Poor man’s lend-lease: Russia continues to import U.S. microchips needed for missile navigation and Internet censorship despite sanctions

RU

Microchips made by American companies have been repeatedly found In missiles, drones and warplanes that bomb Ukrainian cities. Among them are chips classified in international documents as “dual-use goods,” indicating that they can be — and most often are — employed in military or surveillance equipment and technologies. These devices include FPGAs. The navigation system of the Kh-101 missile that Russia launched into the Okhmatdyt children's hospital in Kyiv in July 2024 used integrated circuits from Xilinx, a brand manufactured by AMD. Similar but more advanced chips are also used in Russia’s Lancet drone. Xilinx and Altera chips, produced by Intel, are integral to the navigation systems of the Iskander and Kalibr missiles. Despite numerous sanctions, trade embargoes, and restrictions, FPGAs used in military technology continue to be imported into Russia.

Not a single FPGA to the Russian military (on paper)

Even before 2022, it wasn’t exactly easy to ship a high-performance FPGA from a U.S. factory to Russia — or, at least, it shouldn’t have been easy. In 2020, the U.S. Department of Commerce tightened export controls on shipments to Russia, China, and Venezuela.

FPGAs exceeding a certain performance threshold (which wasn’t very high) were classified as dual-use goods, and exporting them to Russia for military purposes required difficult-to-obtain compulsory licenses. As a result, FPGAs were effectively banned from being supplied to buyers linked to the military-industrial sector, or “military end users” — not only the defense department itself, but also security services and law enforcement agencies.

These restrictions were intended to deny Russian (as well as Chinese and Venezuelan) manufacturers of weapons and surveillance technologies access to American innovations. Suppliers are obligated to monitor who the end users of their microchips are and to prevent their products from being repurposed by companies that manufacture military or surveillance equipment. To enforce this regulation, the Know Your Customer (KYC) procedure was introduced, requiring manufacturers to inspect purchasing companies, including through in-person inspections, in order to ensure that FPGAs do not end up in Russia for military use.

Even manufacturers of mass-market encryption devices lost access to FPGAs produced by AMD and Intel (both of which are U.S.-registered, with Intel’s manufacturing largely based in the U.S.). Attorneys at Miller & Chevalier, a major law firm specializing in export control, warned their clients that these legal changes had made it difficult for even telecom and test equipment developers to obtain export licenses.

After Russia invaded Ukraine in 2022, Intel and AMD announced their total withdrawal from the Russian market. That same year, an additional trade embargo was imposed on all shipments from the U.S. to Russia — including chips. Unlike export bans on dual-use goods, this embargo does not depend on the end user, the end use, or the specifications of the microchips. As of 2022, it is essentially irrelevant as to who is sending what type of FPGA to Russia or for what purpose — all shipments of FPGAs are prohibited.

However, as previously reported by The Insider, chip shipments continued. In the two years since the start of the full-scale war, Russia has imported at least $216 million worth of Xilinx-branded products and $120 million worth of Altera-branded products.

According to customs data, AMD and Intel turned a blind eye to the export of Xilinx and Altera chips to Russia for years — even though these chips had no legitimate civilian or domestic uses. Transactions involving Russian buyers and numerous intermediary firms — none of which were authorized to resell these chips to Russia — suggest that instead of performing face-to-face end-user checks, the manufacturing firms may have settled for paperwork that was hardly worth the material it was printed on.

The Insider examined how export control procedures failed to prevent tech corporations from supplying Russia's defense industry.

FPGAs are essential for the Russian defense industry, but it doesn’t know how to make them — which is why it successfully buys them

Devices with programmable logic are not military technology per se. FPGAs are required in scenarios where performance — rather than mass production — is critical. FPGA sales are growing rapidly around the world, primarily because of the demand for computing power for data centers and “artificial intelligence” technologies and telecommunications. For example, mobile operators rely heavily on these chips, which are commonly found in mobile base stations. FPGAs are utilized where there is a need to process large amounts of data quickly, making them particularly promising for applications in computer vision and systems based on it, such as video object detection.

A device using FPGAs lacks the versatility of a conventional computer, which can play music, solve differential equations, and compare texts. However, FPGAs can perform specific tasks requiring numerous similar calculations simultaneously — like face recognition, content filtering on the Internet, or automated trading — with remarkable efficiency.

