Report: Chinese firms breaking Russian embargo with US chips

News | April 17, 2023

By Peter Clarke

semiconductor China Russia

Chinese firms are breaking US sanctions by re-exporting hundreds of millions of dollars’ worth of US chips to Russia over the last year, says a Nikkei report.

Broad sanctions were introduced by the US on February 24, 2022, immediately after Russia’s invasion of Ukraine. These include limits on semiconductor components, and the US made it clear at the time it expected China to comply (see Report: US expects Chinese firms to uphold Russian tech sanctions).

The declared intention was to limit Russia’s ability to buy or make the means of electronic warfare such as missiles, defence systems and drones which rely on image sensors, radar and DSP chips.

Japanese publication Nikkei has combed through Russian semiconductor import customs data obtained from an Indian research database over the period February 24, 2022 to December 31, 2022. The newspaper found that numerous small traders in Hong Kong and mainland China provide a supply route to Russia and that China’s trade in US chips has jumped tenfold since the war began.

Record sales

Nikkei said the records show 3,292 chip transactions worth at least US$100,000 each with about 70 percent labelled as US products from such companies as Intel, AMD, Texas Instruments, Analog Devices, OnSemi and Qorvo.

Russian chip imports over the period were worth more than US$1 billion in total with in excess of US$740 million being US chips. Of these about 1,774 transactions with a value in excess of US$570 million were shipped through Hong Kong or mainland China. This compared with 230 similar transactions worth US$51 million through the same route during the same period in 2021, Nikkei said.

Nikkei cited the example of a company called Agu Information Technology Ltd., a company that was only established in April 2022 but that was able to ship more than 60,000 Intel chips to Russia valued at about $18.7 million. Some Intel processors had a piece-part value of $13,000, Nikkei said.

The report quoted several US chip companies, including Intel, saying they do not supply Russia with chips and that they are in compliance with all laws and regulations including US export controls.