Why is the US using semiconductors to curb the Russian invasion of Ukraine

Semiconductor chips, the apparently unremarkable component responsible derailed Global supply chains over the past two years may play a pivotal role in the international community’s efforts to curb the Russian invasion of Ukraine. Whether these tactics will actually work as intended is still far from certain.

Semiconductors have become the equivalent of the nuts and bolts of the 21st century, supporting everything from smart phones to Ford F-150s. Although Russia and Ukraine are not well known for semiconductor production, they are important sources of neon and palladium gas used in the production of those coveted wafers. like CNBC NotesNearly all of the US supply of neon comes from these two countries, a heavy dependence that has some experts worried about looming supply shocks that threaten to derail global supply chains just like shortages. Back to be under control.

For some context: Neon saw a staggering 600% price increase during the last Russia-Ukraine conflict, in 2014. To make matters worse, Russia, Reuters Notesthe United States supplies about 35% of palladium, a metal that is integral to the sensors and other applications the technology industry depends on.

“This will have an impact,” Techcet President and CEO Lita Shon-Roy Tell CNBC. “It will continue to limit the source of the chip.”

Experts and members of the chip industry told Reuters that the supply shocks from the Russian invasion may take time to appear, in part because many chipmakers have spent the past two years diversifying their supply chains to deal with the last loss. But while chipmakers and suppliers expressed optimism about their ability to withstand the disruption earlier this week, few really predicted the strength and scale of the Russian invasion.

Concerns about chips may have started as the United States and others seem willing to use the components as a means of economic pressure on the Russian government.

Late Thursday afternoon, the Biden administration responded to the attack on Ukraine by announcing New sanctions were issued against the Russian government. Those measures included new export controls from the Department of Commerce that reportedly placed restrictions on semiconductors, computers, telecommunications, information security equipment, lasers, and sensors that prevented their use by Russia.

At a news conference, President Joe Biden said the new measures “will impose a heavy cost on the Russian economy, both immediately and over time.”

Although the exact details about those penalties remain unclear, the Biden administration has been studying some variations on the semiconductor restrictions for some time. Earlier this month, management threatened To cut off Russia from its supplies of semiconductors if the boycott invades Ukraine. This is important because while the United States may rely on Russia for access to materials, Russia is highly dependent on the United States for actual chip and chip designs.

The administration has warned that it may restrict not only Russia’s access to US-made chips but also chips from other foreign countries, a restriction that could have a devastating effect on the Russian economy.

If Russia wants to develop this [technology] You need to import technologies and products that only we, our allies, and our partners produce,” a White House official said Tell Axios “This would lead to the atrophy of Russia’s production capacity over time.”

This plan is not foolproof though. Semiconductor restrictions won’t stop Russia Helicopters and tanks of invading Ukraine in the near term, and some experts worry that such a gambit may actually backfire on the United States and others in the future. at Interview With Politico, Paul Triulo, head of technology policy at consultancy Albright Stonebridge Group, said the US policy of denying access to chips to an entire country was “unprecedented” and could prompt other foreign chip manufacturers to reconsider incorporating US technologies into their products. .

“At a minimum, it adds to the industry’s concerns about the unintended consequences of the US government arming the dominance of US technology in the semiconductor sector,” Triollo said. Triollo said such a move could also lead to retaliatory cyberattacks from Russia and the United States and other countries.

Nor is it clear whether the US-led effort to isolate Russia from semiconductors will succeed as elegantly as the Biden administration believes.

as others have done pointed out, semiconductor manufacturing represents one of the greatest complexities in the modern interconnected economy with elements of a single product often moving across many provinces and even continents before reaching the destination in its final form. Even if the administration succeeds in resolving these complexities, it is likely that Russia will instead turn to a friendlier China, which by some Estimates It already accounts for about 70% of Russia’s imports of computers and smartphones.

None of this is to say that there is nothing that can be done, but it does suggest headaches that explode in the brain when trying to impose economic sanctions using parts of technology that, by design, depend on international trade.