These days, the eyes of many Western countries are on the moves that Russia is making in relation to Ukraine. And given the indications that it may invade Ukraine, NATO members are assessing what response to give the country if the invasion finally occurs. Of them, the country that has announced the toughest measures if this happens is the United States. The Biden Administration has threatened Russia, among other measures, with use against country export controls.
This could lead, according to Extreme Tech, to the US using the same measures against Russia that Trump used against Huawei. And this could have very serious consequences for the country, which among other things could lose access to the semiconductor market, essential for manufacturing all kinds of equipment and products.
The United States has a list of entities subject to export restrictions in which there are companies, individuals, governments and NGOs. The country’s authorities can customize the restrictions it applies to organizations and individuals in it, so you can use various levels of sanction against them.
The effects of sanctions on Huawei
Thus, for example, the US measures against Huawei, which appears in it, are quite restrictive, since cannot do business with US companies or buy the latest technology of semiconductors as many of them are manufactured with american technology. As a result, Huawei’s revenue is down 31% in 2021 and the company has been pushed to sell its Honor smartphone division.
One of the measures used against Huawei is the Foreign Direct Product Rule. Since August 2020, the Department of Commerce issued a rule that prohibited Huawei from directly purchasing restricted technology. In addition, you are also prohibited from purchasing any foreign product “produced by a plant or a major component that is itself a direct product of US-origin software or technology. The latter meant an update of the rule that tightens the ban and has made technology purchases from Huawei much more difficult.
It is just what the United States could do with Russia if it invades Ukraine, in what would be an unprecedented decision. The United States has long restricted the sale of computers to certain countries, but the rules applied to companies based in the United States. Currently, a regulation like this one issued by the United States could, in theory, target the majority of electronics companies in Russia. Everything from consumer electronics and mobile devices to computer manufacturing could be affected.
How sanctions could affect Russia in terms of semiconductors
In particular, the sanctions could affect the purchase of semiconductors, a component that is considered essential by more and more sectors, given the increase in products and devices that integrate chips to be able to execute their most advanced functions. And although US companies do not control the majority of the market for their manufacture, they do control a significant share of the market for chip-making equipment.
In addition, companies such as the European ASML, US sanctions would likely follow, given that among other things its EUV systems rely on US-made components, which would make the company subject to export control measures.
Therefore, the United States cannot completely turn off the semiconductor faucet to Russia, but it will be able to significantly limit access to chips developed with the latest nodes, which would leave the country behind in technology. For example, the latest CPU and GPU technologies, as well as the deployment of 5G, rely on 5 and 7 nanometer manufacturing technology. Without access to them, it would have to make do with chips developed using 14-nanometer technologies or older. Which is not enough to deploy new technology. It would take years for Russia to develop a chip manufacturing industry that can compete with those of Intel or other manufacturers.
The impact of the bans will depend, of course, on how aggressive and harsh the Biden Administration acts. There are not many companies from the United States, but it is It is likely that the objective of the US authorities is in companies from other countries. For example, TSMC, which is responsible for the development of Russian-designed Elbrus CPUs. And the segmented and focused restrictions on this type of technology could be very harmful for the country’s industry even though, apparently, it does not affect many products. For now, TSMC has issued a statement saying that it complies with all laws and regulations, which implies that it does not want to side with either party.
But the US could resort to the combination of conventional sanctions and targeted export bans, which would have much more effect than choosing just one of the options. It remains to be seen what European countries will do if Russia invades Ukraine. Some of them depend on Russia for natural gas exports, and the Nordstream 2 pipeline, a joint German-Russian project to bring more natural gas to Europe, is said to be complete, but its entry into production is reportedly being delayed. due to regulatory delays, and may not be operational before the second half of 2022.
Russian-designed CPUs, such as the Baikal-M, feature octa-core Cortex-A57 CPUs developed using TSMC’s 28-nanometer technology. But there is not much more information about which process nodes are currently available in Russia. There are already facilities working with 90- and 65-nanometer technologies, and apparently there were plans to build 45-nanometer technologies, but it’s not clear if they were ever built.
It remains to be seen, therefore, what happens in Ukraine in the short term, while the negotiations in this regard between the United States and Russia that have been held up to now have not been fruitful at all. For this reason, talking about sanctions may be one of the attempts made by the United States to warn Russia of what may happen if it decides to enter Ukraine.
