US Sanctions Russia's Tech Industry, Including Largest Chip Maker, Mikron

In a global economy increasingly dependent on technology, a relatively small player like Russia cannot afford to be cut off, especially as China, the US and EU increase their dominance.  

Recognizing the implications for their futures, tens of thousands of Russian tech workers and entrepreneurs are fleeing the country, furthering its future development. JL

Timothy Lee reports in ars technica image TASS:

Many of Mikron's chips are used in bank cards, identification cards, and RFID tags. The company also manufactures power management chips. In addition to supplying technology for Russian military operations, the US says Mikron is responsible for a majority of Russia's chip exports. War-related sanctions have had a big impact on Russia's technology sector. Yandex—Russia's Google—has had to sever business relationships with Western companies. Yandex's market value has plunged from $31 billion to $6.8 billion. 70,000 Russian tech workers have fled Russia since the invasion of Ukraine began. A Russian trade group warned 100,000 more tech workers might flee if conditions do not improve.

The Biden administration slapped a new round of sanctions on Russia, with a focus on technology companies that support the Russian war effort in Ukraine. Among the sanctioned companies is Mikron, Russia's largest chipmaker.

“We will continue to target Putin’s war machine with sanctions from every angle until this senseless war of choice is over,” said Treasury Secretary Janet Yellen in the Treasury Department's press release announcing the action.

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Many of Mikron's chips are used in bank cards, identification cards, and RFID tags. The company also manufactures power management chips. In addition to supplying technology for Russian military operations, the US says Mikron is responsible for a majority of Russia's chip exports. So hobbling the company could help starve Russia of the hard currency it needs to pay for imports.

Another company targeted by Thursday's sanctions, AO NII-Vektor, works on Russian satellites. A third, T-Platforms, makes supercomputers and "original computing equipment for the mass information technology market."

The Treasury Department also announced broad sanctions on the aerospace, marine, and electronics sectors in Russia. "This determination allows for sanctions to be imposed on any individual or entity determined to operate or have operated in any of those sectors," the Treasury Department wrote.

The Biden administration is also trying to crack down on efforts by the Russian government to evade the sanctions by setting up front companies. The US released a list of 21 entities that it believed were acting as fronts for sanctioned Russian companies or the Russian government.

War-related sanctions have had a big impact on Russia's technology sector. A Bloomberg article this week reported that Yandex—Russia's version of Google—has had to sever business relationships with many Western companies. If the sanctions continue, Yandex will struggle to obtain enough servers and other hardware. Since late last year, Yandex's market value has plunged from $31 billion to $6.8 billion, according to Bloomberg.

The Associated Press reported this week that as many as 70,000 Russian technology workers have fled Russia since the invasion of Ukraine began. According to the AP, "Putin reacted to the exodus of tech professionals by approving legislation to eliminate income taxes between now and 2024 for individuals who work for information technology companies."

The head of a Russian trade group warned that as many as 100,000 more tech workers might flee the country in April if conditions do not improve.