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June 7, 2013

Blacklisted Russian Supercomputing Company Speaks to Suspicions

Nicole Hemsoth

Almost two months ago, we reported on a document from the United States Department of Commerce that pinned rather hefty suspicions on the Russian supercomputer company, T-Platforms. 

According to the Department of Commerce, T-Platforms has been associated with “activities that could result in an increased risk of the diversion of exported, reexported, or transferred (in-country) items to weapons of mass destruction (WMD) programs.”

The agency further explained in a detailed document

“We have reason to believe that T-Platforms is associated with military procurement activities, including the development of computer systems for military end-users and the production of computers for nuclear research. T-Platforms has locations in Germany and Taiwan that are engaged in the same types of activities of concern. Based on T-Platforms’ activities, including those of its locations in Germany and Taiwan, the ERC determined that it is engaged in activities contrary to U.S. national security and foreign policy interests and poses a high risk of involvement in violations of the EAR.”

We have since spent a great deal of time trying to better understand the cause and story behind the blacklisting. While the U.S. Department of Commerce has been mum about specifics, we were able to eek some details out of the company over the course of a couple of months, culminating in a more defined Q and A from their CEO, Vsevelod Opanasenko

T-Platforms argues that they have been maligned because of their competitive position, despite the very clear assertions from the U.S. government that they have landed on the foul side of trade by providing systems and technologies to hostile nations. As you will see, particularly at the end of the interview, their sense of American technology competitiveness is creating an “east versus west” paradigm–one that is being fed by moves like banning foreign competitors. Although they told us they were not permitted to speak about the allegations, Opanasenko lays out his case rather clearly…more to come.

HPCwire: As you know, we reported on the document that stated that T-Platforms had been “blacklisted” by the U.S. Department of Commerce due to conditions that involved national security. What really happened here–what do you admit might have been seen as potentially a threat to U.S. national security and what do you believe is false?

Opanasenko: We have received a document from the Department of Commerce outlining the reasons to include T-Platforms on the Entry List. We believe it must have been a misunderstanding or an error, at best, because the assumptions behind these reasons are either irrelevant to us or based on some kind of misinterpretations.  

We are working with US lawyers to prepare an appeal. As to whether we admit that we might have been seen as a threat to U.S. national security, we’d first need to understand whether the US administration views Russia as a friend and partner, or, primarily, as an enemy. 

The connection is obvious, to my mind.  We have always evangelized HPC and we now finally see local awareness and user demand growing. We apply huge efforts to develop HPC in Russia as well as in Europe. And we obviously do a lot to encourage industrial use of HPC in our home market. As a result, our industrial customers become more competitive as HPC cheapens and shortens their R&D cycle. 

So, if the US administration considers Russia an enemy, it would hardly be interested in increased competitiveness of Russia’s manufacturing. If, on the contrary, Russia is viewed as a partner, we present no threat to US national security or foreign policy interests whatsoever.   

I’d also add that, as we’ve been told by many, it’s quite unusual that a company like ours would turn up in this particular list. Taking this into account, and also knowing competitive practices applied by certain US corporations in Russia and Europe, and methods they use to fight us, I couldn’t dismiss the possibility of their involvement. I’m not going to voice particular brands to avoid speculation.   

HPCwire: What will the basis of your appeal be? Is it even possible for you to appeal this–and isn’t the damage done to your business by the point that this is finally resolved going to be so great as to significantly harm your business permanently?

Opanasenko: Our appeal is based on the evidence proving that we have not violated anything. As an initial stage of the appeal, the Bureau of Industry and Security has asked us to answer a number of questions. Some of them are simply based on incorrect assumptions and need to be clarified, and the rest of them require additional information which we are going to provide in full.  Whether the decision can actually be reconsidered, is a question to the US authorities.  

The damage done to our business is already quite substantial: for the latest 2.5 months our product development and operations are frozen, the costs are being cut down to the minimum, and we have no idea on how long it will last. It is obvious that if the situation persists for a long time, the damage will be irreparable and, indeed, it would spoil our business forever. I would rather not fall into such pessimistic forecasts though.

Our image has also suffered a tangible damage.  We hope that, above all, this interview helps our partners to better understand the situation and avoid a one-sided interpretation. In particular, I want to stress that all our purchase activities have always been transparent, and our suppliers have been fully informed on end-users and end-use of our projects.  I hope that, as I said, this is a misunderstanding, and the information provided with our appeal would help to quickly resolve the situation.

HPCwire: Given your dealings with U.S. as a company, are you inclined to believe that the U.S. is viewing Russia as an enemy? If so, where does supercomputing fit into the “threat” concept? 

