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Cablegate: Extrancheck: Pre-License Check: A) D368267

VZCZCXYZ0000
PP RUEHWEB

DE RUEHMO #3074/01 1761307
ZNR UUUUU ZZH
P 251307Z JUN 07
FM AMEMBASSY MOSCOW
TO RUCPDOC/USDOC WASHDC PRIORITY
INFO RUEHC/SECSTATE WASHDC 1548
RUEAORC/USCBP WASHDC
RHMFIUU/HQ BICE WASHINGTON DC

UNCLAS MOSCOW 003074

SIPDIS

SIPDIS

USDOC FOR 532/OEA/MHAMES/LRITTER
USDOC FOR 3150/USFCS/OIO/CEENIS/MCOSTA

E.O. 12958: N/A
TAGS: BEXP ETRD ETTC RS
SUBJECT: EXTRANCHECK: PRE-LICENSE CHECK: A) D368267
AND B) D371035 - JSC MIKRON

1. Unauthorized disclosure of the information provided
below is prohibited by Section 12C of the Export
Administration Act.

2. Reftel requested a Pre-license check to determine
the legitimacy and reliability of the end-user, JSC
Mikron, Zelenograd, Russia. The company is listed on
BIS license application a) D368267 (Lam Research) and
b) D371035 (Axcelis) as the ultimate consignee of an
Alliance 9600 PTX Etch system (ECCN 3B001.c.1), an
Alliance 9400 Etch system (ECCN 3B001.c.1), an Exelan
HPT Etch System (ECCN 3B001.c.1), a High Energy
Implanter Model HE (ECCN 3B001.b.1), and a High
Current Implanter Model GSD Ultra (ECCN 3B001.b.2).
These items are controlled for national security and
anti-terrorism reasons under ECCN 3B001. The licensees
are Axcelis, 108 Cherry Hill Drive, Beverly MA 01915-
1088, and LAM Research, 4650 Cushing Parkway Fremont
CA 94538.

3. On June 7, 2007, Export Control Attache Donald
Pearce and Licensing Officer Brian Baker of Office of
Export Administration conducted a pre-license check at
the offices of Joint Stock Company Mikron (Mikron),
1st Zapadniy Proyezd #12, Zelenograd, Russia. The
export control team met with Andrey Golusko, Deputy
Head of Microelectronics Solutions, and Gennady
Krasnikov, General Director, and Alain Astier, Vice
President - Front-End Technology and Manufacturing
Group of STMicrolectronics.

4. Mikron is a producer of semiconductor products
targeted for the Commonwealth of Independent States
(CIS) and Southeast Asia markets. Mikron, founded 15
years ago, is a subsidiary of Joint Stock Company
Sitronics. Sitronics owns 74% of Mikron stock, with
17% of the shares held by small shareholders and 100
legal entities, and the remaining 9% by the Federal
Real Estate Cadastre Agency (Russian acronym
Rosnedvizhimost). Sitronics, a telecom and IT
solutions provider, is a publicly traded company
listed on the London Stock Exchange. Sitronics is
majority owned by Joint Stock Company Sistema, a
consumer services holding company. Mikron employs
approximately 1500 at its Zelenograd headquarters and
a second facility in Voronezh. About 600 of the staff
are engineers, with the remainder in administrative
and support positions.

5. Mikron designs and produces over 400 different
types of analog and digital integrated circuits (ICs),
including smart cards and radio-frequency
identification (RFID) products. Mikron has two wafer
fabs with a combined average annual capacity of
600,000 4" wafers and 120,000 6" wafers. Mikron also
has a smart-card production facility capable of
producing 280 million RFID cards and 60 million chip
modules annually. Mikron currently produces the RFID
cards used in the Moscow Metropolitan Transport System
(Metro subway trains) and GSM cards for cellular
telephone providers MTS (Russia) and UMC (Ukraine).

6. The Axcelis and Lam Research equipment will be
utilized to give Mikron the ability to produce its own
memory chips for use in its smart cards. Mikron has
partnered with ST Microelectronics of France (ST) for
transfer of a "copy-exact" process and manufacturing
technology for the production of Electrically Erasable
Programmable Read-Only Memory (EEPROM) circuits. ST
will provide Mikron design expertise and access to its
network of suppliers. Mikron will then provide access
to the Russian market for ST. The package ST will
provide consists of tool specifications, facilities
and utilities specifications, process recipes and
training for Mikron engineers. ST and Mikron hope to
have the clean rooms ready for tools by September,
2007 and are targeting their first chip starts for
December, 2007. This advance will allow the company to
produce smart cards completely in-house, drastically
reducing turnaround time and overall costs. Mikron
currently receives the EEPROMS from ST in France.

7. Security at the facility is high due to the value
of the end products; specifically banking smart cards,
GSM chips and metro passes. The system includes a 24-
hour a day, seven day a week security presence, as the
fabs are at work at all times. An electronic system

monitors all entry and exit areas, and special "man-
trap" systems are employed in high-value areas such as
the smart-card production facility. Access to all
areas is controlled by a proximity card system, which
also logs employee movements within the facility and
limits access to sensitive areas.

8. Mikron is not currently a Ministry of Defense
contractor, though it has supplied products to
companies that may have military contracts. The
majority of items provided are power management ICs,
such as the ones used in the automotive industry. In
Soviet times, Mikron produced voice scramblers for
military communications systems, but as the company
turned to civil applications after the fall of the
Soviet Union, these product lines were converted to
produce items of a commercial nature. Today most
military hardware in Russia is produced by the Federal
State Unitary Enterprises, and most of the components
are either fabricated in-house or imported. There are
approximately 30 Russian enterprises with facilities
in Russia and Belarus currently producing ICs, which
may be involved in military contracting.

9. Recommendations: Post recommends JSC Mikron,
Zelenograd, Russia, as a reliable recipient of
sensitive U.S. origin commodities. It is requested
that post be notified of final disposition of the
application, and of any shipments for this
organization in order to conduct appropriate FCS
follow-up and statistical reporting.
(FCS MOSCOW/SBOZEK/DPEARCE)
BURNS

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