Russian CPU, encountering huge obstacles

Leading CPU makers AMD and Intel left the Russian market in late February after Russia invaded Ukraine, and it's not easy for Russian PC makers to get the chips they need.

There are several Russian companies that design their own processors, but these chips are made by TSMC, which no longer allows exports to Russia. Therefore, the country cannot replace foreign CPUs with its own, according to the Kommersant business daily.

Russian PC and server manufacturers reportedly delivered only 15,000 PCs and 8,000 servers this year based on the Elbrus and Baikal processors designed in Russia and manufactured in Taiwan, according to the Ministry of Digital Development, Communications and Mass Media. 

"If the batches of Russian processors Elbrus, Baikals ordered and produced can be shipped, we will have more [PCs and servers based on Russian CPUs] this year," said Maksut Shadayev, head of the department. "Intellectual property rights and all documents are It's Russian, but there are no production facilities in Russia that can produce these CPUs, which is why production is ordered in other countries." 

Russia's most advanced fabs can produce chips at the 90nm node, while MCST's most advanced CPUs are manufactured by TSMC on its 16nm manufacturing process. 

Major Taiwanese companies were among the first to halt cooperation with Russia after Russia launched war against Ukraine months ago, as the United States, Britain and the European Union imposed restrictions on Russian high-tech exports.  

In June, Taiwan's Ministry of Economic Affairs (MOEA) officially issued a list of high-tech products that are prohibited from being exported to Russia and Belarus to prevent these countries from using advanced technologies for military purposes. In particular, Taiwanese authorities prohibit the export of processors with performance exceeding 5 GFLOPS, operating at 25 MHz or higher, having external interconnects with data transfer rates of 2.5 MB/s or higher, and/or having wider ALUs exceeding 32 Bit. Essentially, Taiwan is not allowed to export advanced processors to Russia, so TSMC is unable to ship chips produced for the country. TSMC is not the only company unable or unwilling to ship chips to Russia.

"Foreign manufacturers that produce processors based on the blueprints of Russian developers refuse to fulfill orders in 2022, including shipping already produced chips," Shadayev said.

T-Platforms, a Russian company that had plans to build an Exascale supercomputer and domestically produced CPUs, declared bankruptcy this week because the company's assets cost less than its debt. T-Platforms is one of the few companies in Russia that can build world-class high-performance supercomputers. The main reason for the bankruptcy was not sanctions from Western countries, but Russia's attempt to replace Western technology with its own.

T-Platforms was founded in 2002 to build servers and supercomputers that could compete with products from the likes of IBM and HP. Over the years, T-Platforms has developed some of Russia's highest-performance supercomputers based on AMD Opteron, Intel Xeon and Nvidia Tesla processors. For example, the company's Lomonosov supercomputer, based on 33,072 CPUs, is rated the 18th most powerful machine in the world and the 3rd most powerful supercomputer in Europe.

Eventually, the company expanded beyond Russia and opened offices in Hannover, Germany; Hong Kong, China; and Taipei, Taiwan. However, the company ran into trouble with the U.S. Department of Commerce in early 2013, which accused T-Platforms of violating U.S. national security by selling supercomputers to military end users and nuclear research. As a result, T-Platforms was removed from the DoC's Entity List in late 2013 and early 2014.

But after Russia invaded Crimea in 2014 and faced the first round of sanctions, the government launched plans to develop microprocessors and other chips in the country to replace x86 products from AMD and Intel. Baikal Microelectronics is a subsidiary of T-Platforms founded in 2012 to create Arm-based systems-on-chip for PCs in government agencies.

Baikal Microelectronics received government subsidies to speed up the development of its own processors and servers. However, while Baikal Microelectronics has successfully designed several Arm- and MIPS-based processors, and T-Platforms has begun selling some of its new servers in Russia, they have failed to deliver their products on time. As a result, the Russian Trade Ministry prosecuted Baikal in 2019. Meanwhile, the CEO of T-Platforms was arrested in March 2019 after his company failed to deliver around 9,000 Baikal-based PCs to the Ministry of Home Affairs. Since then, the company has begun laying off people and closing its operations.

Ultimately, T-Platforms had to sell its 60% stake in Lake Baikal to Varton in October 2020, CNews reported. The company filed for bankruptcy in October 2021. In December 2021, the Moscow arbitration decided to introduce an external monitoring procedure for T-Platforms. Former T-Platforms CEO Vsevolod Opanasenko, who faces ten years in prison, plans to file for bankruptcy himself. Some media reported that he once controlled 75% of T-Platforms, while the remaining shares belonged to the Russian government.

