Russian Missiles, American Chips

On the morning of Aug. 19, 2023, Olha Holynska boarded a train in Kyiv with her 6-year-old daughter, Sofiya, to travel to Chernihiv, an ancient city in northern Ukraine. Almost 18 months had passed since Russia launched its full-scale invasion of Ukraine, and the war in the east continued to rage, but Chernihiv hadn’t seen any fighting for more than a year. The city and its 300,000 residents had been living in relative peace.

Holynska, 37, had friends and relatives in the city, known for its golden-dome churches and flower-filled parks. It was a hot, sunny day, and Chernihiv was busy with people out to celebrate the Feast of the Transfiguration, an Orthodox holiday when worshippers take baskets of apples and honey to churches to be consecrated. Holynska, who works for Ukraine’s Ministry of Justice, had arranged to meet her friend Yulia and her 3-year-old twin girls.

The train arrived at 11:04 a.m., and Holynska and Sofiya piled into Yulia’s car. Sofiya was a bundle of energy, wanting to go places, do things. A month earlier, while visiting the town of Lviv, she’d gotten up in front of a crowd in the main square to sing, solo, the Ukrainian national anthem. A fan of the Ukrainian version of MasterChef, she liked to be filmed cooking. One of her favorite rituals was going to a cafe and ordering a cappuccino for her mother and foamed milk with marshmallows for herself.

In Chernihiv, the girls ran into a park near the town square and climbed onto an empty wooden stage, a frequent venue for children’s performances. At 11:19 a.m., an air raid siren sounded, warning that there might be incoming drones or missiles. Holynska didn’t hear the alert, and many locals in the park either didn’t notice it or assumed it was another false alarm set off by Russian forces attacking border towns 50 miles away.

On the stage, Sofiya and the twins were playing with beaded bracelets, which kept falling off their small wrists. Suddenly, there was a rumble. Holynska looked up to see a missile soaring above the treetops. Moments later, at 11:28 a.m., it exploded above a white-stone theater on one side of the square where dozens of people involved in the production of military drones were holding a conference.

The explosion unleashed a ball of fire that caused trees to bend and hurled thousands of half-inch cubes of metal through the air. The roof of the theater was blown off, but the building remained intact, and no one inside was killed because everyone had scrambled into a bomb shelter.

About 500 feet from the theater, Holynska felt a blast of heat. The explosion lifted the stage into the air and onto her left foot, trapping her. She saw her daughter splayed out on the stage, unconscious and bleeding from her torso. Unable to move, Holynska began screaming for help. So did her friend Yulia and the twin girls, who were unharmed. “There’s a small child here!” they yelled. Two men rushed over and managed to lift the stage off Holynska’s bloodied foot.

Around her, the square had been transformed into a battlefield, filled with hundreds of injured civilians. The engine of the exploded missile crashed on fire into a nearby building. Smoke filled the air. Rescue workers came upon a man in a minibus with half his head blown off. The driver of a red Toyota had been thrown against a wall of a kebab shop by the force of the explosion and died instantly. A 19-year-old journalism student watched in horror as shrapnel killed her mother and left her grandmother’s right hand hanging by threads of flesh.

Holynska rushed to Sofiya. There was no time to waste waiting for an ambulance. She flagged down a motorist, who sped them to the hospital, driving into the oncoming lane to bypass traffic. She held her daughter in her arms, whispering, “Don’t leave me.”

They were the first to arrive at the hospital, and Sofiya was immediately taken into intensive care. A missile fragment had struck an artery near her heart. When the doctors attempted a transfusion, the blood just poured out. Holynska called her husband, who was serving in the Ukrainian military in Kharkiv, 300 miles to the southeast, telling him to come to Chernihiv as soon as possible. Sofiya died on the operating table two hours later. In all, the Russian missile killed seven people and injured 214 that day.

“Why did the missile strike there? How could a fragment fly from so far away and kill Sofiya?” Holynska asks months later, on a warm day in June, tears streaming down her face. Dressed in black, with a tattoo of Sofiya on the inside of her left forearm, she has returned to Chernihiv to perform a ritual she’s followed every Saturday since the missile strike. She buys a cup of foamed milk with marshmallows and places it on the scarred wooden stage alongside flowers and stuffed animals left to mark the spot where her daughter was killed.

