The West's Technological Edge in Geopolitical Competition

The US and its allies enjoy a significant technological advantage over China and Russia.  The Chinese are working hard to catch up but the West is not standing still. It is making huge investments in research and development to maintain this edge as it becomes increasingly clear that the outcome of the ongoing international geopolitical competition will largely be determined by technology. 

East-West Comparison of GDP, R&D. Source: IMF (GDP), OECD (R&am...

In 2019, the United States and its allies invested $1.5 trillion in research and development, far outpacing the combined Chinese and Russian R&D investment of half a trillion USD.  This gap will likely narrow if the East's GDP continues to grow faster than the West's, allowing for higher investment in technology. 

After the Russian invasion of Ukraine, the US, EU, Japan, South Korea and Taiwan have made it clear that the Western allies can and will use technology sanctions to control the behavior of China and Russia. 

Taiwan Semiconductor Manufacturing Company (TSMC) will no longer fabricate computer chips for Russia, according to media reports. The ban will particularly affect Russia's Elbrus and Baikal processors, unless China agrees to step in to manufacture these chips, and risk additional US sanctions itself. Both Russian processors use mature 28 nm technology. The world's most advanced TSMC fabrication technology today is 5 nanometers. The best US-based Intel can do today is 7nm technology. China's SMIC (Semiconductor Manufacturing International Corporation) has the capability to produce chips using 14 nm technology.  Semiconductor chips form the core of all modern systems from automobiles to airplanes to smartphones, computers, home appliances, toys, telecommunications and advanced weapons systems.  

While China is the  biggest volume producer of semiconductor components in the world,  the Chinese design centers and fabs rely on tools and equipment supplied by the West to deliver products. Western companies dominate all the key steps in this critical and highly complex industry, from chip design (led by U.S.-based Nvidia, Intel, Qualcomm and AMD and Britain’s ARM) to the fabrication of advanced chips (led by Intel, Taiwan’s TSMC and South Korea’s Samsung ) and the sophisticated machines that etch chip designs onto wafers (produced by Applied Materials and Lam Research in the U.S., the Netherlands’ ASML Holding and Japan’s Tokyo Electron ), according to the Wall Street Journal

There is no question that the current western technology sanctions can seriously squeeze Russia. However, overusing such sanctions could backfire in the long run if the US rivals, particularly China and Russia, decide to invest billions of dollars to build their own capacity. This would seriously erode western technology domination and result in major market share losses for the US tech companies, particularly those in Silicon Valley. 

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Comment by Riaz Haq on May 11, 2022 at 9:22pm

India Semiconductor Ambitions Are a Heavy Lift
Governments everywhere see both a threat and an opportunity from the current chip shortage. India is no exception.

https://www.wsj.com/articles/india-semiconductor-ambitions-are-a-he...


Indian Prime Minister Narendra Modi isn’t known for keeping his head down and working silently on a goal. Fanfare and zealous speeches are more on brand. The latest case in point: his speech at the Semicon India 2022 conference in late April, pitching India as a potential semiconductor manufacturing hub.

This goal, however, may require some humility and patience, particularly when leading economies like the U.S., Germany and Japan have already attracted large investments from top chip makers. And unlike manufacturing powerhouse China, which is also vying to be a serious global chip-making player, India lacks a robust domestic market for chips.

So far, the country has received proposals worth $20.5 billion from five companies. These include Indian oil-and-gas major Vedanta in joint venture with Foxconn, Singapore-based IGSS Ventures Pte, and the ISMC—a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor. Noticeably absent are many of the top global chip makers such as Taiwan Semiconductor Manufacturing Co. and Samsung —although Intel is in the process of acquiring Tower Semiconductor.

India has proven itself in smartphone assembly and is now the second-largest smartphone assembler after China. It understandably wants to move up the value chain—but cheap labor won’t be nearly enough. Chip making is a technology- and capital-intensive industry and needs, at a minimum, reliable access to power and water, things that Indian governments have often struggled to supply in the past.

Mr. Modi’s grandiloquence aside, getting on the map in the next 10 years and partly supplying India’s own domestic requirements looks like a reasonable goal to shoot for—in addition to focusing on the chip design and assembling, testing, and packaging aspects of the value chain. It isn’t surprising that the Indian government wants to seize the moment. But here, the adage about walking before running seems apt.

