Two days ago, Russian troops started attacking Ukraine. Immediately after the attack, various European countries and the United States “launched” a series of sanctions against Russia. In the second ban trance against Russia’s commercial interests, Joe Biden has included a full embargo on the sale of semiconductors to Russia.
“We will improve their ability to compete in the 21st century economyBiden said Thursday. He also listed sanctions that will cut Russia off the chips that power cars, smartphones and even missiles.
Joe Biden is cornering Russia
Put simply, Biden’s embargo means that any chip developed using any American technology cannot be sold to Russia. This sanction bears many similarities to the one announced against several Chinese companies, including Huawei. But the latter had the goal of not allowing China to overtake the United States in terms of technology.
Anyway, as the US Assistant Secretary of Commerce for Industry and Security said Thea Rozman Kendler“most products made overseas using sensitive US technology will also be limited to export to Russia“.
“Russia’s access to cutting-edge technology from the United States and partner countries will stop. Its defense industrial base and military and intelligence services will not be able to acquire most Western-made products“Said Kendler.
Effectively, the United States does not have a large semiconductor manufacturing base. But those few companies lead the industry. In other words, even though the chips are manufactured outside the US, most of them are based on US intellectual property.
However, for Russia, this shouldn’t come as a surprise as the White House talked about it just weeks before Russia attacked Ukraine.
“Some of the most powerful impacts of our actions will come over time as we squeeze Russia’s access to finance and technology for strategic sectors of its economy and degrade its industrial capacity for years to come.Biden said.
On the other hand, chipset makers will not suffer much from the loss of a partner like Russiaas it is not a big player in the sector.
Second John NeufferCEO of the US Semiconductor Industry Association (SIA), lhe Russia accounts for only 0.1% of global chip purchases. According to data from IDCthe Russian conductor market alone is worth $ 50 billion in trade on a global industry boasting $ 4.5 trillion.
Also, Russia buys about 70% of the chips it needs from China, Biden’s embargo should not affect Chinese products. But more importantly, almost all SoCs made in Asia are low-end chips, so Russia will not be able to create flagship products.
In turn, Russia and Ukraine are the main suppliers of neon and palladium gas. Both are essential in chip manufacturing. So there is every reason to think that Putin will launch similar sanctions.
Although we must point out that many chipmakers have already tried to diversify their neon supply after Russia last invaded Ukraine in 2014. By that time, neon prices had risen by 600%.
“Unless Ukraine turns into a protracted war lasting over a month, the impact on neon supplies should be minimal.“Says the Morningstar analyst Phelix Lee.
