Ledger element

The Element Group of Companies was created in 2019 on the basis of the assets of AFK Sistema and Rostec in order to form on the basis of leading domestic enterprises a single national center of competence in the development and production of microelectronics in Russia. It unites Russian microelectronics enterprises, including JSC Micron, JSC NIIME, JSC NIIET, JSC NIIMA Progress, JSC NZPP Vostok, JSC NIITM.

GC "Element" has a full cycle of development and production of electronic component base (ECB), electronic units and modules, equipment and materials for microelectronic production in the most popular market segments. As of 2023, the group has 10 design centers and 10 production sites

The products of Element Group are used in banking, SIM and transport cards, urban infrastructure development and management projects, communication and satellite navigation systems, as well as control elements in transport and other areas.

Performance indicators

2023:93% profit growth to RUB 5.3 billion and negligible marketing costs

Chip manufacturer Element in 2023 earned 5.3 billion rubles in net profit, which is 93% more than a year earlier. The company's revenue in comparison with these segments of time rose by 46% and reached 35.8 billion rubles. Such data in accordance with international financial reporting standards (IFRS) were released on April 22, 2024.

Revenue growth in the Element group was associated with an increase in demand for the Russian electronic component base, and an increase in net profit - with cost optimization while increasing production volumes.

Chip manufacturer "Element" in 2023 earned 5.3 billion rubles of net profit

Capital expenditures of Element Group of Companies at the end of 2023 amounted to 11.8 billion rubles against 3.1 billion rubles in 2022. The company attributed this growth to an increase in the group's investment in expanding existing and creating new production facilities, as well as the development of new products and technologies.

Among the investment projects being implemented in 2023 are the expansion of the production of integrated circuits on plates with a diameter of 200 mm, the modernization of crystal industries and the launch of lines for enclosing microcircuits into plastic.

New developments of the group's enterprises include the launch into serial production of a series of 32-bit microcontrollers based on RISC-V cores, the creation of a line of communication and navigation modules, as well as a line of electronic component base for the needs of industry and the energy sector, the group said in a statement dated April 22, 2024.

In 2023, 3,009 people were hired by the group's enterprises (+ 30% compared to 2022), of which 2,331 were production personnel.

In 2023, the group's EBITDA reached 8.7 billion rubles, an increase of 68% compared to the previous year due to an increase in production volumes and an increase in the operating efficiency of the group. The ratio of net debt to EBITDA decreased to 1.3x compared to 1.8x at the end of 2022 due to the group's increased profitability.^[1]

With revenue for 2023, 35.7 billion rubles, marketing and advertising expenses amounted to only 71 million rubles.

At the same time, over the year, the marketing budget decreased by 10% (in 2022 - it was 79 million).

The share of marketing and advertising expenses of Element Group of Companies from revenue in 2023 amounted to only 0.2%. And this despite the fact that an IPO is planned, and the level of fame of the group and the clarity of its business tends to zero.

There is another figure in the reporting - representative expenses of 34 million rubles against 19 million rubles a year earlier. As a rule, budgets allocated for participation in conferences are recorded in this line. But even with them, the figures are more than modest (the share of total marketing and representative expenses from revenue is less than 0.3%).

For comparison, recall that IT companies that recently listed their shares on the stock exchange or planned IPOs have much more significant marketing budgets:

• Positive Technologies - 1.58 billion rubles, or 7% of revenue.
• Astra Group of Companies - 435.65 million rubles, or 4.6% of revenue.
• Selectel - 228.2 million rubles, or 2.2% of revenue.

History

2024

Creation of an investment fund worth ₽10 billion

In early December 2024, Element Group announced the creation of an investment fund of ₽10 billion together with development institutions. The names of partners in the group are not disclosed.

The president of the group, Ilya Ivantsov, said that we are talking about the creation of a separate legal entity with a controlling stake in Element. The fund will work according to the buy & build model, aimed at developing its own competencies through the acquisition of specialized companies and teams.

Chip manufacturer "Element" creates an investment fund for ₽10 billion

The fund will be funded by the group's own funds, including funds raised from the IPO in May 2024. At the same time, the funds of the investment program in the amount of ₽92 billion for 2023-2026 will not be involved. The company is also counting on additional government support measures.

The fund will focus on investments in mature industrial technologies with a focus on mass serial adoption of industrial electronics. One of the promising areas of investment, the president of the group called the robotics sector, the development of which becomes necessary against the background of a shortage of personnel in industry.

