Russia Acquires High-End AI Chips Through Indian Backdoor, Circumventing US Sanctions

Russia skirts sanctions, acquires Nvidia and AMD chips through Dell servers from India

In brief: Russia has been circumventing sanctions imposed on it by sneaking tech into the nation since the war with Ukraine began. According to a new report, one of the methods it is using to acquire high-end processors is to purchase Dell servers from an Indian pharmaceutical company. The US and the European Union restrict the export of dual-use goods to Russia that could be used in its military industrial complex, a ruling put in place following Russia's invasion of Ukraine in 2022. Bloomberg News reports that between April and August 2024, Shreya Life Sciences, a mid-sized Indian pharmaceutical company, exported 1,111 units of Dell's PowerEdge XE9680 servers, which have an average price of $260,000, to Russia. The servers were equipped with 4th-gen Xeon Scalable CPUs and Nvidia H100 or AMD Instinct MI300X accelerators optimized for AI operations. Data available for 998 of the shipped servers show they were equipped with the H100 chips. The servers, worth an estimated $300 million, were legally exported under India's trade regulations. They were sent to two Russian trading companies, Main Chain Ltd. and I.S. LLC. Bloomberg writes that these were just the latest in a series of technology exports Shreya made to Russia since September 2022. While the servers shipped to Russia from India, they originated in Malaysia. Between March and August 2024, 1,407 PowerEdge XE9680 units were shipped from Malaysia to India. Neither Malaysia's Investment, Trade and Industry Ministry nor the Prime Minister's Office responded to an email from Bloomberg seeking comments. India does not participate in the US and EU sanctions imposed on Russia, which it relies on for military equipment and increased oil imports. Shreya was founded in Moscow in 1995 by Sujit Kumar Singh. It started by distributing and marketing pharmaceutical drugs before creating its own manufacturing plants. Between January 2022 and August 2024, it sold $22 million worth of pharmaceutical products to Russia. The first record of non-medical exports was in September 2022, when it shipped computer hardware to Russian firm Lanprint Ltd worth $755,333. Lanprint was later added to the US sanctioned company list. India is the second-biggest supplier of restricted tech to Russia after China. It was reported in 2022 that Russia was buying chips from the Chinese gray market. A risky move, considering 40% of them were found to be defective. China is also subject to US sanctions on certain tech. In April, it was reported that Chinese entities, including research institutes and universities, were able to obtain high-end Nvidia AI products by purchasing server products, such as those from Dell, embedded with the chips from resellers.

Indian firms secretly funneled AMD, Nvidia AI GPUs to Russia -- sanctions reportedly skirted on hundreds of millions of dollars of hardware

