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The Next Huawei? US Threatens to Inflict 'Export Control' on Russia if It Invades Ukraine (stripes.com) 119

How exactly could Russia be deterred from invading Ukraine? The U.S. government is now "threatening to use a novel export control to damage strategic Russian industries, from artificial intelligence and quantum computing to civilian aerospace," according to Stars and Stripes (an editorially-independent newspaper for the American military). The newspaper cites administration officials as its source: The administration may also decide to apply the control more broadly in a way that would potentially deprive Russian citizens of some smartphones, tablets and video game consoles, said the officials. Such moves would expand the reach of U.S. sanctions beyond financial targets to the deployment of a weapon used only once before — to nearly cripple the Chinese tech giant Huawei. The weapon, known as the foreign direct product rule, contributed to Huawei suffering its first-ever annual revenue drop, a stunning 30% last year, according to analysts.

The attraction of using the foreign direct product rule derives from the fact that virtually anything electronic these days includes semiconductors, the tiny components on which all modern technology depends, from smartphones to jets to quantum computers — and that there is hardly a semiconductor on the planet that is not made with U.S. tools or designed with U.S. software. And the administration could try to force companies in other countries to stop exporting these types of goods to Russia through this rule. "This is a slow strangulation by the U.S. government," technology analyst Dan Wang of Gavekal Dragonomics, a research firm in Shanghai, said of Huawei. The rule cut the firm's supply of needed microchips, which were made outside the United States but with U.S. software or tools.

Now officials in Washington say they are working with European and Asian allies to craft a version of the rule that would aim to stop flows of crucial components to industries for which Russian President Vladimir Putin has high ambitions, such as civil aviation, maritime and high technology.... But the effort could face head winds from American and European business interests that fear using export controls could lead to Russian retaliation in other spheres — and eventually cause foreign companies to seek to design U.S. technology out of their products. That's because the extension of the rule beyond a single company like Huawei to an entire country or entire sectors of a country is unprecedented.

"It's like a magic power — you can only use it so many times before it starts to degrade," said Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a think tank. "Other countries will say, 'Oh, man, the U.S. has total control over us. We'd better find alternatives.'"

The newspaper also spoke to Paul Triolo, chief of technology policy at a global political risk research and consulting firm called Eurasia Group. His opinion "this would be weaponizing the U.S. semiconductor supply chain against an entire country."

And in more ways than one: Targeted use of the foreign direct product rule could be a blow to Russia's military, which relies on a type of chip called Elbrus that is designed in Russia but manufactured in Taiwan at a chip foundry called TSMC, according to Kostas Tigkos, an electronics expert at Janes Group, a U.K.-based provider of defense intelligence. If the United States barred TSMC from supplying those chips to Russia, as it successfully barred TSMC from supplying Huawei, that would have a "devastating effect," Tigkos said.

In a statement, TSMC said it "complies with all applicable laws and regulations" and that it has a "rigorous export control system in place ... to ensure export control restrictions are followed."Analysts say that Western multinational firms probably would comply with the export controls. All U.S. chipmakers include clauses in their contracts requiring customers to abide by U.S. export rules.

The article also explores a scenario where businesses in China step in to supply Russia (citing estimates from the Peterson Institute for International Economics that China already builds 70% of the computers and smartphones that Russia imports).

"If Chinese firms wound up supplying Russia in violation of the rule, that would leave Washington with a major diplomatic dilemma: whether to sanction them, even if they make ordinary — not military — goods."
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The Next Huawei? US Threatens to Inflict 'Export Control' on Russia if It Invades Ukraine

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  • again (Score:5, Insightful)

    by excelsior_gr ( 969383 ) on Monday January 24, 2022 @07:55AM (#62202037)

    ...if it invades Ukraine, *again*.

    • Re:again (Score:4, Interesting)

      by rsilvergun ( 571051 ) on Monday January 24, 2022 @09:10AM (#62202263)
      I think it's more of a when at this point. The Trump administration put us in such a weak position with regards to Russia that they can easily invade the Ukraine, put up with the sanctions for a little bit while using Bitcoin and cryptocurrency to launder money and while Europe and Asia by gas under the table, and then it all blow over. I'm guessing they're waiting until winter is over both because it's easier to fight a war when it's not winter and because they'll have gotten there years worth of sales on gas. By the time the next winter comes along we'll have moved on and lifted the sanctions quietly.

