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Seagate fined $300 million after getting caught selling hard drives to Huawei
- The US government implemented a rule to restrict sales of certain foreign items made with US technology to HUAWEI.
- Seagate was caught selling hard drives to the blacklisted company.
- Seagate will now pay $300 million in a settlement with US authorities.
Seagate, the company best known for its data storage solutions, has landed in some hot water. The company is now facing a hefty fine, as well as other penalties, for selling hard drives to Chinese tech manufacturer HUAWEI.
The US Department of Commerce claims that Seagate violated US export laws when it sold hard drives to HUAWEI. Between August 2020 and September 2021, it’s said Seagate shipped 7.4 million hard disk drives (HDD) — worth over $1.1 billion in total — to the blacklisted company.
The Department of Commerce put HUAWEI on its “Entity List” — a US trade blacklist — in 2019. The Entity List bans HUAWEI from buying parts and components from US companies without US government approval. In August 2020, a rule was added to restrict sales of certain foreign items made with US technology to the manufacturer.
Despite the rule going into effect in August 2020, Seagate continued to sell HDDs to the company for over a year. With HUAWEI’s other suppliers ceasing shipments, this made Seagate the sole supplier of this equipment.
“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 Assistant Secretary for Export Enforcement Matthew S. Axelrod. “Today’s action is the consequence: the largest standalone administrative resolution in our agency’s history.”
According to Reuters, Seagate believes its foreign-made drives were not subject to US export control regulations. In a statement, Seagate CEO Dave Mosley had this to say:
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.
Although Seagate believes it is innocent, the company has agreed to pay $300 million to settle with US authorities. The company will have to pay the amount in $15 million increments every quarter for the next five years. Seagate has also agreed to three audits of its compliance program and is subject to a five-year suspension of its export privileges.