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FT: Russia still imports one-third of essential war tech from Western companies

This is one of the downsides to western companies outsourcing production to Asian countries with more lenient export controls
Microchips
Chip. Illustrative image via Promyslovyi Portal

A data analysis conducted by the Kyiv School of Economics has revealed that Russia obtained at least one-third of its essential foreign battlefield components from companies headquartered in the United States and allied nations in 2022, FT reports.

This unintended lifeline of critical technology to the Russian military occurred largely as a result of many major western firms having outsourced production facilities to Asian countries with more lenient export control policies.

The $7.3 billion worth of vital tech products—mainly advanced semiconductors, computer parts, electronics, and automotive components—were largely manufactured in non-NATO member states, according to the Ukrainian economic institute’s findings. China proved the most significant source, providing around $1.9 billion of the high-tech goods that ended up in Russian hands during the ongoing invasion of Ukraine.

“It’s been a normal business strategy for years for western technology companies to have manufacturing plants across Asia,” Olena Bilousova, a senior researcher at the Kyiv institute who worked on the data analysis, told FT. “But these overseas factories need to be made to comply with the same stringent export controls they would face at home to avoid this unintentional hemorrhage of technology to the Russian military.”

The data indicates the critical items were primarily sold to Russia through independent distributors and other intermediaries, exploiting a major loophole in export regulations. According to US sanctions expert Kevin Wolf, directly targeting “distributors and other middlemen” with sanctions could effectively curb the diversion of restricted tech supplies to sanctioned countries.

One prominent example cited is the US semiconductor company Analog Devices, which saw its exports to Russia rise dramatically from $123 million in 2021 to $269 million in the first 9 months of 2022, even after Analog claims it halted all direct sales to Russia following the invasion of Ukraine in February. Only $20 million of those chips were produced in the US, with most coming from company facilities located in China and Malaysia instead.

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