One of the goals is to create a national leader in its market segment, capable of becoming a public company and a significant player in the market with a fairly serious business scale on the horizon for 3-5 years, "Ilya Ivantsov emphasized.

During the period of high interest rates, the company does not plan to change its strategy of mergers and acquisitions, but has increased the requirements for the profitability of potential investment objects. Currently, more than 20 companies are in the group's field of view, transactions with which can be financed through a new investment fund. Specific areas of investment will be determined after the completion of the formation of the fund.^[2]

Start-up of production of communication equipment running on photon integrated circuits

St. Petersburg State Electrotechnical University "LETI" together with the group of companies "Element" on November 7, 2024 announced the start of production of ultrahigh-frequency generators based on photon integrated circuits (FIS), which have unique characteristics. It is assumed that the development will help establish quantum communications.

According to Izvestia, the new type of microelectronics provides significantly higher speed compared to traditional silicon chips.

Production of communication equipment running on photon integrated circuits launched in Russia

Radiophoton devices allow you to work with ultra-wideband signals, which ensures high speeds and large volumes of transmitted information, "said Viktor Tupik, Vice-Rector for Strategic Development of St. Petersburg State Technical University" LETI. "

The technology of photon integrated circuits production differs from silicon electronics in lower requirements for topological norms, which ensures a high percentage of yield of suitable crystals at the stage of industrial development. The speed of photons in such schemes is almost equal to the speed of light.

Associate Professor of Probability Theory cyber security RUDN and Vyacheslav Begishev stressed that these devices open up wide possibilities for the development of ultra-wideband communication systems, including future/6G 5G networks and quantum communications. The production of such components in Russia will reduce dependence on foreign technologies.

The first industrial prototypes of photon microwave generators will be released at the Voronezh enterprise by the end of 2024. The development also includes components for quantum communications - random signal generators and spectrum analyzers.

According to SPbGETU "LETI," the global market for integral photonics for promising telecommunications systems and quantum communications systems is estimated at $10 billion, while Russia's share is about 2%. The main research focuses on the integration of microelectronic silicon technology and photonic technology.^[3]

Approval of the investment program for 92 billion rubles

On October 25, 2024, it became known that the Russian microelectronics manufacturer Element approved an investment program for 92 billion rubles. It is aimed at developing competencies and production capacities in the field of producing an electronic component base (ECB), radioelectronic equipment and modules, in the field of equipment and materials for the production of ECB.

According to Interfax, the president of Element Ilya Ivantsov told about the investment program. According to him, as of October 2024, the program is 90% funded. The company's own funds account for about 20%: this is money raised during the initial public offering (IPO), as well as part of the profit. Another 50% are funds received as part of state support: we are talking about direct state financing of development work and subsidies for the development of products. The remaining part of financing (about 30%) is concessional loans and loans, the average rate on which is 2%.

Microelectronics manufacturer "Element" approved an investment program for 92 billion rubles

One of the main areas of the investment program, as Ivantsov notes, is the expansion of existing and the creation of new production capacities. Such projects are implemented at all enterprises of the Element group. The second important task is to develop new products and technologies.

We are working on expanding technological options so that the existing facilities can produce the widest possible range of products. Including more high-tech - that is, not just basic microcontrollers, but, for example, microcircuits, which in their capabilities are closer to the processor level, - said Ivantsov.

In particular, two projects were implemented to create new production lines with the involvement of funds from the Industrial Development Fund (EDF). Two lines have been launched at Micron - for assembling microcircuits into plastic cases and for producing chip modules for bank cards, electronic documents and SIM cards. And at the Voronezh Research Institute of Electronic Technology, a line for the housing of microcircuits was put into operation.^[4]

Launch of microelectronics production in Voronezh for 790 million rubles

In September 2024, the Element group of companies launched the production of microelectronics for medical and industrial equipment in Voronezh, investing more than ₽790 million in the project. This was reported by the press service of the company, indicating that the new production facilities will make it possible to produce microcontrollers of their own design, which will be used in various fields, including medicine, household resource accounting systems and automation of production processes.

According to TASS, the main object of investment was the enterprise of the Research Institute of Electronic Technology (NIIET JSC) in Voronezh, where production will be established. The project also involves the Industrial Development Fund, which provided ₽616 million in the form of a preferential loan under the Component Products program. The new lines will make it possible to produce a wide range of microelectronic components in metal polymer cases, which significantly expands the technological capabilities of the enterprise.

