Vladimir Putin announced the plans after the launching ceremony last week of the new Perm nuclear submarine of the Yasen-M class. That boat will be the first full-time carrier of the Zircon hypersonic cruise missile.

Following the withdrawal of Soviet submarine, military officials originally wanted to field 30 Yasen-class submarines and 14 strategic Borei-class boats.

Putin’s announcement indicate a shift on objectives, with 10 copies to be built in each class.

Submarine manufacturing plant Sevmash has emerged as something of a bottleneck in the overall production scheme. The plant hasn’t been making enough boats, and only a year ago modernized its production facilities.

Given Russian plans to start building new fifth-generation submarines of the Husky class by 2027, the Yasen-M line may cease to exist, according to Pavel Luzin, a Russia defense expert with the Washington-based Center for European Policy Analysis.

Moscow’s overall naval weapons mix has leaders hesitant to rush into additional Yasen production, as support elements like reconnaissance satellites and ships as well as accompanying surveillance aircraft are lacking, according to Dmitry Smirnov, a Russian military expert.

In addition, the defense budget shifted to the production of weapons needed in the war against Ukraine. Sevmash is not receiving enough orders for the construction of submarines, and employees are getting pay cuts, says economist Vyacheslav Shiryaev.

Aggravating the situation, after the invasion of Ukraine, Russia lost access to foreign components due to sanctions and was forced to start from scratch on some submarine parts.

Officials have put into operation new development facilities related to the fuel system and started construction of a hangar for avionics testing at the Komsomolsk-on-Amur factory in eastern Russia, according to the company.

Su-57 aircraft are limited in their participation in the invasion of Ukraine, carrying out strikes from Russia’s territory. Following the country’s full-scale invasion of neighbor Ukraine, state arms makers Rostec, UAC and the aircraft plant in Komsomolsk-on-Amur are under numerous sanctions from the United States, the European Union, Ukraine, Great Britain, Switzerland and other countries, forcing them to look for electronic equipment and components in Asia or import them illegally.

Russia only has a small number of Su-57 aircraft. The contract for the production of 76 planes by the end of 2027 was signed by the Defense Ministry at the Army Forum in June 2019, with Komsomolsk-on-Amur specified as the main production site.

However, the plant was quickly deemed too small, forcing officials to spend time expanding production space, which entailed changing and adding new equipment.

As a result, according to independent aviation expert Michael Jerdev, to date, the Air Force has received no more than one-third of what was planned under the contract. There was a transfer of 10 aircraft to the Air Force in 2022, and 11 copies in 2023. Critical bottlenecks are the supply of avionics and a new engine, the so-called Izdelie 30, says Jerdev, pointing to Western sanctions.

Until recently, Su-57 aircraft were equipped with the previous-generation AL-41F-1 engine. In December 2023, Rostec announced that some of the aircraft delivered in 2024 would boast the successor engine.

According to Pavel Luzin, an expert at the Washington-based think tank CEPA, the engines of the so-called second stage for the Su-57 and Su-75 Checkmate have been in development since the early 2010s, but they are unlikely to enter mass production before 2025. The production capabilities of the Ufa Engine Industrial Association are limited, which likely will mean the company must stop making older engines to focus on the new one.

The Russian Defense Ministry announced that it plans to receive 22 Su-57 aircraft in 2024. But by August 2024, there was no information about the status of any deliveries yet.

Ukrainian forces are thought to have damaged one or two Su-57 aircraft in June 2024 with a strike on the Akhtubinsk airfield in southern Russia, the Kyiv Independent reported at the time, citing Ukrainian military intelligence spokesman Andrei Yusov.

The move comes as Russia’s full-scale invasion of neighbor Ukraine has triggered an AI arms race on the battlefields there, especially in aerial and land drones, that analysts believe will shape future conflicts.

Elements of artificial intelligence have long been used in the Russian military industry, which is tightly controlled by the government. For example, there is a cluster of ground robot makers for the Marker, Platforma-M, Soratnik, Uran-9 vehicles that have supplied their wares for the war against Ukraine.

The country’s missile complex, too, has a history in infusing varying degrees of autonomy into targeting algorithms, perhaps most famously under the Perimeter program, a Soviet-era algorithm sequence for orchestrating a retaliatory nuclear strike.

