Paul Triolo on Russia chip sanctions

ASG's Paul Triolo spoke with Politico on the Russia microchip sanctions: 

Paul Triolo, the technology policy lead at consulting firm Albright Stonebridge Group, said supercharging the [Foreign Direct Product Rule] to target the entire Russian tech sector could upend the global chip industry.

“The FDPR has only been used before for similar purposes against Huawei,” — the Chinese telecom giant, which the Commerce Department barred from purchasing advanced chips in 2020 — “and not against an entire country or industrial sectors within the country,” Triolo said. “We are once again in uncharted waters.”

— U.S. leverage: Very few of the world’s most advanced chips are manufactured in the U.S. (most come out of Taiwan or South Korea). But many are designed by U.S. firms or via U.S. software, and therefore fall under the FDPR — giving the Biden administration a major economic weapon to deploy against Russia.

— Industry blowback? The FDPR has never been applied to an entire country, or even a swath of industries within one country. Acting that broadly could cause foreign chip manufacturers to think twice before relocating to the U.S. or incorporating U.S. technologies into their products or development processes.

“At a minimum it adds to industry concerns around the unintended consequences of the U.S. government weaponizing U.S. technology dominance in the semiconductor sector,” Triolo said.

— We’ve got chips, but they’ve got cyber: Rasser also said the Kremlin is unlikely to sit quietly as Washington chokes off its supply of advanced microchips. If the FDPR is used aggressively, he warned of “very destabilizing cyberattacks” on U.S. and Western targets that could dwarf previous Russian efforts.

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