"Element" launched in Voronezh the production of microelectronics for medical and industrial equipment

According to the press service of the company, the new line is designed to produce microcontrollers, microprocessors, power converters and other elements in demand in medical equipment and production automation systems. It is expected that by the end of 2025 the company will reach production of up to 3.5 million plastic cases annually, and in the future it is planned to expand to 10 million products per year.

The group of companies "Element" includes more than 30 enterprises engaged in the development and production of integrated circuits, semiconductor devices and power electronics. According to the company, the project to expand capacities in Voronezh contributes to the development of the Russian microelectronic industry, providing the country with important components for high-tech solutions in the field of medical and industrial equipment.^[5]

Development of the first equipment in the Russian Federation for the production of power transistors

Element Group of Companies has completed the development of the first Russian equipment for the production of power transistors. This became known in August 2024.

According to Vedomosti, the project to create equipment was implemented with the support of the Ministry of Industry and Trade as part of comprehensive measures to support domestic microelectronics. The Element group also invested its own funds in the project, but the exact amount of the investment is not disclosed. It is expected that mass production of power transistors will be launched in 2025-2026, which will significantly increase the level of localization of the production of these components in Russia. The development has already attracted interest in the domestic market, and 15 customers have confirmed their intentions to purchase new equipment.

The Element group developed Russian equipment for power transistors and received orders, spending billions

The main installation, developed by the group's specialists, is designed to perform the second stage of creating plates for power transistors - the epitaxy process. As part of this process, a layer of gallium nitride, a sought-after material that is used to produce LEDs, power microelectronics and other high-frequency devices, is applied to the silicon substrate. The company's specialists emphasized that this technology is similar to growing crystals for microprocessors, but is focused on the production of power transistors for various industries.

As noted by independent expert Aleksei Boyko, enterprises specializing in the production of LEDs and various types of transistors can become the main consumers of products. He also stressed the personnel problem in the industry, where the lack of specialists makes development difficult. After 2022, the industry switched to a more sustainable component base and is working to increase the level of localization and competencies. The emergence of new technologies based on gallium nitride can increase the technological independence and export potential of Russian microelectronic products.^[6]

Obtaining a loan of 3 billion rubles to expand production

On August 13, 2024, it became known about the provision of a loan to Element Group in the amount of ₽3 billion to expand the production of an advanced electronic component base for civil industries. Financing was provided by Novikom Bank, which is a subsidiary of Rostec State Corporation.

According to TASS, the loan funds will be used to develop the production capacities of Element PJSC, which is part of the group of companies. The peculiarity of this loan is the preferential interest rate of 3% per annum, provided under the program of state support for the domestic microelectronic industry. Such financing conditions will allow Element Group to significantly increase the production of electronic components at its enterprises.

Microelectronics manufacturer Element Group raised 3 billion rubles to expand production

In addition to expanding existing production lines, the Element group of companies plans to allocate part of the funds for the development and production of onboard equipment for unmanned aircraft systems. The main focus will be on the civilian sector, including the use of unmanned aircraft systems in agriculture, traffic control and monitoring of the state of energy sector facilities.

As part of the new direction, Element Group of Companies will focus on creating key components of on-board equipment for unmanned aircraft systems, such as flight controllers, engine speed controllers, as well as transceiving equipment for communication with the operator and image transmission. The creation of a domestic component base for unmanned aircraft systems will reduce dependence on imported components and accelerate the introduction of unmanned technologies in various sectors of the economy.^[7]

Obtaining a loan of 15 billion rubles for the production of power components

Public Joint Stock Company "Element," a leading developer and manufacturer of electronics in Russia, received a loan of ₽15 billion to create serial production of power microelectronics components for the civil market. This became known on July 31, 2024. Financing was provided by the ВЭБ.РФ State Corporation under the Cluster Investment Platform program.

The total cost of the project is ₽19,5 billion. The decision to grant the loan was approved by the supervisory board of the corporation. The new enterprise will be the first in Russia major serial production of crystals of power diodes and transistors based on silicon and silicon carbide using modern technologies.

GC "Element" took a loan of 15 billion rubles for the production of power components

The design capacity of the new production will allow producing up to 140 thousand plates per year. It is expected that over the next six years this will increase the volume of Russian production of power microelectronics from the current 2% to 70% and significantly increase the level of localization of the power electronic component base.

Microelectronics is one of the priorities of the activity ВЭБ.РФ. The launch of the project is critical not only for the industry itself, but also is a factor in the success of a number of projects in other areas: transport engineering, aircraft industry, power, etc., "said ВЭБ.РФ Deputy Chairman Daniil Algulyan.

