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Anti-Russia feels, dual-use deals: Latvian firms supply Russian army with microchips despite sanctions

Despite export controls and sanctions, Latvia has imported microchips to Russia worth millions of euros since the onset of the full-scale war in Ukraine. A significant player in this import is Lesta-M, a company whose government contracts for microchip supply total over 80 million roubles ($831,000). Their main clients are Russian state enterprises within the military-industrial complex, including the manufacturers of Iskander missiles and the Tor-M2E anti-aircraft missile system.

Content
  • Buyers, old and new

  • Iskanders and Su-27: where Riga microchips might be used

RU

Buyers, old and new

In the 1960s, the Riga Semiconductor Devices Plant (RZPP) was among the first in the Soviet Union to master the production of integrated circuits. In the late 1990s, the enterprise was privatized. Following a series of transformations, divisions, mergers, acquisitions, and renamings, three companies emerged: AS RD ALFA, engaged in leasing and management of its own or leased real estate, AS ALFA RPAR, and AS RD ALFA Mikroelektronikаs Depаrtаments, producing electronic components, such as operational amplifiers and voltage comparators.

According to Latvian press reports (1, 2), the activities of the enterprise significantly diminished in scale during the post-Soviet period. Some premises were either demolished or converted into shopping centers, although production did not cease.

The former site of the Alfa plant in Riga
The former site of the Alfa plant in Riga

In Russia, the products of the Riga plant were represented by Alfa LLC. According to the data from the Unified State Register of Legal Entities (EGRUL), it's a 100% subsidiary of Riga-based AS ALFA. Alfa's website provides a detailed range of Riga's products:

“Operational amplifiers, comparators, DACs, ADCs, RF modules, analog and digital signal converters, timers, voltage regulators, sensor interfaces...”

However, Alfa LLC didn't handle the microchip imports to Russia directly. Import-export data from Importgenius reveals that two other companies took charge of this: Lesta-M Company LLC (with co-owner Petr Shumov, who was also a director at Alfa LLC) and Alfa-LR LLC (previously a subsidiary of RD ALFA Mikroelektronikаs Depаrtаments).

Riga microchips were supplied to Russia under the trade names RD ALFA and ALFA RPAR. The main supplier was RD ALFA Mikroelektronikаs Depаrtаments. However, with the onset of the war in Ukraine, everything changed. Now the suppliers are ALFA RPAR and apparently two Chinese firms: Dalian Stella Trading Co. Ltd (which previously supplied scrap metal to Russia) and Liaoning Jinhechuang Logistics Co. Ltd.

In Riga, there was no concern when Russian buyers vanished and were swiftly replaced by new customers, acquiring products valued at $1.7 million in less than twelve months of the military conflict. Concurrently, the Moscow “subsidiary” persisted in running a Russian-language advertising website showcasing a range of Riga microelectronics. Notably, the director of this Moscow “advertising” company, via Lesta-M Company, became the exclusive recipient of Riga's exports to Russia.

Iskanders and Su-27: where Riga microchips might be used

Within the government procurement system, one can find records of Lesta-M Company LLC delivering 68 types of microchips and radio components to various Russian state enterprises. The Insider pinpointed that 59 of these were produced at the Riga Semiconductor Devices Plant. The bulk of the orders handled by the company are from entities within the Russian military-industrial complex.

According to government procurement data, the most significant trading partner of Lesta-M Company LCC was Scientific Research Institute of Electronic Devices JSC (NIIEP). This enterprise is part of Rostec through the Techmash concern. NIIEP was involved in the development of Iskander missiles and the creation of radar systems for the military. The enterprise produced close-range location systems for Kinzhal missiles, automation for Tochka-U systems and Iskanders, and onboard computers for the S-300V. Lesta-M Company entered into contracts worth 43 million roubles with NIIEP.

The second most prominent purchaser of Riga microchips working with Lesta-M Company LLC is the Izhevsk Electromechanical Plant “Kupol” (IEMZ JSC), where the Tor-M2E anti-aircraft missile system is manufactured. This enterprise has been included by the U.S. Department of Commerce in its sanctions list.

The next significant customer buying Riga microchips through Lesta-M Company LLC is the Ufa Instrument-Making Production Association. It manufactures onboard instruments for the Su-27 jets. Lesta-M also supplied microchips to the Ural Optical-Mechanical Plant (UOMZ), which produces opto-locational stations for combat aircraft; OJSC Radiopribor, a radar manufacturer; and Rostec's Ryazan State Instrument Plant (GRPZ), which manufactures radar systems, as well as the Stelmakh Research Institute Polyus, which produces laser-guided weaponry.

Lesta-M's main state-owned customers: NIIEP tops the chart with contracts worth 40+ million roubles, with IEMZ Kupol (10+ million roubles) coming in second.
Lesta-M's main state-owned customers: NIIEP tops the chart with contracts worth 40+ million roubles, with IEMZ Kupol (10+ million roubles) coming in second.

According to sources in the Ukrainian Armed Forces, no Riga microchips have been found in downed Russian missiles to date. Hence, it remains unclear whether they were used in missile production, but they certainly could be, as devices with similar parameters were detected, particularly in Kinzhal, S-300, and Kh-59 missiles.

The Insider's request for comments went unanswered by Alfa.

Cover photo: A 'missile cemetery' where fragments of Russian missiles fired at Kharkiv since the beginning of the war are stored / Kostiantyn Liberov and Vlada Liberova (https://twitter.com/Liberov)

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