The big loophole allowing Russia to access US chips? China

Russia is evading sanctions to acquire U.S.-made semiconductors and weapons components for use in Ukraine—largely through China, according to a new Senate report that led lawmakers to grill chip-making executives on Tuesday.

“Manufacturers are objectively and consciously failing to prevent Russia from benefiting from the use of their technology,” Sen. Richard Blumenthal, D-Conn., said at a hearing of the Permanent Subcommittee on Investigations.

After Russian forces moved more heavily into Ukraine in 2022, the United States placed strict controls on technology transfers to Russia, an attempt to hobble its arms industry.  But that technology is still making its way into weapons such as the Kh-101 cruise missile that struck a children’s hospital in Kyiv on July 8, killing two and injuring more than 50. 

The report said U.S. chip companies—such as AMD, Texas Instruments, Intel, Analog Devices—have big gaps in their internal auditing, even if they do appear to be in compliance with current laws and export controls. It also said the companies are also slow—at best—to respond to requests from lawmakers, non-governmental organizations, and journalists asking the companies to trace the path from legal sale to Russian missiles.

“Intel, Texas Instruments, AMD, and Analog Devices have all received trace requests from external groups showing that their semiconductors have been found in Russian weapon systems. Responses from Intel, Texas Instruments, and Analog Devices to these trace requests, which seek to help understand how Russia is continuing its war efforts in Ukraine, have been delayed, nonresponsive, or nonexistent,” the report says. 

In their testimony, the company officials all said that they were acting within the confines of the law and that they make a lot of chips and parts so keeping track of where they go after sale is difficult. Tiffany Scurry, a vice president and chief compliance officer at AMD, said that the chips they had seen in Russian weapons were “typically between five and 15 years old, sometimes more than 20 years old. We have not yet seen a part…recovered that was post-sanctioned.”

Shannon Thompson, vice president and assistant general counsel at Texas Instruments, said “Chips are often sold and resold multiple times. Bad actors can take basic chips from everyday products and use them in military applications. The same inexpensive chip that helps conduct battery power and electric toothbrushes can be used in the same way in drones or UAVs.”

But the company officials also acknowledged that they had only recently made contact with representatives from Conflict Armament Research, the Royal United Services Institute, and other groups that monitor illicit tech transfers into Russia, so they did not necessarily have a full picture of what products were making their way into Russian weapons. 

Said Blumenthal: “It’s a war that's going on for two years, export sanctions for two years. You told this committee just minutes ago that you believe that these computer chips are all old, but your company hasn't sent a team there to inspect them. You haven't taken steps to verify whether that information is correct. That's just your opinion or belief.”

A larger potential obstacle to tackling illicit chip transfers to Russia, even if these companies committed to more internal audits and worked more proactively with outside monitoring groups and agencies, the companies’ ongoing business with China suggests that the transfers would continue anyway. 

According to the Senate report: “Exports to Hong Kong and China from the four companies have decreased year-to-year from 2021 to 2023, but reports regarding Russia’s ability to evade U.S. sanctions have repeatedly highlighted Hong Kong and China as the two largest continuing sources of semiconductors to Russia.”

Sen. Roger Marshall, R-Kansas., put the problem to the company executives directly. “Certainly, it appears that China is intimately involved in this process,” Marshall said. “I assume that every one of you still sells chips to China?”

The officials said they did. More than one said that they also had manufacturing agreements with Chinese companies, all perfectly legal under current U.S. law. 

“You can’t trust them,” said Marshall.