On Wednesday, the U.S. Department of Commerce announced a $300 million settlement with Seagate Technology Holdings (STX.O) for selling over $1.1 billion in hard disk drives to Huawei in violation of export control restrictions.
Seagate supplied the disks to Huawei between August 2020 and September 2021 despite a 2020 order that barred Huawei from buying foreign products created using U.S. technology. Due to national security and foreign policy concerns, Huawei was placed on the Entity List in 2019 to reduce U.S. product sales to the corporation.
Washington has taken several measures to prevent China from acquiring advanced technologies that could aid its military or abuse human rights.
The Commerce Department claimed Seagate was Huawei’s sole hard drive supplier for approximately a year after the 2020 regulation took effect, shipping 7.4 million drives.
The department said Huawei stopped receiving hard drives from the other two major vendors after the 2020 rule took effect. The U.S. Senate Commerce Committee reported in 2021 that Western Digital and Toshiba are the other two.
“Its competitors had stopped selling to them… However, Seagate continued sending hard disk drives to Huawei,” said Commerce Department assistant secretary for export enforcement Matthew Axelrod. “Today’s action is the consequence.”
Because they weren’t built with U.S. equipment, Seagate’s foreign-made drives weren’t subject to U.S. export controls.
In an order announced Wednesday, the government said Seagate misinterpreted the law to require examination of only the last stage of its production process.
