Context

• Russia has recently ordered its first mobilisation since World War II to bolster its invasion of Ukraine. Military mobilisation means a nation assembles and readies military troops and supplies for war.
• Ukraine PM recently remarked that Russia has spent almost half of their weaponry arsenal and have only "four dozen" hypersonic missiles left as they are unable to replenish the military weapon stock due to sanctions and shortage of microchips.
• However, Russia being a reliable supplier for India is concerning in this scenario as Russia’s defence production capabilities will continue to decline well after the ongoing war in Ukraine ends.

Delivery delays amid chip shortage

• Hold up delivery: Russia has delayed the delivery of two Talwar-class stealth frigates for up to six months. There are also short-term delays in the supply of S-400 Triumf missile systems and spares for Kilo-class submarines, MiG-29 fighters and Kamov Mi-17 military transport helicopters.
  • These setbacks indicate a deeper problem, i.e. Russia’s inability to access semiconductor chips for defence platforms going ahead.
  • Thus there will be delays and cost overruns, with supply chains disrupted, financial systems in tatters and Russian manufacturers closing shop.
• Ukraine move: Ukraine put out an alleged shopping list of semiconductors, connectors, transformers, etc. that Russia is desperate to purchase.
• Classification: Politico, a US-based media company, gained access to a shopping list of semiconductors and components indicating the items Russia most wants and divided this list of semiconductors into three parts: Critical, Important, and Not-so-important.
  • The Critical list: It contains chips of basic complexity, such as connectors, memory chips, besides digital signal processors and Field Programmable Gate Arrays (FPGAs), which fall slightly higher in the complexity grade.
• Concerns related to Russian equipment: There are no cutting-edge chips in the list and these items can be manufactured on a large scale in most cases. This lack of complexity in Russian equipment has also surprised the US.
  • There have been claims that college students majoring in electrical engineering could reverse engineer and build most of the electronics used.
  • Also, there have been instances of Russian-guided missiles missing their mark purely due to the old versions of navigation systems.

High-tech sanctions begin to bite

• U.S. ban: Following Russian invasion of Ukraine, the US quickly banned selling semiconductors used in defence systems to Russia. The new controls target chips, encryption software, lasers, sensors, etc for Russia’s defence industry.
• Ban by other semiconductor majors: The other three pillars of the semiconductor industry, i. e. Taiwan, South Korea and Japan, also banned the export of items through the export control list provided by the US.
• Repercussions: These controls essentially mean that none of the high-end chips will be available for use by Russia. It is running low on hypersonic weapons because of the unavailability of microchips.
  • Evidence: Examination of the remnants of the missiles Russia launched on Ukraine showed the usage of older technology parts with elementary GPS systems and even chips taken out of dishwashers and refrigerators.
• Lack of indigenous infrastructure: Russia also does not have the infrastructure to manufacture these chips domestically.
  • Only two Russian companies, Angstrem-T and Mikron Group, are reported to have elementary production-grade chip manufacturing capabilities.

India’s precarious position

• Western stance: The chances are bleak that West will remove the high-tech sanctions imposed on Russia even after the end of ongoing war.
  • With these constraints to negotiate, Russia could proceed in two ways, neither of which augurs well for India which is the largest importer of Russian weaponry in the world.
• Indirect procurement: Russia could use chips from western manufacturers by indirectly sourcing them, as seen in most weapons in Ukraine and similar to armaments purchased by the Soviet Union during the Cold War, where a complex and large network of suppliers was established to circumvent sanctions.
  • There are also third-party firms sourcing chips and then directly selling them to Russia.
  • It is tough to track chips once they leave the foundry, as there may be multiple unregulated second-hand markets for them.
  • From the Indian perspective, even if Russia does continue the supplies, India has to think twice before using chips obtained from these dark markets.
• Equipment at risk owing to China engagement: The other option for Russia’s defence industry is to approach China and obtain the chips from them. This may work for Russia and be advantageous for China to have Russia in their debt.
  • However, India has to be wary of these Chinese chips entering into the defense equipment being sent to India.

Conclusion

• Regardless of Russia’s intentions, its capability to meet India’s defence needs has taken a big hit. Whatever the option Russia opts for, India must prepare for a sharp drop in Russia’s ability to deliver on defence purchase orders.
• Given the reality of Russia’s defence sector, India must diversify its weaponry in the short term and focus on local manufacturing over the long term.
• India must utilise partnerships with the US, Japan, Australia, France, and Israel to secure defence equipment and chip supplies.