      Democracy is just plain dying globally and locally. There's just too many people who no longer believe in democracy. You'd be amazed how many people I talk to you online and offline who don't believe it should be easy to vote in America. They don't understand that it's a people they don't like can't easily vote that's not a democracy, it's just oligarchy with more steps.

      Furthermore, they don't understand that those laws that make it hard to vote will be used against them if and when they disagree with the people in power.
      • Re:again (Score:5, Interesting)

        by Freischutz ( 4776131 ) on Monday January 24, 2022 @10:03AM (#62202435)

        I think it's more of a when at this point. The Trump administration put us in such a weak position with regards to Russia that they can easily invade the Ukraine, put up with the sanctions for a little bit while using Bitcoin and cryptocurrency to launder money and while Europe and Asia by gas under the table, and then it all blow over. I'm guessing they're waiting until winter is over both because it's easier to fight a war when it's not winter and because they'll have gotten there years worth of sales on gas. By the time the next winter comes along we'll have moved on and lifted the sanctions quietly. Democracy is just plain dying globally and locally. There's just too many people who no longer believe in democracy. You'd be amazed how many people I talk to you online and offline who don't believe it should be easy to vote in America. They don't understand that it's a people they don't like can't easily vote that's not a democracy, it's just oligarchy with more steps. Furthermore, they don't understand that those laws that make it hard to vote will be used against them if and when they disagree with the people in power.

        If Russia wants to overrun Ukraine they had better do it quickly. They don't have the logistical base to supply a major offensive for any length of time. Any sanctions on military critical chips and high tech components they can't build themselves is going to hit them in two places. Firstly their ability to sustain any war in the Ukraine after their munitions stockpiles run out and secondly it will devastate their arms sales since such a shortage would brick enormous amounts of military hardware they have sold to other countries. Finally there is hardly any country which would choose Russia when given the choice of trading with Russia or trading with the west and that includes China. Ukraine doesn't have to win, Ukraine just has to bog the Russians down long enough for their oversized force, driven by an undersized military logistical system and reliant on imported chips for high tech weapons to run out of ammo and supplies. Then there is the ever present danger that some helicopter landing-pad sized cap wearing Russian general with a chest covered in shiny medals sends some shells over the wrong border and drags NATO into the shooting war.

      • I don't think the Russians take the winter much into account when it comes to fighting wars (the French and the German will sadly support this claim). They're doing fine in the cold, they thank you very much. In other news, they threaten with nukes anyone that dares question their annexation of Crimea, while the US threatens to take their Playstations away if they invade Ukraine (again).

        A referendum was used to solidify the Crimean annexation. It was used to take the Brits out of the EU. I won't be surprise

        • Winter is key. Germany will freeze to death without Russian gas so there won't be any complaints from them (or NATO) when Russia invades. That's why this is happening now.

        • it's whether they've got the money stored up to handle the sanctions. They want this years oil and gas profits banked away.

          Nobody's gonna "leave the union" in the states. What they're trying to do is split California so the corporatists can get 2 more Senate Seats.
      • by AmiMoJo ( 196126 )

        Many Western democracies were weak to start with, and it didn't take much for Russia to interfere with them. The UK is just as bad, a relatively small push from Russia got us into brexit and we will probably never recover from it. Next step is the UK breaking up into separate countries again.

        The ROI for the Internet Research Agency must be incredible.

        • because we lack strong parliamentary systems. The UK has a parliament but it's kneecaped by the House of Lords and their Monarchy (who despite having no power on paper has a ton of it in practice). The US Senate, House of Lords and Monarchy need to be disbanded and replaced with more democratic institutions. I'm a capitalist, but capitalism can't survive without Democracy.
          • by AmiMoJo ( 196126 )

            It's the opposite of that, parliament has too much power. Once someone like Johnson gets in there is very little anyone can do to limit the damage.

      • The Trump administration put us in such a weak position with regards to Russia that they can easily invade the Ukraine, put up with the sanctions for a little bit while using Bitcoin and cryptocurrency to launder money and while Europe and Asia by gas under the table, and then it all blow over

        It's odd, then, that they waited for Biden to be president to possible do this.

        • Re:again (Score:4, Insightful)

          by AleRunner ( 4556245 ) on Monday January 24, 2022 @01:28PM (#62203251)

          It's odd, then, that they waited for Biden to be president to possible do this.