Vysikan’s job, studying components from weapons recovered on the battlefield and in Ukrainian cities and towns, has been an all-consuming one. His institute’s work has allowed Western military analysts to peer into the inner workings of the Kremlin’s missiles. One of its most troubling findings: learning just how reliant Moscow is on Western technology.

Sometimes Vysikan, who served in the Ukrainian military before joining the institute in 2018, finds little to examine. Many Russian missiles that have hit their targets or been shot down by Ukraine’s air defenses are completely destroyed, leaving behind only scraps of metal. This time he was lucky.

Back at the institute in Kyiv, where missile and drone remnants are on display in a ramshackle yard, he opened cardboard boxes containing the pieces recovered from Chernihiv. One was a module from the Iskander’s SN-99 navigation system, found on the square near the theater. It contained components made by four Western companies.

Roughly 24 feet long, the Iskander-K cruise missile is central to Russia’s precision-weapons capability. Military analysts say it entered Russia’s arsenal more than a decade ago. Russian state media reported in January that Novator, part of state-controlled defense conglomerate Almaz-Antey, had expanded production to 24 hours a day to make more Iskander and other cruise missiles to fill military orders.

Truth Hounds, a Ukrainian human-rights organization, interviewed residents along the flight path of the Iskander that hit Chernihiv and concluded that a Russian brigade most likely launched the missile from the Kursk region, just across the border with Ukraine. (The region was the target of a Ukrainian incursion this August, a year after the missile hit.) From there, the SN-99 navigation system, the brain inside the missile that links to satellites, guided it about 200 miles to Chernihiv.

Markings on the missile’s engine and some of the components showed it was assembled no earlier than March 2023, more than a year after the US and its allies imposed export controls that banned shipments of a broad class of technology to Russia to kneecap its defense industry. The restrictions made it illegal to ship Western-designed semiconductors to Russia if they could be used for military purposes, even if they were made in China. When the US announced the controls on the day of Russia’s invasion, in February 2022, US Secretary of Commerce Gina Raimondo vowed to “use every tool at our disposal to restrict products, software and technology that support Russia’s military capabilities.”

Ukrainian officials had been complaining for months before the attack on Chernihiv that the effort was failing, and the Iskander fragments offered stark proof. “The missile was fresh,” Vysikan says in an interview at the institute, wearing a black jacket emblazoned with “Expert” on the back. “It had components that enabled it to communicate with a satellite, which meant one thing: It was more deadly.”

One fragment that survived the explosion was a forest-green metal board dotted with chips the size of a baby’s fingernails inside squares with yellow borders. Vysikan pulls out a magnifying glass to read the tiny print etched into two of the semiconductors. It shows they were made by Silicon Laboratories Inc., a company based in Austin. Numbers on the chips show they were produced in the third week of January and the first week of March 2022. It takes months for semiconductors to snake their way through the global supply chain, making it likely Russia imported them after Western export controls were in place.

Other navigation components found among the Chernihiv debris were made by Analog Devices, a US chip manufacturer; Germany’s Infineon Technologies; and Integrated Silicon Solution Inc., a US-based company with Chinese ownership. After cataloging the pieces, Vysikan shipped most of them to Ukrainian investigators probing the attack as a possible war crime.

Silicon Laboratories said in an email that it has a “robust export tracking program” and complies with US and European restrictions but that “once products are sold into the civil technology global mass market, bad actors can unlawfully divert products.” A spokesman for Infineon Technologies AG said in an email that the company “instructed all distribution partners globally to implement robust measures that will prevent any diversion of its products or services contrary to the sanctions.” He said Infineon will stop doing business with companies if it has evidence they are trading with Russia. Integrated Silicon Solution didn’t respond to requests for comment.

