US widens Russia sanctions, targets semiconductors sent via China

WASHINGTON, June 12 (Reuters) - The United States on Wednesday dramatically broadened sanctions on Russia, including by targeting China-based companies selling semiconductors to Moscow, as part of its effort to undercut the Russian military machine waging war on Ukraine.

Among the steps, the U.S. Treasury said it was raising "the risk of secondary sanctions for foreign financial institutions that deal with Russia's war economy," effectively threatening them with losing access to the U.S. financial system.

It also said it was moving to restrict the Russian military industrial base's ability to exploit certain U.S. software and information technology (IT) services and, with the State Department, targeting more than 300 individuals and entities in Russia and beyond, including in Asia, Europe and Africa.

Separately, the Commerce Department said it was targeting shell companies in Hong Kong for diverting semiconductors to Russia, taking steps that would affect nearly $100 million of high-priority items for Moscow including such chips.

"Today’s actions strike at their remaining avenues for international materials and equipment, including their reliance on critical supplies from third countries," Treasury Secretary Janet Yellen said in a statement.

"We are increasing the risk for financial institutions dealing with Russia’s war economy and eliminating paths for evasion, and diminishing Russia's ability to benefit from access to foreign technology, equipment, software, and IT services," she said. "Every day, Russia continues to mortgage its future to sustain its unjust war of choice against Ukraine."

The news came as U.S. President Joe Biden departed early Wednesday for a summit in southern Italy with leaders from other Group of Seven democracies. One of the top priorities for the G7 leaders is boosting support for Ukraine, now in the third year of resisting Russia's invasion, and disarming the Russian war machine. (Reporting By Karen Freifeld, David Lawder and Arshad Mohammed; Writing by Arshad Mohammed; Editing by Chizu Nomiyama)