          Why odd? Some of the Russian connections to Trump were Democrat lies, however he was very clearly pro Putin and also pro weakening American security commitments in Europe. As long as Trump was in power it was better not to embarrass him and, after Trump attempted to blackmail Ukraine by blocking military aid [wikipedia.org], even if Trump wasn't a Russian asset, it was pretty clear to Putin that he could safely and slowly prepare for an invasion without expecting full commitment against him.

          Biden may be crap too, but he's still more likely to take action against Putin than Trump, so Putin's under clear pressure to get some profit out of it all at this stage even if that's just concessions due to diplomatic pressure.

    • *more* -- Russia has had soldiers in the Ukraine since before the 2014 White Truck invasion, and lets not forget the debacle or Russian troops in the Ukraine shooting down a passenger plane: https://en.wikipedia.org/wiki/... [wikipedia.org] . Those troops are still largely in the Ukraine.
    • This means the US is folding in Ukraine. Putin gave the US an ultimatum - Nato expansion stops here, or else. And yes, this includes a Cuban Missile Crisis element - back then it was first US missiles in Turkey, then Russian missiles in Cuba, then talks and mutual withdrawal. Now Putin is saying if the US wants to put missiles in Ukraine, it should get used to Russian missile subs just outside of US waters.

      Russia is not ok with arming Ukraine either, this is too close to Moscow for them. If shit hits the f

    • Picture this. Ukraine is a attractive and semi musculure woman that is being bent over by a thuggish Russia and about to get corn holed. Ol puti is whispering in her ear "Relax, this IS going to happen!" Trump and the republicans are all for the Russians doing anything they want and Russia has payed for the privilege. It is clear that there is allot of leverage that the Russians have amassed over the republicans and they have been towing the line for years now. Any sanctions will not hurt them much ove
    • US is such a disgusting bully.

  • by JoeyRox ( 2711699 ) on Monday January 24, 2022 @08:06AM (#62202073)
    Europe needs natural gas from Russia more than Russia needs imports from the West.
    • We Germanen very clever. Very cuul. We de funfitg pillar of Putkin. We de fourth reich!

      Nukular bad, Putler gud!

    • by AmiMoJo ( 196126 )

      How would US export controls affect Europe? Europe buys gas in Euros. One of the reasons for creating the Euro was to give Europe protection from this kind of action by the US, since paying in USD means the US has some jurisdiction.

      • How would US export controls affect Europe?

        By retaliating against USA's allies.

        Europe buys gas in Euros. One of the reasons for creating the Euro was to give Europe protection from this kind of action by the US, since paying in USD means the US has some jurisdiction.

        Doesn't matter what currency you use to buy natural gas if the producer wont sell it to you.
        • But russia is that source of gas. Threatening to not buy russian gas only hurts europe right now. We know this because russia has cut off supply as a political weapon in the past.
          • But russia is that source of gas. Threatening to not buy russian gas only hurts europe right now. We know this because russia has cut off supply as a political weapon in the past.

            I think you misunderstood. The retaliation is by Russia, not Europe, ie cutting Europe off from its natgas supply.
        • by AmiMoJo ( 196126 )

          You think Russia would retaliate against the EU for something that the US did?

          • You think Russia would retaliate against the EU for something that the US did?

            They can try, Russia would have no leverage, but they can try ....

            • They can try, Russia would have no leverage, but they can try ....

              Europe gets about a third of its natgas and oil from Russia. That's literally powerful leverage.
              • They can try, Russia would have no leverage, but they can try .... Europe gets about a third of its natgas and oil from Russia. That's literally powerful leverage.

                More like 26%, not 33% and that is extremely over hyped leverage. Funnily enough, other than war, it also seems to be Russia's only leverage. Russia can cut off gas to the EU, it would be a major irritant to the EU but it would not be a world ending cataclysm. Russia is not the only country on the planet selling gas. For Russia it would represent the loss of most of their military budget. The idea that cutting off gas sales is some kind of catastrophe for the EU is about as amusing as the Brexiteer's idea t

          • You think Russia would retaliate against the EU for something that the US did?

            One of the main differences this time which is meant to make sanctions effective is that they are being agreed by all the NATO countries. This is not just supposed to be a US action.

      • Im not sure. Its not like Russia ever had an issue using black market sources. This is a consumer threat, not a threat of components vital to state sovereignty. Is interpol really going to crack down on a few thousand Xbox Series X, purchased legally in Romania, to be smuggled into russia for sale on the black market? We arent talking aluminum tubes for uranium refining. We are talking Samsung Galaxy and Xbox/Playstation consoles. Its a weak threat IMO.
        • For these chips there are only a handful of places on Earth that can make them. A Russian consumer can buy an Iphone from the black market... in a corrupt regime like Russia everybody and their dog is trading on the black market and it is part of daily life. The Russian military wanting to buy a specialized guidance chip for their missiles... that isn't exactly something the guy bootlegging smokes which fell off a truck can supply.