Comment by Riaz Haq on May 13, 2022 at 5:13pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

By his own account, Ilias Sabirov, a Moscow businessman, had supplied Russia's military with high-performance computer chips made in the United States for years.
Then, in 2014, Russia seized the Ukrainian peninsula of Crimea, and the U.S. government began imposing a series of new sanctions and export controls on Russia, including severely restricting sales of such chips.
But that didn't stop Sabirov from obtaining more, according to U.S. authorities and a Reuters review of Russian customs records.

In the spring of 2015, a parcel containing more than 100 memory chips specially hardened to resist radiation and extreme temperatures – critical components in missiles and military satellites – arrived at Sabirov's business address in Moscow, according to the Russian customs records and a U.S. federal indictment. American prosecutors allege that the "rad-hard"chips were sourced from a company in Austin, Texas, called Silicon Space Technology Corp, or SST, but shipped to Russia via a firm in Bulgaria to evade U.S. export law.

After Russia launched a full-scale invasion of Ukraine in February, the United States and more than 30 other nations responded with an unprecedented barrage of additional sanctions and export restrictions. But the story of how the American chips made it from Texas to Moscow back in 2015 shows how sensitive Western technology can still end up in Russia despite strict U.S. export controls.
This account of the criminal case against Sabirov and two Bulgarian businessmen, which remains open, contains new details from interviews with U.S. officials and several of the main actors, including two fugitives. And it points to the challenges of imposing a rigorous export-control regime, especially on so-called dual-use components that can serve both civilian and military purposes.
The Texas scheme and other U.S. criminal cases involving sensitive technology that ended up in Russia, reviewed by Reuters, reveal a chain of willing suppliers, front and shell companies and false claims on export forms that specialized Western components were intended for civilian rather than military use. Sought-after parts have included microelectronics and precision tooling for the Russian military.
During war, said U.S. Department of Defense spokeswoman Sue Gough, rad-hard chips play an essential role for communications, intelligence and surveillance.

The Texas company, which had been repeatedly warned by its own lawyers that it couldn't ship rad-hard chips to Russia without a license, admitted that from 2014 to 2019, it had conspired with the three men to do just that. Reuters couldn't determine whether the chips ultimately were used for a military purpose. The U.S. attorney's office in the western district of Texas declined to comment.
In a statement, Vorago said it "is, and always has been, committed to zero tolerance compliance with all U.S. laws, including export controls." It said it "has been fully cooperative" in the U.S. investigations and "has implemented strengthened compliance procedures and training to prevent a recurrence."

The company also said it was "deliberately misled into believing that shipments were going to Bulgaria for use in Europe - a legal export. These customers provided a seemingly valid end-user certificate to Vorago certifying that the end user of Vorago's products was not in Russia

Sabirov denied any wrongdoing in an interview with Reuters and said the rad-hard chips never went from Bulgaria to Moscow, contradicting evidence gathered by U.S. prosecutors and customs records reviewed by Reuters. He said he always complied with U.S. export rules and never laundered money. "The sanctions they applied on myself, on my companies and on my friends are absolutely unfair, absolutely fake and absolutely wrong," he said.

Comment by Riaz Haq on May 13, 2022 at 5:13pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...


Milan Dimitrov also denied any wrongdoing. The accusations of export violations are "nonsensical," he told Reuters. "The whole thing is a misunderstanding. "His father, Dimitar Dimitrov, couldn't be reached for comment.
Sabirov, who is in Russia, and the two Bulgarians remain fugitives in the criminal case.


