Russia's chip shortage may become the next opportunity for the chip industry

As the war between Russia and Ukraine continues, the demand for Russian military weapons has surged. However, Russia currently seems to be facing a shortage of weapons chips. Global semiconductor exports to Russia have plummeted by 90 percent since the United States and its allies imposed export controls on Moscow over its conflict with Ukraine, according to Reuters. Control of Russia's aerospace sector is hitting its ability to generate revenue and support military aviation.

Russia urgently needs to buy chips for weapons manufacturing

Under such circumstances, Russia urgently needs to purchase chips for weapons manufacturing. Recently, a purported list of Russian purchases has leaked. The product types include semiconductors, transformers, connectors, transistors and other components, most of which are manufactured by companies in the United States, Germany, the Netherlands, the United Kingdom, Taiwan, and Japan.

From the detailed product list, the out-of-stock models come from Vicor's power supply modules and American AirBorn connectors, Intel's (Altera) 10M04DCF256I7G FPGA, Marvell's 88E1322-AO-BAM2I000 Gigabit Ethernet transceiver, ADI's AD620BRZ, AD7249BRZ, AD7414ARMZ-0, AD8056ARZ, LTC1871IMS-1#PBF and other nearly 20 models. And Microchip's EEPROM, microcontroller, power management chip, etc. The vast majority of out-of-stock chips are made by US chip giants Marvell, Intel (Altera), Holt (aerospace chips), Microchip, Micron, Broadcom and Texas Instruments.

Russian chips are overly reliant on Western imports, whether for military or civilian use, many Russian chips and components rely on imports from the West. Russian military companies have been affected by various sanctions in 2014, 2020 and now in their access to imported components. However, Russia has been purchasing chips from various places through various channels. For example, chips from other countries and regions such as Europe and the United States are imported through distributors operating in Asia.

The U.S. government said in March that one of the Russian customs records showed $1.1 million worth of Xilinx products.

U.S. President Joe Biden has placed five Chinese companies on a trade blacklist for allegedly supporting Russia's military and defense industrial base.

Russia is currently actively seeking independent research and development in military and civilian chips to get rid of foreign dependence.

In terms of military industry, Russian military enterprises have spent a lot of money, but have not completed the implementation of import substitution.

On the civilian side, Russia is also promoting the development of domestic enterprises. The Russian government has invested in support of Mikron, a Russian private semiconductor company, to increase the company's production capacity. Mikron is currently the largest chip company in Russia, both OEM and design. Mikron can currently produce semiconductors in 0.18 micron to 90 nanometer process technology, which can be used to produce transportation cards, Internet of Things, and some general-purpose processor chips.

But the U.S. Treasury Department said Mikron Corporation, Russia’s largest microelectronics manufacturer and exporter, was one of 21 entities and 13 individuals placed on a list of sanctions that also include blocking any U.S. property.

Judging from the current situation, the Russian-Ukrainian war may continue. Russia's weapons reserves may be insufficient, and Russia may encounter greater obstacles in purchasing chips for weapons in the future, and it will be difficult for Russia to make progress in independent research and development for a while. Will the shortage of chips in Russia become the next outlet for the chip industry?