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It’s no secret that the US government’s ban on conducting business with Huawei prompted many companies to cancel their deals and withdraw their operations. However, Seagate has recently found itself in trouble with the US Department of Commerce for allegedly selling over 7 million hard drives to Huawei, thus violating the US sanctions. As a result, the department has ordered Seagate to pay a fine of $300 million.
According to the Commerce Department, Seagate continued selling hard drives to Huawei between August 2020 and September 2021, despite Western Digital and Toshiba, its primary competitors, stopping their dealings with Huawei in response to the foreign direct product rule. Moreover, the company further violated regulations by signing a three-year strategic agreement with Huawei, becoming its sole source of hard drives.
“Today’s action is the consequence: the largest standalone administrative resolution in our agency’s history,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod.
In addition to the $300 million fine, which Seagate will pay in $15 million increments over five years, the company will also undergo three audits of its compliance program and have its export privileges suspended for five years.
Seagate’s response
In a statement, Seagate CEO Dave Mosley acknowledged the settlement and stated that they settled because they felt it was the best course of action, despite believing they had complied with all relevant export control laws at the time of the sales.
“We believe entering this agreement with BIS and resolving this matter is in the best interest of Seagate, our customers and our shareholders,” said CEO Dave Mosley.
This penalty serves as a reminder of complying with export control laws and regulations, especially when dealing with the US and China and their respective trade blacklist companies. Organizations must ensure they are aware of and adhere to all relevant export control laws to avoid hefty fines or potential export bans.
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