According to Ilya Ivantsov, President of Element Group of Companies, the growing demand for power microelectronics components is associated with the development of modern electric vehicles, the creation of charging infrastructure, as well as with the development of the aircraft industry and railway transport, including high-speed.

The Cluster Investment Platform program provides for the provision of credit to industrial enterprises at a preferential rate for the implementation of investment projects for the production of priority products. The list of such products was approved by the interdepartmental commission of the Ministry of Industry and Trade of Russia on the basis of industry import substitution plans and a list of critical materials, components and raw materials.^[8]

GC "Element" revealed the volume of investments in R&D and plans for the development and production of microelectronics

The volume of investments of Element Group companies in R&D in 2023 amounted to 3.6 billion rubles, which is 2 times more than the same indicator in 2022. This is stated in the group's annual report, published in July 2024, discovered TAdviser.

The company works in the knowledge-intensive industry sector, and the development of new technologies is a key component of development. This activity requires significant investment and is carried out by the company mainly with the involvement of government subsidies to partially compensate for costs.

All the company's developments are applied in nature and, ultimately, are aimed at developing the product line, explains Element Group in a published document. More than 400 engineers, technologists and developers in the Element Group are working on the creation of new microcircuits.

R&D units operate at all of the group's production sites. The general coordination of the activities of research centers is carried out by the technological development unit of Element PJSC. Patents are issued for the main results of the company's activities in the field of R&D. From 2021 to 2023, the number of group patents increased by 42% and reached 481.

GC "Element" increased investments in R&D in 2023

The main directions of developments which conduct the Element Group enterprises, the following:

• computing - processors and microcontrollers. All developments are conducted on open architectures and can be painlessly transferred to various production sites;
• communication and navigation - the company conducts research both in the field of applied and modular solutions, as well as in the field of creating appropriate microcircuits;
• power electronics, including power devices based on both gallium nitride technology and silicon and silicon carbide technologies;
• developments for Russian industries are products that can be commercially reasonably produced in Russian factories for the civilian consumer segment. This segment includes, but is not limited to, power converters, semiconductors, analog chips;
• a promising area of ​ ​ development - memory technologies. This segment includes technologies for the epitaxy of gallium nitride, photonics.

In 2024, the R&D units of the Element Group launch a number of new areas of research:

• development in the field of processors, including those with graphics and built-in cores. Previously, the company was not represented in this segment, and it should become one of the key areas for the development and expansion of the presence of Element Group in the Russian market;
• a program of research in the field of power electronics;
• expanding sensory research on photon chips;
• launch of projects for the development of Russian integrated circuits for 4G (LTE) modems.

In the annual report of the Group of Companies "Element" states that the acute shortage of products of the microelectronic industry in the Russian market persists. Demand exceeds production capacity by 3.3 times against the background of the departure of foreign players, stimulating the development of Russian microelectronics production. To meet demand, the group will continue to develop production facilities and develop scientific and technological cooperation and expand the product line.

In 2024, for example, the implementation of the "Cube" project was launched, aimed at the production of silicon diodes and transistors. A new production building has been laid at the semiconductor device plant. At the same time, the development of new technologies is carried out both in the contour of the Element Group of Companies and in cooperation with leading universities, for example, in the framework of joint ventures with Tomsk State University and St. Petersburg State Electrotechnical University.

In 2023, the range of Element Group of Companies was replenished with new microcontrollers, smart power keys and navigation receivers. In 2024, it is planned to begin serial shipments of new microcontrollers.

Also today, Element Group of Companies already produces a number of microcircuits integrated into the Vostok modular platform. In 2024, these products will be transferred to consumers in the form of finished products, which can be used not as separate microcircuits, but as modules. In addition, in 2023, Element Group of Companies began serially shipping solutions on 1921VK035 microcontrollers. The Vostok platform on these microcontrollers is actively sold, including in open areas such as Ozon. Consumers use these products in their robotic and industrial systems.

Also in the reporting period, the group presented the first nitride-gallium power devices to consumers, thereby opening a new product direction. Now the project has expanded to include not only power electronics, but also LEDs. In 2023, two production projects for the housing of microcircuits were under implementation, and in 2024 the production of metal polymeric casings began. In addition, a number of projects are in development.

The cycle of creating a new product takes an average of two years, so already in 2024-2026, new samples of products should be with our consumers, "the Element Group of Companies reports in its annual report.

The factories of the Group of Companies "Element" are capable of producing components 180-90 nm. This is the basic level for the production of microcontrollers, interface drivers, Wi-Fi modules, sensors, auto electronics and space systems.