Now, Russian officials are outfitting equipment returning for repairs from the Ukraine war with new technology, like remotely controlled fire modules, automatic target tracking, and propulsion systems, Vasily Elistratov, who oversees AI technology at the Russian Ministry of Defence, said at the Forum Army-2024 held here this month.

According to Deputy Prime Minister Dmitry Chernyshenko, the volume of the Russian AI market in 2023 reached almost 650 billion rubles, or $7.3 billion, an amount dwarfed by spending in the collective West on various outgrowths of the technology.

The dedicated AI budget line, for which officials have yet to give a number, is meant to help facilitate the transition into defense applications. A specialized department for the development of artificial intelligence is now in place in the Russian Defense Ministry, Chernyshenko announced.

For example, an AI control capability is now in development for the S-500 air-defense system, with threat assessment and damage prediction of a possible ballistic missile attack.

“The Russian defense industry will develop artificial intelligence and automated systems for products with high speed, where errors are not so critical,” said Sergei Smyslov, an independent defense industry expert based in Russia. With that in mind, potential applications include missile defense systems, artillery shells and aerial drones, he added.

Another area of AI use will be aviation and artillery to increase their efficiency, said Pavel Luzin, senior fellow at the Center for European Policy Analysis. Autonomous attack drones will likely remain commodities for a long time. As for autonomous ground robots, most of them will be used to supply troops on the battlefield and evacuate the wounded. AI will also be used in computer modeling of military campaigns during their preparation, Luzin said.

Russia is also going to use AI to improve the production processes of military products, with automatic quality checks that will trigger a manufacturing halt if they fail.

The Ministry of Defense by itself is unlikely to be able to effectively develop weapons with AI. There is a personnel problem in the scientific institutes of the Ministry of Defense, as the best graduates tend to go elsewhere.

Government officials have been building a development track in the government-owned industries instead, for example through Rostec companies and the Era Foundation, according to Luzin.

In early 2022, Rostec State Corporation’s Roselektronika Holding created the Artificial Intelligence Technologies Research Laboratory, which is engaged in research on the use of AI in radio communication systems, development in the field of virtual-reality technologies, big data technologies, and machine learning of deep neural networks.

The Era Foundation seeks to identify new technology among private companies and universities. In August, the foundation selected eight projects – including an unmanned boat, a remote-controlled turret, various drones, and a drone-detection system – that will receive funding to enter mass production.

Notably the country aims to put Sfera communications satellites into orbit — an analogue of the American-made Starlink and the British OneWeb constellations. Roscosmos previously sought to launch more than 600 systems into space as part of this project, but budget cuts prevented this. Now the agency is eyeing 360 satellites, although Borisov said the goal ought to be at least 1,200.

The government has agreed to approve 180 billion rubles (U.S. $2 billion) for 162 satellites. However, thus far the state has allocated 95 billion rubles, and a strategy meant to further develop the domestic communications sector up to 2035 calls for the launch of six geostationary satellites.

Sergei Prokhorov, who leads the Sfera project, recently said there is money set aside for four of them.

Is this practical?

While Borisov, who spoke July 3, is aiming for the production of at least 250 satellites per year for various purposes, the country currently makes about 15 annually — despite an existing capacity to manufacture about 40 each year.

Roscosmos’ goal is unrealistic, according to Pavel Luzin, a space policy expert at the Center for European Policy Analysis think tank. He noted the satellites will likely serve several functions, including optical observation, communications, meteorology, radar and television service.

“All the serious satellites that Russia has launched into space since 2022 were produced using imported Western electronics purchased no later than the mid-2010s, before the first sanctions,” Luzin told Defense News, referring to economic restrictions placed on Russia following its full-scale invasion of Ukraine.

“It turns out to be a fundamental contradiction: Russia has a big problem with satellite production, but at the same time Russia declares that in just a couple of years it will be able to produce [250] high-quality satellites for various purposes per year and is already mastering the technologies of their conveyor production,” Luzin said. “This simply does not happen.”

