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Russian Microelectronics Giant Kremniy El Suspends Operations After Drone Strike Amidst Ongoing Conflict - IC Manufacturing

The Kremniy El microelectronics plant, one of Russia's largest producers of semiconductor components, has been forced to halt production following a significant drone attack attributed to the Armed Forces of Ukraine. The strike, which took place during the night of January 23-24, 2025, involved six drones that targeted the plant's production areas and storage facilities in Bryansk, causing extensive damage and halting operations. The attack also disrupted critical energy supply infrastructure, further complicating recovery efforts. Fortunately, no casualties were reported among the workers.

This is not the first time the plant has been targeted during the ongoing conflict. Kremniy El has previously faced similar drone assaults, with two attacks occurring in just the last three months, including one in October 2024. The plant has long been a key target due to its strategic role in Russia's defense and technology sectors. It manufactures essential components for military systems, including missiles and air defense technologies, making it a focal point in the broader geopolitical struggle.

In the aftermath of the attack, Russian air defense forces reported intercepting 37 drones, including 18 reactive drones, in the vicinity of the Bryansk region. Despite these efforts, the six drones that struck Kremniy El caused significant damage, with parts of the factory's production lines and warehouses sustaining destruction. The plant has yet to provide an estimate on the cost of the damage or a timeline for resuming production.

Kremniy El plays a crucial role in Russia's semiconductor industry, with over 800 clients across the nation, many of which are defense-related. The plant specializes in manufacturing power modules, semiconductor devices, and integrated circuit chips, which are vital components for military systems like the Pantsir and S-500 missile defense systems. Its output is also key to replacing imported electronics, making it central to Russia's import substitution strategy, particularly following the sanctions imposed after 2014.

The recent attack adds another layer of uncertainty to Kremniy El's future operations. In November 2024, the plant had announced a major expansion plan worth 18 billion rubles, focusing on developing new semiconductor technologies and scaling production to meet growing demand. However, the ongoing risks posed by drone strikes and the broader geopolitical instability may jeopardize these plans, especially as the plant faces mounting pressure to secure its production capacity.

UCE GROUP

As Russia grapples with an increasingly complex semiconductor manufacturing landscape, domestic production remains critical. The country has struggled to reduce its dependence on foreign semiconductor technologies and equipment, with state-funded initiatives aimed at bolstering the local semiconductor sector. In 2024, the Russian government allocated over 240 billion rubles to support domestic chip production, with the goal of achieving self-sufficiency in semiconductor manufacturing by 2030.

Kremniy El’s vulnerability highlights the intersection of military and industrial interests in modern warfare. The plant's significance in the microelectronics supply chain has made it a prime target, underscoring the strategic importance of technological infrastructure in the ongoing conflict. The future of Kremniy El will depend not only on its ability to recover from this latest attack but also on how effectively it can navigate the shifting tides of global and domestic geopolitical pressures.

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