U.S. and E.U. Face Uphill Fight in Keeping Chips Out of Russia

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The United States and European Union are currently facing an uphill battle in trying to keep computer chips out of Russia. This has become a complex issue, with a burst of perplexity that the U.S. and E.U. have not fully come to terms with yet.

The semiconductor industry has grown to become a vital component of a broad range of technological applications, from smartphones to advanced weapon systems. Thus, it plays a critical role in national security, and this is where the challenge lies. The U.S. and E.U. are concerned about Russia obtaining computer chips that will be used for military purposes, and they are trying to impose sanctions to prevent the export of these chips.

The Obama administration imposed export controls on computer processors in Russia following the Crimea annexation. However, Russia quickly responded by assembling its semiconductor industry through the creation of the Russian National Technological Initiative (NTI). The NTI has been aimed at enhancing Russia’s sovereignty through the development of homegrown technologies, specifically in the semiconductor arena.

Russia’s efforts have been successful, with a growing number of semiconductor design firms operating in the country, including Angstrem-T and Mikron. These firms have gained the needed experience and infrastructure in the manufacturing of chips. Moreover, these firms have formed linkages with multinational chip manufacturers like Samsung and Intel, with the latter setting up a plant in Russia to manufacture processors.

Due to these developments, the E.U. and the U.S. have become increasingly concerned about the threat posed by Russia in the semiconductor industry. The concern is that Russia intends to use this technology to advance its military capabilities, which are already sizeable, considering the country’s scientific community’s strength.

The U.S. has been aggressive in deterring Russia’s move to expand its semiconductor industry. In 2018, the U.S. Commerce Department issued orders to ban U.S. firms from selling components and software to Chinese tech giant ZTE. This was done because the U.S. administration believed that ZTE was supplying its equipment to Iran and North Korea, constituting a violation of trade sanctions.

The ZTE ban was lifted after ZTE agreed to pay a $1 billion fine and to allow a team of U.S. monitors to regulate its operations. This incident showed that the U.S. government could use the powerful leverage of export controls to achieve its objectives.

Also, the U.S. Senate voted overwhelmingly in 2020 to approve a defense spending bill that includes a ban on U.S. Defense Department purchases of any products containing chips manufactured in Russia or China.

The E.U., on the other hand, has taken a more cautious approach in trying to deter Russia’s gaming of the semiconductor industry. This is because the E.U. is very much reliant on Russia for resources, like natural gas. As a result, the E.U. has worked to come up with alternative ways of balancing the supply chain to ensure that countries like Russia have fewer opportunities to exploit their technological capabilities.

The E.U. has, therefore, invested in cybersecurity, specifically in a system to monitor supply chains of electronic components such as chips. The system is aimed at guaranteeing the authenticity and reliability of the components used in technological applications.

However, the E.U.’s approach is seen by some as inadequate in addressing the risks posed by Russia. China has a considerable presence in the European market, and European firms have also increased their investments in China, increasing the likelihood of tech transfers to Russia. Also, E.U. member countries are vulnerable to cyberattacks, with countries like France, Spain, and Germany experiencing increasing numbers of cyberattacks in recent years.

The U.S. and E.U.’s uphill battle in trying to keep chips out of Russia can be seen as an analog to a classic whack-a-mole game, where trying to solve one problem creates another. The U.S. and E.U. imposing sanctions to limit Russia’s semiconductor industry’s growth has driven Russian firms to seek relations with Chinese firms who are already preeminent players in the semiconductor market.

Moreover, the U.S. and E.U. are facing growing pressure from other countries like India and South Korea that are looking to challenge China’s technological hegemony. It is difficult for the U.S. and E.U. to maintain their position in the semiconductor industry without seeking to collaborate with partners or resorting to protectionist policies.

In conclusion, the battle to keep chips out of Russia is not straightforward, and it may be challenging for the U.S. and E.U. to stem Russia’s growing technological capabilities in the semiconductor industry. The U.S. has shown that the use of export controls is an effective tool in limiting countries’ technological capability, but the effectiveness of these measures may be undermined by countries seeking other strategic partners.

Moreover, the E.U.’s approach of monitoring supply chains may not be adequate in addressing the risks posed by Russia’s growing technological capabilities. The U.S. and E.U. may need to collaborate with their allies or seek to develop strategic technological alliances to maintain their position in the semiconductor industry.