Shipments of high-end chips and other electronics to Russia via China and Hong Kong said to fall by 20 percent after aggressive enforcement

Restricted semiconductors and other electronics shipped through mainland China and Hong Kong to reach Russia for its war against Ukraine fell by one-fifth this year, according to US Commerce Department figures, but US officials see both jurisdictions as key global nodes for Russia to source restricted high-tech parts for its military, Reuters reported.

Transshipments of restricted microelectronics through Hong Kong fell 28 percent from January to May, while transshipments through China fell 19 percent, an unnamed US Commerce Department official said.

The parts include semiconductors and other parts restricted by the US and the EU as likely to be used by Russia for the Ukraine war.

The official said there was “some cause for being at least optimistic” that enforcers had been able to “slow down some of this trade” but added that China was “still our number one concern”.

High-tech transshipments

The person said US authorities had aggressively enforced sanctions against Russia and had engaged with the companies whose products were transshipped.

“We are talking to any company whose items are showing up on the battlefield,” the official said.

The Hong Kong government said it “does not implement, nor do we have the legal authority to take action on, unilateral sanctions imposed by other countries” but said it was “enforcing vigorously” sanctions imposed by the United Nations Security Council including those regarding North Korea.

The US Treasury has sanctioned companies accused of having links to Russia’s military, including shell companies in Hong Kong that diverted semiconductors.

A separate customs dataset from Washington, DC-based global security non-profit C4ADS found more than 200 Hong Kong-registered firms shipped nearly $2bn of goods to Russian buyers from August to December 2023, including $750m of restricted items.

The electronics in the C4ADS data include Nvidia “Jetson TX2” Edge AI systems, which are components used in drones that the Ukraine government has discovered on the battlefield.

Radar chips

Nvidia said pre-owned Jetson parts are available through second-hand channels.

“Although we cannot track products after they are sold, if we determine that any customer is violating US export controls, we will take appropriate action,” the company said in a statement.

Another consignment included two shipments worth $1 million (£770,000) each of chips from France’s Vectrawave that were labelled as microprocessors.

Vectrawave makes specialised chips for communications and defence systems including radar.

Align Trading, the consigner for the Vectrawave chips, had an address in a Hong Kong industrial area near the Kwai Chung container port that was a mouldy room stacked with hundreds of Hong Kong companies registry letters, Reuters found.

The consigner for a shipment of Nvidia parts to Russia, Malachor Electronics, had a secretarial address in a plush office building in Hong Kong’s central business district, but its director had a UK listed address and could not be reached, the report said.