Russia can find components on the world market for the production of several satellites, but not enough to produce hundreds, Luzin added. “The heads of companies report that despite the sanctions, the industry is alive, although in fact they may not know where to get components for hundreds of satellites.”

Indeed, Borisov had said “industry is functioning relatively stably” amid the sanctions.

Amid the war, the state has adjusted its satellite production priorities, focusing heavily on dual-use satellites — that is, ones that provide military and civilian services.

Among its priorities are the optical reconnaissance satellite Razdan; a radar satellite for marine reconnaissance for the Pion-NKS constellation; two radar satellites, dubbed Obzor-R and Kondor; and several Glonass communications satellites.

Denis Banchenko, a former employee of Roscosmos, told Defense News that “a significant part of the planned satellites, and most likely all of them, will be used in the interests of the Ministry of Defence of the Russian Federation for intelligence, surveillance, navigation and communications purposes.”

United Aircraft Corp., which owns Tupolev and the Kazan Aircraft Plant, said upgrades were done for preproduction, mechanical assembly and flight test centers.

The Kazan Aircraft Plant is the sole organization in Russia that produces Tu-160M bombers. It also upgrades Tu-22M3 and Tu-160 bombers.

The military-industrial organization KazGAP served as the design and construction lead for the facility modernizations. As part of a state program to further develop the domestic defense industry, KazGAP has since 2016 carried out work, valued at about 30 billion rubles (U.S. $340 million), to modernize 10 Kazan facilities, which is approximately three-quarters of the plant’s workshops.

The modernization effort was to be completed in 2020, but KazGAP experienced delays amid several dozen criminal cases brought against Kazan subcontractors, who were charged with fraud and embezzlement. The payment amount for the work was not modified, leaving it up to subcontractors to self-fund the remaining work.

Under a 2018 contract, the Defence Ministry is expected to receive 10 new Tu-160M bombers by 2027. So far, it has received three.

In 2019, due to financial problems, KazGAP was sold to the holding company Technodinamika, which is part of the Russian defense conglomerate Rostec. Modernization work at the plant followed.

To date, nine facilities, including the workshops of aggregate and final assembly, have received certificates of compliance and permits for commissioning. According to United Aircraft Corp., construction work related to the production of heat treatment and coating is 86% complete.

The expectation is that all the modernization work on order for the Kazan Aircraft Plant will be done this year. Meanwhile, a new upgrade project, worth more than 90 billion rubles, is set to begin to benefit the serial construction of the civil aircraft Tu-214.

Russia is currently engaging in a full-scale invasion of Ukraine and has used its bomber fleet to attack civilian areas and critical infrastructure.

The announcement comes amid the country’s invasion of Ukraine, during which Ukrainian forces have destroyed and disabled several Russian naval vessels.

Viktor Yevtukhov unveiled the forecast June 9 during an interview with the state-owned channel Zvezda TV. In total, according to the Ministry of Industry and Trade, the Navy took delivery of 40 surface ships and 24 submarines over the last decade.

In 2023, the Navy received three submarines: the Borei-A-class nuclear-powered Emperor Alexander III; the Yasen-class nuclear-powered Krasnoyarsk; and the Kilo-class Mozhaysk.

The service also took on seven surface ships: the frigate Admiral Golovko; the corvettes Merkury and Rezkiy; the missile-armed ships Cyclone and Naro-Fominsk; the minesweeper Lev Chernavin; and the repaired frigate Neustrashimy.

This year, the Navy is expected to receive four submarines and 12 surface ships, plus a collection of support vessels such as tug boats; bulk carriers; training, hydrographic, rescue and supply vessels; and other small boats, according to Pavel Luzin, a Russia defense expert with the Washington-based Center for European Policy Analysis think tank.

Yevtukhov attributed the large anticipated delivery to Russia’s successful efforts in finding substitutions for components blocked by international sanctions.

Sergey Smyslov, an independent analyst with an engineering background in Russia’s defense sector, said domestic organizations have begun producing the substitutions.

“Yes, it may not be of the best quality, and additional time is required to develop the missing components, but the minimum necessary requirements are [being met],” Smyslov added.

However, the outdated or low-quality technology used as a result impacts the reliability of the final product, Luzin said.

