Seagate fined $300 million for supplying Huawei with onerous drives

Computing storage producer Seagate has agreed to pay a $300 million penalty imposed by the US Department of Commerce (DOC) for transport over $1.1 billion price of onerous disk drives to Huawei, violating export management restrictions. An investigation by Commerce’s Bureau of Trade and Safety (BIS) decided that Seagate shipped 7.4 million onerous drives to Huawei between August 2020 and September 2021 with out acquiring an export license, regardless of a rule launched in August 2020 that restricts gross sales to the Chinese language firm.

The $300 million penalty is the most important fantastic ever imposed by the BIS that isn’t tied to a felony case. The BIS says it’s greater than double Seagate’s earnings in promoting the onerous drives.

Huawei was first positioned on the Entity Record, a US commerce blacklist, in May 2019 amid issues the corporate’s communications expertise might assist the Chinese language authorities spy on American networks. These restraints have been expanded in August 2020 when BIS imposed a license requirement on sure foreign-produced objects made with US expertise being bought to Huawei. Seagate claimed its onerous drives weren’t topic to the restrictions (in accordance with Reuters), and continued to do business with Huawei, turning into the corporate’s sole supplier of HDDs.

“Even after Huawei was positioned on the Entity Record for conduct inimical to our nationwide safety, and its rivals had stopped promoting to them on account of our international direct product rule, Seagate continued sending onerous disk drives to Huawei,” mentioned Matthew Axelrod, Assistant Secretary for Export Enforcement.

Underneath the phrases of the settlement, Seagate pays the $300 million fantastic in quarterly installments of $15 million over 5 years, ranging from October 31, 2023. The corporate additionally agreed to a multi-year audit and a five-year suspended “denial order,” which might activate and stop Seagate from exporting merchandise if it fails to pay any installments or full its audit necessities.

“We imagine getting into this settlement with BIS and resolving this matter is in one of the best curiosity of Seagate, our prospects and our shareholders,” mentioned Seagate CEO Dave Mosley in a statement. “Whereas we believed we complied with all related export management legal guidelines on the time we made the onerous disk drive gross sales at problem, we decided that partaking with BIS and settling this matter was one of the best plan of action.”