10 September 2024

...The Permanent Subcommittee on Investigations (“PSI” or “the Subcommittee”) initiated an inquiry in September 2023 to better understand efforts of American semiconductor manufacturers to prevent U.S.-manufactured semiconductors from ending up in Russian weapons. The Subcommittee focused its inquiry on four U.S.-based semiconductor manufacturers whose products have reportedly appeared in Russian weapons (including Kh-101 cruise missiles) on a consistent basis: Analog Devices, Intel, Texas Instruments, and Advanced Micro Devices Incorporated (AMD) (collectively, the “Four Companies”).

The U.S. export control regime for semiconductors relies heavily on corporate compliance and diligence, asking that companies implement practices to ensure that their products do not wind up in the wrong hands. The federal government has provided companies with a number of tools to further this mission while emphasizing that companies must develop their own systems to identify questionable transactions and continuously adapt to confront adversaries focused on acquiring their products...

This report represents the Subcommittee’s findings on the role that the four selected semiconductor manufacturers play in ensuring that their products do not continue to fuel Russia’s aggression in Ukraine; however, these findings can be applied more broadly to export control compliance efforts across the semiconductor manufacturing industry.

The Subcommittee’s investigation found that U.S. semiconductor manufacturer efforts have been abjectly lacking. Some companies have done the bare minimum required by law, conducting cursory checks on their customers while trying to wash their hands of any real responsibility for their distributors’ role in Russian diversion...

The Subcommittee’s inquiry found:

• The semiconductor manufacturing industry has not increased its complianceefforts effectively or fast enough to combat Russian diversion efforts.
• Exports from AMD, Analog Devices, Intel, and Texas Instruments to multiple countries with entities identified as assisting in Russian diversion efforts were significantly elevated in 2023 compared to exports prior to Russia’s war in Ukraine.
• Since the start of 2024, AMD, Analog Devices, Intel, and Texas Instruments have each identified and blocked sales to entities potentially involved in Russian diversion. However, these sales could have been identified and blocked earlier and faster with more proactive compliance regimes.
• Export controls compliance policies at AMD, Analog Devices, Intel, and Texas Instruments fail to meet best practices and recommendations from the Department of Commerce and non-governmental organizations. All (except for AMD) have failed to timely respond to external tracing efforts, and each presently lacks sufficient internal auditing and distributor auditing related to export controls compliance...

Accordingly, this report makes the following recommendations:

1. Semiconductor manufacturers should respond to external tracing efforts thoroughly and in a timely manner.
2. Semiconductor manufacturers should annually audit their entire export controls compliance programs, and audit targeted processes more frequently—particularly when problems arise or regulations change.
3. Semiconductor manufacturers should implement policies to provide increased visibility into export controls compliance in their distribution chain, including yearly auditing of all of their distributors’ export controls compliance.
4. Semiconductor manufacturers should routinely submit export control compliance plans for review and comment by the Department of Commerce’s Bureau of Industry and Security (BIS).