Nevertheless, a source in Russia’s naval industry told Defense News that the Defence Ministry is generally satisfied with submarine construction efforts. Still, the source added, shortcomings remain in regard to the production of surface ships, with delivery dates regularly postponed.

Indeed, Emma Rayman, a politician from St. Petersburg, said “the problems of the Navy are related to the fact that the naval industry requires significant financial investments, and budget constraints can affect the speed and scale of construction of new ships.”

For example, the Severnaya Verf shipyard was supposed to transfer the frigate Admiral Isakov to the Navy in 2022, but that is now scheduled to take place in December 2025.

Likewise, service was to receive the corvette Provorny by the end of 2022, but due to damage from a fire, the deadline was pushed to 2025. Additionally, two Steregushchiy-class corvettes were to be delivered in 2018; thus far, one was transferred in 2023.

The Admiralty Shipyards plant was also supposed to transfer a patrol ship to the Navy in 2020, but that is now expected to take place this year.

As for the Yantar Shipyard, it was expected to deliver a pair of large landing ships — the Vladimir Andreev and Vasily Trushin — around the 2023-2024 time frame. But even before this deadline passed, it was changed to 2025-2026.

The Vostochnaya shipyard has also experienced setbacks in the construction of Navy ships. In particular, the firm was to build two Karakurt-class corvettes and a small tanker, but amid financial troubles, the Amur Shipbuilding Plant, owned by United Shipbuilding Corp., took charge in August 2023.

A shortage of engineers and specialists in the domestic shipbuilding industry is also slowing down construction efforts, Rayman said, with Luzin noting there aren’t even enough personnel to crew the ships.

According to a March post on the official procurement website, 885M-class boats — otherwise known as fourth-generation Yasen-M nuclear submarines — are in need of parts for an auxiliary electric propulsion system or AEPS. This one contract is worth 286 million rubles (U.S. $3 million).

The ministry explained that during development work, foreign-made components were used as part of the AEPS because the domestic industry was unable to provide the required parts.

The West has hit Russia with economic sanctions over Moscow’s invasion of Ukraine, making it difficult and sometimes impossible for the country to procure foreign-made components. As such, Russia is unable to carry out subsequent serial deliveries and repairs of the AEPS.

To overcome this, the ministry has proposed the creation of a modified AEPS based on locally made components — essentially the production of a new system. The move would see industry make Russian analogs of foreign-sourced nodes for a static frequency converter with a microprocessor control system as well as for a propulsion panel with a switching unit.

The nodes for the static frequency converter include the microprocessor control system of the AEPS, the secondary power supply system, the local control panel and the power unit.

The propulsion panel and switching unit nodes include an instrument for measuring insulation resistance and a section of the propulsion panel.

The ministry noted the propulsion electric motor and the transformers with a rotating field will not change in this system.

The work is to take place in four stages and conclude by Nov. 26, 2027. The approximate date for the implementation of the new system is 2028.

Remote control

The second tender, valued at 295 million rubles, involves the creation of remote control devices for circuit breakers, which provide protection against electrical overloads, short circuits and the like.

Some Russian naval vessels currently use switches from foreign companies, including France’s Schneider Electric and the Switzerland-based firm ABB.

The ministry noted the Russian-made VA16M circuit breakers cannot fully replace foreign-made switches since they do not come with remote control devices.

With Russian versions, the ministry could increase the service life and reliability of the electronic level controller, reduce operating costs due to the increase in scheduled maintenance intervals of the controller, and move toward full automation of the controller.

The work for this potential contract would end by Nov. 30, 2026.

Emergency power

The ministry also published a tender for 444 million rubles to modify the main components of the static inverter POS-650 for the 955A (Borei-A) and 885M (Yasen-M) submarine classes. This would also replace foreign-made options, which the ministry noted are difficult to source.

A static inverter is commonly used as an emergency power system.

The main modifiable components of the POS-650 include the transistor modular switch; power switchgear; upper-level control system; power output measurement system; AC filter unit; power cables and connectors; and the cooling system.

The government will determine the final composition and number of modified POS-650 components needed during the first phase of this effort, which involves developing technical solutions based on the results of an analysis of existing POS-650 components and the availability of domestic production.