Such devices are hardly produced in Russia. The Mikron plant, which proudly dubs itself “the heart of Russian hi-tech,” offers only two FPGA models in its product range. Its competitor, the Voronezh Semiconductor Devices Plant, produces three such microchip models. The stated specifications of these models roughly align with the simplest FPGAs produced under the Xilinx and Altera trademarks. Xilinx, the undisputed leader in the Russian market, manufactures chips that can contain millions of logic cells — capabilities that Mikron isn’t even close to matching.

The Russian military and space industry continue to require powerful FPGAs, leading companies to find creative means of purchasing American products despite the ongoing restrictions and export control rules. Even in 2024, two and a half years into the full-scale invasion of Ukraine, FPGAs are still crossing the border. Naturally, these purchases are not made by manufacturers directly tied to the Russian military-industrial complex, but by reseller companies.

FPGAs in Russia: Radars, Internet censorship, and facial recognition

FPGAs are not limited to use in missiles and drones; they are also frequently utilized in radar technologies, primarily those used by the military. This conclusion is supported by data on Xilinx chip purchases by Russian enterprises and design bureaus, as well as patent and invention application data found in the Rospatent database. Russian defense and aerospace enterprises regularly post job vacancies for FPGA programmers, often specifying the need for expertise in the Xilinx and Altera brands. Xilinx microchips are used in Angara launch vehicles and radio signal measurement equipment.

Xilinx FPGAs are also employed in encryption and information protection hardware systems such as “Continent” («Континент») and “Sobol” («Соболь») produced by the company Kod Bezopasnosti («Код безопасности», lit. “Security Code”). Despite being under U.S. sanctions for some time, the company continues to develop new hardware and software systems using the most advanced American chips. These systems are then used in technologies involved in Internet filtering, as previously reported by The Insider.

However, Kod Bezopasnosti complained of a shortage of imported components for its network filters — devices used to filter traffic — back in 2022. UserGate, another Russian company producing traffic filtering systems, faced similar challenges with imported electronics.

Government procurement records confirm the ongoing supply of components to Russian military-industrial enterprises. For example, trade embargoes did not prevent the Ural Optical and Mechanical Plant from purchasing and utilizing Xilinx microchips. Although the plant produces civilian products, it primarily supplies optoelectronic systems to the Russian army. Additionally, the American manufacturer’s boards, which cost tens of thousands of dollars, were purchased by the Orion Scientific and Technical Center (НТЦ «Орион»), which develops hardware and software for Russia’s Federal Security Service (FSB). After the sanctions were imposed, high-performance microchips were also supplied to JSC Central Design Bureau of Automatics (TsKBA), a company that manufactures navigation systems for Russian missiles.

Another promising application of FPGAs is for video surveillance systems with facial recognition capabilities, The Insider's sources affirm. This involves the most advanced chips, such as the Xilinx Ultrascale+ series, which the company actively promoted in the Russian market until 2022. These specialized, high-cost “hardware” solutions process video streams from multiple cameras every second, isolating faces in the crowd and matching them against databases.

Deep Internet filtering, which allows censors to recognize and block VPNs or specific applications like YouTube or Telegram, is most effective when implemented on FPGAs. FPGAs are also critical for solving certain math problems, like finding Dedekind numbers.

While calculating the eighth Dedekind number on a regular laptop takes eight minutes, calculating the ninth would take several hundred thousand years. However, using a supercomputer equipped with FPGAs — the Noctua 2 supercomputer at the University of Paderborn — the problem was solved in five months. Although this is a remarkable achievement, it is unlikely that modern Russia is investing in the search for Dedekind numbers.

How export controls and trade embargoes (don't) work

The Insider received information into how the sale of complex and expensive microchips is managed by a foreign company with no ties to Russia or military technology. For its equipment, the company required high-performance FPGAs made by Altera, costing $4,000 or more per unit. Sometimes, they ordered just one or two chips, and at other times, up to a hundred. Even when purchasing a few FPGAs, a committee of two or three people would visit the customer's location to conduct a thorough inspection — all in compliance with the Know Your Customer (KYC) procedure.

The manufacturer also requires a letter from the buyer indicating the final recipient of the product. However, since inaccurate information is often provided in these letters, in-person inspections are necessary. A special license is also required for exporting such goods from the U.S.

The inspectors insist that it is strictly prohibited to import chips into Russia, whether in their “naked” form or contained in equipment transferred to the Russian side along with the technology and usage rights. However, if equipment is imported into Russia without transferring ownership to a Russian entity (say, by bringing in a personal laptop that does not become government property), and the individual is not granted access to the technology underlying the FPGA, such shipments might be allowed to “pass.”

