A chip manufacture machine Photo: VCG

Chinese chip producers are looking at increasing inquiries from Russian firms cautiously, with no concrete progress made due to a series of factors ranging from the threat of US sanctions to payment issues, an industry source told the Global Times.

"There is indeed a pick-up in demand from Russia for various types of electromechanical equipment, and we are also trying to match up demand and supply, but domestic manufacturers are more cautious, and we have not learned that there is any substantial progress" from current inquiries, a senior industry expert familiar with the situation told the Global Times on Monday. 

Increased inquiries are being seen from Russian businesses amid Western sanctions related to the Russia-Ukraine conflict. Notably, Russia's card payment system is reportedly soliciting "a couple of Chinese suppliers" for microchips used in the Russian Mir payment system, according to Reuters. 

Russian companies are also looking at ploughs, valves, meters, machine tools, spare parts for excavators and wind drums, according to notices posted on the official WeChat account of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) in recent days. Semiconductors are on a list of products Russian companies are seeking. 

CCCME reportedly plans to hold a business-to-business meeting with Russian companies in May and June. 

Still, nothing concrete has come from the current inquiries. The impediments include factors such as funds, transportation, and US export control measures, and most Chinese companies still do not have substantial solutions for these issues at the moment, the insider said.

"Deals rely on companies carrying them out. Companies are in a risk-off mode, opting for a cautious approach in the face of continuous, escalating US-led sanctions on Russia," said the insider, noting companies are also concerned about payment issues.

In the field of chips, the insider said the business scale of bank card chips is "not large."

Industry data put Russian chip imports at a mere $500 million a year, which is less than 0.1 percent of global volume, although chip imports often appear in finished products and play a vital role in Russian industries and consumer use.

Experts noted that Russia's heavy industry is relatively strong, and the chips required are not as advanced as products in the sector of information and communications technology.

Xiang Ligang, director-general of the Information Consumption Alliance, an industry association, told the Global Times on Monday that Chinese manufacturers can easily meet the "very low technical standards (at 90 nm)" required for chips used by Mir bank cards, which are basically chips used for data storage. 

Xiang expected that demand for microchips from Russia will continue to rise amid the current situation. 

China has everything from production equipment to end products for chips, except for a small portion of production materials that need to be imported, Xiang said.

The Chinese government has repeatedly warned the US not to undermine normal business ties between Chinese and Russia companies.
While vowing to sanction Russia, the US has kept importing crude and uranium from Russia in recent weeks.