The supply chain that keeps tech flowing to Russia

By | December 14, 2022

Reuters reports:

In March this year, a new firm appeared in Turkey’s corporate registry. Azu International Ltd Sti described itself as a wholesale trader of IT products, and a week later began shipping U.S. computer parts to Russia.

Business was brisk, Russian customs records show. The United States and the EU had recently restricted sales of sensitive technology to Russia because of its Feb. 24 invasion of Ukraine, and many Western tech companies had suspended all dealings with Moscow.

Co-founded by Gokturk Agvaz, a Turkish businessman, Azu International stepped in to help fill the supply gap. Over the next seven months, the company exported at least $20 million worth of components to Russia, including chips made by U.S. manufacturers, according to Russian customs records.

Azu International’s rapidly growing business didn’t come from a standing start, Reuters reporting shows: Agvaz manages a wholesaler of IT products in Germany called Smart Impex GmbH. Before the invasion, Russian custom records show that the German company shipped American and other products to a Moscow customer that recently has imported goods from Azu International.

Reached at his office near Cologne in October, Agvaz told Reuters that Smart Impex stopped exporting to Russia to comply with EU trade restrictions but sells to Turkey, a non-EU country that doesn’t enforce most of the West’s sanctions against Moscow. “We cannot export to Russia, we cannot sell to Russia, and that’s why we just sell to Turkey,” he said. Asked about Azu International’s sales to Russia, he replied, “This is a business secret of ours.”

Contacted again shortly before publication, Agvaz said Smart Impex “observes all export restrictions and manufacturer bans” and “has not circumvented Western sanctions against Russia.” He said he couldn’t answer questions about Azu International. Turkish corporate records show he sold his 50% interest in the Istanbul company on Nov. 30 to his co-founder, Huma Gulum Ulucan. She couldn’t be reached for comment.

Azu International is an example of how supply channels to Russia have remained open despite Western export restrictions and manufacturer bans. At least $2.6 billion of computer and other electronic components flowed into Russia in the seven months to Oct. 31, Russian customs records show. At least $777 million of these products were made by Western firms whose chips have been found in Russian weapons systems: America’s Intel Corp, Advanced Micro Devices Inc (AMD), Texas Instruments Inc and Analog Devices Inc., and Germany’s Infineon AG. [Continue reading…]

Print Friendly, PDF & Email