A review by Reuters of U.S. court and other federal records shows that the Texas case isn't unique.
Between 2008 and 2014, a father-and-son team smuggled more than $65 million worth of sensitive microchips from New Jersey to Moscow-area companies directly associated with Russian military, intelligence and nuclear-warhead design programs, according to U.S. authorities.
Alexander Brazhnikov Jr. of New Jersey, a naturalized U.S. citizen born in Russia, pleaded guilty in federal court in 2015 to purchasing microelectronics inside the United States, repackaging and relabeling them, and then shipping the goods to Moscow apartments and vacant storefronts linked to his father, a Russian national. There were 1,923 shipments in all, and the son admitted that the money to pay for it was laundered from Russia through 50 foreign shell companies, registered in countries stretching from the Marshall Islands in the Pacific to Panama and Belize in Central America, court records show.
"We believe that the microchips were all going to the military-industrial complex because Russia doesn't produce anything else that would have required that level of chips," said Peter Gaeta, one of the prosecutors on the case, which remains open.
The son, whose field of study was listed as "nuclear physics" in court records, was sentenced to 70 months in prison and was released in December 2018. His father, Alexander Brazhnikov Sr., owner of a Moscow-based microelectronics import-export firm, was charged with conspiracy and remains a fugitive. The company allegedly distributed the components acquired in the United States to Russian defense contractors licensed to procure parts for the Russian military and security service, and Russian companies involved in the design of nuclear weapons.
"The scale of this case is just daunting," Gaeta told Reuters. "But this was not a lone wolf operation. This is happening across the board with Russia."
Alexander Brazhnikov Jr. declined to comment on the case. His father couldn't be reached.
In another case, Alexander Fishenko, a dual citizen of the United States and Russia, ran a years-long scheme to procure and ship sensitive microelectronics from U.S.-based companies to Russian government customers, including its military and intelligence services.
Fishenko owned a Houston, Texas-based export company and also was an executive in a Moscow-based procurement company, according to federal prosecutors. Between 2002 and 2012, his export company shipped goods through New York to contacts in countries including Finland, Canada and Germany who would send them onto Russia. Among the items were electronics with applications in radar and surveillance systems, weapons guidance systems and detonation triggers.

Comment by Riaz Haq on May 13, 2022 at 5:14pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

Fishenko and 10 other people were indicted in 2012 for participating in a conspiracy to sell controlled technology to Russia without required licenses. He later pleaded guilty to, among other charges, acting as an agent of the Russian government. Seven others were convicted either through pleas or at trial. Fishenko spent more than seven years behind bars.
New York lawyer Richard Levitt, who represented Fishenko in the case, declined to comment, and Fishenko himself couldn't be reached.
"It is common for illegal exports of controlled technology to go through middlemen overseas to hide the true destination of the goods," said Daniel Silver, a former federal prosecutor in Brooklyn who handled the Fishenko case. "These global networks can shield U.S. exporters by making it harder for law enforcement agents to connect the dots."
In recent years, Russia has tried to blunt Western export restrictions by making more parts at home or shifting to suppliers located in allied countries, such as China. Still, Russian companies remain heavily reliant on the West for high-precision machinery and some high-performance semiconductors like the radiation-hardened chips Sabirov imported.
"If a Russian satellite orbits around the Earth without a glitch, you can definitely assume that it contains Western electronics," an executive with a U.S. semiconductor maker said, asking not to be named. Russia doesn't make such chips and China, despite heavy investment, has yet to bridge the gap with rivals, the person said.


To supply its military, Russia has found high-tech suppliers in the U.S. and other Western countries. Between 2015 and 2018, Almaz-Antey, a state-owned manufacturer of Russia's sophisticated air-defense missile systems, managed to bypass German export restrictions and procure nearly $10 million worth of high-precision metalworking machines, according to a person familiar with the matter and an official case summary filed with a Hamburg court. Export-license papers claimed the machinery was destined to various Russian producers of civilian goods in the city of Yekaterinburg when, in fact, they were delivered to a nearby Almaz-Antey facility, according to the person familiar with the matter and the case summary. Almaz-Antey didn't respond to a message seeking comment.
Suzette Grillot, a professor of international studies at the University of Oklahoma, said Western trade restrictions on Russia worked during the Cold War because the West then dominated world trade. "When you went from the U.S. to Russia in the early 1990s, it was a different world technologically speaking, the place was definitely behind the times in communications and other technologies," she said.
But replicating Cold War sanctions to squeeze the Russian economy and military industry today seems like an elusive goal, Grillot said, because Russia has had almost unlimited access to Western technology for the past 30 years and can now also rely on alternative suppliers such as China and India. "You can't unring a bell," she said.

