Forward to the Past: Sanctions and Strategic Trade Control in the Age of Algorithms, Semiconductors and Artificial Intelligence
DOI:
https://doi.org/10.65879/3070-6122.2026.2.01Keywords:
Semiconductors, Artificial Intelligence, GaN, Performance Elasticity, Nonproliferation Regimes, KYP, Sanctions, End-user Certification, Strategic TradeAbstract
This paper analyzes how software and artificial intelligence enhancements, applied throughout the lifecycle of advanced and off-the-shelf semiconductors, enable performance elasticity—allowing standard hardware to achieve enhanced or restricted capabilities, including the development of weaponized variants. We examine how the potential for weaponizing hardware-software synergies is challenging traditional strategic trade controls and arms embargoes. In the Wassenaar Arrangement, the leading nonproliferation regime for conventional arms and dual use technologies, Russia’s obstruction has frustrated the work on necessary controls. We are also discussing how these disruptions and technological advances are exploited by adversarial actors for the illegal transfer of semiconductors to the embargoed Iran, North Korea and Russia.
Our research indicates that these illegal transfers are not stopped with the recent shift by the US and EU towards "Know-Your-Product" (KYP) lifecycle governance. Their technical definitions still overlook and underregulate the versatility of the software/AI’s performance elasticity and consequently, their compliance guidance is not proactive.
References
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[3] EU Council Regulation 833/2014 and EU Council Decision 2014/512/CFSP, and U.S. President’s Executive Orders 13661 and 13662, but they were preceded by UN sanctions resolution 1718 on North Korea, and resolution 1737 on Iran, both adopted in 2006, whose embargoed military supplies and related dual use technologies automatically included military applications of semiconductor technologies.
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[13] Updated Consolidated Trigger List, as agreed to by the Zangger Committee on November 28th; 2023; Link: English
[14] Link to NSG Control Lists and guidance documents: https://nuclearsuppliersgroup.org/en/
[15] Link to Australia Group Common Control Lists and guidance documents: https://www.dfat.gov.au/publications/minisite/theaustraliagroupnet/site/en/controllists.html
[16] Link to the Missile Technology Control Lists and MTCR Annex Handbook: https://www.mtcr.info/en/mtcr-annex
[17] Link to the Wassenaar Arrangement lists of dual use goods and technologies and munitions list: https://www.wassenaar.org/control-lists-previous-years/
[18] Statement by Executive Vice-President Dombrovskis at the EU Foreign Affairs Council (Trade) press conference 30 May 2024.
[19] On 8 September 2025, the European Commission adopted a Delegated Regulation updating the EU dual-use export control list in Annex I of Regulation (EU) 2021/821. The new EU control list provides for the addition of new dual-use items, including: controls related to quantum technology (e.g. quantum computers, electronic components designed to work at cryogenic temperatures, parametric signal amplifiers, cryogenic cooling systems, cryogenic wafer probers); semiconductor manufacturing and testing equipment and materials (e.g. Atomic Layer Deposition equipment, equipment and materials for epitaxial deposition, lithography equipment, Extreme Ultra-Violet pellicles, masks and reticles, Scanning Electron Microscope equipment, etching equipment); Advanced computing integrated circuits and electronic assemblies such as Field Programmable Logic Devices and Systems
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[26] Ukrainian cities ‘terrorised’ by North Korean weapons in Russian hands; Justin McCurry, Reuters; 30 May 2025.
[27] The Illicit Flow of Technology to Russia Goes Through This Hong Kong Address, New York Times; July 2024
[28] Treasury Takes Aim at Third-Country Sanctions Evaders and Russian Producers Supporting Russia’s Military Industrial Base, Press Release of the U.S. Department of the Treasury; October 2024
[29] See for example https://www.getfactorysense.com/resources/understanding-rfid-tracking-what-is-it-and-how-does-it-work
[30] Onni Aarne, Tim Fist, and Caleb Withers; Secure, Governable Chips -- Using On-Chip Mechanisms to Manage National Security Risks from AI & Advanced Computing; Center for a New American Security; January 2024
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Copyright (c) 2026 Enrico Carisch, Saurabh D. Chowdhury, Durra Sahtout, Sune Danielsson (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
