China cuts shipments to Russia of smartphones, laptops and other tech

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Chinese tech exports to Russia fell in March after U.S. sanctions took effect, U.S. Commerce Secretary Gina Raimundo said on Tuesday, calling it a sign of Beijing’s distrust of the violation. trade bans.

Chinese laptop shipments to Russia fell 40% in March from February, while smartphone exports fell by two-thirds, she said, citing the most recent Chinese trade data available. . Exports of telecommunications network equipment fell 98%, she added.

China’s willingness to help Russia resist sanctions is an open question for Western policymakers. The export figures, which were previously reported by The Wall Street Journal, suggest that Beijing was at least initially reluctant to break the rules, perhaps for fear of US retaliation, which could involve restricting tech sales to companies. Chinese.

Sanctions on Russia require companies around the world to abide by the ban if they use US manufacturing equipment or software to produce computer chips, also known as semiconductors. Most chip factories around the world, including those in China, use software or equipment designed in the United States, analysts said.

“I’m often asked, you know, are these export controls working? And I think the answer is an absolute, unqualified yes,” Raimondo said. “I think they work because we have such a strong coalition of countries around the world participating in the app.”

Computer chip industry begins to suspend shipments to Russia in response to US sanctions

The United States and 37 other countries designed the trade restrictions to cripple Russia’s military and high-tech economy after the country invaded Ukraine. The rules prohibit the sale of computer chips, telecommunications equipment, lasers, avionics and maritime technology to many Russian buyers.

There are signs that the restrictions are also undermining Russia’s ability to manufacture at least some military equipment. Raimondo told a Senate committee last week that Ukrainian officials reported finding computer chips intended for home appliances in Russian military equipment. Raimondo’s spokeswoman later clarified that the makeshift chips were found in reservoirs.

Douglas Fuller, a semiconductor expert at City University of Hong Kong, said it was less strange than it sounds. A type of semiconductor known as a microcontroller is used to control various functions in appliances and motor vehicles, he said. Since tanks are essentially armored vehicles, the chips could likely be used to control the same functions they perform in cars, such as braking and steering, he said.

US officials say the export bans were not meant to stop the flow of consumer goods to Russia. But trade lawyers say some companies have stopped shipping electronics to Russia, whether or not individual items violate the rules.

“Many companies simply stop exporting to Russia. Period,” said Kevin Wolf, a former senior trade executive who is now a partner at Akin Gump Strauss Hauer & Feld.

This differs from the approach of Western tech companies to an earlier US rule banning tech exports to Huawei, the Chinese telecommunications maker, which the US has accused of threatening US national security. . In that case, computer chip makers and other companies asked their lawyers to dig into the rules to determine what sales were still allowed.

“Invading a foreign country and killing people obviously has more impact on a company’s political decisions than what [in Huawei’s case] has been described as a broad national security threat,” Wolf said.

More money was likely at stake in sales to Huawei than in sales to all of Russia for some technology exporters, he added.

Various major tech companies – in the United States, South Korea and even China – have said they will stop sales or suspend operations in Russia during the war.

China’s DJI, the world’s largest maker of commercial drones, said in April it was suspending operations in Ukraine and Russia, becoming the first major Chinese company to openly exit markets over a war the government Chinese refused to convict.

Apple announced in March that it was suspending all product sales in Russia. A few days later, Samsung also suspended all product sales, including smartphones and computer chips.

Apple, Samsung and China’s Xiaomi were the top three smartphone makers in Russia in the first quarter, in terms of shipments, according to the latest figures from International Data Corporation (IDC).

Xiaomi did not immediately respond to a request for comment on its sales to Russian buyers.

Even if some tech companies no longer sell directly to Russia, their products could still get there via the gray market, said Nabila Popal, research director for the global device market at IDC.

“Savvy traders will find a way to get them in,” she said.

Exports to Russia from various countries have fallen sharply, Raimondo said. US shipments in technology categories subject to export controls fell 86%. South Korea’s exports to Russia fell by 62% and Finland’s by 60%, she said.

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