Learn more about our data and insights

Controlling the supply chains of Common High Priority Items (CHPIs) has been a critical part of sanctions applied by the US and European Union, among others, against Russia. Judicious use of international trade data and supply network analysis can help trace the flows of these products through other countries.

Such flows may be one reason why the Turkish government has updated its electronics custom system to ensure blocking of exports of Common High Priority Items (CHPI) to Russia, after reports of pressure from the US to ensure the shipment of sanctioned products is minimized.

The conflict in Ukraine has tightened the focus on the export of CHPIs to other countries that may end up in Russian weapons systems, with reports suggesting that North Korean missiles incorporate semiconductors produced by US-domiciled firms.

CHPIs, as defined by the US government, cover 50 products across four main categories and are focused on electrical and electronic products that have potential military dual uses.

• Tier 1 is focused on computer chips.
• Tier 2 targets network connectivity equipment and capacitors.
• Tier 3 is split into two parts including computers and cameras in one group and weapons parts in another.
• Tier 4 is also split, including electronics manufacturing equipment in one group and metal working equipment in the other.

Turkey's exports of CHPIs to Russia have already begun to decline after booming in 2023. Market Intelligence data shows total exports in the three months to Aug. 31, 2024 reached $13.5 million, down by 78.1% year over year and off by 85.3% compared to the February 2023 peak. The remaining exports are led by Tier 3A products, particularly computer power supplies and commercial-grade (under 1kV) electrical switching equipment.

Turkey has not been the only source of CHPI product flows to Russia. Constructing "mirror trade" calculations for Russia shows that total imports of CHPIs reached US$1.44 billion in the three months to July 31, 2024, down by 21.7% versus a year earlier.

The largest exporting region in the three-month period was mainland China, accounting for 65.5%, while Hong Kong SAR represented a further 7.4%, with shipments having dropped by 28.3% and 49.9% respectively.

The second largest supplier was India, accounting for 17.2% of shipments, but shipments surged 557% higher year over year. Turkey was a distant sixth at 1.1% of total flows after Malaysia's and Kazakhstan's 2.4% and 4.1% supplies.

From a product perspective, exports from China were led by networked devices (list 2) and computer servers (list 3A) in the three months to July 31, 2024, worth an aggregate $362 million. Hong Kong was the leading supplier of computer chips (list 1) accounting for $13 million of $18 million total shipped to Russia.

[mainland china provides chart]

The trade in CHPIs appears to be carried out by private firms. Recent reports pointing to a pharmaceutical firm shipping computer servers to Russia from India provides an example. This indirect shipping routing and associated risks of breaching US or EU sanctions rules underscores the importance for firms of understanding their downstream supply chain network.

Not all CHPI shipments are easily visible in trade data, particularly where they are contained within other products or where direct malfeasance such as smuggling is carried out.

One route is to detect unusual changes in CHPI flows among countries that have not historically been significant importers.

Global trade in CHPIs increased by 11% year over year in the three months to July 31, 2024, Market Intelligence data shows. Countries with rapid growth in both percentage and dollar terms (over $20 million of growth) include Ethiopia (142%), Georgia (128%) and Azerbaijan (67%) among others. Shipments to Ukraine also increased 76%, likely reflecting resupplies to support to war effort.

In the case of Georgia, the growth was accounted for entirely by shipments of computer servers, principally from Hong Kong, while for Azerbaijan supplies were focused on servers and network equipment, led by shipments from mainland China.

[CHPI trade flows chart]

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.