The US Department of Commerce (DOC) fined Seagate $300 million for shipping over $1.1 billion in hard disk drives to Huawei, violating export controls. The Bureau of Industry and Security (BIS) found that Seagate supplied 7.4 million hard drives to Huawei between August 2020 and September 2021 without an export license, despite an August 2020 rule restricting shipments to the Chinese corporation.
The BIS’s greatest non-criminal fine is $300 million. The BIS sells hard drives at more than twice Seagate’s profit.
Huawei was added to the US Entity List in May 2019 because of worries that its communications technology could help the Chinese government spy on American networks. In August 2020, BIS required licenses for foreign-manufactured items built with US technology supplied to Huawei. According to Reuters, Seagate became Huawei’s sole HDD supplier after claiming its hard drives were exempt from the limitations.
“Even after Huawei was placed on the Entity List for conduct inimical to our national security, and its competitors had stopped selling to them due to our foreign direct product rule, Seagate continued sending hard disk drives to Huawei,” said Matthew Axelrod, Assistant Secretary for Export Enforcement.
Seagate will pay the $300 million punishment in 15 million-dollar quarterly installments starting October 31, 2023. Seagate also consented to a multi-year audit and a five-year suspended “denial order” that could bar it from exporting if it fails to make installments or finish its audit.
“We believe entering this agreement with BIS and resolving this matter is in the best interest of Seagate, our customers and our shareholders,” stated Seagate CEO Dave Mosley. “While we believed we complied with all relevant export control laws when we made the hard disk drive sales at issue, we determined that engaging with BIS and settling this matter was best.
