Daily Times

US sanctions targeting Russia’s nascent high tech industry have caused a Russian microchip company significant financial woes and delayed the launch of an initiative meant to produce substitutes for Western products, the firm’s owner said.

President Vladimir Putin has stressed the need to develop Russia’s domestic tech industry to make it less dependent on Western equipment. But Moscow’s efforts to manufacture Russian microchips and other high tech products have been thwarted by US sanctions against a string of Russian tech companies.

Angstrem-T, which makes semi-conductors, has accumulated significant debts and is set to be taken over by state development bank VEB after failing to reimburse an 815-million-euro ($944.75 million) loan dating back to 2008, said Leonid Reiman, chairman of the company’s board of directors.

Reiman, Russia’s former minister of communications and information technologies, said the company’s inability to reimburse its debt was in part tied to US restrictions on the import of dual-use technologies and its addition to US Treasury sanctions in 2016.

The US moves were prompted by Russia’s annexation of Ukraine’s Crimean peninsula in 2014 and its support for separatist rebels in eastern Ukraine. It has imposed further sanctions against Russia since 2016 over other issues.

Prior to the sanctions Angstrem-T purchased most of its equipment from US multinational firm Advanced Micro Devices and bought a license from IBM to produce chips.

The company is heavily reliant on US products, but the sanctions now bar it from doing business with US firms.

“Although we initially received the (US) State Department’s consent for this project and the delivery of the technology here, the sanctions caused the deadlines for its completion to be drawn out,” Reiman told Reuters.

“The factory is working, the products are being produced, but the question of procurement remains.”

VEB, which Reiman said could become the majority owner of Angstrem-T by the end of the year, declined to comment.

When Angstrem-T began producing its first chips in 2016 after nearly a decade of false starts and delays, Prime Minister Dmitry Medvedev depicted the initiative as a way Russia could surmount already existing US sanctions.

Published in Daily Times, October 18^th 2018.