Suppliers of equipment and electronics for the Russian defense industry have long known that specifying a firm in the EU or China as the final recipient is often enough for American manufacturers to approve the shipment. This quasi-legal scheme worked particularly well up until the start of Russia's full-scale invasion of Ukraine in 2022. For instance, from at least 2000 to 2014, Pavel Flider, an immigrant naturalized in the U.S., purchased dual-use electronics — including Xilinx FPGAs — from U.S. companies and resold them to Russia through European intermediary firms. Regulators occasionally investigated his company's activities, but they were usually satisfied with Flider's explanation that his goods were not destined for Russia. In reality, the chips were going to Russian defense companies, a fact that became known after Flider was detained and his San Francisco home was searched in 2015. Flider eventually struck a deal with the investigators, turned over the other participants in the chip smuggling scheme to the authorities, and was handed a large fine.

Flider is one of the few people caught illegally exporting electronics to Russia in the last 20 years (see The Insider’s investigations into the Serniya network, smuggler Maxim Marchenko, and Miami-based businessmen Oleg Patsulya and Vasily Besedin). Other schemes uncovered by the FBI tend to be similar to the one used by the convicted businessman. This is likely the way expensive microchips ended up in Russia, ultimately being used in missiles targeting Ukrainian cities.

How U.S.-made FPGAs are being shipped to Russia

Shipments of FPGAs and finished products containing them often follow a well-established pattern across various industries. Before the full-scale invasion of Ukraine, legal deliveries were handled by distribution firms. After the war began, these firms lost their official status, and foreign producers ceased doing business in Russia — or at least they claimed they did. However, individuals connected to the former official suppliers — such as former owners, directors, and employees — leveraged their market connections to establish new legal entities and continued exporting through these.

For example, in 2018, Macro Group LLC (ООО «Макро Груп») was the official distributor of Xilinx in Russia. Inline Group («Инлайн Груп») was also involved in deliveries. Today, Xilinx FPGAs are offered for sale via a collection of websites that appear to be remarkably similar to one another in both design and content: fpga.su (owned by a Stanislav Bolt, who is linked to a number of firms, with “Spetspostavka”, or «Спецпоставка», the most notable among them), plis2.ru (owned by Inline Group), and xilinxonline.ru (owned by Snabinter LLC, ООО «Снабинтер»).

These sites attract buyers with headlines like “Official distributor of Xilinx in Russia” or “Wholesale supplies of scarce electronic components from the USA.” AMD, however, no longer has any “official distributors” in Russia. Nonetheless, the affiliation of some companies with former “official distributors” suggests that the old trading partners' connections are still active in this market. As of August 2024, AMD's website still listed the address and phone number of its old Moscow office.

FPGA sales in Russia are also facilitated by retailers offering a wide range of electronic components from various companies. For instance, products featuring these boards can be found at the Robotics Shop and Fregat components store.

Can we be sure that illegal FPGA supply channels are still operating today? It appears so. For example, the sanctioned company T-Component SP («Т-Компонент СП») is advertising “special offers” for the supply of Xilinx FPGAs.

T-Component is displaying photos of chips on its website against a branded backdrop bearing its logo — a likely attempt to convince the consumer of its ability to import the necessary goods into Russia. These images are featured in the section titled “Recent shipments of Xilinx chips from T-Component.”

However, the schematics on the site do not include lot numbers or other identifiers that would allow the manufacturer to trace how these products entered Russia. The Insider contacted AMD with the information about the webpage displaying these product photos, but no reaction to these data had been received by the time of publication. According to customs data, chips labeled as shown in the pictures were indeed imported into Russia, but in no case is T-Component JV listed as the importer.

This indicates, among other things, the relative futility of attempts to challenge importing firms. It costs about $300 to set up or close an LLC in Russia — which is less than the cost of an hour's work of a lawyer in Washington, DC. Meanwhile, the actual shipments may be handled by entirely different companies.

Significant volumes of top-end Xilinx FPGAs (including those already built into printed circuit boards, or PCBs) were delivered to Russia by a company called ID Solution («Айди Солюшн»). It is associated with Merusoft («Мерусофт»), which specializes in facial recognition technologies. ID solution’s purchases suggest the company has substantial parallel computing capabilities — the products they order could even be used to build a supercomputer. On the other hand, judging from ID Solution's website, the company is busy retailing FPGAs to other consumers. Until recently, it was believed that ID Solution acted as a middleman for Russian companies purchasing components for drones. Drones typically use chips that cost hundreds, not tens of thousands, of dollars.