To ensure the technological stability of the business, Element Group develops accurate mechanical engineering and the production of special gases and materials. By 2030, it plans to replace at least 70% of the technological production route with its own equipment and materials, follows from its annual report.

The company is also working to expand the commodity range of key factories and other design centers. GC "Element" is aimed at increasing technological capabilities and transferring the production of products that were previously produced abroad to domestic sites.

Note that the annual report of the Element Group of Companies was published for the first time. This was preceded by its transformation from a joint-stock company into a public joint-stock company and exit to. And before IPO that, the group also disclosed its financial statements for the first time, IFRS but it contained much less details than in the annual report.

Going public

On May 30, 2024, the Russian developer Element made an initial public offering (IPO) on the St. Petersburg Stock Exchange. Trading in securities began under the ticker symbol ELMT.

It is reported that the IPO of "Element" passed along the lower limit of the price range - 223.6 rubles per lot, including 1000 ordinary shares. During the procedure, the company raised 15 billion rubles, including a stabilization package. Market capitalization, taking into account the funds received, amounted to 105 billion rubles. This is said to be the first IPO of a high-tech Russian company in the development and production of microelectronics.

Russian developer "Element" carried out an initial public offering of shares

The placement of shares of the Element group on the stock exchange is a landmark event in the development of the company and the Russian microelectronics industry. We are the first in this high-tech sector to acquire public status and whose shares have become available to a wide range of investors in the stock market, "says Ilya Ivantsov, President of Element PJSC.

It is noted that during the IPO, investors purchased exclusively shares of an additional issue (cash-in). The share of free-float securities amounted to 14.3% of the company's share capital after its increase as a result of the IPO. Element will use the funds raised to expand production, develop and launch new promising products and technologies on the market. We are talking, in particular, about special technological equipment.

According to the results of the IPO, tens of thousands of investors became shareholders of Element. The Company is talking about the formation of a balanced and diversified shareholder structure. At the same time, Element satisfied the demand from retail investors as much as possible by providing them with priority allocation. The final allocations are distributed approximately equally between retail and institutional investors.^[9]

Start accepting applications from investors for participation in IPO. Intention to attract 15 billion rubles

PJSC Element, a Russian developer and manufacturer of electronics, on May 23, 2024 shared with TAdviser the indicative price range of the initial public offering of ordinary shares and announced the start of accepting applications from retail and institutional investors for participation in the IPO.

The indicative price range is set at 223.6 rubles to 248.4 rubles per lot, including 1,000 ordinary shares, which corresponds to the company's market capitalization in the range from 90 to 100 billion rubles (excluding funds raised as part of the IPO). The size of the offer will be 15 billion rubles. The offering will consist solely of shares issued as part of a cash-in issue. It is expected that according to the results of the IPO, the share of shares in free float (free-float) will be more than 13%. Element plans to use the funds raised during the IPO to finance the group's development program.

The collection of applications started on May 23, 2024 and will end on May 29, 2024. Earlier, on May 21, 2024, SPB Exchange decided to include shares in the first level quotation list from May 30, 2024. They will trade under the ticker symbol ELMT and ISIN RU000A102093.

"We announce the price range of the placement of PJSC Element shares and officially announce the start of collection of applications. The IPO of our group is an opportunity to invest in the development of domestic microelectronics, which has tremendous growth potential at the current stage of technological development. As part of the IPO, countries we intend to attract 15 billion rubles for further intensive development of the group, "said the president of Element PJSC. Ilya Ivantsov

Plan for IPO at SPB Exchange

The Element Group, a Russian developer and manufacturer of electronics, on May 17, 2024 informed TAdviser of its intention to conduct an initial public offer of ordinary shares with a listing on PJSC SPB Exchange.

As specified in the company, within the framework of the IPO, investors will be offered exclusively shares of an additional issue, the main shareholders of the company do not plan to sell their shares. The listing and start of trading in shares are expected in the second half of May - early June 2024. Thus, Element PJSC will become the first public company among developers and manufacturers of radio and microelectronics in Russia. The company expects that its shares will be included in the quotation list of the first level of the St. Petersburg Exchange. It is assumed that according to the results of the IPO, the share of shares in free float (free-float) will be at least 10%.

Element Group expects to use the funds raised during the IPO to finance a development program that involves expanding existing and creating new industries, supporting the launch of new products in promising high-margin segments and expanding into international markets.

