By Murad Rakhimov | 2026-02-23

Russia wants to build its own semiconductor industry, but the technology it hopes to master dates to the era of early smartphones. A planned trillion-ruble state holding aims to revive chip production, even as factories stall, imports shrink and the country falls further behind the global race for microelectronics.

The government plans to create a state-owned microelectronics holding company, with one proposed name being the United Microelectronic Company. Its primary objective is to begin producing chips using 28-nanometer process technology -- a standard global manufacturers adopted more than a decade ago.

Entrepreneur Denis Frolov, owner of Astra Group, is considered a leading candidate to head the company. Astra's profits surged after Russia's 2022 full-scale invasion of Ukraine, according to Forbes.

Funding the project

Authorities plan to spend about 1 trillion RUB (about $13 billion) on the initiative through 2030. The state will cover roughly three-quarters of the funding, while Sberbank will invest 250 billion RUB (about $3.3 billion).

The funds are intended both for factory construction and for workforce training, materials science, chemical production and domestic manufacturing equipment.

Lawmakers have proposed an additional source of financing: a levy on companies that import or manufacture electronic goods. Beginning in September 2026, manufacturers and importers of products such as smartphones, laptops and home appliances must pay a "technology contribution."

The fee is expected to vary by product category and could reach up to 5,000 RUB (about $65) per unit. Analysts expect the measure to raise production costs and push consumer electronics prices up by 4% to 6%.

Zelenograd legacy

The weaknesses of Russia's electronics sector are evident in Zelenograd, a city about 37 kilometers (23 miles) from central Moscow that historically served as the country's microelectronics hub.

Plans for the new holding include modernizing facilities of NM-Tech, which inherited infrastructure from the failed state project Angstrem. Semiconductor expert Denis Shamiryan wrote that the plant was originally supposed to begin operations in 2014.

Angstrem traces its roots to a research institute founded in 1963 and once produced chips for Soviet electronics. Its subsidiary Angstrem-T acquired equipment from an AMD facility in Dresden in the late 2000s, but the machinery remained stuck in a Rotterdam warehouse for years. The project ultimately collapsed, and the enterprise went bankrupt.

NM-Tech now plans several new microchip projects, though implementation is expected only in 2028–2030.

Zelenograd is also home to Mikron, Russia's only serial chip producer capable of manufacturing at 90-nanometer topology. Demand for domestic chips surged after Western suppliers withdrew following the invasion of Ukraine, while Chinese components became far more expensive. By 2023, Mikron's capacity was insufficient, and the company faced lawsuits over undelivered bank-card chips.

Problems extend beyond Moscow. Authorities recently delayed the launch of the Karat microchip factory in Yekaterinburg until late 2027, citing design readiness issues. Local media later reported construction had not yet begun.

Billions and nanometers

Officials justify the new holding by pointing to a broader crisis in the industry. The Ministry of Industry and Trade acknowledges that the state electronics development program fell short by 33.1 billion RUB (about $428 million), with deficits since 2024 running into tens of billions more.

Industry groups say output dropped by more than a quarter in 2025 and many companies face severe shortages of working capital.

Technological lag also remains stark. Mikron plans to begin serial production of 65-nanometer chips only in 2028 -- roughly two decades behind global leaders. The 28-nanometer node targeted by the new program reflects technology widely adopted around 2010.

Vladimir Teslenko, a candidate of chemical sciences, described that level as "the limit in Russia for now."

"Judging by open information, Russian developers are not yet joining the technical race for nanometers and angstroms," he wrote in a column for Online Patent in October.

Journalist Konstantin Agafonov, who studied the industry, said revival requires raw materials, skilled workers, specialized equipment and large financial investment.

"With all these indicators in modern Russia -- it's a disaster. Perhaps only the situation with personnel looks a little better. Universities train specialists, though many of them, having gained experience, move abroad," he told Kontur.

He added that even silicon wafer production depends on imported inputs and foreign equipment, while advanced lithography systems are not produced domestically.

"Now about the money. Intel built a factory in Germany for $17 billion. Another giant -- TSMC -- for $40 billion in the USA. The trillion rubles reported in the news is a tiny sum for such an industry -- only about $13 billion," the expert concluded.

Desperate move?

Some analysts question whether the new holding can succeed at all.

Alisher Ilkhamov, director of the Central Asia Due Diligence center in London, called the decision to produce chips on older nodes "a desperate step" driven partly by military needs.

"Apparently, even purchasing chips from China has become problematic… But whether this will help with the mass production of chips is a big question," he told Kontur.

Political analyst Anvar Nazirov was even more skeptical, saying the project is unlikely to deliver technological independence.

"It is a typical corrupt project for embezzling budget money. Just like Skolkovo," he told Kontur.

Nazirov described the initiative as theft on a massive scale and suggested the Kremlin's leadership is too focused on the war in Ukraine to monitor such projects closely.

"I have the feeling that Vladimir Putin agrees to everything and does not even pay attention to it," he said.