Bangkok, Thailand – U.S. efforts to cripple the Russian war machine in Ukraine have trapped an unlikely target far from Moscow: Malaysia's multibillion-dollar semiconductor industry.
Malaysian semiconductor maker Jatronics SDN BHD is among nearly 300 entities on which Washington imposed US sanctions last month over its alleged ties to Russian military suppliers.
Kuala Lumpur-based Jatronics is accused of sending electronic parts and components to Russia that Moscow needs to sustain the conflict.
Russian customs data shows that one of the Russian companies that Jatronics has supplied since the large-scale invasion of Moscow in February 2022 has already been sanctioned by Western governments for its alleged links to the Russian defense industry.
The latest sanctions, announced on May 1, freeze any US assets held by the targeted entities and prohibit anyone under US jurisdiction from dealing with them, effectively excluding them from the US financial system.
U.S. officials have not said they know for certain that components shipped by Jatronics have actually been used in military equipment.
“Jatronics supplied these components to Russian-based companies that supply the Russian military-industrial complex,” a US State Department spokesperson told Al Jazeera.
Some of the materials Jatronics sent to Russia included Tier 1 items on the US Department of Commerce's High Priority Common Item List, established in the wake of the invasion to curb Russia's access to technologies needed to the war, the spokesman said.
The Commerce Department describes Tier 1 items as those “of greatest concern due to their critical role in the production of advanced Russian precision-guided weapons systems, Russia's lack of domestic production, and limited global manufacturers.”
Jatronics declined to comment.
Russian customs data analyzed by the Center for Advanced Defense Studies (C4ADS), a Washington-based think tank, corroborates the US government's claims.
It reveals dozens of shipments since the invasion to companies in Russia, some with their own clients in Russia's growing defense industry.
According to the data, which was shared with Al Jazeera, Jatronics made more than 50 deliveries to companies in Russia worth more than $3 million between April 2022 and September 2023.
The materials included microchips, semiconductors, and silicon wafers, the raw materials for making semiconductors.
“Microchips, which make up the majority of items shipped by Jatronics, are particularly noteworthy due to their dual-use capabilities. For example, US-designed microchips have frequently been found in Russian cruise missiles, fighter jets and drones that have been intercepted or shot down,” C4ADS analyst Allen Maggard told Al Jazeera.
According to the data, Jatronics delivered to eight different companies in Russia.
These include OOO Planar, which the United States sanctioned in March 2022.
At the time, the State Department said Planar “specializes in acquiring foreign technology for Russia's military programs, including Russia's military space programs.”
He added that Planar's main customer was the Izhevsk radio plant, “which develops items and technologies for the Russian military.”
The plant's website says its projects have included navigation systems for unmanned aerial vehicles and lists Russia's Interior Ministry, which oversees the country's police force, among its “partners.”
The data also shows that Jatronics shipped to a Russian company called Design Center Kristal.
The Kristal Design Center website says that the company's partners include Kamaz, Russia's largest truck maker, which was also under sanctions at the time of the shipments by the United States and other Western governments for supplying to the Russian army.
Maggard said Jatronics might have become aware of its clients' military ties.
“Jatronics had the opportunity to recognize the connections of these companies with the Russian defense sector. Other exporters should learn to spot the numerous warning signs displayed by several of Jatronics' recipients,” he stated.
While chipmakers themselves may not be familiar with such signals, Maggard added, they can hire companies that specialize in these types of “due diligence” checks when doing business with Russia.
The latest US sanctions come as Malaysia aims to become a major hub in the global semiconductor supply chain by boasting its geopolitical “neutrality.”
In April 2022, just weeks after Russia's full-scale invasion, Malaysia's ambassador to Russia sparked controversy when he told Russian media that the country would consider “any request” for semiconductors.
In a keynote speech at the SEMICON Southeast Asia 2024 technology conference last week, Malaysian Prime Minister Anwar Ibrahim presented his country as the ideal “neutral and non-aligned” host for semiconductor manufacturers amid the war. technology between the United States and China and said his government would aim to attract $100 billion in new investment.
While the policy may serve Anwar's government economically and politically by attracting foreign investors and pushing back against Western pressure to choose sides, it also makes domestic companies doing business abroad vulnerable to the kind of sanctions that just prevailed over Jatronics, said Zachary Abuza, a professor at the National War College in Washington.
“They are preparing them to be sanctioned. Malaysia is clearly under US surveillance right now,” Abuza told Al Jazeera.
In December, the United States sanctioned four Malaysia-based companies for allegedly helping funnel drone parts to Iran, which Washington accuses of selling drones to Russia for use in Ukraine.
Earlier this month, a senior U.S. Treasury Department official visited Malaysia to press the government over the risk of sanctions it was running by allegedly allowing Iranian oil and funds for “terrorist groups” to flow through the country.
Commenting on the visit, the Malaysian government said it gave more importance to sanctions imposed by the United Nations than those applied by individual countries.
But as the war in Ukraine continues, Abuza said, the United States is likely to become even tougher on countries seen as helping its enemies.
“The Americans really believe they can help the Ukrainians achieve their strategic goals if we can truly stop Russian global supply chains that are trying to evade sanctions, and Malaysia has proven to be an important cog in the Russian machine,” he said.
The sanctions send the message that “yes, you can sell to the Russians, but you will lose access to the American or European markets,” Abuza added.
“And that's why those sanctions are really a way to change behavior, not just punish. “We're trying to send signals that selling to the Russians is just very short-sighted in terms of business.”
Malaysia's top government spokesperson, Fahmi Fadzil, did not respond to Al Jazeera's requests for comment on the new sanctions.