The contract work is to conclude by Nov. 26, 2027. The estimated time frame for the system’s implementation is 2028.

This story was updated April 1, 2024, at 5:01 p.m. ET with information about a third tender.

The effort, which concluded this month, is meant to increase the energy efficiency of production at Sevmash, which is expected to build a fifth-generation nuclear submarine for Russia.

The shipbuilder has now begun operating electroplating sites focused on ultrasonic cleaning, special chrome plating, solid and electrical insulating anodizing and chemical nickel plating, according to the company.

“By the turn of the 2010-2020s, Sevmash seems to have managed to achieve a more or less stable rate of submarine production. The construction and testing cycle now takes about seven years,” Pavel Luzin, a military expert at the Center for European Policy Analysis in Washington, D.C., told Defense news. “At the same time the plant is working on eight to 10 submarines at different stages of construction. By creating a new production facility, Sevmash strives to increase its commercial efficiency.”

Still, it’s unclear whether things will turn out as planned for the shipbuilder, Luzin added.

“Given the closure of access to Western technologies and equipment, when the entire chain of cooperation involved in the creation of submarines suffers from sanctions, it is difficult to predict how effective the modernization of Sevmash will be,” he said.

The last major modernization of Sevmash’s production facilities took place in the 1970s for the construction of third-generation nuclear submarines. Thanks to its participation in the government’s Federal Target Program, which aims to develop Russia’s military-industrial complex, Sevmash began reequipping and reconstruction in 2011.

Under the program, Sevmash was to receive 46.5 billion rubles (U.S. $507 million). Until 2017, the main expenses involved the purchase of automated technological equipment; multichannel measuring instruments; high-precision, computer-controlled machines; and highly efficient energy and mechanized equipment. The company sourced these from France, Switzerland, Italy, the Czech Republic, Sweden and Germany.

After 2022, Sevmash bought machines and instruments locally and from Belarus. For example, in February 2024, it purchased technological equipment for a deperming demagnetization station for 1.5 billion rubles from the Krylov State Research Center.

Sevmash will continue participating in the Federal Target Program until 2027, but must take this opportunity to modernize its production facilities for the construction of a fifth-generation nuclear submarine.

Luzin said this effort is already on the books, and that “Russia is in a hurry to create fifth-generation submarines, given that the Borei and Yasen subs will be under construction at least until the early 2030s.”

In 2020, the plant began to create a floating dock to replace its existing Sukhona dock built more than 40 years ago. Two years later, Sevmash completed the conversion of equipment from oil and coal to natural gas, which is more economical and energy-efficient. That same year, it completed reconstruction of its deep-water and shallow-water industrial embankments, traversing docks, and discharging berth.

And in 2023, the company wrapped up modernization of its steel workshop, in which it acquired electric arc furnaces to produce steel, equipment for the secondary treatment of steel, gas treatment stations for furnace emissions and closed water circulation cooling systems. According to Sevmash, the goal here was to more effectively schedule work that involves the foundry as well as increase the cost-effectiveness of materials and resources.

The company is updating its crane equipment. It already replaced about 300 pieces, including elevators, manipulators and the cranes themselves. The plant is expected to complete this project by 2027, according to its parent company, United Shipbuilding Corp.

Sevmash’s forging and heating workshop, where parts for future nuclear submarines are heat-treated, is also receiving an upgrade, the plant has reported. Dozens of new electric furnaces and other equipment are undergoing installation there, it said. The replacement of the workshop’s equipment at this scale has not taken place in more than 60 years.

The shipbuilder is also updating its welding equipment. According to Russia’s official procurement website, Sevmash spent about 25 million rubles on welding equipment in 2022, despite a failed effort to buy spare parts for welding from the Swedish company ESAB that year.

Last year alone, 636 units of various equipment were put into operation, Sevmash reported. Among them was a new central digital automatic telephone exchange. And the plant has said it is purchasing transport vehicles.

Another important point in the technical re-equipment of the plant is the creation of the infrastructure necessary for the implementation of the block-modular method of nuclear submarine construction. That approach involves assembling submarines from large blocks filled with equipment. It would replace the current modular-aggregate method at Sevmash, introduced during the construction of third-generation nuclear submarines.

