In the early 2000s, President Vladimir Putin launched a large-scale restructuring of Russiaʼs military industry. One of the key stages of this reform was the creation of the large state concern “Rostec”. It united the enterprises of the defense complex under a single management.
The creation of “Rostec” and other giant corporations was supposed to simplify work on large projects, achieve economies of scale, simplify work with foreign customers and strengthen Russiaʼs position on the world arms market. However, this reform created monopolies and harmed small and medium-sized enterprises — without them, innovations cannot appear in any market.
Western sanctions have cut off Russia (although not completely) from the supply of modern microcircuits. Russia needs them to produce communication systems, drones and high-precision missiles. This became a serious challenge for the military industry.
Even before the invasion on February 2, 2024, Russia stockpiled imported chips, anticipating potential sanctions. At the same time, it tried to establish its own production. Russia has enterprises capable of producing simple semiconductors, but it is decades behind in the production of microcircuits. For example, Angström, which produced microcircuits for military equipment and was sanctioned even before the start of a full-scale invasion, was never able to arrange purchases and declared itself bankrupt. In 2020, it was nationalized and tried to restart production, but failed. Another example is the Micron Corporation. It produces chips for passports and bank cards, but cannot produce a chip for a modern missile.
The lack of microelectronics is particularly acutely felt by manufacturers of UAVs and EW systems. They purchase the necessary microcircuits through China and Turkey.
In 2022, Western countries strengthened the sanctions regime. To circumvent it, Russia is creating its own analogues, importing the equipment it needs through the countries of Central Asia and increasing military cooperation with Iran and North Korea.
CNA / «Бабель»
Another major problem facing the Russian military industry is the shortage of modern machine tools, especially CNC machines, which are needed to produce high-precision weapons. Western countries no longer supply them, so Russia is looking for workarounds. It buys part of the machines in China or copies foreign samples and produces analogues from Chinese parts. For example, this is done by the concern "Kalashnikov" and "Kovrovsky Electromechanical Plant", which produces lathes and milling machines.
In recent years, Russia has increased imports of CNC machine tools using "gray" schemes.
CNA / «Бабель»
Currently, the Russian defense industry quickly and reliably produces modernized versions of Soviet-era weapons. Its T-72B3 tanks and Su-30/35 fighters, created on the basis of Soviet designs, are ordered by the Russian army and bought by foreign ones. Thus, Russia remains one of the worldʼs largest arms exporters.
Russia faces serious problems when developing and producing new, modern weapons systems. The most striking examples are the Su-57 fifth-generation fighter, the Armata tank and the Severodvinsk-class submarine, which are still not in mass production. The shortage of both modern machines and modern microcircuits makes itself felt. In mass production, due to outdated workshops and poor quality control, there are too many defects in serial copies for them to work reliably "in the field".
Kamikaze drones and high-precision missiles remain the key weapons for Russia in the war with Ukraine. Russia still produces them in sufficient quantities, despite sanctions and export restrictions — and this is unlikely to change.
The lack of modern machines hit the production of missiles (“Kalibr” missiles, “Iskander” missiles and X-101/102 missiles) harder than the lack of microprocessors. Judging by indirect data, the volume of rocket production and their quality are falling. This is happening fast enough to force Russia to conserve missiles, but not fast enough to stop the firing altogether.
At the same time, Russia was able to increase the production of the Geran-2 kamikaze drone modeled after the Iranian Shahed-136. Studies of these drones show that almost all of their electronic components — controllers, microprocessors, circuit boards, stabilizers — are manufactured by Western companies. Such components are produced in multimillion-dollar batches for household appliances, so it is impossible to fully control their sale, especially in chains of five or six resellers.