It was April 2022, and executives from top Russian defense companies had gathered in Moscow to discuss their diminishing stockpile of microchips, which are critical for operating missiles and other weapons.
Demand was higher than ever. Russia had launched its full-scale invasion of Ukraine just six weeks before the meeting, deploying weapons that relied on microchips, even as sanctions were squeezing the supply.
In his opening remarks at the Moscow event, Sergei Sakhnenko, head of United Instrument Manufacturing Corporation (UIMC), spelled out the problem: Many chips were made by companies now banned from doing business with Russia.
“The introduction of sanctions against the defense industry enterprises has hit us hard,” he said, according to a leaked transcript of his speech.
“The lion's share of components are made abroad,” added Sakhnenko, with many sourced from “NATO and EU countries.”
The speech was found among leaked emails and internal documents from subsidiaries of Ruselectronics, a holding company that is part of the sprawling state-owned defense conglomerate Rostec, which also owns UMIC.
The emails provide a rare glimpse into how Russian defense officials reacted to a supply crisis — and how they dealt with it.
The Russian response was also documented in a September 2024 report by the U.S. Senate Permanent Subcommittee on Investigations, which focused on the role of major American microchip manufacturers.
The committee's 15-month probe found that Russia was circumventing sanctions and export controls by tapping a network of companies in mainland China, and Hong Kong. The Asian companies would source U.S. chips and sell them onward to Russian firms supplying the defense sector.
Russia’s Kinzhal and Kalibr missiles, and Geran drones, which have battered Ukrainian cities and killed civilians, all require such microchip technology. So do weapons like the Tornado-G system, which can launch 40 rockets at the same time from the back of a truck, and the Giatsint-S, a powerful tank-mounted gun.
“These savage weapons could not be made or fired without electronics from U.S. manufacturers,” said the Senate Subcommittee report.
The leaked emails from Ruselectronics add context to the subcommittee’s findings, including the names of Russian companies supplying the defense sector with chips.
Reporters also analyzed Russian tax data, which revealed more companies supplying Ruselectronics. And import data showed the Chinese and Hong Kong firms that sold American microchips to Russian companies.
‘Illicit diversion’
On March 22, 2022 — less than a month after Russia’s assault on Ukraine — a company called Elitcom LLC wrote to a Ruselectronics subsidiary, saying it would not be able to deliver the microchips it had promised by May. The problem, according to the leaked email, was that the chips came from Analog Devices Inc., a major U.S. manufacturer.
Russian troops were pushing toward Ukraine’s capital by then, and meeting strong resistance. Sanctions had been imposed quickly, barring companies in countries including the U.S. from doing business with some Russian individuals and entities. Export controls also banned U.S. companies from sending chips to Russia.
“A number of manufacturers have stopped supplying the Russian Federation with their products,” Elitcom wrote. “These manufacturers were joined by Analog Devices.”
But Elitcom had a plan.
“We sent a new request to purchase these products through foreign partners, for which we received a confirmation, but with a new delivery date of September — October 2022,” the company wrote.
Journalists were not able to find trade data for Elitcom, so it’s unknown if the company made the delivery and which “foreign partner” it referred to. However, the email does highlight the method Russia has used to source microchips manufactured by U.S. companies, which was also documented in the Senate report.
Russian importers supplying chips to Ruselectronics relied on intermediary firms, mostly from mainland China and Hong Kong. These Asian companies would buy chips from the regional distributors of U.S. manufacturers like Analog Devices. The chips could pass through multiple intermediary companies before being sold to firms such as Russia’s Elitcom.
The system neatly circumvented sanctions, since a U.S. company might have no clue where its chips ended up. However, experts say microchip firms should do more to track products to the end user.
“It is quite evident that they are not taking sufficient measures,” said Erlend B. Bjortvedt, founder of Corisk, an Oslo-based firm that helps international companies navigate risks like sanctions and corruption.
“Some producers have had to admit that they lack such control resources,” he said. “The only way to force producers to step up their own controls, is to enact preventive investigations with hard and punitive penalties for violators.”
In response to a request for comment, Analog Devices said it “is committed to preventing the unauthorized resale, illicit diversion, and misuse of our products,” adding that it has “taken several steps to bolster our export control programs.”
Chinese Network
Trade data shows that Analog Devices chips found their way into Russia through a Hong Kong company called Icscan Electronic, which did not respond to a request for comment.
Icscan Electronic was one of more than 50 mainland China or Hong Kong firms selling chips from U.S. manufacturers to Russian companies that supply Ruselectronics, according to trade data. About half of those Chinese and Hong Kong firms are subject to the U.S. sanctions for deliveries to Russia, although Icscan Electronic is not among them.
Icscan Electronic sent a large shipment of U.S.-branded chips in 2024 to a Russian company called Elsup, trade data shows. Elsup appears in Russian tax data that year as a supplier to Istok Research and Production Corporation, which is a Ruselectronics subsidiary.
That shipment mirrors a pattern also revealed by the U.S. Senate Subcommittee probe.
“Entities in Hong Kong and China — which receive substantially more U.S. semiconductor imports than the other countries noted — are understood to be responsible for the vast majority of the continuing flow of semiconductors to Russia,” the report stated.
Semiconductors are the material microchips are made of, and the term is often used to refer to chips themselves.
“The Subcommittee’s investigation found that U.S. semiconductor manufacturer efforts have been abjectly lacking,” the report said.
But controlling the flow of chips is a challenging task, according to James Byrne at the Royal United Services Institute, a London-based security think tank. He noted that manufacturers rely on complex distribution networks.
“The distributors sell components to all sorts of entities all over the world,” he said. “Let's say you sell to some distributor in Hong Kong, and then they sell to another entity in Hong Kong, and that entity ships them to the Russians.”
“I think it's a difficult problem to solve, but it doesn't mean it's impossible,” Byrne added.