With the new method, most of the assembly work gets carried out in specialized workshops before the blocks are fed to the slipway for the final assembly of the entire submarine. According to Sevmash, this approach will improve the quality of work, reduce labor intensity and production costs, and shorten the construction time of a submarine by 18 months.

For block production to take place, the company would have to expand its assembly and welding workshops, build combined cleaning and painting chambers, and reequip itself for so-called buildingway-delivery production. This work is expected to conclude in 2031.

“The block construction method has been developed for submarines for more than one year, and requires greater accuracy of the entire technological process and a high-production culture at all stages. It is not yet very clear how successfully it can be implemented because it requires the approval of USC, Rosatom and other cooperation participants,” Luzin said.

“In addition, good engineers and workers are needed, but not many people want to move to Severodvinsk,” he added. “And even if the new method is introduced soon, it is not a fact that it will really reduce the time of construction and acceptance tests of the submarine by the expected 18 months.”

The projection comes amid a demographic crisis of an aging population, factors that run counter to the government’s trumpeting of expanded weapons production and construction of new plants while the war against Ukraine enters its third year.

According to the former deputy prime minister and head of Roscosmos, Yuri Borisov, the entire Russian defense industry will lack 400,000 workers in the near future.

Irina Sokolova, a specialist at a Moscow recruitment agency who asked that her employer not be revealed, said there are fewer incentives available to fill the ranks. “In 2022-23, the Russian defense industry attracted almost the entire possible personnel reserve by increasing salaries,” she told Defense News. “It is becoming more difficult to recruit specialists; unemployment in Russia is only about 3%. Defense companies are already enticing personnel from each other.”

Firms have tried to increase cooperation with universities and technical schools to prime the personnel pump, according to aerospace industry analyst Vasily Brevnov. But finding management staff adept at navigating the pressure of the Ukraine war is another story.

“With the beginning of a special military operation, many heads of defense industry enterprises were not ready to work in the new realities,” Brevnov told Defense News, using the government-prescribed parlance for the war. “In some cases, drastic personnel decisions were needed.”

For example, business leaders were unfamiliar with available subsidies and credit opportunities or were unable to find alternative suppliers in the wake of Western sanctions, he said.

Managers were also used to running their businesses without paying attention to the needs of their engineers, according to Sergey Smyslov, an independent defense industry analyst. In addition, according to Russian media, the courts are considering the cases of former heads of various defense companies who are accused of fraud, embezzlement and abuse of authority.

Finally, the government’s legislative and regulatory framework is slowing down many production processes, increasing time, costs and hindering technological solutions, analysts interviewed for this article said.

The sanctions squeeze has especially hit those industries in which Russia has long relied on Ukrainian products or established channels for obtaining Western components, according to Brevnov and Pavel Luzin of the Center for European Policy Analysis think tank. Affected industries include aviation, space, shipbuilding and machine tool construction.

Scrounging for parts

While high-end radar components may now be hard to source for Russian arms makers, there is a large market of old but hardy parts that is nearly impossible to regulate, according to Michael Jerdev, a Russian aviation expert.

“If you look at the database of electronic components found in Russian weapons by Ukrainians, you can see a great conservatism in the use of electronic components in military equipment,” he said. “The mass of electronic component samples is literally 25 years old, massive and saturated in the secondary market, which is almost impossible to control with sanctions.”

Crucial equipment has continued to make its way to Russia since the beginning of the war — or has been there all along. Kirill Sypalo, general director of the Central Aerohydrodynamic Institute, said in November 2022 imported machine tools made up the vast majority of equipment in his organization, with producers hailing from Germany, Sweden and Israel.

In total, foreign manufacturers accounted for up to 50% of the electronic components used in rocket and space technology systems and up to 70% in satellite production, an engineer at the state-owned enterprise Russian Space Systems told Defense News, speaking on the condition of anonymity to discuss internal planning assumptions.

Vitaly Egorov, an independent expert on the Russian space industry, said “new sanctions in electronics led to the suspension or significant postponement of the launch dates of various spacecraft.”

“Roscosmos itself or the Russian industry is not able to create a full-fledged replacement, and all the hopes of Russian cosmonautics are connected either with China or with parallel imports, that is, essentially gray schemes to circumvent sanctions, but this leads to significant losses of time and money,” he added.