Following sanctions from the United States and its allies over the war against Ukraine, Russia now has to smuggle advanced processors into the country. As discovered by Bloomberg, an Indian pharmaceutical company, has been involved in exporting Dell servers to Russia, circumventing sanctions imposed by the U.S government. Between April and August 2024, Shreya Life Sciences shipped 1,111 units of Dell's PowerEdge XE9680 servers, valued at hundreds of millions of dollars, to Russia. These servers are based on Intel's 4th Generation Xeon Scalable CPUs and are equipped with AMD's Instinct MI300X or Nvidia's H100 processors for AI and HPC processors. The shipments, which were legally conducted under India's trade regulations, were sent to two Russian companies, Main Chain Ltd. and I.S LLC. Trade data shows that these exports began in September 2022, following the imposition of sanctions that cut off its access to Western markets. The servers trace back to Malaysia, where they were initially sourced by Dell's subsidiary in India before being exported to Russia. Shipping documents for over 800 units of PowerEdge XE9680 servers show Malaysia as the country of origin. Between March and August 2024, India imported 1,407 of these Dell servers from Malaysia. Despite multiple attempts to seek comments from Malaysian officials regarding the exports, neither Malaysia's Investment, Trade and Industry Ministry nor the Prime Minister's Office provided a response to Bloomberg. Shreya's exports of Dell servers to Russia surged in April 2024, with an average price of $260,000 per server. These servers are classified under HS code 847150, part of a list of dual-use goods restricted by the EU and U.S. to prevent their use in Russia's military operations. Main Chain, the primary recipient of Shreya's exports, was registered in Russia in January 2023 and is headed by Anastasia Obukhova, who previously ran small tourism companies. Shreya Life Sciences, founded in Moscow in 1995 by Sujit Kumar Singh, initially focused on distributing pharmaceutical products but later expanded into manufacturing. In addition to its pharmaceutical exports, which amounted to $22 million between January 2022 and August 2024, Shreya began exporting restricted machines to Russia in September 2022. Its first shipment included computer hardware worth $755,333, sent to Russian trading company Lanprint Ltd., which was later sanctioned by the U.S. in September 2023. After Lanprint and another client, Silkway LLC, were sanctioned, Shreya shifted its exports to Main Chain Ltd. and I.S LLC, neither of which are currently on the U.S. sanctions list. Shreya, alongside another Indian company, Hayers Infotech, which operates out of the same office in Mumbai, has reportedly exported $434 million worth of high-tech goods to Russia since February 2022 facilitating the flow of AI and HPC GPUs to Russia, despite international efforts to stop such exports. Such routes has placed India under scrutiny by Western governments and made India the second-largest supplier of restricted technology to Russia, after China. In recent months, U.S. and E.U. officials have traveled to India to persuade the Indian government to cease these exports. However, India's stance remains unchanged, as Prime Minister Narendra Modi's government continues to prioritize its economic and military ties with Russia, particularly in the context of discounted Russian oil imports.

Russia Is Reportedly Getting Access To NVIDIA's High-End AI Chips Through A Backdoor Present In India, Violating US Export Laws

Despite US sanctions, Russia is reportedly getting access to NVIDIA's cutting-edge chip by a rather "clever" backdoor, which is allegedly a pharma company present in India. Well, it seems like the Biden administration's efforts to reduce the influence of US tech on the global markets haven't been working out too well, as sanctioned nations have found new workarounds to get access to high-end AI hardware. From GPU rental services to the presence of black markets, NVIDIA's AI chips are all over the markets where they shouldn't be, and in a new report by Bloomberg, it looks like Russia is getting access to NVIDIA's H100 AI chips, from none other than a backdoor in India, with combined value of shipped equipment reaching up to $300 million. The report claims that an Indian pharmaceutical company, "Shreya Life Sciences," has allegedly shipped out 1,111 units of Dell's most advanced AI clusters, the PowerEdge XE9680, which comes with cutting-edge AI accelerators, notably from both NVIDIA and AMD. The specifications of the shipped items show that Russia has access to NVIDIA's H100 AI chips, which are integrated into Dell's server units. Interestingly, Russia is barred from receiving Team Green's AI chips, so this is a clear violation of both the US and EU export laws. It is claimed that Russia is using the AI computing power on its hands to enhance military and warfare applications, along with promoting in-house AI efforts, so this is a matter of concern for US authorities, especially since the equipment is being used against the ongoing aggression in Ukraine. However, India isn't the only nation involved since, according to the shipping manifests, the Dell PowerEdge servers are imported from Malaysia and then sent out from India to Russia, so the overall supply chain doesn't involve a few parties; rather, it is a whole network. Given that India holds key relations with Russia, the trade isn't a violation of domestic laws, but for global powers, it might be a "red flag," given that India is an emerging nation when it comes to AI capabilities and just recently, NVIDIA's CEO Jensen Huang paid a visit to India, informing about the integration of Blackwell processors into domestic AI clusters, but given that the nation is involved in supplying cutting-edge equipment to hostile nations like Russia, the US might need to take harsh decisions to cut off the supply. That is why we say that simply barring the export of a particular product won't do the job right, given that individuals will find workarounds, and we have seen plenty of such cases. Given that these markets are too big for NVIDIA to ignore, the firm can't simply cut off the supply, so adequate supply chain regulations have become a must for the US and allies to prevent technology transfer.