Due to the war with Ukraine and the resulting global isolation and sanctions, Russia is devising a plan to revive its struggling domestic semiconductor manufacturing, as it cannot obtain chips from traditional suppliers. Therefore, Russia's new chip plan involves significant investments over the next eight years, but the targets do not seem ambitious.

For example, while TSMC plans to achieve 2nm process by 2026, Russia hopes to achieve 28nm local chip manufacturing by 2027 and domestic 14nm chip manufacturing by 2030, according to the latest report from Cnews.

The Russian government has drafted a preliminary version of a new microelectronics development program that requires an investment of about £3.19 trillion ($38.43 billion) by 2030. This funding will be used for developing local semiconductor production technology, domestic chip development, data center infrastructure, talent, marketing homemade chips and solutions, according to Cnews.

In terms of semiconductor manufacturing, the country plans to spend £42 billion ($5 billion) on new manufacturing technology and upgrades. One of the short-term goals is to increase local chip output using 90nm manufacturing technology by the end of this year. The long-term goal is to establish a manufacturing process using a 28nm node by 2030, which TSMC achieved in 2011.

Historically, Russia has achieved some success in software and high-tech services, but relatively less success in chip design and manufacture. Although the plan involves cultivating local talent and developing chips domestically, the country also plans to establish a reverse-engineering program for "foreign solutions" to transfer its manufacturing to Russia by the end of this year. By 2024, all digital products should be produced locally. Items that the country cannot produce domestically are expected to be purchased from China.

While Russia's plan seems to include many projects and sets some targets, it should be noted that even China has not succeeded in localizing a significant portion of critical chip manufacturing. Whether Russia can achieve its targets by 2024 or 2030 remains uncertain due to the inability to use technologies developed in the US, UK, or Europe. However, this does not mean that there are no possible solutions.

The plan is expected to be finalized by April 22, 2022, and submitted to the prime minister for formal approval.

Russia provides 7 billion rubles in aid to the largest chip manufacturer.

In September 2022, the Russian Federation announced that it would provide subsidies to its largest semiconductor manufacturer to ensure the continued operation of the factory. Reports from Russia indicate that a state-backed entity has provided 7 billion rubles in aid to Mikron, a Russian company, to sustain its operations.

The report states that the state-backed entity, acting as an investment company and development institution in the country, has provided new funding to Mikron. Vnesheconombank Development and Foreign Economic Affairs Corporation Bank (VEB.RF) is a Russian development company established in 2007, derived from the derivative company of the first international bank established in the Soviet Union a century ago in 1922. It has a legendary past, initially restructured as a government development entity, reducing its commercial operations and investing pension fund assets in foreign currency-denominated currencies.

As part of the loan, which has a term of 10 years, the manufacturing equipment of the chip company serves as collateral. Mikron is one of the oldest chip companies in the world, founded in 1964, and it stands as another relic of Russia's former Soviet history.

Since then, it has been responsible for manufacturing various semiconductor products, including microprocessors and payment card chips. In terms of manufacturing technology and processes, Mikron lags far behind its global counterparts, with reports stating that it started mass production of the 65nm manufacturing process node in 2020. In comparison, TSMC began producing nanochips in 2005, and Intel started producing 65nm chips in 2007.

However, Mikron still handles a significant portion of Russia's semiconductor exports and other products crucial for the daily functioning of the country's economy. Importantly, these chips are also the backbone of Russia's Mir debit card and credit card payment system.

Furthermore, despite its production of older nodes, Mikron's capacity was believed to be only 6,000 wafers per month according to the reports at that time. Coupled with the limitation of older nodes on the number of chips that can be squeezed onto a wafer, the limited capacity makes Mikron's chips particularly premium-priced.