Heavily dependent on foreign parts, Russian naval shipbuilders are now looking to source components from manufacturers in China, India, or Iran through shadow import schemes, a leading researcher at the state-owned enterprise Kant, who asked that their name not be revealed, told Defense News.

Alexey Migalin, the chief executive of marine equipment seller NavMarin, said in an interview with Kommersant newspaper that radars, satellite-based navigation receivers and related devices are manufactured in Russia, but based on Chinese technology.

China to the rescue?

At the Neva 2023 International Exhibition and Conference in St. Petersburg, the head of the Russian Maritime Register of Shipping, Petr Vanyukov, said 60 of his employees are embedded all over China to scout equipment officials hope could replace the entire ecosystem of sanctioned Western technology.

In September 2023, at a meeting of the Council of the Russian Chamber of Commerce and Industry, Konstantin Babkin, president of the Rosspetsmash Association, said there is practically no production of hydraulics components, needed for making tanks, in Russia. Similarly, local makers of bearings and electronic parts can only produce up to 25% of the required volume, he added.

At the same time, it is not profitable to produce those parts in Russia, Babkin said, adding that the tax burden in China is lower and loans are cheaper.

That explains why many experts interviewed for this article said the scheme of import substitution is still weak. The head of Rostec, Sergey Chemezov, stated in a June 2022 article for RBC “replacing everything is pointless, economically inexpedient and simply impossible.”

In a study by the Russian Higher School of Economics, more than 60% of executives polled said they are confident that within two to three years they will only partially be able to forego using foreign equipment, technologies and raw materials.

Machine tools play a crucial role in the production of numerous types of weapons and military equipment. Well before Russia’s invasion in 2022, the country’s machine tool industry had been in crisis.

Last year, the government approved a program to provide loans to machine tool builders at an interest rate of 1% per year. The government plans to inject 300 billion rubles (U.S. $3.2 billion) into the industry by 2030. Rostec aims to reduce the import of machine tools by half.

In an effort to obtain foreign components and technologies, Russian metalworking company Stankomashstroy plans to open a machine tool factory in China.

But Asian-made machines are considered to be of lesser quality. Mikhail Prokopyev, an expert on robotics at SofPol, speaking at the Russian Industrial Week event held in Moscow in October, said Chinese equipment is usually less durable and less precise than Japanese and European equipment.

Parallel imports and smuggling are also used by Russia. According to Russian independent investigative journalists from The Insider, there are examples of a private foreign company purchasing microchips from Analog Devices or Texas Instruments, both U.S. companies, and reselling them to a Russian private importing company.

Russian officials are hedging against the semiconductor flow drying out completely. Analysts have observed large-scale import activity of equipment from China, amounting to a future repository that could serve production needs for one to two years, said Luzin, the CEPA analyst.

All told, the Russian defense industry, while firing on all cylinders, is behind the technology curve as Chinese substitutions turn out to be lackluster. As a result, it is easier for Russian industry to reproduce old Soviet models of equipment, rather than create technically more complex Armata tanks and Su-57 aircraft, Luzin said.

Deputy Defense Minister Alexei Krivoruchko said on Jan. 26 that the entry into the armed forces of the Sarmat strategic missile system, Tu-160M bombers and the Borei-A nuclear submarine Knyaz Pozharsky are the main tasks for 2024. The objectives have remained the same since December 2022, when Defense Minister Sergei Shoigu announced atomic-weapons plans for the then-upcoming year during a speech at the Defence Ministry Board.

The development of the Sarmat missile system has been behind schedule for a long time, and only one successful flight test of the missile is recorded. This is due to the fact that the production and testing of the rocket are under the jurisdiction of Roscosmos, which suffers from low profitability, accumulated debts and increased losses.

The CEO of Roscosmos, Yuri Borisov, in a December 2023 interview with Rossiya 24 TV channel, said that the corporation had lost 180 billion rubles ($2 billion) of export revenue due to the strong impact of sanctions.

The closure of access to Western technologies and components required the search for alternatives, which led to the fact that Roscosmos enterprises incur additional costs, as due dates for equipment deliveries approach.