          I'm not saying it is impossible. A firm in another country could order the ch
          • Maybe. But from what I can tell Russia and China are both in bed. They both just happened to develop hypersonic missiles at the exact same time rendering all missile defense obsolete. I am not a fan of coincidence. I think they are both playing a elaborate game of chess and trying to force our move so they can countermove with something we were either not expecting or something we cannot counter once we commit to an alternate action.
    • Europe should build more LNG ports, so gas can be imported from America or Qatar.

      Gas in Europe: $80 / MWh

      Gas in America: $15 / MWh

      • $15+$80 shipping. Great idea, bravo.

        • $15+$80 shipping. Great idea, bravo.

          Shipping costs for LNG, including cooling and rewarming the gas, are about $10 per MWh.

          So American gas could be delivered to Europe for about $25/MWh, which is a third of the European price.

      • by AmiMoJo ( 196126 )

        Europe should make weaning itself off gas a priority.

        • Europe should make weaning itself off gas a priority.

          Germany is still burning lignite. It will be a while before they start shutting down gas turbines.

    • Europe needs natural gas from Russia more than Russia needs imports from the West.

      So what, appeasement for economic reasons? Putin is acting like a 1930s dictator and we know where that leads.
      Give them an inch and they'll take a mile. Europe and Russia could really do with working out a way to be friends. Ideally, in the long run, Russia should be able to join the EU; it's in everybody's interest and there's lots more people in the EU who have friendly histories with Russia, however building on that needs trust and the fact that energy is clearly seen as a weapon is hardly the way to bu

    • Europe needs natural gas from Russia more than Russia needs imports from the West.

      Russia needs the revenues from gas sales to Europe. Most of that army amassed on the Ukrainian border was paid for with money from gas sales to Europe. However, Europe can afford to buy more expensive gas from sources other than Russia. They won't like it but they can afford it. In a couple of decades Europe won't need Russian gas. This scares Russia.

    • The United States could supply Europe long enough to crush Russia's economy. The real question is will the oil and gas executives allow it. On the one hand they might because of the increased cost of gas and oil on the other hand losing the profits from the sale and trade of Russia's gas might be too much for them to swallow. But as usual this will be decided by money and by people way further up the food chain then the president of the United States
    • I suspect that's why it's the US discussing export controls and not Europe.
    • It'd be kind of foolish and short sighted for Europe to choose cheap gas in the short term over preventing a restored Soviet Union in the long term though; considering how much damage Russia did to Europe the last time, how long it took to dislodge them, and how expensive it was to fix the damage Russia did... damage which is still not undone and, in the case of a certain part of Ukraine, won't be undone for literally thousands of years. It's not like we haven't seen this playbook in action already in the

  • "Targeted use of the foreign direct product rule could be a blow to Russia's military, which relies on a type of chip called Elbrus that is designed in Russia but manufactured in Taiwan at a chip foundry called TSMC.."

    "The article also explores a scenario where businesses in China step in to supply Russia.."

    So it's war with two countries then?

    • Europe/USA distracted at war with Russia would be a good time for China to invade Taiwan ... which seems to me to be getting close to World War III. China will not want to start until the winter olympics are ended in about a month's time.

      • by Anonymous Coward

        I think the risk of China invading Taiwan is fairly overstated in all honesty. Russia and China differ in a key way; much of China's military apparatus exists to keep the Chinese themselves in check, whilst the Russians are quite happy to drink Putin's Kool Aid without threat of death.

        So for China, foreign excursions are a significantly more risky proposition, and there reaches a point where they simply overextend and lose what they have. China is also on the verge of a financial crisis, and rising interest

        • "So for China, foreign excursions are a significantly more risky proposition, and there reaches a point where they simply overextend and lose what they have."

          Perhaps, China has been just as expansionist in the past. They just don't let anyone have relations with them if they talk about it. They claim the people of a place are racially chinese, they begin the slow creep in.. then when they seize control they claim to be quelling dissidents and that the territory was always part of China. They play the long g
    • The newspaper does not know what they are talking about. Military Elbrus CPUs as used in their military aircraft like the Su-57 are produced in Russia proper in 90nm process at Mikron. The Elbrus processors manufactured at TSMC in China at 16nm are used in civilian government servers like the tax revenue service. Not the military. So while this would cripple their effort to transition to Elbrus on civilian server side applications, think civilian government and private banks, it would make no difference for

      • I will also add that the sales volumes of these Elbrus chips are so small they can easily store enough chips for a couple years time with available purchase orders.