ID Solution, in particular, imported ready-made PCBs containing the latest FPGA matrices from Xilinx. The boards were manufactured by HiTech Global — a U.S. company.

In February 2023, ID Solution imported HTG-840 Virtex UltraScale PCBs containing the XCVU19P-1FSVB3824E FPGA, which costs more than $80,000, into Russia via Uzbekistan. This is the highest performance generation of programmable integrated logic circuits available on the market, the Virtex UltraScale+, which was released in 2023. There are 8,938,000 logic cells in this chip. By comparison, the XC2V1000TM circuit from the Kh-101 missile mentioned above has only 11,520 cells — about a thousand times fewer, and it costs around a thousand times less.

ID Solution and Macro Group were HiTech Global's official distributors in Russia. In 2014, Dmitry Veleslavov, chairman of the board of Macro Group, said in an interview with a specialized publication: “After the third wave of sanctions, we faced a ban on supplying all new families of Xilinx to Russia, which fall under 'dual-use,' including for civilian projects.” This clearly indicates that these companies could not have been unaware that they were violating sanctions laws.

Judging by the customs declarations, it seems that in some cases the cargo was not even repackaged in Uzbekistan’s capital Tashkent, but was immediately sent to Russia, as the declarations show the same weight of goods on the journey from the U.S. to Uzbekistan and from Uzbekistan to Russia.

The emergence of Uzbekistan and other post-Soviet countries as transit points is linked to the increasing complexity of traditional supply routes through China. Industry representatives told The Insider that the transit or re-export of dual-use (or embargoed) goods made in Europe or the U.S. — or the export from China of such goods produced using European or American technology — has recently come up against new obstacles. For example, when a Russian businessman tried to purchase an Arria 10 FPGA on Alibaba (with prices ranging from hundreds to thousands of dollars per chip), the seller on AliExpress bluntly stated: “We can only do it on the black market.” Market experts are assuming these goods are now increasingly being transported using old-school smuggling methods — “inside TV sets or microwave ovens.”

Another Russian buyer’s attempt to pay for legal goods (not related to military technology) through a Chinese bank in yuan was rejected by eight out of ten banks, which feared being hit with secondary sanctions. Another businessman, who was trying to purchase goods in China for a large Russian state corporation, was told by the seller there: “Come to pick up in person, and bring the money in suitcases.” In such an arrangement, all the risk involved in transporting the goods through customs falls on the Russians.

Reaction of exporters and producers

The Insider attempted to contact HiTech Global, the manufacturer and official exporter to Uzbekistan of PCBs embedded with Xilinx FPGAs, but had received no response as of the time this investigation was published. U.S. public records indicate that HiTech Global's affiliates include Samantha Alimardani, Cyrus Mousavi, and Seyed Mousavi.

Hong Kong-based Arcbase Electronics, a major FPGA exporter to Russia and a key partner of a former AMD distributor Inline Group, acknowledged in a response to The Insider that it continues to supply Xilinx products to Russia. The company also noted that it still employs a “Russia manager,” a Dmitry Pushkin, who is directly involved in these transactions.

AMD responded to The Insider's inquiry by saying: “AMD suspended all sales and technical support for AMD and Xilinx products into Russia and all restricted regions immediately following Russia’s invasion of Ukraine. We are committed to full compliance with all U.S. and global export regulations and have a clear policy requiring our distributors and customers to do the same.”

However, AMD did not clarify at which stage of the distribution chain the exporting firms that directly shipped the goods into Russia were involved, nor how the FPGAs and boards containing them ended up in their possession. Additionally, AMD did not explain what happened to the “Know Your Customer” verification procedure.

Electronics distribution experts explained to The Insider that the only point at which a sanctions violation can be intercepted is when a general or national distributor sells the goods — after that, no further control can be exercised by the manufacturing company. As long as major distributors take the buyers' word for it — i.e., so long as sellers fail to conduct in-person visits to verify that the circuits are installed in the declared equipment, such as a university computer for calculating Dedekind numbers — sanctions violations will persist.

The above indicates that it is the responsibility of the manufacturing corporation and its distributors to track every chip in this class. While it may be impractical to monitor the fate of cheaper chips priced at $10 per unit, subject area experts confirm that it is possible to establish localization and verify the use of chips valued at $100,000.