Russian Defense Firms Shift Operations to China
Companies are establishing Chinese subsidiaries and acquiring local technology to maintain defense production.
Updated on Oct. 24, 2026 in Semiconductors
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Between 2024 and 2026, Russian defense firms have increasingly shifted manufacturing operations to China to circumvent Western sanctions. This transition includes the registration of new subsidiaries and the direct acquisition of intellectual property from Chinese contractors.
Why it matters
By leveraging Chinese manufacturing capacity, Russian entities are working to sustain defense output while facing ongoing international sanctions. This collaboration also facilitates joint research efforts, which help these firms reduce testing costs and accelerate their development timelines.
The Russian firm Element has registered at least four subsidiaries in China and acquired over 100 million rubles of power electronics intellectual property. Additionally, firms are preparing for the production of specialized five-axis machine tools in the Shaanxi province.
The players
Element
This Russian company is a key player in the microelectronics industry and has faced US sanctions since 2022.
StankoMashStroy
A Russian manufacturing plant that produces machine tools and has been under US sanctions since 2023.
Shijiazhuang Tonhe Electronics
A Chinese technology firm that provided power electronics intellectual property to Russian partners.
United Microelectronics Corporation
A major semiconductor foundry that explored potential investment opportunities in Chinese factories.
Shaanxi Stermasi Technology
A Chinese company registered by the Russian firm StankoMashStroy to facilitate localized production.
The details
Russian companies like Element and StankoMashStroy are actively partnering with Chinese entities to bypass US sanctions imposed in 2022 and 2023. These partnerships involve establishing local production lines for critical components to ensure a steady supply chain for defense-related manufacturing.
Timeline
2022: Element became subject to US sanctions.
2023: StankoMashStroy became subject to US sanctions.
2024: Element began assembling chips in China.
2025: Votkinsk Plant and Kupol operated as StankoMashStroy customers.
April 2026: Element acquired power electronics intellectual property in China.
The Tech Race
This move represents a departure from traditional reliance on Western or domestic production, signaling an attempt to bypass the constraints of the U.S. Office of Foreign Assets Control sanctions programs. It positions these Russian firms to utilize Chinese manufacturing infrastructure to sustain their technological capabilities.
While this shift is primarily geopolitical, it underscores the difficulty of enforcing international trade restrictions in the high-tech sector. Increased production of specialized machine tools in China could eventually alter the regional availability of various industrial components.
The takeaway
The ongoing collaboration between Russian defense entities and Chinese manufacturers highlights a broader trend of relocating production to avoid trade restrictions. Experts anticipate that this integration will continue to expand throughout 2027 unless secondary sanctions effectively deter Chinese involvement.
Further reading
Learn more about the evolving landscape of global chip production in our Semiconductors section.
Source note: This article includes information reported by RBC-Ukraine.
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