. Last Updated: 07/27/2016

Small Investment Could Reap a Hi-Tech Benefit

In few industries has the economic dislocation of the last half decade been so damaging as in the electronics industry. The leaders of the Soviet Union aimed to make the country one of the world's principal producers of electronics components. The Soviet Union spent the equivalent of hundreds of millions of dollars on plants and equipment, establishing 24 major semi-conductor production centers and a host of electronics enterprises. Today the challenge is to find long-term uses for this huge, ailing complex.

Though there are no supporting statistics to definitively prove it, it is likely that in 1991 just two Russian sites churned out over 1 million desktop computers between them. According to Sergei Orlov of the consultancy East/West Electronics, if you take the known commercial integrated-circuit output of the giant electronics conglomerates in Zelenograd and Voronezh and subtract the amounts which went to make televisions and other miscellaneous items, you can calculate the amount which was used to make computers. When these two conglomerates reached their brief peak in 1991 to 1992, they annually manufactured 600,000 single-user computers each.

According to market researchers IDC, even though Russia's computer market has been growing relatively strongly for the last three years, it has not reached the level of computer consumption to match the output of these two plants in 1991. That is not to say, however, that these early computers were well utilized: After they were shipped to their designated "customers," they were probably warehoused, destroyed or cannibalized. They had a reputation for poor design and terrible reliability.

These two plants, and a similar factory in Minsk, Belarus, called Integral, today have the best chances for long-term survival.

Zelenograd and Voronezh have partially built clean rooms able to support the manufacture of integrated circuits of 0.6 micron in size -- which, for many applications, would still be in demand on world markets for several years. These facilities require only a relatively small amount of investment to finish them off and bring them to world standards.

Today the Zelenograd electronics conglomerate is making money primarily by selling simple processors to Far Eastern manufacturers of calculators and watches. It announced this year that it will, at last, start manufacture of sub-micron level products. Of the remainder of the 24 major Soviet-era semi-conductor producers, some now produce consumer electronics goods. Others have ceased production completely.

Nevertheless, most of the simple components used in locally made electronics and electrical goods today are still Russian. Importers supply those products which Russian industry either cannot make or can no longer make cheaply.

The trend, however, is now toward buying foreign parts. All the electronics distributors I spoke to said that in the last year, their sales volume of imported components was increasing. Whereas it used to be microprocessors, memory, micro-controllers and signal processors that were imported, today it is also resistors, capacitors, and other products which are analogous to Russian parts but are better, or cheaper, or both.

The fundamental problem now faced by the Russian electronics industry is that almost all of the investment which occurred in the industry was made during Soviet times. The technology is old, and if plants are not modernized, they will only be able to produce unsellable, obsolete technology.

Robert Farish is the editor of Computer Business Russia fax: 929-9958, e-mail: farish@sovam.com

Minsk's Integral, meanwhile, is producing memory integrated circuits.