According to Ilya Ivantsov, President of the Element Group, the IPO will give the group the opportunity to raise additional funds to implement its investment program, which will contribute to the further advanced development of the microelectronic industry in Russia.

As he noted, the development of microelectronics is the basis of the country's technological sovereignty. In the coming years, the Element group will have to implement a number of large-scale projects, which include the expansion of existing and the launch of new production facilities, as well as the development and mass production of high-tech products.

"We are consistently working to expand the scale of the business, strengthen market positions, which is already reflected in the growth of the main financial indicators. To reach a new level, we have everything we need: a strong scientific and production base, support from the state and, of course, high-class specialists, "added Ilya Ivantsov.

It is expected that the company and its main shareholders will assume obligations related to the restriction on the placement of new shares and the alienation of already placed shares within 180 days from the date of the start of trading on the "St. Petersburg Exchange." The IPO also provides for a stabilization mechanism for up to 30 days after the start of trading.

Participation in the IPO will be available to qualified and unqualified investors - individuals, as well as institutional investors. It will be possible to apply for the acquisition of shares through Russian brokers.

GC "Element" bought JSC "NIPS"

On May 15, 2024, it became known about the sale of the Novosibirsk Institute of Software Systems (NIPS JSC) to the Element group of companies. The latter, as a result of the transaction, increased its stake in NIPS JSC from 10% to 90%, having bought out its stake from Rostec. Read more here.

Preparing for IPO

The Element group of companies plans to go public by the end of 2024. This was reported on March 13, 2024 by Vedomosti.

According to sources familiar with the preparations for the IPO, the company expects to receive an estimate of 100-150 billion rubles. "Element" aims to attract 10-15 billion rubles to finance a large-scale investment program. If these goals are achieved, Element's IPO may become the largest in the Russian technology sector in recent years.

Element Group of Companies plans to go public by the end of 2024

Element was created in 2019 and is a joint venture between Rostec and AFK Sistema. The share of "Element" in the Russian electronics market reaches tens of percent. The GC includes 19 enterprises operating in the field of development, production and design of microelectronics. The group includes such enterprises as Micron, Research Institute of Electronic Technology, Research Institute of Electronic and Microelectronic Equipment Progress, Semiconductor Device Plant, Novosibirsk Semiconductor Device Plant with OKB, Voronezh Semiconductor Device Plant and other companies. Micron is considered the main asset of the Element.

The "element" is engaged in the production of microcircuits, semiconductors, as well as various radioelectronic equipment. In addition, Element is the only manufacturer of chips for foreign passports in Russia, as well as one of two manufacturers of chips for bank cards.

According to experts, an important factor in the success of a potential IPO is the growth of state support for the sector, which has grown significantly in recent years.

"According to the data, Ministry of Industry and Trade 2023 billion rubles were allocated for state support of the sector 150 year, and 2024 billion in 210, so the potential of domestic companies is really huge here," Alexander Abrahamyan, head of the group for working with wealthy clients, commented on Alpha capital the news.[10]

Construction of a plant for the production of radio modules for base stations in Tomsk for 2.5 billion rubles

The Element Group of Companies intends to launch in Tomsk the development and production of modules and components for base communication stations. This was announced on March 12, 2024 by Kommersant.

Tomsk State University may become an Element partner in this enterprise. The university will take over the training of personnel and research. It is planned that 150 university students will take part in the design and production. In addition, functional control of products will be carried out on the basis of the TSU collective design center.

GC "Element" intends to launch in Tomsk the development and production of modules and components for base communication stations

According to Kommersant, at the moment a number of Russian electronics manufacturers are developing radio modules within the framework of the roadmap. According to experts interviewed by the media, market participants assess the project positively, but hope that import substitution will not only be declarative. Thus, the representative of the Proteus company (the company is also developing various solutions in the field of communication within the framework of the roadmap) expressed the hope that "the intentions of colleagues will be embodied in the correct implementation of real import substitution, and not declarative."

Russian companies can be the first to be transferred to the domestic electronic component base. For manufacturers of base stations, it is necessary to ensure a full cycle of their configuration and calibration, including in finished products, which we intend to do within the framework of this project - said JSC Element.

Judging by the project's roadmap, Element JSC (a joint venture between Rostec and AFK Sistema) plans to start producing the entire range of components for equipment. The development and production of components for radio modules will be engaged in the Research Institute of Electronic Technology, the Research Institute of Molecular Electronics, JSC Semiconductor Device Plant and others.^[11]

2023

Element created the Nanotronics Company

In early July 2023, information appeared that the Element group, a joint venture of the state corporation Rostec and AFK Sistema, formed a new company called Nanotronics. Read more here.

