items are classified as dual-use, meaning they have both military and civilian applications and therefore are beyond the range of export controls. For example, a microchip could have uses in a washing machine and a drone. Nevertheless, a lot of these technologies come from countries that have imposed comprehensive trade embargoes against Russia, and in particular its military. All U.S. goods apart from food and medicine are forbidden to reach the Russian military. KSE's study revealed that more than two-thirds of the foreign components being utilized by Russian military equipment originated from companies headquartered in the U.S., with other prominent origins being Japan and Germany (allies of Ukraine). It could not be verified by CNBC whether or not the implicated companies had knowledge of the equipment's final destination. Swiss authorities stated they were working with the companies to "educate them on red flags". Representatives from Japan, Germany, and the U.S. did not reply to a request for comment on the matter. Additionally, the Royal United Services Institute conducted a study that found Russia has been using approximately 450 different types of foreign-made components in 27 of its most modern military systems such as cruise missiles, communications systems, and electronic warfare complexes. A large portion of these components come from well-known U.S. companies that produce microelectronics for the U.S. military. "Sam Bendett, an advisor at the Center for Naval Analyses, highlighted that due to the advanced non-Russian high-tech systems and technologies becoming industry and global standards, there is strong dependency that has been formed on the Russian military and civilian economy. The widespread applications of these technologies have made them central to global supply chains, and thus more difficult to control. Sanctions enacted by Ukraine's Western allies on Russia still leave many countries engaging in trade relations with the nation. On this matter, Bendett commented, 'It is tough to mitigate civilian microelectronics from international traffic and trade, which is something that the Russian business sector, military, and intelligence services are exploiting.' Trade flows can be complex. In some cases, a shipment may need to be sold multiple times before being sent to a neutral intermediary country, where it can be sold to Russia. Data indicates that China is the leading exporter of microchips and other technologies used in battlefield items to Russia. In the fourth quarter of 2022, Chinese and Hong Kong-based sellers accounted for more than 87% of Russia's semiconductor imports, compared to 33% in Q4 2021. Of those goods, more than half (55%) were not manufactured in China, but instead originated from elsewhere and were sent to Russia through Chinese or Hong Kong intermediaries. Olena Yurchenko, an advisor to the Economic Security Council of Ukraine, declared that this should come as no surprise as China is striving to gain financially off of Russia's economic seclusion. Neither the Chinese trade department nor the Russian government answered an inquiry for a response regarding the results. Simultaneously, Moscow has amplified its imports from intermediary countries situated in Central Asia, the Caucasus and the Middle East, as per national trade data. In 2022, the exports of Georgia, Armenia, and Kyrgystan to Russia experienced an immense surge, with vehicles, aircraft and vessels making up a sizeable portion of the increase. At the same time, the European Union and the U.K. saw an upturn in their exports to those countries but experienced a decrease in their direct dealings with Russia. According to Bendett, “a lot of these countries really cannot sever certain types of trade with Russia, like Georgia, and nations in Central Asia, which have a major trade balance with the Russian Federation." No comment was given by Georgia, Armenia and Kyrgyzstan’s governments to CNBC in regards to the escalation in trade. The escalation in trade caused Western states to call for more countries to abide by the sanctions, or to put second-degree sanctions on particular entities in those countries in an effort to weaken Russia's military capacity. In June 2023, the European Union launched a new set of sanctions which included the prevention of the "purchase, delivery, transfer or export" of particular restricted goods and technology to certain states acting as middlemen for Russia. Additionally, 87 new companies from countries like China, the United Arab Emirates and Armenia, which contribute to Russia's military force, were added to a blacklist and the exportation of 15 pieces of technology employed in Russian arms in Ukraine was limited. EU spokesperson Daniel Ferrie declared that they are not sanctioning the countries; rather, they are obstructing a sanctioned product from arriving to Russia through a third party. Nonetheless, some are voicing doubts that the steps taken are adequate, particularly when it comes to major trading associates. Yurchenko from the Ukrainian Economic Security Council claimed that, "[The sanctions] may work against, let's say, Armenia or Georgia, which are not major trade partners for the European Union or the United States. But when it pertains to China or Turkey, that's a very unrealistic prospect". Others stress that corporations must hold themselves more accountable for pursuing their supply chains and avert their goods from being in the wrong hands. Ribakova expressed, "The companies themselves ought to have the structures to be able to trace it and abide by export regulations. If we carry out certain ethical principles or national safety objectives, we cannot be offering [to Ukraine] with one hand and then giving to Russia with the other."

0 comments

Comments


We help clients solve critical operational, business & financial issues using innovative technologies such as Web3 & Blockchain.

Address:

20 CECIL STREET, #05-03, PLUS, Singapore 049705

2023 Intric Technologies Pte Ltd

bottom of page