Started by two Massachusetts Institute of Technology graduates in 1965, Analog is one of the world’s oldest semiconductor companies. It occupies an important niche in the chip business by producing sensors, integrated circuits and radio frequency transceivers used to convert audio and visual data into digital signals. Smaller than industry leaders such as Nvidia Corp. and Taiwan Semiconductor Manufacturing Co., Analog is one of the top makers of simpler semiconductors that power mobile phone networks and widely used electronic devices. It’s a publicly traded company whose two biggest shareholders are institutional investors Vanguard Group Inc. and BlackRock Inc.

Millions of components produced by Analog and restricted by US export controls have been shipped to Russia since March 2022, customs data show. Last year alone, Russia imported $326 million in Analog components, according to an analysis of Russian trade data by researchers at the Kyiv School of Economics. That’s a small but meaningful part of Analog’s 2023 revenue of $12.3 billion.

Russian customs data provided to Bloomberg Businessweek by ImportGenius, a US firm that collects global trade data, don’t show any direct sales from Analog to Russia. Instead, components flowed primarily through companies in China and Hong Kong. That reflects the nature of the global supply chain: US chip companies use authorized distributors, which in turn sell to electronics suppliers around the world.

The US has tried to stem the tide of chips into Russia by cracking down on these middlemen. In late August the Department of the Treasury unveiled sanctions against a new round of 400 targets for sustaining Russia’s war in Ukraine, including more than a dozen Hong Kong companies. But it hasn’t accused Analog, or any other manufacturers, of export control violations.

Analog says it complies fully with export laws, that it doesn’t condone the Russian military using its products and that it has taken steps to strengthen compliance. “We implemented more robust customer screening,” a spokesperson said in an emailed statement, referring to requirements that companies conduct additional due diligence on entities flagged as high risk. “Steps include taking additional internal and external measures such as collaboration with government agencies and establishing a vigorous audit process to examine distributors for illicit shipments.” Analog didn’t respond to requests to trace the specific components documented in the Chernihiv attack.

Texas Instruments said much the same thing in an email, adding that it regularly identifies and blocks suspicious orders. “If we learn our parts have been diverted to Russia, we conduct an in-depth internal review and take immediate and appropriate action,” the company said.

Ukrainian officials say Western semiconductor companies aren’t doing enough to police their supply chains and stop chips from flowing to Russia’s military factories. Kyrylo Budanov, a lieutenant general who heads Ukraine’s military intelligence agency, voices his frustration with the continued sale of technology to Russia in an interview inside his heavily guarded concrete headquarters in Kyiv. Dressed in black military fatigues, he says he’s seen no change in the flow of components to Russia.

“If you open up any of these missiles or drones, you’ll see for yourself that they are full of Western components,” says Budanov, whose agency manages the database of foreign components found in Russian weapons. “Companies can say that they’re not selling anything to Russia, that they’re just selling to some intermediaries. But it doesn’t change the fact that those parts are getting into Russia in huge volumes.”

Gruff and combative, Budanov has been the target of Kremlin-backed poisoning attempts, according to Ukrainian intelligence officials. (His wife survived a poisoning in a November attack that some Ukrainian officials blamed on Russia.) The black flag of Ukraine’s military intelligence agency hangs on a pole in his office. Two years after Russian President Vladimir Putin annexed Crimea in 2014, the agency changed the flag’s emblem to an owl plunging a sword into a map of Russia. The symbol of the country’s military intelligence agency is a bat, a common prey for owls. “Those missiles are not going from factories to storage,” Budanov says. “They go directly to the frontline units that fire them on Ukraine.”

Cheap and plentiful, Analog’s global-positioning receivers are produced mostly at the company’s factories in China and elsewhere in Asia. Analog enables the receiver to work on both US-controlled GPS and Russia’s Glonass satellite navigation system, making it attractive for the Russian military. Russia has struggled to produce chips capable of receiving encrypted signals solely from Glonass satellites, so it uses components that can also connect to GPS.

Budanov says the only way to block the Kremlin’s targeting capability is to stop the flow of semiconductors to Russia. That’s not happening, he says: “Everybody’s averting their eyes from what’s going on.”