Comment by Riaz Haq on May 13, 2022 at 5:14pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

Trained as a physicist and chemist, Wesley Morris had developed solutions to harden semiconductors against heat and radiation. In 2004, he founded SST (now called Vorago Technologies) in a bid to monetize his patented inventions. Morris told Reuters that his techniques caught the attention of the U.S. military, and SST received millions of dollars in research grants from the U.S. Department of Defense, including from top-secret missile programs, to hone its technology.
But 10 years later, in the spring of 2014, SST was still chasing its first significant commercial order. That's when Morris, the company's chief executive, said he learned from a newly recruited salesman that a Russian businessman, Sabirov, was interested in buying rad-hard chips from SST. Sabirov, the salesman said, wanted to purchase them for Russia's space agency, making him an attractive customer prospect because Russia relies almost entirely on imports for its rad-hard requirements.
The Russian space agency, Roscosmos, said it had no information about Sabirov's involvement in procuring electronic components for Russia.
Sabirov arrived at a meeting at SST's office in Austin in May 2014, accompanied by a Bulgarian associate, Dimitar Dimitrov. The two men formed an odd pair, Morris and several other people who dealt with them said. The Russian spoke English fluently and projected the confidence of a man with solid connections in his country's state bureaucracy. The Bulgarian appeared to be a brilliant scientist whose scuffed shoes suggested that he didn't worry too much about his attire. Both men seemed to have solid technical backgrounds.
According to Morris, Sabirov told him that one of his Russian companies, Kosmos Komplekt, had been buying rad-hard chips from SST's bigger U.S. rival, Aeroflex, since 2011, and was interested in transitioning to SST's products.
"I wanted to get the business," Morris recalled thinking at the time.
A spokesman for Cobham Group, which acquired Aeroflex in September 2014, said Aeroflex had stopped shipping rad-hard chips to Sabirov in Russia prior to the acquisition.
A week after the May 2014 meeting in Austin with Sabirov, SST's outside lawyer dampened Morris's expectations of quickly clinching a lucrative contract. "Anything that requires a license to Russia is currently subject to a presumption of denial," the lawyer told Morris and other executives, according to Commerce Department documents.
Morris told Reuters he wasn't ready to abandon what could be the transformational contract SST had longed for. From his conversation with Sabirov, Morris said he had grown hopeful the Russian would order $10 million worth of goods. He said he believed that the chips would be used in satellites, not in missiles.
Morris said that in July 2014, he and Sabirov discussed their options upon meeting on the sidelines of a nuclear-technology conference in Paris. Morris said his ideas hinged on obtaining one of the few export licenses U.S. authorities were still granting as part of Washington's cooperation with Russia on joint space programs.
Days after the Paris meeting, however, Morris lost hope. Geopolitical tension with Moscow had escalated after a Malaysian airliner flying through Ukrainian airspace was downed by a Russian-made missile, killing 298 people. Even though Moscow denied involvement in the tragedy, obtaining an export license to Russia was now virtually impossible, Morris concluded after conferring with SST's lawyer.
"We can't send you anything," the American CEO said he told Sabirov.

Comment by Riaz Haq on May 13, 2022 at 5:15pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

But Morris said Sabirov proposed to him an alternative solution: how about using Bulgaria, a country for which an export license wasn't necessary, as a transit point? To avoid the need for a U.S. license, chips could be mounted on electronic boards in Sofia, effectively changing the product's designation in export documents before they were shipped to Moscow.
In early August 2014, Morris again conferred with SST's lawyer, who said the plan wouldn't fly. Unless Sabirov could prove he was "adding substantial value in Bulgaria," a license for export to Russia likely would be required, the lawyer advised in an email, according to Commerce Department documents. The documents don't name the lawyer.
That same month, Sabirov told SST that since sanctions had disrupted his business of procuring parts for Russia, he had set up a Bulgarian company that would target civilian markets in Europe, according to former SST employees and the Commerce Department documents. The plan was to assemble modules with chips and sell them to car makers for use in engines and exhaust systems. Rad-hard chips aren't commonly used in automobiles because of their cost.
Sabirov's Bulgarian business – Multi Technology Integration Group EOOD, or MTIG – was set up by a relative of a business partner in Sofia. The next month, September 2014, MTIG ordered a silicon wafer of rad-hard memory chips from SST for $125,000, according to interviews and federal court documents. Sabirov told SST that MTIG would test the chips and that more orders would follow, according to interviews and Commerce Department documents.

