Putin ties tech sovereignty to the war against Ukraine as Sberbank buys 41.9% of Element

Sberbank, Russia's biggest bank turned technology conglomerate, has taken a major stake in leading electronics producer Element, as Moscow pushes for sovereignty in the production of the high-tech components needed for the war in Ukraine.

Western nations have restricted Russia's access to critical technology, including semiconductors and microelectronics. But Ukraine has warned that Russia is increasingly able to replace smuggled Western components with its own technology.

Sberbank said late on Thursday it had acquired a 41.9% stake in Element from private equity fund Sistema and unidentified minority shareholders for 27 billion roubles ($355.73 million).

All three companies are targeted by Western sanctions over the war.

Looming showdown between Sberbank and Rostec

Russian newspaper Kommersant, citing sources, reported that under the deal, Element's manufacturing assets will be integrated into Sberbank's tech arm. Sberbank, which rebranded as Sber in 2020, now calls itself a technology company.

Element manufactures integrated circuits, semiconductor devices, and microchips, accounting for about half of Russia's microelectronics production.

Sberbank said it will make a buyout offer to minority shareholders.

But it now looks set for a showdown with state-owned defence and technology conglomerate Rostec, which owns 41.6% of Element and was quoted by Russian news outlets as saying it will not sell its stake.

Rostec - headed by Sergei Chemezov, a longtime friend of Russian President Vladimir Putin - helped create Element, merging its own electronics manufacturing assets with those of Sistema.

Putin call for 'Made in Russia' military smart tech

Moscow has stepped up long-range strikes on Ukraine, using drones and missiles, as it presses its position amid US-brokered efforts to end the conflict.

Speaking at the World Economic Forum in Davos, Switzerland on Thursday, Ukraine's President Volodymyr Zelenskiy called for increased scrutiny on Russia's tech imports, saying it would not be able to produce missiles without "critical components sourced from China, Europe, the United States, and Taiwan."

Following Thursday's announcement of the Element stake purchase, Sberbank CEO German Gref took part in a meeting on the microelectronics industry chaired by Putin at the Kremlin.

"Leading countries and unions, such as the United States, China, and EU countries, are now focused on strengthening sovereignty over key elements of the production chain in electronics," Putin said in remarks released by the Kremlin.

Strengthening Russia's military capacity and advances in artificial intelligence and quantum computing were only possible with a domestic manufacturing base, he added.

"It is obvious that the Russian army should be equipped with smart technology based on our own solutions. This fully applies to the civilian sector as well," Putin said.

Rostec's leadership did not attend the meeting.

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