Businessman with interests in Germany bypassed sanctions by exporting U.S. lithography machines for microchip production to Russia

Cover photo: Plasma etching unit manufactured by the California-based company Applied Materials. Source: appliedmaterials.com

RU

Despite their ties with the West, many foreign firms continue to evade sanctions in order to sell semiconductor dry etching machines for chip production to Russia. The Insider has discovered that a Hong Kong-based company, owned by a Singaporean entrepreneur with business interests in Germany, is among the top violators of U.S. bans on shipping American high-tech products to Russia.

This year, Russian Engineering Group LLC (ООО «Инжиниринг Групп») imported lithography systems for microchip manufacturing made by the California-based firm Applied Materials, along with parts and spare components, totaling over $4 million. The imported goods also include dry etching units, which offer several technological advantages over wet etching.

The equipment, sourced from China and Taiwan, was shipped by the Hong Kong-based Smart Kit Technology Limited — a company which has no website — while the “trading country” was listed as Hong Kong. According to the Hong Kong corporate registry, the company is owned by Chinese national Chan Po Wah (陳寶華) and Singaporean national Gallal Sabry Sera.

In Russia, a man with the same name (written as «Сераг Галлал Сабры», or “Serag Gallal Sabry”) has at different times been co-owner of five separate firms. One of them, Kvant LLC (ООО «Квант», from which the Singaporean has already withdrawn), still operates in Zelenograd, generating revenues of several billion rubles a year with a staff of around 1,000 people. The Russian edition of Forbes described the enterprise in 2021 as “a major manufacturer of TV sets.” The Singaporean's other firm (over which Sera retains control to this day) supplies ordinary household appliances from China.

Gallal Sabry Sera may also be described as a Western European industrialist and businessman with serious interests in the European Union. A man with the same name is listed as a director of LEDsikon (formerly RandLight GmbH), a German company producing LED devices. Hong Kong-based Sunrise Holdings Limited was listed as the company's parent firm in the German registry as of November 2019.

The Insider has reached out to Engineering Group LLC (ООО «Инжиниринг Групп») and Gallal Sabry Sera at LEDsikon for comment.

Prohibited machinery

U.S. law prohibits the export to Russia of items on a restricted list if those items meet any of the following conditions: they were made in the United States they contain a certain percentage of U.S.-made components, or they were produced elsewhere using U.S. technology or in a U.S.-owned facility. Despite these restrictions, Russia imported $230 million worth of such goods in the first quarter of 2024.

The primary categories of goods imported in circumvention of sanctions were:

• jet engines;
• spare parts for civil aviation aircraft;
• gas turbines;
• internal combustion engines;
• lithography equipment used for the manufacture of microchips;
• mining machines;
• pumps and valves for the oil and gas industry.

These products are often exported by companies that do not use the machinery themselves but rather resell it. Smart Kit Technology Limited is one such firm.

In a recent investigation, The Insider highlighted Russia’s efforts to develop domestic chip production capacity in the face of the country’s technological limitations and relative economic isolation.