The wafer, which had been produced using SST's hardening process at a Texas Instruments Inc foundry, was shipped to MTIG at the end of January 2015, according to former SST employees. Four months later, after the eight-inch wafer had been cut into 115 memory chips, the semiconductors were shipped to one of Sabirov's companies in Moscow, Sovtest Comp, where a 4.6-pound parcel arrived on May 25, according to Russian customs records, interviews and Commerce Department documents.
Texas Instruments said it "complies with applicable laws and regulations in the countries where we operate. At this time, we are not selling into Russia or Belarus."
By the time SST shipped the wafer to MTIG, the U.S. company had undergone a change in management. In early January 2015, Morris had been stripped of his CEO title after losing a battle for control with the firm's main investor, New Scientific Ventures. NSV declined to comment. The new CEO, Bernd Lienhard, learned of the shipment to Bulgaria in March 2015, according to the Commerce Department documents. Vorago declined to comment about Lienhard being informed about the deal.
The company rebranded itself as Vorago Technologies that August, but its fortunes continued to rely on Sabirov. In the fall of 2015, Lienhard learned that the Russian was planning to order five more wafers. Lienhard sent Sabirov an email saying it was "the most important biz opportunity for us this year and we are very committed to do whatever necessary to help you," according to the Commerce Department documents.

Comment by Riaz Haq on May 13, 2022 at 5:15pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

In November 2015, the two men exchanged more emails. Lienhard offered a steep discount if Sabirov ordered more wafers before year end.
"How would you feel about the following scenario? Could you buy only 3 wafers this quarter and we would reduce the price per wafer from currently $125,000 to $100,000?" Lienhard emailed Sabirov. "You would help us a lot."
Five days later, Sabirov asked if there were "any obstacles for direct shipment to Moscow?" Lienhard responded that the wafers would have to be sent to Bulgaria to comply with export regulations, according to the Commerce Department documents, which contained excerpts from the communications.
In December 2015, a new Vorago sales executive, Anne Joubert, met with Sabirov and Dimitar Dimitrov in Munich to discuss additional wafer purchases, according to interviews and Commerce Department documents. Days later, MTIG sent Vorago a purchasing order for five more wafers. Federal documents show that Vorago shipped two of them to MTIG in December 2015.
In July 2016, Joubert flew to Bulgaria where she met with Sabirov and the two Dimitrovs. During the meeting, Joubert asked if MTIG was shipping Vorago's rad-hard chips to Russia, according to interviews and federal court records. "Maybe," Sabirov replied. When Joubert said this would violate U.S. export regulations, Dimitar Dimitrov assured her that all of the chips the Texas company previously had shipped to MTIG had remained in Bulgaria
According to the federal indictment, this claim was false because some chips had been sent to Russia. The indictment says that the "Ship to" address on an MTIG invoice was Sabirov's company, Sovtest, in Moscow. Joubert declined to comment.
Sabirov continued discussing ordering more wafers, including during a meeting with Lienhard in Sofia in August 2018, according to the Commerce Department documents.
That December, an export control officer from the Commerce Department went to Sofia to verify that Vorago chips had been used by MTIG in Bulgaria. The officer met with the younger Dimitrov, Milan, who denied the semiconductors had been sent to Russia and said they were still in Bulgaria, according to the federal indictment.
By then, Vorago, Sabirov and the Dimitrovs were under investigation by both the Federal Bureau of Investigation and the Commerce Department for alleged export violations, according to interviews.
In early 2016, the company's founder, Morris, informed the FBI about what he viewed as alleged irregularities at the firm, including the sales involving Sabirov, according to people familiar with the matter.
Weeks after the tip-off, in April 2016, FBI agents raided Vorago's head office in Austin, searching the premises while staffers were told to remain in one room, according to the people familiar with the matter. "It was a very disruptive day," one former employee recalled.

