Russian microchip smuggling ring exposed after decades

A sophisticated Russian smuggling network which acquired electronic chips and other sensitive Western technologies intended for Moscow’s defense industry were exposed after operating for decades.

According to a recent Financial Times report, the smuggling network was centered around Maxim Ermakov, a Russian businessman recently sanctioned by the United States and the United Kingdom. Although he has no public ties to Russian defense companies, leaked documents show that Ermakov claimed to work for Istok, a state-owned manufacturer of electronic warfare systems for the Russian military.

The Financial Times reported that Ermakov used many countries’ systems to access restricted microchips.

Ermakov used a complex network of shell companies in countries including Ireland, France and the United Arab Emirates to acquire restricted microchips from companies like Ommic, a struggling French manufacturer. The microchips, which have both civilian and military uses, were smuggled into Russia via elaborate routes designed to conceal the end user and circumvent export controls.

Former Ommic director Marc Rocchi relied heavily on Ermakov’s business to keep the company afloat, even though he knew the microchips were intended for the Russian defense industry. Rocchi is now awaiting trial in France on charges related to the smuggling scheme. Ommic has since closed its doors after French authorities seized the company’s shares.

Smuggling ring used extensive network to circumvent restrictions

Russian intelligence agencies have long used networks like Ermakov’s to circumvent restrictions on acquiring Western technology, export control experts say. Although parts of his network have been sanctioned, Ermakov continues to operate and has recently imported materials useful for manufacturing microchips into Russia through new front companies.

The investigation highlights the ongoing challenge of preventing Russia from acquiring sensitive Western technology, even as export controls tighten. Analysts say new fronts quickly emerge when existing networks are disrupted. With microchips essential to Russian electronic warfare, smuggling will likely persist regardless of sanctions.

Featured image credit: Photo by Ferid Faiqoglu; Pixels; THANKS!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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