Russia's Sberbank takes stake in Element as Putin pushes tech sovereignty

By Gleb Bryanski

MOSCOW, Jan 23 (Reuters) - Sberbank, Russia's biggest bank turned technology conglomerate, has taken a major stake in leading electronics producer Element, as Moscow pushes for sovereignty in the production ​of the high-tech components needed for the war in Ukraine.

Western nations have restricted Russia's access ‌to critical technology, including semiconductors and microelectronics. But Ukraine has warned that Russia is increasingly able to replace smuggled Western components with its ‌own technology.

Sberbank said late on Thursday it had acquired a 41.9% stake in Element from private equity fund Sistema and unidentified minority shareholders for 27 billion roubles ($355.73 million).

All three companies are targeted by Western sanctions over the war.

LOOMING SHOWDOWN BETWEEN SBERBANK AND ROSTEC

Russian newspaper Kommersant, citing sources, reported that under the deal, Element's manufacturing assets will ⁠be integrated into Sberbank's tech arm. Sberbank, ‌which rebranded as Sber in 2020, now calls itself a technology company.

Element manufactures integrated circuits, semiconductor devices, and microchips, accounting for about half of Russia's microelectronics production.

Sberbank said ‍it will make a buyout offer to minority shareholders.

But it now looks set for a showdown with state-owned defence and technology conglomerate Rostec, which owns 41.6% of Element and was quoted by Russian news outlets as saying it will not sell ​its stake.

Rostec - headed by Sergei Chemezov, a longtime friend of Russian President Vladimir Putin - helped create Element, ‌merging its own electronics manufacturing assets with those of Sistema.

PUTIN CALLS FOR 'MADE IN RUSSIA' MILITARY SMART TECH

Moscow has stepped up long-range strikes on Ukraine, using drones and missiles, as it presses its position amid U.S.-brokered efforts to end the conflict.

Speaking at the World Economic Forum in Davos, Switzerland on Thursday, Ukraine's President Volodymyr Zelenskiy called for increased scrutiny on Russia's tech imports, saying it would not be able to produce missiles without "critical components ⁠sourced from China, Europe, the United States, and Taiwan."

Following Thursday's ​announcement of the Element stake purchase, Sberbank CEO German Gref took ​part in a meeting on the microelectronics industry chaired by Putin at the Kremlin.

"Leading countries and unions, such as the United States, China, and EU countries, are now focused ‍on strengthening sovereignty over key ⁠elements of the production chain in electronics," Putin said in remarks released by the Kremlin.