This article was originally published in Der Spiegel and written by the paper’s Oliver Imhof, as well as Airwars’ Sanjana Varghese and Nikolaj Houmann Mortensen. The original German-language version can be read here.

It is the workhorse of the Russian armed forces in Ukraine: the Orlan-10 drone provides important reconnaissance data, corrects artillery fire and can even be equipped with grenades. It is one of the most used drones by the Kremlin’s forces, heavily involved in the destruction of Ukrainian cities.

Research by SPIEGEL and the British organisation Airwars now shows that components from numerous German manufacturers may have ended up with the drone manufacturer via the import company SMT iLogic – despite sanctions against the manufacturer. The German companies include Infineon, Würth and AMS Osram.

The products include microchips, thermal sensors, cameras and antennas. Many are shipped indirectly through hubs in China, Hong Kong and elsewhere. It is unclear whether the companies intentionally violated sanctions.

“Producers of specialised components often do not know in detail what their products can be used for,” said Gabriel Felbermayr, director of the Austrian Institute for Economic Research (WIFO). “Still, it’s surprising that German exporters don’t smell a rat when large quantities are supplied to dubious companies with which there have been no or no substantial business relations before, and where presumably very good prices can be found.”

190 shipments

Nearly 18 months after Russia’s invasion of Ukraine, the West has struggled to cut off supply to Moscow’s war machine. Both the US and the EU imposed sanctions aimed at disrupting supply chains, and many Western companies released public statements after the invasion stating they would not be selling products to Russia or Russian companies.

Yet multiple reports have found foreign components in large numbers in military equipment used by Russian forces. Trade has been facilitated by a complex network of transshipment hubs, shell companies and other diversionary mechanisms that have limited the impact of sanctions and kept goods flowing into Russia.

Nevertheless, according to several reports, foreign components are repeatedly found in Russian military equipment; including the Orlan-10. A complex network of transshipment points, shell companies, and other diversionary mechanisms facilitates the trade.

While the drone manufacturing Special Technology Centre (STC) has been sanctioned by the US since 2016, SMT i-Logic has seemingly been able to import huge volumes of microelectronics and components used in the Orlan-10 for years. An investigation by Reuters and the UK think tank RUSI uncovered that iLogic operates from the same address in St. Petersburg as the Orlan manufacturer, and that iLogic was established by senior STC executives shortly after Russia’s invasion of Crimea.

In response the EU placed SMT-iLogic on its sanctions list in February 2023, and banned EU companies from supplying electronic goods to the company.

Between the beginning of February and the end of September 2022, products from around 20 German companies or their subsidiaries were sold to SMT iLogic, a review of commercially available data shows. This includes a total of just over 190 shipments, including from Infineon, Würth Elektronik and AMS Osram. Goods from German semiconductor giant Infineon alone were shipped 55 times.

Infineon said it had “instructed all distribution partners worldwide to take reliable measures to stop deliveries of products or the provision of services on behalf of Infineon that violate the sanctions… It is extremely difficult to control the resale of a product throughout its life cycle. Nevertheless, we have taken all measures at our disposal to ensure compliance with the sanctions not only according to their wording but also in line with their spirit.”

Würth said in a statement that “the companies of the Würth Elektronik Group do not deliver to Russia from Germany or any other country. Incidentally, all deliveries abroad are checked for compliance with applicable embargo regulations using an established export control system.”

Many chips also found in civilian devices

AMS Osram said it was taking the allegations seriously and would launch an investigation. After reviewing the case, AMS Osram says the shipments were “very simple LED light sources.”

Despite reports of widespread use of the Orlan-10 in Ukraine, some 87 shipments of parts to SMT iLogic this year came from nine different German electronics companies or their subsidiaries. Dozens of shipments from German companies were sent in the month following the imposition of EU sanctions, although no shipments came directly from Europe during that period.

Despite the sanctioned buyer, exporting companies frequently state in customs forms that products are not intended for military purposes They include semiconductors and heat sensors, often in large quantities. A shipment from Yilufa Electronics via Shenzhen in China in March 2023 contained 500 “inductors and wedges for wide applications in the manufacture of industrial equipment.” They had been supplied by Würth Elektronik, a German manufacturer.

Although some shipments contain semiconductors, many types of chips installed in drones are also found in various civilian devices, explains Chris Miller, author of “Chip War” – a book about the global trade in semiconductors. It is extremely difficult to clearly identify the origin of components, he says, because they are traded worldwide in sold in large quantities and used in everything from smartphones to dishwashers to cars. Millions of chips for everyday applications are available on the world market, and Russia needs only a fairly limited number of components to build drones, Miller said.

“So that adds to the difficulty because then you may only need to smuggle in a thousand chips—depending on the type of chip, you can often fit that in just a couple of suitcases,” he says.

As the distribution networks after manufacturing are so complex, sanction control is a challenge, he says. “Once the chips leave the factory, they are sold not only to end users, but also to distributors who resell them to other distributors and end users. That’s really where the enforcement challenge emerges.” So it’s difficult for manufacturers to control exactly where their products end up. Gabriel Felbermayr therefore suggests that intermediaries who resell to Russia could be sanctioned.

Impossible to hide

Customs data shows that manufacturers rarely, if ever, export products directly to SMT iLogic. Instead, most appear to have been sourced from distributors and microelectronics companies. The companies supplying the parts to SMT iLogic are mostly Chinese firms, with some also based in other countries such as Serbia, Turkey and India.

Other companies, such as Hong Kong-based Asia Pacific Links, which supplied SMT iLogic components worth several million dollars, are owned by Russians living abroad. Another export company, Industrial Components Weirich, is run by a 58-year-old Russian-German from a suburb of Saarbrücken, according to Die Welt. According to customs data, this company sent at least 130 shipments to SMT iLogic between Russia’s invasion and the end of September 2022, and delivered integrated circuits to SMT iLogic as late as February 2023 – before EU sanctions were imposed on SMT iLogic. The company did not respond to SPIEGEL’s request for comment.

While most of the shipments went from China to Russia, both Industrial Components Weirich and Turkish and Chinese companies sent dozens of shipments directly from Hamburg and Waldbrunn to St. Petersburg in the fall of 2022 to February 2023.

Erlend Bollman Bjørtvedt, the head of Corisk, a Norwegian risk analysis consultancy, closely monitors the trade flows of semiconductors from Europe after the start of the Ukraine war. “It’s not really possible to hide trade anymore,” says Bjørtvedt . “So companies are taking a very, very big risk.”

One indication, for example, is when a company that previously shipped only small or no quantities of components suddenly ships large quantities to countries such as Kazakhstan. This often indicates “shadow trade,” in which the components are subsequently exported from that country to Russia.

“What we see is that many Western companies have multiplied their normal sales to Kazakhstan by 10 times, 20 times, 100 times – sometimes 1,000 times. They experience enormous growth in their exports, and such patterns should always serve as compliance warnings, red flags waving inside the corporate organization,” he said.

Bjørtvedt acknowledges, however, that once components enter Russia through complex distribution networks, it becomes difficult for the manufacturer to exercise control. In such cases, he said, it is more likely to be an involuntary parallel import. Companies whose products unwittingly appear in the conflict then usually distance themselves publicly.

“The sanctions regime against Russia is difficult to control because it specifies export bans on certain products, rather than banning exports in general but allowing exceptions. The latter would be easier to enforce,” says Gabriel Felbermayr.

The production of this investigation was supported by a grant from the Investigative Journalism for Europe (IJ4EU) fund.