Not all components have imprinted dates of production, and the Iskander’s receiver had no discernible markings indicating when it was made. But the ImportGenius data show that Russia imported at least 14,500 shipments of Maxim electronic integrated circuits in the first two years of the war, indicating a steady supply. Most came from middlemen in China and Hong Kong; some made their way to Russia via the United Arab Emirates, Thailand and Turkey.

More than two-thirds of the shipments of Analog products entering Russia in 2023 were coded as integrated circuits, among 50 types of components designated high priority by the Department of Commerce because of their use in weapons systems, according to an analysis by the Kyiv School of Economics. Olena Bilousova, who worked on the analysis, says the export controls have forced Russia to pay more than twice as much for Analog components it buys from intermediaries as it did before 2022. These companies know Russia has few alternative sources, and they charge a markup.

Efforts to crack down on the middlemen are a cat-and-mouse game. As soon as a company gets blacklisted, others crop up to take its place, often with similar-sounding names. One example involves a Russian company in St. Petersburg called Elekate. From April to July 2022, it imported $3,560 of Maxim circuit chips, made mostly in Southeast Asia and with codes similar to the one found in the Iskander, from a company called Sunny Technology Co., the Kyiv School of Economics data show. Sunny Technology sent almost 60 shipments of Analog components to Russia in 2022. Elekate didn’t respond to an email seeking comment.

A Businessweek reporter went looking for Sunny Technology in July at an address for a semiconductor exporter matching that name in a mirrored glass tower on a busy road in the Kowloon district of Hong Kong. But there was no trace of any such company. Instead, a firm called Professional Accounting & Taxation Ltd. occupied the entire floor. One staff member said Sunny Technology wasn’t based there and refused to answer additional questions. Hong Kong’s corporate registry didn’t have any records for Sunny Technology, but it had entries for companies with variations on that name.

The other Analog part found in the Iskander was an RS-232 interface, a dual-use component that transmits data inside computers. Russia imported at least $407,611 of such Analog chips from the start of the war through the end of 2023, according to an analysis of trade data provided by the Kyiv School of Economics. About 86,000 were on offer through authorized distributor channels as of August 2024, but more than 4 million were available through unauthorized sellers, says Matthew Haber, chief executive officer of Cofactr Inc., a New York-based company that helps automate electronics procurement and tracks daily stock-level data from hundreds of electronic component distributors.

A shipment of chips with the same product number found on the component recovered in Chernihiv—ADM3202ARUZ-REEL7—was listed in Russian trade data in October 2022. It was sent from Shenzhen Jinmingsheng Electronic Co. to a Moscow company called Onelek LLC. The US sanctioned Onelek in July 2023 and Jinmingsheng in May 2024. Jinmingsheng is registered at one of eight Hong Kong addresses the Commerce Department blacklisted in June 2024 as being used by shell companies believed to be violating export controls. A department official says the decision to publicize addresses was meant to make it harder for companies to shut down and emerge under new names with the same corporate service providers. The eight addresses were responsible for companies that sent almost $100 million in restricted items into Russia in 2023, the official says. (Analog didn’t respond to requests for comment about Jinmingsheng or Sunny.)

On a blistering hot day in August, the smell of fried chicken permeated the lobby of the commercial office building in the Kowloon district of Hong Kong where Jinmingsheng was registered. A business directory listed a tattoo studio, an eyebrow salon and a kung fu massage parlor, but nothing for Room 2309, where the company was supposed to be. The door to the room on the 23rd floor had a paper sign in Chinese with a number to call “for deliveries if no one answers.” A stack of mail sat outside the door. No one answered the doorbell, and a building staff member said he didn’t know what business occupied the space.

Around the time it was sanctioned, Onelek imported chips with almost identical part numbers to the one recovered in Chernihiv from a company identified in Russian customs data as Ace Electronic (HK) Co., which has operated under similar names from several addresses in Hong Kong, according to corporate records, and is a major exporter of components to Russia. A company with a similar name—Ace (HK) Electronics Technology Co.—says on its website that it sells products from Analog and provides an address in a bustling district of northern Hong Kong that is one of the eight listed by the Commerce Department.

