Indian firm smuggles US GPUs into Russia amid sanctions

In a bid to circumvent Western-imposed sanctions on Russia over the war in Ukraine, Indian firms are reportedly supplying US AI GPUs to Russia.  

Following the sanctions, Russia now has to smuggle advanced processors from US companies like Nvidia and AMD to power its AI systems and processes, thanks to the assistance of Indian firms.

Indian pharmaceutical firms supply AI products

A Bloomberg report shows that an Indian pharmaceutical firm has been selling Dell servers to Russia and busting sanctions imposed by the US.

It has been found that between April and August this year, the Indian pharmaceutical firm, Shreya Life Sciences shipped to Russia 1,111 units of PowerEdge XE9680 servers made by Dell and priced at hundreds of millions of dollars.

The Dell servers are fired by 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 Indian trade data shows that shipments, which were legally conducted under the Indian regulations began in September 2022, following US sanctions on Russia which closed its western markets. The consignment was sent to two Russian companies, Main Chain Ltd. and I.S LLC.

According to the Bloomberg report, the servers track back to Malaysia where they were initially sourced by Dell’s subsidiary in India. After they landed in India, the pharmaceutical firm then shipped them to Russia, and this was found out after over 800 units of the PowerEdge XE9680 servers showed Malaysia as the country of origin.

During the period between March and August this year, Malaysia exported 1,407 Dell servers to India. Bloomberg’s multiple inquiries for comments from Malaysian officials or the Malaysian Investment, Trade, and Industry Ministry regarding the exports were unfruitful.

Shreya saw a surge in exports to Russia

At the beginning of April 2024, Shreya’s began to see a surge in its exports to Russia of the Dell servers, at an average price of $260,000 per unit. HS code 847150 is the export code in which the servers are classified, which are part of the dual-use goods list restricted by the European Union and the United States in order to restrict Russian military access.

The primary recipient of Shreya’s exports, Main Chain was registered in January 2023, and the person at the helm Anastasia Obukhova previously headed small tourism companies.

Founded in Moscow by Sujit Kumar Sign in 1995, Shreya Life Sciences was a pharmaceutical products distribution-focused company that was later divested into manufacturing. Additionally, the company added restricted machines export to Russia in September 2022, on top of its pharmaceutical exports which totaled $22 million between January 2022 and August this year.

Shreya, in its first shipment, was computer hardware sent to a Russian trading company Lanprint Ltd., which the United States sanctioned in September 2023 for $755,333. Another client of Shreya’s, Silkway LLC, was sanctioned. The pharmaceutical firm shifted its exports to Main Chain Ltd. and I.S LLC, which are both still not on the US sanctions list.

In other cases, Taiwan Semiconductor Manufacturing Company (TSMC), which is the biggest contract chipmaker in the world decided to immediately stop exports to chip designer and Chinese company Sophgo after a Huawei processor carried one of their chips.

Huawei which is China’s most important chip company, is also under US sanctions on exports to keep the Chinese industry and military at a disadvantage.

Recently, the United States Commerce Secretary, Gina Raimondo said she is under ‘no illusion’ that export sanctions on the American-made chips from Nvidia, AMD, and other semiconductor companies are the best in the world.

However, she acknowledged that the reports surfacing show that sanction controls are a moving target, which means they are a game of plug-a-hole, both for companies seeking compliance and regulators seeking enforcement.