Russian Spending Continues

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Russian Spending Continues

Russia, like other countries, is affected by the global economic crisis. However, Russia’s government strategy is aimed at building an innovative economy in Russia, and the government continues supporting IT-related industries in Russia, as well as scientific institutions and academia.

Funding of local and international projects (with local participation) — direct investments or investments through the state-owned bank credits— continue. Recently, a list of 294 key strategic enterprises that will be supported directly and indirectly was published on the Russia’s Government website. The list was developed by the Government Commission to increase the stability and development of the Russian economy. The main criteria for inclusion on the list were gain size (more than 15B rubles; over euro330M), quantity of personnel (not less than 4,000 persons), strategic value of the company for Russia, and the size of its tax payments.

Strategic Enterprise Support: Direct and Indirect

Funding of certain investment projects in Russia may be cut, but the maximum reduction of funding is 15%; some projects are postponed until 2010. Support will be both direct and indirect:

    1. Direct Support of $50 Billion ($10 Billion for Stage 1 enterprises)

    2. Indirect Support:

    • Government guarantees for credits, subsidized interest rates
    • 20% reduction in profit tax
    • Reduced export taxes for certain products
    • Government buy-back of qualifying companies
    • Continued government support of critical technologies

On March 18 at a meeting in the State Space Scientific & Production Center, Vladimir Putin declared that the budget of the Aerospace industry in 2009 accounts for 82 billion rubles (euro1,8B) and will not be cut.

Putin named the priority areas of the future which include design of space communication devices for navigation and earth in-depth study from the space. 100% funding of space programs can be considered as unprecedented state support in the circumstances of the global crisis. Thus, the Chairman of Russia’s Government requested that meeting participants be diligent in spending funds.

Some automobile brands will be sold in Russia with the usage of automobile cash-granted credits from the State. The list is approved and includes foreign cars assembled in Russia, like Ford Focus (the most popular), Fiat Albea, Kia Spectra, Renault Logan, Skoda Fabia, Volkswagen Jetta, Chevrolet Niva and some others.

RusNano Funds for Nanotechnology, Microelectronics, and PV

In 2007, Russian State Nanotechnologies Corporation (RusNano) was granted $5B for direct investments in nanotechnologies development and commercialization including microelectronics and PV.

On February 2, 2009 Anatoly Chubais, CEO of RusNano came to ISS in Dresden to deliver the conference keynote presentation. Chubais is very familiar with the Russian high-tech industry, the current economic situation in Russia, and the future plans of the Russian government aimed at the industry support. Chubais outlined the RusNano mission and strategies on the commercialization of nanotechnology projects with high business potential and/or social benefit. During his keynote presentation, he also shared his vision on Russian high-tech industry development, as well as on cooperation between RusNano and European business in semiconductor related areas.

On March 10, 2009 Anatoly Chubais gave an interview to Kommersant magazine in which he said:

“In a budget costs cut situation, I do not think it’s possible to defend the interests of a State Corporation at the expense of the interests of the State itself when it is in a more urgent need of money.” Mr. Chubais confirmed the possibility of transfer of a part of the money which the Corporation is not able to utilize in 2009 from RusNano back to the federal budget for the purpose of temporary use.

However, according to Chubais, RusNano does not intend to review its expense for projects. RusNano is ready to allocate the funds unused in 2009 (euro1,89B) back to the Ministry of Finance, provided that such an aid will be reimbursed to RusNano later when the money is needed for funding of new projects in 2010 and further. In accordance with RusNano estimation, the rest of money which will be left at their disposal (euro1,1B) is quite enough for the fulfillment of investment plan of RusNano for 2009.

In the years 2012-2014, RusNano should receive additional funding to complete its goals— sales of products based on nanotechnologies in Russia for the sum of euro 20B, and the return all of all the initial investments— by 2015.

Starting from Q3 2009, Anatoly Chubais anticipates that RusNano will approve five projects per month with average value of 1,5 billion rubles (euro33,3M) each. Currently,15 applications for projects— in total worth euro500M— are under consideration by RusNano. The above includes several semiconductor and PV investment projects.

Semiconductor and PV Investment Projects

Here are the semiconductor and PV investment projects already funded by RusNano in 2008–2009 (Q1) and under consideration for funding in 2009:

    1. LED project in Urals: In December 2008, an agreement was signed by RusNano, ONEXIM and the Ural Optical and Mechanical Plant to establish a joint company to manufacture new generation lighting products (LED). Investments: Total — euro76.7 M, RusNano — euro 40.6 M

    2. NITOL Group: In February, 2009 RusNano signed an Agreement with NITOL Group on funding the final step of their Polysilicon and monosilan manufacturing project with estimated annual production volume of 3,800 tons of PolySi and 200 tons of monosilane for PV and semiconductor industry. The products will be supplied to Krasnoyarsk Region where— with the support from the federal government— the Siberian PV industry cluster is being developed. RusNano investment: euro103M.

    3. Siberian Project: Photovoltaic systems based on 3-cascade heterostructures. The project is aimed at setting up production facility and marketing for new generation HCPV modules with Fresnel lenses and tracking systems. Investment: Total — euro 241 M, RusNano — euro107 M.

    4. Solar Elements in GaAs Investment Project: This project aims to set up processing units of multi-cascade heterostructural solar elements and solar cells based on A3B5 semiconductor materials with effectiveness 27–29% and specific power of 350 W/m2. Investment: total — euro37.2 M, RusNano — euro14.3 M

    5. Mikron/Sitronics Investment Project: The project is aimed at the upgrade of Mikron’s new 200 mm production line from 130nm to 90nm in technology partnership with STMicroelectronics. Investment: RusNano — euro80 M.

    6. FEI /NTMDT Project: FEI is working in cooperation with NTMDT in Russia to set up Electron Beam Microscope manufacturing in the Special Technology and Manufacturing Zone of the Moscow Region. This project is currently under consideration by RusNano with a decision completed soon.

    7. OLED Manufacturing Project in the city of Vladimir is at an early stage of consideration.

Some second-tier semiconductor-related projects of state-owned companies have been supported by the government. These include:

  • Pulsar (Microwave Device Manufacturing)
  • Svetlana (LED)
  • Istok (Microwave Device Manufacturing)
  • Basic Angstrem (High-Voltage Device Manufacturing)
  • SRISA (Pilot Production Line Upgrade)
  • Tronic (Focused Niches with High-Reliability Products: automotive, industrial, etc.)
  • Photomask Center in Zelenograd
  • Others

For additional information about the current status of Russian/FSU market, please follow this link:

April 1, 2009