China Transshipments of US Chips to Russia Up - Report

Despite US sanctions on Russia following the invasion of Ukraine, hundreds of millions of dollars' worth of US-made semiconductors continue to flow into Russia through circuitous routes, according to reporting in Nikkei Asia.   A large portion of these chips are channeled through small traders in Hong Kong and mainland China.

Records from February 24 to December 31, 2022, showed 2,358 transactions, totaling at least $740 million, labeled as products of US chipmakers such as Intel, AMD, and Texas Instruments. About 75% of these transactions were shipped from Hong Kong or mainland China, amounting to $570 million.

The value of these exports increased tenfold compared to the same period in 2021. High-performance chips sought by Russia are used to control missiles and defense systems. The export data includes microprocessors from Intel and AMD, FPGAs from Xilinx (an AMD subsidiary), chips from Analog Devices, Texas Instruments, and On Semiconductor, and high-end radio frequency chip components from Qorvo.

Major chipmakers like Intel, Texas Instruments, Analog Devices, and On Semiconductor have stated that they do not sell to Russia or other sanctioned countries and are in compliance with all applicable laws and regulations, including US export controls. Analog Devices assets they have been putting extra effort into combating unauthorized resales but acknowledged the extreme difficulty of stopping such shipments entirely.

Although chipmakers and established distributors face close scrutiny from US authorities, numerous smaller traders, including one-person operations and recently established businesses, are harder to monitor. These small, lesser-known chip distributors may not follow "know your client" principles strictly.

Enforcing sanctions and cracking down on secondary chip sales to Russia or other sanctioned parties is challenging, as small trading companies can easily change names or operate under new names even if subjected to sanctions. The globalized supply chain also complicates keeping control of goods and tracking distribution beyond a certain point.