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High-Tech Exports to Russia Banned in Response to the Ukraine Attacks

March 2, 2022
The electronics industry has been quick to respond to a new round of restrictions meant to keep Russia from receiving high-tech products.

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Responding to Russia’s invasion of Ukraine, the U.S. Commerce Department has banned exports of high-tech products to Russia. It’s a step intended to hamper Russia's ability to produce tanks, airplanes and other military equipment, according to Lightwave

The European Union (EU) plus Japan, Australia, the United Kingdom, Canada and New Zealand have agreed to adopt similar sanctions. The Commerce Department has also imposed restrictions on Russian access to semiconductors, computers, telecommunications technology, information security equipment, lasers and sensors, and added 49 Russian military end-user organizations to its Entity List.

The World Steps Up

According to Lightwave, placement on the list requires that special licenses be obtained for items developed in the U.S. as well as foreign items produced using U.S. equipment, software and blueprints before they can be sent to these Russian entities. Instructions for filing for such licenses state that the parties involved should assume such license requests will be denied.

The BIS’ actions, along with those of the Department of the Treasury, are part of the Biden-Harris Administration’s response to Russian aggression. These measures also reflect cooperation among the US, EU, Japan, Australia, United Kingdom, Canada and New Zealand, with more expected to join, in aligning on export control policies and requirements.

“If necessary, based upon any subsequent destabilizing actions by Russia, the U.S. government will follow up in the days to come with additional stringent economic measures,” the Bureau of Industry and Security (BIS) stated in a press release announcing the sanctions.

All the Right Moves

The BIS says these export control measures are the most comprehensive application of Commerce’s export authorities on U.S. items—including technology, as well as on foreign items produced using U.S. equipment, software and blueprints—targeting a single nation. “These actions, in concert with those that our partners are taking,” it says, “restrict Russia’s access to items that can support the country’s defense industrial base and military and intelligence services.”

“With these export controls, we, together with our allies and partners, are technologically isolating Russia and degrading its military capabilities,” said Assistant Secretary of Commerce for Export Administration Thea D. Rozman Kendler. “Russia’s access to cutting-edge U.S. and partner country technology will halt. Its defense industrial base and military and intelligence services will not be able to acquire most Western-made products.”

In a fact sheet, the BIS outlined the main components of the regulation, which took effect on Feb. 24. It says this final rule builds on existing restrictions on exports to Russia and implements major policies specific to Russia and Russian end-users. “Russia’s attack on Ukraine is an attack on the democratic, rules-based order and the United States must meet this aggression with real consequences,” said Deputy Secretary of Commerce Don Graves in the press release.

“This coordinated policy is a strong statement of solidarity from the United States and the international community with the people of Ukraine,” he added. “This powerful response was developed in close consultation with our global allies and partners to cut the Russian military off from the technologies and products it needs to sustain its unprovoked and unacceptable aggression.”

Companies React Quickly

According to the Washington Post, companies have been acting quickly to halt deliveries to Russia in response to the sanctions. It also says that Russia is vulnerable to the export ban because it doesn’t produce consumer electronics or chips in large quantities.

“In particular, it doesn’t make the highest-end semiconductors needed for advanced computing, an area dominated by Taiwan, South Korea, the United States, Europe and Japan,” the publication reports, noting that TSMC’s participation in the sanctions is “particularly damaging” because the company is the world’s largest manufacturer of chips, including the most advanced.

If the ban does what it was intended to do, it could impact Russia much more than the industries that would otherwise be able to export their goods to the country. “While the impact of the new rules to Russia could be significant, Russia is not a significant direct consumer of semiconductors, accounting for less than 0.1% of global chip purchases,” the Semiconductor Industry Association (SIA) said in a statement.

The SIA also said that the broader Russian ICT market totaled only about $50.3 billion out of the $4.47 trillion global market, according to 2021 IDC data. “In addition, the semiconductor industry has a diverse set of suppliers of key materials and gases,” SIA noted, “so we do not believe there are immediate supply disruption risks related to Russia and Ukraine.”

About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.

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