Putin's Miscalculation: How Sanctions are Sabotaging Russia's Electronics Industry

The war in Ukraine continues without any sign of slowing down, and while Putin may have thought that he had the upper hand following the Crimea annexation, the countless sanctions against Russia are having a significant effect on its ability to manufacture electronic products, including a microchip shortage that affects tank warfare. What challenges is Russia facing, why has Putin introduced a new fund, and what will be the consequences for Russia in the long term?

What challenges is Russia facing?

Since the founding of the Soviets, Russia has always been somewhat of an outsider to the rest of the world. Of course, Russia has provided immense contributions to the scientific and engineering community, especially in the fields of physics and mathematics. At the same time, Russia was a critical component in the Allied victory against Germany during WW2, a war that saw untold amounts of devastation. But the many years of isolation during the communist era, the bizarre political situation with the continual rule of Putin, and the numerous Russian oligarchs have made Russia an uncomfortable country to deal with.

In the case of Europe, some believed the answer to Russia was to introduce closer ties by creating bipartisan dependency, in other words, relying on Russian energy so that Russia could rely on products from the West. In the case of the US, Russia has always been kept at arm’s length, and involvement between the two has been minimal. Either way, it seemed for a long time that this was working; Russia’s economy grew, education improved, and the country was rapidly modernising.

Impact of Sanctions on Russia's Military Technologies

But then, in 2014, Russia decided to annex Crimea from Ukraine, which was a moderate backlash from the rest of the world. However, the resulting sanctions had minimal impact on Russia’s capabilities, and the inability of Ukraine to take back Crimea demonstrated to Russia that the rest of the world was weak. Thus, in 2022, Russia decided to do the unthinkable and decided to outright invade Ukraine with the purpose of taking over the nation (despite what Putin said, this is a war and not a special operation).

However, Putin seriously underestimated the West’s resolve, and countless sanctions were introduced, which limited Russia’s economy, and ability to trade with other countries and even export its own energy. Furthermore, the complete incompetency of the Russian army combined with massive amounts of military spending is seeing Russia facing some serious financial struggles.

And, of course, the lack of access to modern electronics (such as semiconductors) has outright prevented Russia from developing new military technologies. In fact, the situation has become so dire in Russia that tanks from the second world war are being pulled out of storage and sent to the front lines. Considering that modern armed forces are heavily dependent on encrypted communication channels, GPS, real-time data processing, and detection systems, having restricted access to semiconductors will, over time, have a massive impact on Russia’s ability to fight Ukraine. 

One excellent piece of evidence that shows Russia’s struggles is the large amount of commercial-grade electronics being found in Russian military equipment. While there are those that have complained about Western devices ending up in Russian systems, the truth is that the Russian military is likely using underground connections with companies to get access to key semiconductors, and it is not the fault of Western companies. At the same time, the use of commercial-grade equipment in military applications provides a benefit to Ukraine as such devices cannot be relied upon to the same degree as military-grade components. Thus, the reliability of Russian equipment will now be seriously affected. 

Putin introduces new fund to help secure semiconductors and drones

The war in Ukraine has taught the world many things, including that Russia has the second-best army in Ukraine, not the world, but also the importance of technology in war. For example, drones have played a massive role in identifying targets for artillery systems, as well as attacking key targets such as personnel, vehicles, and ammo stockpiles. 

Recognising the importance of semiconductors and drones, Putin has recently announced a new fund that will encourage the technological development of semiconductors and drones in Russia. The total fund will provide 6.4 billion rubles (approximately $80 million) and will help projects working in unmanned aviation, microelectronics, robotics, wireless communication, and cargo delivery, all of which have been essential in Ukraine. 

The project that is launching the fund, the National Technology Initiative, has already invested around $215 million on 60 projects which have included 3D printing, drones, and crewless navigation. However, while the fund may help to develop new technologies, the continuing sanctions will make it difficult for prototypes to make it into production. 

What are the consequences for Russia in the long term?

Unless a Russian coup removes Putin from power and immediately pulls out from Ukraine, the ongoing war will have devastating long-term impacts on Russia. 

Firstly, the continuation of the war will only make Russia more of a pariah, and countries will be less like to work with Russia on new projects, provide funding, or share research. In fact, China, who could have been argued as being Russia’s closest ally, has been hesitant to provide equipment to Russia. 

Secondly, the ongoing war will keep Russia back on semiconductors as the rest of the world brings in more sanctions. However, even if China develops advanced semiconductors, it may not be comfortable sharing these devices with Russia. As Russia can only rely on Iran and North Korea after China, it is unlikely that Russia will ever be able to catch up to the West from a technological point of view.

Thirdly, the inability to access the latest technology will see the military capabilities of Russia falter. Basic military systems such as dumb artillery can easily be developed (shells that don’t use GPS guidance or are programable), but these alone are unsuitable for proper defence against a modern military. As such, Russia would be at serious risk of invasion from neighbouring countries, such as Georgia, who have expressed interest in taking back lands illegally annexed by Russia.  

Overall, Putin’s decision to invade Ukraine has massively crippled Russia. If Russia fails to get access to the latest semiconductor devices, then not only will its technological capabilities shrink, but so will its ability to develop new technologies, defend itself, and even survive as an independent nation.