Opanasenko: The answer to this question actually depends on how our work with BIS will proceed. If it appears that considering our appeal at BIS takes an unnecessary long time, we would be indeed inclined to believe that certain politics is involved.  If the procedure goes smoothly after BIS receives straight answers supported by solid facts from us, the decision could be quickly revised. 

In fact, I believe it would be easier to suspect economic rather than political motives to underline the situation. HPC is widely recognized as a powerful competitive tool. ‘To out-compete is to out-compute’ has become a commonplace. Strategically, greater achievements in supercomputing mean better competitiveness in the global market for a country: in this sense, a potential rival is indeed a ‘threat’ to U.S. as a current HPC market leader.   

It is clear that T-Platforms is not the only HPC manufacturer able to satisfy the local demand for supercomputing power, and the decision taken by BIS will primarily affect the distribution of vendor market shares, giving the U.S. companies the opportunity to regain the local market won by T-Platforms in recent years.  It is also clear that blocking a successful local manufacturer affects the HPC technology development in the country, in the long term. Although, being a private business, we would definitely prefer to view U.S. as a technological partner, like we have always done, well outside any ‘threat concepts’.

HPCwire: Do you feel there has been a conspiracy to keep T-Platforms from growing into a wider market? If so, please give us a sense of that theory—

Opanasenko: I would rather confine myself to facts. We have observed growing demand for alternative non-US hardware vendors in Europe for several years in a row, and our recent progress supports this trend. Last year we have reported our collaboration project for PRACE with the Finnish CSC, we are about to announce our first delivery to Juelich Supercomputer Center, we were successful as a developer of choice for the new QPACE project. We, as well as some of our customers, were explicitly informed more than once that our progress is not viewed upon favorably by everyone on a political level, and attempts of pressure have indeed been made. It is a fact, not a theory, that our ability to challenge the power balance on the EU HPC market disturbed certain politicians. 

We were always quite independent in terms of technology choice, trying to satisfy diversified customer needs rather than promote a ‘favorite’ vendor. This contradicts customer policy of certain U.S. vendors. As a result, we sometimes were openly refused product and pricing support by certain manufacturers.

Rather than a conspiracy against T-Platforms, these facts, in my opinion, show one tendency which potentially threatens healthy development of the entire HPC industry and should be seriously reconsidered.   I mean an intention to artificially restrict competition and keep current global market leaders in place, at whatever price. 

HPCwire: It’s hard to argue with the fact that America’s dominance in the tech hardware market is significant–and controls the bulk of international business. If T-Platforms is cut out of the American business supply chain and others, including China and Japan build their capabilities on the chip, interconnect and system fronts, as you told us before, you think there will be a mass exodous away from American vendors, correct? In other words, as you noted, this is because of these types of perceived business practices–this would, in effect, create a East v. West technology ecosystem, no?

I would agree here.  Look at what’s happening in the global market. EU plans to invest billions of Euros in the development of semiconductors. President Putin creates ‘industrial clusters’ to improve research and manufacturing. President Obama advocates the return of manufacturing to the U.S. and ensuring American technological leadership. This shows that globalization has obvious flaws, and local manufacturing is likely to rise again, resulting in greater customization of products and independency from imported goods. While corporations benefit from globalization, many politicians begin to understand that it contradicts national interests and does not always help to address competitiveness, employment and environmental issues.  Today, large corporations are weary of private initiatives undertaken by small and medium-sized companies. The tendency is to either buy potential rivals or to simply drive them out of the market.  

No one wants to put the ‘East’ against the ‘West’. However, this opposition automatically results from certain government decisions. Sanctions against Huawei, now expelled from the US market, like our blockade, prompt national economies to develop their own competence in key technological areas, instead of using technologies developed globally. As a result, Europe, China, Japan, South Korea are now independently developing semiconductor industry. If American corporations were more open-minded in terms of technological cooperation, this could have been avoided.

In other words, by restricting competition and joint development, Americans are forcing the ‘East’ to go its own way, that is, to develop its own independent technology. As a result, some customers might indeed leave U.S. companies and opt for the ‘East’.  In the long term it undermines U.S. corporations rather than reduces the competition threat, because they virtually ‘bite the hand that feeds’.  

T-Platforms has always supported global collaboration, and all of our projects were based on partnering with major U.S. vendors. However when we are cut out of the global technological chain we have no choice but to go for local government support and develop home-grown technology. This sets our countries apart in the area where there should have been mutually profitable collaboration. 

***

While T-Platforms has pulled out of the International Supercomputing Conference this year, we are expecting to engage in a short meeting with the company for further details. If you have questions that you’d like considered, please ping me at editor@hpcwire.com 

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