Russia continues to buy U.S. chips, bypassing sanctions

14 December 2022, 11:38 AM
A 1988 Texas Instruments chip found inside a Russian 9M727 missile (illustrative photo) (Photo:REUTERS/Valentyn Ogirenko)

A 1988 Texas Instruments chip found inside a Russian 9M727 missile (illustrative photo) (Photo:REUTERS/Valentyn Ogirenko)

Despite Western sanctions, Russia continues to import semiconductors through shell companies registered in Turkey, Hong Kong and Estonia, states an investigation by Reuters and the British analytical center Royal United Services Institute (RUSI), published on Dec. 13.

Azu International, which was registered in Turkey, in March, began supplying U.S. components to Russia a week later, and over the next seven months exported technology worth $20 million. The co-founder of the company, Turkish businessman Göktürk Agvaz, also runs the German firm Smart Impex. Before the start of a full-scale war, it supplied goods to Russia, but after the imposition of sanctions, it switched to export to Turkey, which is not part of the EU.

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According to customs, in seven months Russia received electronic components worth at least $2.6 billion, including $777 million worth of chips manufactured by Western companies like Intel Corp, Advanced Micro Devices (AMD) , Texas Instruments, Analog Devices,  and Infineon - which have been found in Russian weapons.

Some of the shell companies are associated with Russians. According to journalists, Pixel Devices, registered in Hong Kong and associated with Russian citizen Kirill Nosov, is involved in the supply of Western technologies to Russia (Nosov himself told Reuters that he helped create the company, but doesn’t work there). The main client of Pixel Devices is the St. Petersburg company CompLiga, which has imported electronics worth at least $210 million since April 1, including Intel and AMD products worth at least $50 million.

The investigation also drew attention to the Moscow-based logistics firm Novelco, which organized a seminar in September on the topic of finding “alternative ways to deliver goods” to Russia. The heads of the company advised to transport goods through third countries.

Novelco CEO Grigory Grigoriev reported on LinkedIn that his company has opened a branch in Istanbul and is shipping goods from Turkey to Russia, which is a violation of US and EU trade restrictions. In March, Grigoriev registered the ‘Smart Trading’ company in Istanbul, which, according to Russian customs enforcement, managed to supply semiconductors to Russia from U.S. manufacturers worth at least $660,000.

From April 1 to Oct. 31, Elmec Trade, registered in Tallinn, Estonia, sent goods worth at least $17 million to Russia, including products from the American chip producer Analog Devices. The CEO of the company, Alexander Fomenko, told Reuters that he is allegedly finishing orders from the last year that weren’t completed due to the pandemic.

Also, according to investigators, Titan-Micro has imported at least $9.9 million worth of electronic components since April 2022. The company is registered in a wooden house in the middle of a forest on the outskirts of Moscow, while its actual office, apparently, is located in the main office of Radiant Group, a Russian distributor of microcircuits and other electronic components, which fell under U.S. sanctions in July 2021 .

Earlier, The New York Times, citing the British arms research group Conflict Armament Research, reported that Russia was using cruise missiles manufactured a few months after the West imposed sanctions to strike Ukrainian civilian infrastructure.

In August, British RUSI analysts already stated that Russian cruise missiles and air defense systems, which they studied, are mainly dependent on Western components. About two-thirds of the components are made by U.S. companies, and almost a quarter of all Western components are made by U.S. chip makers Analog Devices and Texas Instruments.

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