U.S. reports decline in illicit microchip shipments to Russia through Hong Kong
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Illicit shipments of microelectronics to Russia via Hong Kong and China have decreased by a fifth this year, according to data from the U.S. Department of Commerce, Reuters reported on July 21.
Despite this reduction, Hong Kong remains a "global sanctions evasion hotspot."
From January to May 2024, the supply of Common High Priority Items (CHPL) goods—components that can be used for Russia’s military needs—through Hong Kong decreased by 28%. The transit trade in chips from Russia through mainland China, excluding Hong Kong, decreased by 19%.
"I think there's some cause for being at least optimistic that we have been able to slow down some of this trade," a U.S. Commerce Department official said. However, they added that "China is still our number one concern.”
The U.S. government views Hong Kong and China as key outlets for Russia's purchases of materials for the military industry, including semiconductors and drone parts. The reduction in supplies is attributed to sanctions and interactions with companies whose products are sold to Russia.
"We are talking to any company whose items are showing up on the battlefield," the official said.
In response to a Reuters inquiry, the Hong Kong government stated that it "does not implement, nor do we have the legal authority to take action on, unilateral sanctions imposed by other countries."
A report by The Committee for Freedom in Hong Kong Foundation (CFHK) revealed that between August and December 2023, $750 million worth of CHPL goods were shipped through Hong Kong. These shipments included high-performance chips from Nvidia and France's Vectrawave to low-cost chips from Texas Instruments and Intel. According to the CFHK, some of these banned goods were sent to Russian firms under sanctions.
Nvidia told Reuters that it stopped selling to Russia in March 2022 and requires its customers to comply with all applicable U.S. laws. Other companies mentioned in the report also declared compliance with the sanctions and said they require their distributors to meet the same standards.
China's help in Russia's circumventing Western sanctions
British Defense Secretary Grant Shapps accused China on May 22 of providing or preparing to provide Russia with "lethal aid" for use in the war against Ukraine. On May 23, the Chinese Foreign Ministry denied Shapps' claims in response.
Reuters reported, citing its own sources, on June 21 that Russian dictator Vladimir Putin's visit to China last year helped provide Russia with payment alternatives to circumvent American sanctions.
U.S. Ambassador to NATO Julianne Smith said on July 2 that China continues to supply Russia with dual-use goods and thus fuels Russia's war against Ukraine.
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