Russia's ambitious AI strategy could hit the wall due to shortages of investment, equipment and personnel.

The Russian government has recently updated its strategy for the development of artificial intelligence (AI) in a bid to create a regulatory framework, foster growth of human resources and facilitate technological efficiency.

According to a PwC report, by 2030, AI's contribution to the global economy could reach $15.7 trillion. Certainly, the Russian government wants to get a piece of that pie and so far the situation has been pretty good for Russian companies which are eager to embrace AI-based solutions. A third of Russian companies are already using AI-based solutions in their operations, including companies that the government considers as belonging to critical information infrastructure.

 

AI as a remedy

In addition, Russian authorities hope that AI will contribute to the growth of the country's economy, which has been struggling since Moscow's invasion of Ukraine in February 2022 and ensuing Western sanctions.

According to Russian government experts, the adoption of AI-based tech could add as much as RUB11.3 trillion ($124bn) to the country's GDP by 2030.

The government's plans are ambitious. Over the next five years, it expects the volume of the country's computing power to grow ten-fold, while the number of AI researchers publicising their findings at top-level conferences will more than double, and the share of industries with a high level of AI implementation will grow to a stunning 95%.

At the same time, the government expects to train as many as 70,000 AI professionals by 2030. The annual volume of services rendered for the development and implementation of AI solutions should grow to RUB60bn ($660mn) over the next five years from the current figure of RUB12bn ($132bn).

So far, the AI segment in Russia has seen some progress. AI is used in banking, medicine, retail, logistics, industry and other sectors of the economy. And the government hopes that AI-based solutions will bring substantial growth to a number of sectors of the economy.

One third of Russian companies are already using AI technologies in their operation. According to research data from Yakov & Partners and Yandex, 94% of companies that have started using AI to fulfil business tasks believe that it has allowed them to noticeably cut costs. 68% of the AI using companies noticed the impact of the technology on their financial performance.

 

Government cash for AI

Over the last year or so, Russian authorities have been serious about fostering the development of the AI segment. Last year, a national programme specifically focused on AI development was launched as part of a bigger scheme, Data Economy and Digital Transformation of the State, scheduled to run up to the end of 2030.

As of September of this year, the AI programme was updated and its management was transferred from the ministry of economic development to the ministry of digital development, which is apparently better placed to run programme in the digital sphere.

Under the government programme for AI development, RUB27.4bn ($301mn) is expected to be provided from the federal budget, while another RUB4.1bn ($45mn) is expected to be raided from the private sector.

"The main emphasis in the development of AI will be placed on domestic technologies, software and hardware," Yevgeny Morozov, head of innovation at the company EdgeCenter, was quoted as saying by the Russian business daily Kommersant.

The programme contains a number of important stipulations aimed at strengthening technological sovereignty, improving the quality and efficiency of work in the field of AI, as well as creating a legal framework to regulate that area.

The programme also provides specific indicators to be achieved in the field of AI, the expert said. These include an increase in the capacity of supercomputers located on the territory of the Russian Federation, the volume of services provided for the development and implementation of AI solutions, the number of scientific publications, the number of higher education graduates and the share of employees with AI skills.

Russian Deputy Prime Minister Dmitry Chernyshenko, who is in charge of the tech sector, has repeatedly stressed the importance of AI for the country's economy. He has also spoken about the country's substantial research potential in the area of AI.

"Today in Russia there are over 90 research centres in the field of AI that are engaged in scientific work," he told the St Petersburg Economic Forum this June. "Among them are 12 specialised research centres supported by the Russian government. Together with 40 industrial partners, they are developing breakthrough AI solutions."

According to Chernyshenko, examples of innovative AI solutions include an intelligent system for designing objects and structures in the Arctic zone created by ITMO University and a digital polygon for designing and developing robots from MIPT.

The national AI programme is also expected to create incentives for developers of AI-based tools and solutions. The government is currently discussing a possibility of releasing grants of up to RUB50mn ($550,000) to small tech companies and startups for the development of new AI solutions and their adoption in the economy.

 

High expectations and harsh reality

However, the implementation of the Russian government's plans in the area of AI is likely to hit major road bumps, as investment earmarked for the AI programme is insufficient, while AI projects will need computer equipment and personnel that the country's IT industry is currently lacking. On top of that, a legislative framework for AI is not yet there.

The equipment supply issue is quite acute, as Russia's capacity for chip manufacture is substantially limited, while import is problematic because of Western sanctions slapped over the invasion of Ukraine.

Currently, Russia only has capabilities for producing 90-nanometre chips and is exploring mass production of 65-nm chips. However, for tasks requiring substantial computation power, such as AI-based solutions, much more advanced chips are required. For example, the United States is considering a transition to 2-nm microchips, while China expects to go below 10 nm.

"For the successful development of AI in Russia, it is necessary to strengthen the legislative framework, solve problems with the supply of equipment, as well as stimulate the country's own development and production of computer chips," EdgeCenter's Morozov told Kommersant.

"The development and distribution of solutions based on artificial intelligence requires significant investment, while now more than 60% of organisations spend on AI less than 1% of the costs of implementation and use of digital technologies," added Sergey Golitsyn, head of AI at the tech firm T1."The reason for this is the long cycle of implementation of such projects and time-delayed effects."

Another obstacle is a lack of qualified personnel. In August 2023, Russia's digitalisation minister, Maksut Shadaev, estimated the shortage of IT specialists in the country at 500,000-700,000.

Many highly qualified tech professionals left the country since the war in Ukraine began. Many tech firms relocated their personnel to other countries, while some tech specialists just chose to cut ties with Russia and found jobs elsewhere as they were looking for a more stable and promising future.