AMD and Intel reportedly are suspending processor shipments for industrial use to Russia

Intel Core i9-11900K reviewSource: Harish Jonnalagadda / Windows Central

A new report from RBC claims Intel and AMD have “verbally informed Russian manufacturers” that both companies are complying with a ban on the supply of processors to Russia in response to its invasion of Ukraine. That ban on technology and exports is set to take effect on March 3, although reports by RBC suggest Intel and AMD have already halted supplies.

Additionally, according to RBC, partners in China have been informed by Intel’s local office about the ban on the supply of processors to Russia.

The information aligns with recent sanctions imposed by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC). For its reporting, RBC relied on two sources in the IT market but further confirmed the news with a “representative of the Association of Russian Developers and Electronics Manufacturers (ARPE).”

An Intel spokesperson in Russia did respond to RBC and stated “the company is closely monitoring the situation and ensuring compliance with applicable sanctions and export control regulations, including new sanctions imposed by OFAC and rules issued by the BIS.” BIS is the Bureau of Industry and Security under the US Department of Commerce.

However, if accurate, it’s important to note that Intel and AMD’s ban of chip shipments to Russia does not involve “consumer communication devices,” including personal computers, mobile phones, digital cameras, and more. Instead, the ban on importation and sale of processors only applies to industrial usage by either private companies, government entities, or those expressly sanctioned by the US government “including the president, prime minister, deputy prime ministers, federal ministers, state duma deputies and members of the Federation Council, editors-in-chief and deputy editors-in-chief of state media. “

The ban could significantly hurt Russia’s economy in the long run as companies won’t be able to upgrade, replace, or expand server usage for cloud computing and data storage. The same applies to the use of “supercomputers” for heavy data processing. Exceptions could be made if companies apply for and are approved for export licenses, but that process could drag on for months or longer.

Interestingly, Russia has a growing processor business of its own, including the MCST Elbrus-8C server CPU. Still, it has been panned by critics as “very weak” compared to Intel’s Xeon ‘Cascade Lake’ processor. Moreover, like many microprocessor companies, the Moscow Center of SPARC Technologies (MCST) does not make chips but instead only designs them. Taiwan’s TSMC is the manufacturer of the Elbrus, and in a Reuters report, TSMC noted it would comply with new export control rules on Russia, jeopardizing that backup plan. However, as of now, the chip foundry has not officially told Russian authorities that it will block the production of Russian processors.

If the ban takes effect, it remains to be seen what other routes Russia could take to procure processors. Going through China seems the most apparent path, especially since both countries have a close strategic alliance. Nonetheless, even going through backchannels and leveraging re-export maneuvers, prices for such components could rise by 30% for Russian companies to obtain such technology, according to RBC.

Questions also remain on the distinction between consumer and industrial use of devices, including pre-assembled computers, and how US companies will navigate the sanctions.

NVIDIA, one of the world’s largest and most significant suppliers of GPUs for services, AI, and industrial use, has so far not commented on the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) ‘s new rules. Similar calls for Microsoft to ban the export of software to Russia have also been made, although the company has had no comment thus far.

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