Currently, the websites of T-Platforms and Baikal Microelectronics have ceased operations.

In April, the United States imposed sanctions on a range of Russian technology companies, including the country's largest chipmaker, in the latest punitive move against Vladimir Putin for his offensive in Ukraine.

The U.S. Treasury Department said the sanctions target network and technology companies that "helped" Russia invade Ukraine.

Mikron, Russia's largest microelectronics manufacturer and exporter, is one of 21 entities and 13 individuals included in the sanctions list, which also includes blocking any property in the United States.

"Russia's unprovoked aggression not only continues to violate Ukraine's sovereignty but also escalates attacks on civilians and population centers," U.S. Treasury Secretary Janet Yellen said.

"We will continue to sanction Russia from every angle until this senseless war of choice is over," she added.

Software and communications technology company AO NII-Vektor, hardware company T-Platforms and the Molecular Electronics Research Institute (MERI), which works for the Russian government, were also added to the sanctions list, the Treasury said.

As a result of the sanctions, all U.S. properties of targeted individuals and companies are blocked and must be reported to the U.S. government.

Penalties also target Moscow-based OOO Serniya Engineering, which the Treasury said is at the center of a network aimed at evading sanctions by hiding "critical Western technology" from end users, such as Russian intelligence and military agencies.

After TSMC and Samsung cut off supply of high-end chips to Russia, semiconductor chips used by Russia’s advanced weapons, national defense, aerospace and maritime industries, and AI have all been cut off. Can China help Putin? Tom Rafferty, Asia regional director of the Economist Intelligence Unit, believes that South Korea and Taiwan have almost monopolized the production of these semiconductors, and Russia simply cannot find alternative suppliers. American think tanks even bluntly stated that China, as a strategic partner of Russia, has no help because its chip manufacturers are unable to mass-produce cutting-edge chips due to backward technology.

The Wall Street Journal reported that the United States has banned the sale of high-tech products to Russia and its ally Belarus, including semiconductors and telecommunications systems used in the defense, aerospace and maritime industries. The ban also extends to certain foreign products produced using U.S. equipment, software or blueprints.

South Korea and Taiwan, which mainly produce high-end chips, and Japan, which is a strong country in chip manufacturing materials and tools, also prohibit the export of items included in the export control list of the United States. This is tantamount to cutting off Russia's access to many high-end chips and the materials and parts needed to re-produce such products locally.

Western semiconductor industry executives who have studied the current situation of the Russian semiconductor industry believe that Russia's chip manufacturing technology lags behind industry leader TSMC by more than 15 years. Currently, Mikron Group is Russia's leading chip manufacturer, and the company has stated that it is the only local company capable of achieving mass production of semiconductors using the 65-nanometer process. You know, 65nm has been introduced into the chip industry for mass production around 2006. Mikron has not yet commented.

Moreover, some cutting-edge chips designed in Russia are also assembled by TSMC. Russia may be unable to obtain some of these chips, although it is unclear whether they will be subject to sanctions.

Baikal microprocessors are widely used in many Russian-made computers and servers. Russia's Baikal Electronics JSC, which designed the chip, said it was manufactured by TSMC. Documents from the Russian company Moscow Center of SPARC Technologies (MCST) show that some of its latest Elbrus microprocessors are also planned to be produced by TSMC. TSMC declined to comment. Baikal Electronics and MCST have yet to comment.

Currently, Russia still relies heavily on foreign technology to design chips, and its own chip production capabilities are limited. The United Nations Commodity Trade Statistics database shows that in 2020, Russia imported approximately $440 million worth of semiconductor equipment, including components such as diodes and transistors, and approximately $1.25 billion worth of electronic integrated circuits, or "chips."

Although most of these imported products come from Asian countries that have not imposed sanctions on Russia, Russia is still far behind in terms of high-end chips or domestic chips. Taiwan produces most of the world's cutting-edge semiconductors, with the rest produced in South Korea, according to the Semiconductor Industry Association, a Washington-based trade group. South Korea also dominates memory chips, while Japan is home to semiconductor materials and manufacturing tools. Both materials and tools are critical to chip manufacturing.