2022: Inclusion on the US sanctions list

In September 2022, Element Group of Companies was included in the US sanctions SDN list ^[12]

Russian IT companies that fell under US, EU and British sanctions in 2022-2024 TAdviser map

Map of sub-sanctioned IT companies. Click to enlarge

TAdviser drew up a map of Russian IT companies in 2022-2024. which fell under the sanctions of the United States, the EU and Britain. It included, among other things, the Element Group of Companies. The article about the map can be found here.

2021

Agreement on the creation of the consortium "University 360"

GC "Element," North-Eastern Federal University named after M.K. Ammosov, "Almazergienbank" and the online school Skyeng on September 6, 2021 announced the signing of an agreement on the creation of the Consortium "University 360." Read more here.

Agreement with Znak M on cooperation in the production of RFID tags for registration marks

On April 15, 2021, Element Group of Companies announced a number of high-tech developments in the field of microelectronics, RFID and identification, smart transport, information infrastructure, etc. For the strategic development of the group of companies, an agreement was signed with Znak M LLC.

The document regulates cooperation and interaction between companies in the implementation of the project in the field of production of RFID tags for registration marks. The solution allows you to control automatic blocking devices, including barriers, gates, bollards for private and commercial applications.

In accordance with the agreement, a joint company Element Group of Companies and ZNAK M LLC will be created by the end of 2021. The organizational and legal form of the organization will be a limited liability company.

As specified in the text of the document, the Element group of companies will provide the newly created enterprise with the supply of UHF RFID chips for the plate of state registration plates of vehicles (GRZTS), provide a room for organizing the production of modules and transfer the developments necessary for the implementation of the project.

ZNAK M LLC, in turn, undertakes to supply the necessary equipment and materials for organizing the RFID chip module plant for GRZTS in the Russian Federation, as well as provide technologies for the production of chip modules and the implementation of the registration plate concept.

2020

Agreement with MIET in the development of the scientific, technological and production potential of the Russian microelectronic industry

On December 24, 2020, Element Group of Companies, which unites Russian microelectronics enterprises, announced that, together with the technical university of Russia in the field of high technologies, the National Research University MIET signed an agreement on cooperation in the development of the scientific, technological and production potential of the Russian microelectronic industry, the formation of competencies, promotion to the markets of solutions for complex technical systems and industry ecosystems.

This cooperation agreement has become a logical continuation of the work that is already underway with the enterprises of the Element group. Our joint projects will affect not only the training of personnel for domestic microelectronics, but also the development of scientific schools, such as nanophotonics, spintronics, plasmonics and others, - said the rector of MIET, professor Vladimir Bespalov.

Signing an agreement with MIET is a natural step for us in training specialists in the field of microelectronics in Russia, as well as attracting talented youth to the industry. The partnership will allow us to unite our efforts in the development of the competencies of employees of the future, who will be able to solve high-tech problems and implement digital projects in such industries as artificial intelligence, mechanical engineering, medicine, transport, power, the basis for digitalization of which is microelectronics, "said Oksana Kukharchuk, Member of the Board, Vice President for Personnel Management of Element JSC.

The agreement provides for the joint activities of Element Group and NIU MIET, which will allow combining competencies, organizational resources and reputations for the development of markets, increasing the efficiency of developments and implementations in various sectors of the economy, regions and countries based on the electronics ecosystem as part of the implementation of the Strategy of Scientific and Technological Development of the Russian Federation, the program "Digital Economy of Russia," the Strategy for the Development of the Electronic Industry of the Russian Federation.

Element Group and NIU MIET will focus on the development of technologies for the development and production of microelectronic components, the infrastructure of joint educational, innovation and production centers, a training system, as well as on comprehensive research and development work with the subsequent organization of serial production.

The cooperation agreement is designed for three years with the possibility of prolongation.

Among the founders of the Consortium "Telecommunications Technologies" (ANO TT)

On April 21, 2020, Micron informed TAdviser that the state corporation Rostec, Rostelecom and the Element group of companies, with the support of the Ministry of Industry and Trade, are joining forces to bring Russian electronic products to the market. The Consortium "Telecommunications Technologies" (ANO TT) was created, the purpose of which is to form the conditions for the implementation of the state strategy in the field of import substitution and the development of domestic development and production of radioelectronic products, localization of equipment for the telecommunications industry, as well as creating demand for the domestic electronic component base. One of the founders of the consortium was the Element Group of Companies. Read more here.

