Thread by @maxseddon

As their yacht bobbed on the Mediterranean, the microchip executive snapped a picture of his Russian partner asleep on the deck.

He only knew the Russian by his first name, Maxim. But he knew Maxim was using a shadowy network to get the chips for the Russian defense industry.

Marc Rocchi’s qcompany Ommic desperately needed Maxim’s business to stay afloat. A few months earlier Rocchi had flown to Greece to hand-deliver Maxim 230 microchips — €45,000 worth. Maxim had, at one point, offered Rocchi “cash and women” for more, though he declined.

Rocchi knew his ultimate customer was NPP Istok, which makes electronic warfare systems for the Russian military. Specialist microchips like Ommic’s high-performance gallium nitride and gallium arsenide-integrated circuit boards are vital to defense manufacturers like Istok.

After Putin annexed Crimea in 2014, Ermakov had to cover his tracks to avoid sanctions and export controls.

But Rocchi knew who he was dealing with. In 2015, he wrote a letter that referred to Fly Bridge, a front company Ermakov set up, as “our official partner in Moscow”.

Today, Ommic has closed and Rocchi is awaiting trial in France, having been indicted in March. He denies charges of sending secrets to a foreign power that could harm the national interest, exporting dual-use goods to Russia, and submitting false documents.

The man pictured, Maxim Ermakov, has been sanctioned by the US and UK governments in the past fortnight as part of a major crackdown on the networks that Moscow’s intelligence services use to procure advanced western technology for president Vladimir Putin’s war machine.

Russia can’t make advanced chips on the level of the west and Asia’s. “It would be simply too expensive to produce it domestically and it would be militarily inconceivable to go without it,” says @crmiller1.

Instead, the Kremlin’s intelligence services smuggle them into Russia.

The KGB had an entire division, “Line X,” dedicated to stealing western technology.

When the first shoots of capitalism sprung up in the 1980s, avenues opened for Soviet enterprises to buy it on the open market — and for western businessmen to sell it to Moscow.

Irishmen Denis and Eoin Sugrue started exploring the Russian microtechnology market in the 1980s. The Cold War was over, but certain items could not be freely sent into Russia under export controls. Denis Sugrue learned that first-hand in 2005, when the FBI arrested him.

Within months, Sugrue was released after paying a fine for a customs labelling violation. In his memoir, Sugrue said he was able to demonstrate that he had sought to check the device did not need an export licence, while the buyer was also a civilian agency, not a military one.

Sugrue’s book was not widely read. Only half a dozen readers listed its Russian translation on Bookmate, an online reading app popular in Russia. The only one who finished it was a reader using the handle “Monar4”: Maxim Ermakov.

France shut down Ommic this year and sold off its assets to a US chipmaker.

But Istok — and Ermakov — are still active. Since the invasion of Ukraine, Istok has produced novel equipment for the Russian military – and used branches of the Ermakov network to source supplies.

This story, by @xtophercook and me, is a rare look into the inner workings of a Russian technology smuggling operation. And it shows the daunting game of whack-a-mole western governments have to play to stop the chips flowing:

on.ft.com/3Sxmdrb