A beauty parlor now occupies the unit. A building manager told Businessweek that Ace moved out in 2023 and declined to comment further. A new website for Ace Electronic (HK) Co., which says it sells products from Analog and Texas Instruments, lists a different address in northern Hong Kong. On the 22nd floor of a warehouse at that address, there’s a sign for Ace Electronic above a locked door. A man in a gray T-shirt and shorts answered the bell and said the unit doesn’t belong to Ace. Chairs, tables and construction materials were piled up in what looked like a storage facility. A woman carrying a white plastic bag said the space was being used by a film production company. She said she’d been working in the building for a few months and didn’t know anything about Ace.

Both Ace and Jinmingsheng continued to sell chips to Russia in January 2024, ImportGenius data show. Directors for both companies are listed in the Hong Kong registry as Chinese nationals with no links to other firms registered in Hong Kong. No one responded to emails sent to addresses listed on websites for Ace Electronic and Ace (HK) Electronics. Onelek also didn’t respond to a request for comment. Texas Instruments said it doesn’t sell products to Ace. Analog said Ace isn’t an authorized distributor and that it has sent a legal letter to the Hong Kong company demanding it remove Analog’s logos from its website.

Ukrainian investigators found another component in the Iskander’s navigation system: a memory chip produced by Integrated Silicon Solution, a California company acquired by Chinese investors in 2015. At the time, US chip manufacturers were being snapped up by Chinese buyers, and Washington’s relations with Beijing had yet to turn frosty.

Customs data show St. Petersburg electronics trader Kvazar LLC imported 72 similar memory chips made by Integrated Silicon Solution in January 2023 via Helsinki Airport, a direct shipment to Russia from a member of the export control coalition. The total value of the chips was $2,354. The supplier was a Swiss company called Thamestone SA, registered at an address on Rue du Marché, a shopping street in Geneva. The chips were designed to withstand temperatures of as much as 125C (257F), a sign they were likely destined for military use rather than telecommunications equipment. The US sanctioned Kvazar and Thamestone in 2023. Kvazar continued to import restricted Western components months after the US imposed sanctions, the data show. A representative for Thamestone, now in liquidation, declined to comment. Kvazar doesn’t have a website, and a Russian corporate registry doesn’t provide a phone number. No one responded to an email address listed for the company.

“It took more than a year to sanction Thamestone after evidence first appeared that it was violating export controls,” says Erlend Bjørtvedt, founder of Oslo-based Corisk, a consulting firm that works on sanctions and analyzed some customs data for this story. “Governments need to speed up investigations to ensure faster measures against such obvious violators.”

The Iskander also had a NOR flash memory chip from Spansion, a brand made by the German company Infineon Technologies AG. It’s used in everything from washing machines to supercomputers to store small amounts of computer code. A spokesman for Infineon declined to say who bought those chips. Customs data from ImportGenius show Russia imported more than 450 shipments of such chips from the start of the war through the end of 2023. Most of the shipments came from Hong Kong and China, including several through Jinmingsheng. Infineon’s spokesman said his company does not have a business relationship with Jinmingsheng and none of its distribution partners have sold its chips to the firm.

Russia imported $20.9 billion of high-priority components—including radar apparatus, electrical transformers, transistors and other products—from March 2022 through the end of 2023, according to the Kyiv School of Economics. Components made by Intel Corp. and China’s Huawei Corp. topped the list. (Among components recovered by Ukrainian investigators, Intel ranked fifth. No Huawei parts were recorded on the Ukrainian database. A spokesperson for Intel said the company operates in “strict accordance with export laws” and holds customers accountable to the same standards. Huawei declined to comment.)

“Companies need to be held accountable, even if violations were not deliberate but took place because of negligence,” says Bilousova at the Kyiv School of Economics. “Russians will be very creative, and there will still be some smuggling, but what we’re seeing now is not backpacks of microchips but huge shipments.”

US efforts to tighten export controls on Russia led the Biden administration in December to threaten sanctions against banks facilitating the trade, most of which are in China. Those threats, widened in June, helped reduce overall Chinese exports to Russia and led to payment delays.

