Why it matters: The sanctions process is broken or at least highly inefficient because Russia has managed to import many advanced goods to fuel its war machine in Ukraine. The complexity of global supply chains also doesn't help, as enforcers find it impossible to trace from where a chip originated. Meanwhile, chip manufacturers say they are adhering to the law.

Despite sanctions and export controls put in place to prevent Russian President Vladimir Putin from obtaining technology from the West that would help advance the war in Ukraine, the country still managed to import more than $1.7 billion of advanced US and European chips last year, according to classified Russian customs service data shown to Bloomberg.

The data indicated that in the first nine months of 2023, more than half of the imported semiconductors and integrated circuits were brands like Intel, AMD, Analog Devices, Infineon Technologies, STMicroelectronics, and NXP Semiconductors, to name a few. The data didn't show which companies or entities exported the technologies to Russia. It also lacked any other identifying information, such as the point of departure or the date of manufacture.

Russia's ability to obtain chips is an indictment of the inefficiency of the global sanction process. It illustrates the complexity of global supply chains, particularly for chips, which go through distributors with multiple resellers.

Also, many of these chips made their way into Russia via re-exports from third-party countries such as China, Turkey, and the United Arab Emirates. The US and EU have been trying unsuccessfully to block these passageways, especially re-exports of dual-use and advanced goods that are fueling the Russian war machine in the Ukraine.

Unnamed chip manufacturers claim they have adhered to the sanctions and have rigorous processes to ensure compliance. Bloomberg notes that there's no suggestion the companies breached international laws.

Bloomberg notes that the customs values have dipped slightly in the latter half of last year, indicating efforts by the US, EU, and Group of Seven allies to enforce sanctions on Russia became more successful. Still, Russia has become adept at evading sanctions and export controls by the West.

Late last year, Russia managed to overcome sanctions and export controls to expand its missile production beyond prewar levels. Anonymous American officials told The New York Times that Russia was running illicit networks of smugglers through its intelligence services and Ministry of Defense to export critical components to other countries from which they can be shipped to Russia more easily.