“Everything is gone”: Russian business hit hard by tech sanctions

Russian companies have been plunged into a technological crisis by Western sanctions that have created severe shortages of electrical equipment and hardware needed to power the nation's data centers.

After the US, UK, and Europe imposed export controls on products using chips made or designed in the US or Europe, most of the world's largest chip manufacturers stopped business to Russia.

There is a shortfall in the type of chips that are used in the production of cars, household appliances, and military equipment. More advanced Semiconductor used in cutting-edge consumer electronics and IT hardware has been severely constrained.

The ability to import foreign tech and equipment containing these chips has been severely hampered.

One Western chip executive said that everything is gone.

Russia is being forced into a structural transformation of its economy as a result of the Western sanctions against it.

Russia's gross domestic product is expected to contract by as much as 15 percent this year because of the country's inability to export much of its raw materials.

Some of the most severe and lasting effects on Russia's economy will be caused by the export controls on dual use technology. Russia's largest bank, Sberbank, will struggle to expand their data center services due to the unavailability of 5G equipment.

Russia consumes less than 1 percent of the world's chips. Technology-specific sanctions have had a less immediate impact on the country than similar export controls had on China.

Russian groups have relied on imports from foreign manufacturers such as SMIC in China, Intel in the US, and Infineon in Germany, in order to produce their chips. Foundries in Taiwan and Europe have been used for the production of the chips designed by the two companies.