Russia Tightens Microelectronics Localization Rules

The Ministry of Industry and Trade has officially enacted changes to government resolution No. 719. This regulatory adjustment marks a pivotal moment for the domestic electronics industry. The primary goal is to refine the criteria used to determine the 'domestic' status of microchips, ensuring that the classification reflects actual production value added within the country.

Previously, the system may have allowed for broader interpretations of localization. However, the new amendments tighten these requirements significantly. The focus is now strictly on the technological operations that take place on Russian soil. This shift is designed to foster a more robust internal manufacturing ecosystem by incentivizing the completion of critical production stages within the nation's borders.

The revised framework introduces a multi-tiered structure for microchips, categorized by their degree of localization. This approach allows for a more nuanced recognition of products that are partially manufactured domestically versus those that are fully integrated locally. The system relies on a points-based mechanism to determine these classifications.

Under the new rules, microchips must achieve a specific threshold of points to be recognized at a certain level of domesticity. Crucially, these points are awarded only for operations performed within Russia. The criteria for earning points likely include:

• Wafer fabrication and processing
• Assembly, testing, and packaging
• Design and engineering stages

This scoring system ensures that the final classification is a direct reflection of the depth of localization achieved by the manufacturer.

The implementation of these stricter standards is expected to have profound implications for the Russian technology sector. Companies involved in the design and production of microelectronics will need to re-evaluate their supply chains and manufacturing processes to meet the new point thresholds. This may lead to increased investment in local facilities and the development of domestic technological capabilities.

Furthermore, the policy shift aligns with broader national economic strategies aimed at reducing reliance on foreign imports and strengthening technological sovereignty. By defining 'domestic' so strictly, the government is effectively setting a roadmap for the industry's future development, prioritizing self-sufficiency in critical components like microchips.

In summary, the Ministry of Industry and Trade has significantly altered the landscape for microelectronics in Russia through amendments to resolution No. 719. The introduction of a detailed, points-based system for evaluating the 'domestic' status of chips underscores a commitment to deepening local manufacturing capabilities. As the industry adapts to these new requirements, the focus will remain on the specific technological operations conducted within the country, reshaping the future of Russian microelectronics.