Joining the Consortium of Russian Developers DSS

On February 19, 2020, TAdviser became known that leading domestic high-tech companies announced the creation of a "Consortium of Russian DSS Developers." The organization includes the developer of storage and virtualization tools "Aerodisk," the Institute of Software Systems named after A.K. Aylamazyan RAS, the company "Norsi-Trans," GC "Element," "BASEALT," as well as JSC "MCST" - the developer of processors "Elbrus." Read more here.

2019

Creation of a joint venture with Norsi-Trans - Yakhont

On January 24, 2020, it became known about the creation of Yakhont LLC, a joint venture of the equipment supplier for the implementation of the Yarovaya Law, Norsi-Trans and Element (the structure of AFK Sistema and Rostec). Read more here.

Agreement with NTC "Module" and "Hi-Tech" on cooperation in the development of AI technologies in Russia

On December 13, 2019, the Element company informed TAdviser that it had agreed with the STC Module and the Hi-Tech group of companies on joint actions to create hardware platforms and solutions in the field of artificial intelligence technologies (AI) in Russia.

In particular, Element, a single operator of a cluster of microelectronic enterprises in Russia, Hi-Tech, a developer of a tensor microprocessor, and the Module scientific and technical center, a player in the Russian market for knowledge-intensive technologies and a developer of a domestic neural network platform based on its own NeuroMatrix architecture, signed an agreement on joint promotion of interests in the field of artificial intelligence, creating an industry consortium.

Companies intend to jointly develop strategies to provide the Russian market with domestic hardware solutions in the field of AI, which should reduce dependence on foreign manufacturers of specialized AI computers, create an ecosystem for training neural networks, and offer new solutions in the field of electronics with support for AI functions.

In addition, the parties will be engaged in the formation of joint proposals on amendments to regulatory legal acts and acts adopted by various organizations, as well as the organization of measures aimed at bringing the position of the consortium participants to the subjects of legislative initiative.

The agreement as a whole is aimed at supporting the National Strategy for the Development of Artificial Intelligence until 2030 and the federal project "Development of Technologies in the Field of Artificial Intelligence." Among the priority activities of the consortium planned for the end of 2019 is the organization of participation in the intersectoral alliance for the development of artificial intelligence, specified in the "Element."

Agreement with Skoltech and MTS on cooperation on the development of equipment for 5G networks in Open RAN standards

Element, MTS and Skolkovsky Institute of Science and Technology (Skoltech) signed a tripartite agreement on cooperation in the development and production of equipment for 5G networks in open international standards Open RAN in Russia. This was reported on December 10 of the year in the "Element." Read more here.

Opening of the Russian center for collective design of electronics based on FEFU

On September 6, 2019, the Element company informed TAdviser about the opening of the first Russian collective design center in the Far East (CPC Vostok). The center was formed on Russky Island on the basis of the Engineering School and the School of Digital Economics of the Far Eastern Federal University. Read more here.

Creating a Company

On July 15, 2019, Rostec and AFK Sistema announced the creation of a joint venture in the field of microelectronics. The company was named "Element."

As a result of the transaction, Sistema's share in Element amounted to 50.01%, Rostec - 49.99%. Taking into account the difference in the value of the contributed assets, AFK bought a controlling share for 1.35 billion rubles. For the organization, an installment plan for the payment of cash-out is provided.

The agreements consolidate the transition of the controlling share in favor of RTI-Microelectronics, Dmitry Lelikov, deputy head of Rostec, told TASS.

The deal providing for the creation of AFK Sistema and Roselectronics (a subsidiary of Rostec) of the combined microelectronics company was planned to be closed before the end of the first quarter of 2018. However, the partners froze the project due to litigation between AFK Sistema and Rosneft. After the settlement of legal disputes, negotiations between Rostec and Sistema were resumed.

According to Lelikov, the leading microelectronic enterprises of the country are united within the framework of the "Element," which will create the leader of the electronic component base market (ECB) of Russia, will ensure the accelerated development of the microelectronics market.

We expect that the joint venture will become a key supplier of ECB for the infrastructure of the digital economy of the Russian Federation, which will simultaneously solve two problems - to ensure the technological leadership of the state and significantly increase the shareholder value of the company, he said.

"Element" will take part in the implementation of projects in the field of creating electronic documents - a universal electronic passport, a single ticket system for public transport. In addition, the joint venture plans to become a center of competence in the field of artificial intelligence hardware, special materials and 3D assembly technologies.^[13]

Notes