Comment by Riaz Haq on May 13, 2022 at 5:16pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

According to people familiar with the matter, the federal investigations made slow progress. In July 2019, the FBI raided the third floor of an office building, also in Austin, where Vorago had relocated. That same month, arrest warrants were issued for Sabirov and the Dimitrovs.
Seventeen months later, in December 2020, the U.S. Justice Department announced the indictment of the three men on charges of illegally procuring rad-hard chips and money laundering.
Then, last September – six years after the Texas company first began shipping the specialized chips to Bulgaria – the Commerce Department announced a settlement in which Vorago agreed to pay a penalty: $497,000, the proceeds of its sales. Neither Vorago nor its executives were charged in the criminal case.
((David Gauthier-Villars reported from Istanbul, Steve Stecklow from London and John Shiffman from Washington. Additional reporting by Karen Freifeld in New York and Tsvetelia Tsolova in Sofia. Editing by Janet McBride))

"Acquisition of radiation-hardening technology by nuclear-capable aggressive states, like Russia, could embolden them, increasing international security destabilization," Gough said. "Therefore, protection of these chips is extremely important to U.S. national security."
Today, Russia's efforts to circumvent U.S. restrictions on military and other sensitive technology are on the rise, according to U.S. Homeland Security Investigations officials. A specialized unit of 25 U.S. counter-proliferation analysts, whose objective is to spot suspicious shipments, shifted their sole focus from China to Russia in late February, the HSI officials said.
"China doesn't dominate our attention like they used to, and it's Russia where we've seen the biggest increase lately," said Greg Slavens, who recently retired after 30 years as a HSI counter-proliferation supervisor. "The Russians have steadily increased their attempts to get chips for missile and space technology."
The Kremlin did not respond to questions about U.S. accusations that it uses deceptive schemes to bypass Western sanctions and trade restrictions. Russia has previously cast Western sanctions as a hostile act.
U.S. Secretary of Commerce Gina Raimondo, who met with Ukrainian Prime Minister Denys Shmyhal in Washington on April 21, said in a statement the same day that her department is "laser focused on depriving Russia the items and technologies it needs to sustain its war machine."

Complicating matters for U.S. law enforcement: Since 2018, Russia no longer authorizes U.S. export-control officers to conduct on-the-ground checks to ensure that sensitive goods are used for their officially declared purposes, according to people familiar with the matter.

Even when suspects are identified, cases can take years to investigate and adjudicate while accused Russian nationals remain beyond the arm of U.S. law. In the Texas matter, it took about five years for U.S. authorities to bring criminal charges and impose a penalty.

Sabirov, as well as the two Bulgarian businessmen, Dimitar and Milan Dimitrov, were indicted in 2020 on charges of illegally exporting rad-hard chips to Russia and money laundering. And SST, which changed its name to Vorago Technologies in 2015, was fined $497,000 last year by the U.S. Department of Commerce's Bureau of Industry and Security in a separate enforcement action. The bureau oversees export licenses for goods that can be used for both civilian and military purposes.

Comment by Riaz Haq on May 13, 2022 at 5:16pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

The Texas company, which had been repeatedly warned by its own lawyers that it couldn't ship rad-hard chips to Russia without a license, admitted that from 2014 to 2019, it had conspired with the three men to do just that. Reuters couldn't determine whether the chips ultimately were used for a military purpose. The U.S. attorney's office in the western district of Texas declined to comment.
In a statement, Vorago said it "is, and always has been, committed to zero tolerance compliance with all U.S. laws, including export controls." It said it "has been fully cooperative" in the U.S. investigations and "has implemented strengthened compliance procedures and training to prevent a recurrence."

The company also said it was "deliberately misled into believing that shipments were going to Bulgaria for use in Europe - a legal export. These customers provided a seemingly valid end-user certificate to Vorago certifying that the end user of Vorago's products was not in Russia

Sabirov denied any wrongdoing in an interview with Reuters and said the rad-hard chips never went from Bulgaria to Moscow, contradicting evidence gathered by U.S. prosecutors and customs records reviewed by Reuters. He said he always complied with U.S. export rules and never laundered money. "The sanctions they applied on myself, on my companies and on my friends are absolutely unfair, absolutely fake and absolutely wrong," he said.

Milan Dimitrov also denied any wrongdoing. The accusations of export violations are "nonsensical," he told Reuters. "The whole thing is a misunderstanding. "His father, Dimitar Dimitrov, couldn't be reached for comment.
Sabirov, who is in Russia, and the two Bulgarians remain fugitives in the criminal case.

