The US Department of Industry and Commerce has banned the supply of high-end smartphones to the Russian Federation. Will Russian buyers be able to buy sanctioned gadgets?

The document, entitled “Introducing additional sanctions against Russia and Belarus in accordance with the Export Control Regulations (EAR) and clarifications on existing controls”, extends and strengthens the existing sanctions against Russia and Belarus in this concerning “luxury goods”. The resolution went into effect on February 24, 2023, but full details of the additional sanctions imposed are not known until now. The luxury product list included 276 product categories, including “luxury” smartphones with a shipping price of over $300. They are represented on the Russian market by three brands: iPhone, Google Pixel and Motorola. Of these, only a few budget or legacy models are exempt from the new restrictions.“The particularity of this restriction is that it is not very important how a smartphone is made, the main thing is that it uses at least 25% of American technologies,” explains Eldar Murtazin, leading analyst at Mobile Research. Group.Russia’s main iPhone supplier is the UAE and EAEU countries. Thanks to a single customs area, it is possible to deliver sanctioned goods to Russia via neighboring countries, and payments for the goods seem legalFollowing this description, we can say that almost all mid-range and high-end budget Chinese or Korean smartphones may be subject to regulation, since the operating system, processors and modems, as well as intellectual property for a important part of the software and the base of elements are somehow related to the United States, notes Murtazin, and underlines the opacity of the calculation of the “same 25%”.”Among American brands, Russian buyers of electronics are only interested in Apple, but today Russia’s main supplier of iPhones is the United Arab Emirates (UAE), where there are accumulating devices purchased in different regions of the world. That is, all iPhone deliveries are the responsibility of intermediaries. The only question is that when the iPhone is activated, the product information goes to Apple, and they see in which country and to whom the goods were sold. In theory, the US authorities may have questions to the intermediary – why this model was first activated in Russia, “says the source Rossiyskaya Gazeta.” in the field parallel imports.To reduce risk, some intermediaries activate iPhones in their country so that information about the first activation is transmitted from the region where the intermediary is actually located, and only then the goods leave for Russia. This is done in order not to lose contracts with Apple, but, as Russian sellers of consumer electronics note, users see that the phone has already been turned on and often refuse to buy such devices.In the future, a price differentiation of the cost of the iPhone is possible, when the intermediary company will include its risks in the price, and in this case, the non-activated iPhones will become more expensive than the activated ones.According to Murtazin, the existence of the EAEU bloc with its de facto single customs area makes it possible to supply sanctioned goods to these countries, and payments for the goods appear legal and justified by any outside body. “So last year, about 6 million smartphones were delivered to Armenia, an all-time high, while the country’s population is less than three million,” notes the Mobile Research Group analyst.Representatives of Russian mobile operators commented on the politically correct and optimistic new restrictions package and assured that Russian customers will benefit from the maximum range of devices in all price categories.Major Chinese smartphone makers declined to comment.