WASHINGTON — U.S.-made technology continues to fall into Russian hands in Ukraine as a key national security office remains critically underfunded, according to a report from Senate Democrats released Wednesday.
The report, spearheaded by Sen. Richard Blumenthal, D-Conn., comes just as officials in the incoming Trump administration call for massive cuts to government spending. While their arguments have focused on cutting government waste, the new report highlights how existing capacity shortfalls in key government agencies are already undermining U.S. interests.
In the 30-page report, Democratic staff on the Senate Permanent Subcommittee on Investigations say the Commerce Department’s Bureau of Industry and Security (BIS)’s enforcement of export controls “is a shadow of what it should be, and inadequate at every level.”
The agency, it said, is asked to fulfill a key national security function “on a shoestring budget” using “laughable technology that has not been meaningfully updated for nearly two decades” despite more modern alternatives in use not only in the private sector but also at other government agencies.
The end result: U.S. microchips and other equipment continue to be found in Russian missiles, armored vehicles and drones.
The report is the result of a 15-month probe led by Blumenthal in which the leaders of the largest U.S. semiconductor producers testified before the panel and were grilled by both Republicans and Democrats over Russia’s ability to acquire and use their products despite export limitations.
An earlier version of the report was released ahead of the hearing in September, finding that export controls at the U.S.’s four major chipmakers — Advanced Micro Devices (AMD), Analog Devices, Intel and Texas Instruments Inc. — have been “abjectly lacking.”
The new report shows part of the issue may be lack of federal enforcement. The BIS “has largely left the decision of how to comply with the law to semiconductor companies themselves,” the report finds. It also accuses the agency of failing to charge the companies with sufficiently serious violations or imposed fines.
A Department of Commerce spokesperson told NBC News that under the Biden administration, “BIS has implemented the most robust export controls in history, and crucially, we’ve done so in concert with our allies to deny Russia the items it needs to maintain its war machine.”
“While BIS’ budget has been stagnant for a decade, the bureau works diligently around the clock to meet its mission and safeguard U.S. national security,” the spokesperson said, adding that with the necessary resources from Congress, as Commerce Secretary Gina Raimondo and bipartisan members of Congress have called for, “the agency will be even better equipped to address the challenges that come with our evolving national security environment.”
Trump’s pick to lead the agency under his second administration, billionaire Howard Lutnick, at times encouraged calls to slash funding to federal agencies and even empowered Elon Musk to take the helm of the newly created Department of Government Efficiency (DOGE). Musk has called for cuts of as much as $2 trillion in federal spending — more than the entire discretionary budget.
NBC News has reached out to the companies named in the report but has so far only heard back from Texas Instruments and AMD.
“Texas Instruments (TI) strongly opposes the use of our chips in Russian military equipment and the illicit diversion of our products to Russia. TI stopped selling products into Russia and Belarus in February 2022. Any shipments of TI chips into Russia are illicit and unauthorized,” the company said in a statement. “We devote significant time and resources to developing, implementing and refining policies and procedures to combat illicit diversion and keep chips out of the hands of bad actors. If we find evidence indicating product diversion, we investigate and take action.”
An AMD spokesperson said in a statement: “AMD shares the goal of preventing Russian military access to our products outlined in the Senate PSI report and has no tolerance for their illicit diversion into Russian weapon systems. We ceased all sales and tech support for our products to Russia and all restricted regions immediately following Russia’s invasion of Ukraine. Our export compliance program is developed with guidance from the U.S. Bureau of Industry and Security. Before we make a sale, we undertake measures to ensure we know who we are selling to, including a refusal to do business with any company that may have a direct or indirect association with a sanctioned entity. AMD is continuing our collaborations with BIS and the Disruptive Technology Strike Force on this challenging but critical issue.”
Although the U.S. and its Western allies have imposed an array of sanctions to cripple Russia’s economy and cut off the Kremlin’s access to key parts used to build weapons, Russia’s production of artillery, missiles and drones has dramatically increased, according to a report from over the summer. The report from the Royal United Services Institute, a U.K.-based defense think tank, found that Russia obtains raw materials and weapons components from NATO member countries, and greater collaboration is needed between the nations to choke Moscow’s access.
Export controls have emerged as a critical national security tool over the last two decades. Democrats on the investigative panel said the efforts are not only central to crippling Russia’s advances in Ukraine, but also to slowing China’s progress to match the U.S. in artificial intelligence.
In a letter to Raimondo on Wednesday, Blumenthal outlined the report’s findings and asked the agency to take “aggressive steps to cut the flow of U.S. semiconductors into the Russian war machine.”
He referred to a Bloomberg News article from earlier this month that reported Western officials have been continuously frustrated to find Russian weapons “chock full” of American-made electronic components despite a flurry of trade controls. In fact, the report found that, in some cases, Russian distributors have simply integrated ordering information from Texas Instruments’ online shop, TI store, into their offerings, allowing them to see and order up-to-date parts with the click of a mouse. The items then get routed through Hong Kong or other countries before arriving in Russia.
TI told Bloomberg it devotes significant time and resources to keep its products out of Russian hands. In September, a TI official told a Senate hearing about the efforts it makes to control exports to its products.
“I want to be very clear: TI strongly opposes the use of our chips in Russian military equipment. Any shipments of TI products into Russia are illicit and unauthorized,” Shannon Thompson, the company’s assistant general counsel, said during the Senate Permanent Subcommittee on Investigations hearings in September. “We work hard to prevent the illicit diversion of our parts into Russia. Every level of our company takes this seriously.”
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