Some congressional leaders have proposed legislation to further strengthen the controls. In April, Utah Republican Senator Mitt Romney and New Hampshire Democratic Senator Maggie Hassan introduced the Export Controls Enforcement Improvement Act, which would permanently staff an interagency center to coordinate efforts to stop the export of US semiconductors to countries including Russia, China and Iran. “We must ensure that American-designed semiconductors and other technology do not illegally end up in Russian weapons,” Hassan said in a statement.

This month Democratic staff of the Senate Permanent Subcommittee on Investigations issued a scathing report saying that efforts by US semiconductor manufacturers to trace where their products go have been “abjectly lacking.” The panel’s investigation looked at four US-based companies whose components have been found in Russian missiles used to attack Ukraine: Analog, Texas Instruments, Intel and Advanced Micro Devices.

“Some companies have done the bare minimum required by law, conducting cursory checks on their customers while trying to wash their hands of any real responsibility for their distributors’ role in Russian diversion,” the report said. “Few have looked under the hood to see what they could do better. However, willful ignorance also violates the law, and models from other industries show that proactive compliance is readily doable and affordable.”

A Commerce Department official says the enforcement division needs more resources. The agency has only 200 agents and analysts globally, fewer than the Department of Homeland Security’s investigations agency has in Tampa. To get around the staff shortage, the official says, the department is deploying a new strategy. Undersecretaries at the State, Commerce and Treasury departments have jointly gotten on the phone with the CEOs of US technology companies whose components keep ending up on the battlefield to press them to vet their supply chains. He declined to name which chief executives have been called. A Commerce Department spokesperson declined to comment.

Elina Ribakova, a senior fellow at the Peterson Institute for International Economics who testified at a Senate hearing on export controls in February, agrees with the need for more funding. But she says the Commerce Department needs to do a better job of enforcement and not let companies off the hook.

“Companies are already supposed to be doing due diligence on their distribution networks—they’re just not doing it,” says Ribakova, who’s also vice president for foreign policy at the Kyiv School of Economics. “Most companies only work with a few large global distributors. It has a flavor of a farce. If a researcher from the Kyiv School of Economics can find this data, you’re telling me these companies can’t? They’re producing super-sophisticated technology and can run through billions of pieces of data in a second using AI.”

She’s haunted by the what-ifs of that day. She was in the center of Chernihiv with her mother and grandmother to mark the Orthodox holiday at the 12th century Piatnytska Church behind the theater. They stopped for a minute on a bench outside to divide up the fruit they’d had blessed. Toriya had just sat down when the blast knocked her mother to the ground, and she dived down beside her as branches, shrapnel, glass and earth were flying through the air. A missile fragment had pierced the paving stone where she’d been sitting. If she’d stayed on the bench, it might have killed her. Even so, shrapnel hit her leg in two places, leaving her covered in blood. She hesitated to go with her injured grandmother in the ambulance, not wanting to leave her mother’s body. She realized later that her grandmother might have died if she’d waited longer. Doctors ended up amputating her grandmother’s right hand.

“I often dream of missile strikes in which I die—I gasp and wake up,” Toriya says, sitting in a cafe in Kyiv in June, crying as she recounts those events. Her panic attacks have subsided, but she’s still having trouble sleeping and needs another operation on her leg to remove the remaining fragments. “We are killed every day for nothing. Every day they push a button and someone dies.”

When Holynska visits Chernihiv, she imagines Sofiya might appear around the corner. She performs her mourning ritual mostly alone. The Ukrainian military transferred her husband back to Kyiv, but he works long hours. His new job: informing the families of Ukrainian soldiers that their loved ones have died.

Learning about Western chips that helped guide the missile that day has added to her anger. “The companies should monitor where they supply and for what purpose,” Holynska says. “I would like Western companies to open their eyes and see that they should make it impossible to sell anything to a country like Russia.” —With Coulter Jones, Rebecca Choong Wilkins, Olesia Safronova, Ian King and Danny Lee