The desire to reduce costs led to the fact that from 2019 to 2021 Roscosmos laid off 17,000 workers, and in 2023 halved the staff of the headquarters office.

Due to lack of funds, Roscosmos seeks to find investments in cooperation with countries such as Algeria and Egypt, and in 2023 entered the borrowing market for the first time, planning to issue bonds worth 50 billion rubles.

As a result, orbital launches have decreased and stagnated at the level of 15-26 launches per year for the last eight years. Test launches of Russian land-based intercontinental ballistic missiles also decreased from 6-10 in 2013-2017 to 2-5 in 2018-2023, publicly available figures suggest.

Roscosmos subsidiaries involved in the production of Sarmat have financial and production problems. In particular, the Proton-PM plant, which produces the missile’s propulsion system, “faced limited access to Western equipment, tools, raw materials of imported origin and an increase in the interest burden on loans,” director Ivan Krasnov said in 2022.

As stated in the company’s corporate magazine, officials instead bought Russian, Belarusian or Chinese machining and foundry equipment.

In addition, several top Proton-PM managers were arrested last year on charges of embezzlement to the tune of 195 million rubles in connection with planned equipment upgrades, regional media reported.

Chemical Automatics Design Bureau (CADB), which produces the second stage of the Sarmat missile, is in a pre-bankruptcy state. The company has had a chronic shortage of working capital.

After the start of the war, money appeared, but while employees’ wages came through on time again, other CADB contractors are still having difficulty getting paid, a source at the company told Defense News on condition of anonymity to discuss sensitive information. Management also failed to modernize the workshops, as was promised in late 2021, the source added.

Plant managers have been selling non-core assets, like a production site and a canteen for 247.8 million rubles, according to the source.

Meanwhile, the Kazan Aviation Plant (KAP), located in Kazan, Tartastan region, is engaged in the modernization of the existing Tu-160 bombers to a Tu-160M standard, while also producing new planes. The government has previously said the company had prepared four modernized Tu-160M, one of which was transferred to the Ministry of Defense in 2022. In 2023, the Ministry of Defense continued testing it together with Tupolev Company, while the rest of the aircraft are continuing factory testing.

Tupolev is on contract to deliver 10 new bombers by 2027. The first Tu-160M, an upgraded Soviet-era plane, made its first flights in January and December 2022. The second one started factory tests only one year ago, making it unlikely that four upgraded bombers could have been delivered in 2023.

“KAP produced 1-1.5 aircraft per year, that is, it is not able to fulfill the plans of the Defense Ministry,” said Pavel Luzin, senior fellow at the Center for European Policy Analysis, a U.S.-based think tank.

The company is said to be lagging with the modernization of its production facilities, which was supposed to be completed by 2020. In addition, there is the bite of Western sanctions.

“Due to the sanctions, there is a problem of access to the latest machines and tools, high-quality composite materials, high-strength steel, electronic components and other material,” said a professor at the Moscow Aviation Institute who wished to remain anonymous. “There is a replacement in Russia and Asia, but the quality leaves much to be desired. A lot of time is spent on improvements and not everything can be found in the required quantity.”

In addition, KAP has been experiencing a shortage of workers for years. A year before the war against Ukraine, the Tatarstan region’s minister of industry and trade, Albert Karimov, said that 70% of industrial enterprises in the region needed workers, 26,000 thousand people. Among the companies experiencing the greatest shortage, Karimov named the KAP plant.

As a result of ongoing delays, the Russian Ministry of Industry and Trade previously sued Tupolev for 5.8 billion rubles as a penalty under the Tu-160M contract.

According to TASS reports, Russia’s state-owned news agency, the Borei-A-class submarine Knyaz Pozharsky was to be launched in 2023, and two more submarines were to be laid down. While experts don’t consider production shortfalls as the program’s bottleneck, the delay may negatively affect the test program, since the deadline for the delivery of the Navy submarine remains December 2024.

“Plans for the laying of 11 and 12 Borei-A class submarines have not been canceled. Besides, for the Russian authorities, it is necessary to load the plant with something in the 2030s, otherwise it is not very viable in the current political economic situation,” says CEPA’s Luzin.