Complex global dynamics will determine if Russian trade restrictions impact semiconductor sales on a global scale.
Global powers and private companies alike are suspending business as a primary strategy to quell Russia’s invasion of Ukraine. The United States, European Union, United Kingdom, and other countries have imposed sanctions and export controls, restricting the sale of technology — including semiconductors.
We’re watching closely, not only to determine this strategy’s efficacy against Russia, but also for overall market impact. In an already complex global electronics market, how will such trade restrictions impact semiconductor sales and supply chain?
Current sanctions against Russia
While the situation is fluid and has the potential to change daily, wide–ranging sanctions are currently in effect against Russia. For the European Union, these sanctions include restricting banking, energy sector goods and services, oil refining technologies, aviation and space technologies, as well as semiconductor and leading-edge technologies.
The United Kingdom has frozen assets on Russian banks and individuals and suspended all dual–use products. The United States has imposed restrictions on Export Administration Regulation (EAR) items — including EAR99 items, which are mostly low–technology consumer goods. Previously, most EAR99 items did not require a license.
Russian trade restrictions impact semiconductor sales with a ripple effect
One of the repercussions from trade restrictions is United States and China facing off over sanctions against Russia. Currently the U.S. is controlling not only tech products produced by American companies, but also any company worldwide that uses American technology or software. This would effectively extend sanctions to many Chinese companies.
Tracking the nuanced ways Russia trade restrictions impact semiconductor sales
At first glance, the immediate impacts for the semiconductor market appear to be small, based on Russia’s weak demand for semiconductors. A statement from the Semiconductor Industry Association (SIA) addressing sanctions on Russia noted, “Russia is not a significant direct consumer of semiconductors, accounting for less than 0.1% of global chip purchases, according to the World Semiconductor Trade Statistics (WSTS) organization. The broader Russian ICT market totaled only about $50.3 billion out of the $4.47 trillion global market, according to 2021 IDC data.”
The Russian market is not purchasing leading–edge technology, nor are they purchasing in large volumes compared to other countries. But due to the nature of older chip designs as critical components of many long–tail product lines, the drop in demand could actually have an impact.
Protocol magazine recently conducted an in–depth review of Russia’s chip purchases, with a focus on the past few years. The data indicates that Russia does in fact buy many analog chips with older designs—designs that feature prominently into the current shortages in the automotive industry and beyond. In fact, many discrete manufacturers rely on these older chips.
So, in theory, cutting off Russia’s access to these semiconductors could result in an expansion of product on the market for manufacturers looking for older designs. The result might play out as additional product on the market for manufacturers in need of these components.
To summarize: The situation remains fluid, and we are watching closely to determine if Russian trade restrictions impact semiconductor sales on a global scale.
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