US punishes Seagate with $300 million penalty for selling hard disks to Huawei

The U.S. Department of Commerce has filed a penalty on Seagate of $300 million for shipping hard disk drives to Huawei and violating U.S. export control laws.

According to the information, Seagate has agreed to pay $300 million in settlement to the U.S. authorities for shipping $1.1 billion worth of hard disks to Huawei. The hard disk maker sold around 7.4 million drives to the Chinese tech maker after 2020.

Details on this matter veals that Seagate sent the drives between August 2020 to September 2021. Which is against the sales rules imposed on certain items made in U.S.-based technologies. This is another action that the US commerce department took against Huawei in order to keep it away from getting tech support.

Huawei and Entity List:

Back in 2019, the US placed Huawei under the entity list, which prohibits Huawei from purchasing products made by US-based companies. The other two primary suppliers of Huawei include Western Digital and Toshiba Corp, which were also supplying Huawei.

Matthew Axelrod, assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security said that Seagate continue to drive sales for Huawei even after its competitor stopped.

“Today’s action is the consequence,” added Matthew.

Violation:

The administrative penalty was the largest in the history of the agency, which is not related to criminal activity. However, Seagate continues to defend itself that the export of hard drives and transferred technologies don’t fall under the U.S. export law rules. Also, these aren’t direct products of U.S. equipment.

“While we believed we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that … settling this matter was the best course of action,” said Dave Mosley, Seagate CEO.

$300 million penalty:

Seagate will have to file the $300 million penalty in due installments of $15 million per quarter over the next five years. While the first installment is of this penalty due in October 2023.

(source)