A review by Reuters of U.S. court and other federal records shows that the Texas case isn't unique.
Between 2008 and 2014, a father-and-son team smuggled more than $65 million worth of sensitive microchips from New Jersey to Moscow-area companies directly associated with Russian military, intelligence and nuclear-warhead design programs, according to U.S. authorities.
Alexander Brazhnikov Jr. of New Jersey, a naturalized U.S. citizen born in Russia, pleaded guilty in federal court in 2015 to purchasing microelectronics inside the United States, repackaging and relabeling them, and then shipping the goods to Moscow apartments and vacant storefronts linked to his father, a Russian national. There were 1,923 shipments in all, and the son admitted that the money to pay for it was laundered from Russia through 50 foreign shell companies, registered in countries stretching from the Marshall Islands in the Pacific to Panama and Belize in Central America, court records show.
"We believe that the microchips were all going to the military-industrial complex because Russia doesn't produce anything else that would have required that level of chips," said Peter Gaeta, one of the prosecutors on the case, which remains open.

Comment by Riaz Haq on May 13, 2022 at 5:16pm

Special Report: How military technology reaches Russia in breach of U.S. export controls

https://www.reuters.com/world/how-military-technology-reaches-russi...

The son, whose field of study was listed as "nuclear physics" in court records, was sentenced to 70 months in prison and was released in December 2018. His father, Alexander Brazhnikov Sr., owner of a Moscow-based microelectronics import-export firm, was charged with conspiracy and remains a fugitive. The company allegedly distributed the components acquired in the United States to Russian defense contractors licensed to procure parts for the Russian military and security service, and Russian companies involved in the design of nuclear weapons.
"The scale of this case is just daunting," Gaeta told Reuters. "But this was not a lone wolf operation. This is happening across the board with Russia."
Alexander Brazhnikov Jr. declined to comment on the case. His father couldn't be reached.
In another case, Alexander Fishenko, a dual citizen of the United States and Russia, ran a years-long scheme to procure and ship sensitive microelectronics from U.S.-based companies to Russian government customers, including its military and intelligence services.
Fishenko owned a Houston, Texas-based export company and also was an executive in a Moscow-based procurement company, according to federal prosecutors. Between 2002 and 2012, his export company shipped goods through New York to contacts in countries including Finland, Canada and Germany who would send them onto Russia. Among the items were electronics with applications in radar and surveillance systems, weapons guidance systems and detonation triggers.
Fishenko and 10 other people were indicted in 2012 for participating in a conspiracy to sell controlled technology to Russia without required licenses. He later pleaded guilty to, among other charges, acting as an agent of the Russian government. Seven others were convicted either through pleas or at trial. Fishenko spent more than seven years behind bars.

New York lawyer Richard Levitt, who represented Fishenko in the case, declined to comment, and Fishenko himself couldn't be reached.
"It is common for illegal exports of controlled technology to go through middlemen overseas to hide the true destination of the goods," said Daniel Silver, a former federal prosecutor in Brooklyn who handled the Fishenko case. "These global networks can shield U.S. exporters by making it harder for law enforcement agents to connect the dots."
In recent years, Russia has tried to blunt Western export restrictions by making more parts at home or shifting to suppliers located in allied countries, such as China. Still, Russian companies remain heavily reliant on the West for high-precision machinery and some high-performance semiconductors like the radiation-hardened chips Sabirov imported.
"If a Russian satellite orbits around the Earth without a glitch, you can definitely assume that it contains Western electronics," an executive with a U.S. semiconductor maker said, asking not to be named. Russia doesn't make such chips and China, despite heavy investment, has yet to bridge the gap with rivals, the person said.

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    Hackers linked to Russian intelligence have stolen Indian military data from cyber spies believed to be working on behalf of the Pakistani state, according to an assessment by Microsoft researchers. All those involved are part of what are known as "advanced persistent threat" (APT) organizations in their respective countries.  TechTarget defines "Advanced Persistent Threat (APT)…

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    Posted by Riaz Haq on December 8, 2024 at 8:00am

    IDEAS 2024: Pakistan Defense Industry's New Drones, Missiles and Loitering Munitions

    The recently concluded IDEAS 2024, Pakistan's Biennial International Arms Expo in Karachi, featured the latest products offered by Pakistan's defense industry. These new products reflect new capabilities required by the Pakistani military for modern war-fighting to deter external enemies. The event hosted 550 exhibitors, including 340 international defense companies, as well as 350 civilian and military officials from 55 countries. 

    Pakistani defense manufacturers…

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    Posted by Riaz Haq on December 1, 2024 at 5:30pm — 3 Comments

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