        This is not like Huawei who sold millions of devices annually. If you look at it the US sanctions had little impact on Huawei backend devices with their market share even growing slightly. It did not impact the Chinese 5G rollout at all. Precisely for this reason they have enough product in stock for years of production. What Huawei had to do was

  • This will push Russia and China to cooperate and build their own parallel semiconductor industry to avoid US sanctions and still be competitive.
    Will just fragment the market and be problematic for standardization. I see that the US clearly wants to leverage these types of sanctions in geopolitics, but the long-term effect on the industry will be 1 step forward and 2 steps back.

    • I am not an admirer of the governments of either Russia nor China but I respect their potential for dangerous reaction when the basics of their economies is vitally threatened by economic pressures that have the potentials for destructions that have the equivalence of war, If their reaction demands actual war, then it is sensible to acknowledge that neither of these countries is the equivalent of either Afghanistan or Vietnam and those two experiences teach a lesson worthwhile for education.
    • Plus it also creates a quagmire. If we flench and take action in Ukraine, china invades Taiwan, and vice versus. Russians are very good at chess. This seems like a geopolitical game of chess.
  • https://en.wikipedia.org/wiki/... [wikipedia.org]

    Notice that we don't give a shit about the sanctions imposed on us?

    Don't think for one minute that Russia will give a shit about sanctions imposed on them either.

  • by Sneftel ( 15416 ) on Monday January 24, 2022 @09:11AM (#62202267)

    "It's like a magic power — you can only use it so many times before it starts to degrade," said Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a think tank.

    Weirdest simile ever.

    "Hmm... how to describe something that degrades when repeatedly used? Surely there is nothing in our mundane physical world which matches such a description. To the eldritch grimoires!"

  • ...haven't he and his cronies largely been under sanction for the better part of a decade now?

    Clearly, it's having a CRUSHING effect.

  • by Voice of satan ( 1553177 ) on Monday January 24, 2022 @10:29AM (#62202551)

    I heard a SU-35 fighter deal between Russia and Egypt failed because the Russians were unable to manufacture the radars for lack of electronic components. And the Russians are already reacting to be less dependent on western electronics.

    Also, many EU states are very dependent on Russian gas so i don't expect them to do much. The French did the plan Messmer to avoid precisely this kind of situations but it is only France. And the Europeans are not so keen on following the U..S on sanctions. That why they sometimes develop ITAR free aerospace products. The ITAR are a set of rules restricting the use and exportation of US made components.

  • Big Daddy is not as big as he thinks he is. All these sanction plans will fail, just as they did with previous Russian invasions. Ukraine is toast. Time to move on and work on letting green theology destroy the rest of the world.

  • Russia is a nuclear armed state. Ukraine used to be, but we made them give up nukes back in 1994. Good lesson for other countries to hodl nukes. Every option the west has involves risk of all-out nuclear war. To me it seems the only solution against any nuclear armed state is special operations to topple the government without triggering nuclear war which is extremely tricky. I mean with any sufficiently mad leader (not Putin, I think), even economic sanctions may be a trigger.


  • I'm reminded of "Team America: World Police" where Hans Blix meets Kim Jong Il:

    Hans Blix:  "...or else.

    Kim Jong Il: Or else what?

    Hans Blix: Or else we will be very angry with you... and we will write you a letter, telling you how angry we are.”

  • The Foreign Direct Product Rule could be used to force internet providers to choose between providing routes to the U.S. or to Russia. Cutting Russia off from the internet would also have the benefit of cutting Russia's cyber criminals off from the internet. (At least the ones not wintering outside of Russia)
  • and that there is hardly a semiconductor on the planet that is not made with U.S. tools or designed with U.S. software.

    In the world where the world free market economy is threatened by China's state capitalism pretending to be a "free market economy", this is a rare glimpse of good news.

    • So you believe China will respect US IP and play by the rules? We have outsourced everything. China has physical access to all of our tech, they just do not have legal access to use it as they see fit. They can quietly make chips for Russia and sell them at a large profit while pretending to support the sanctions to drive up the prices of these very same chips.

Keep up the good work! But please don't ask me to help.

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