Seagate hit with $300 million penalty for persevering with $1 billion relationship with blacklisted agency Huawei

https://www.cnbc.com/2023/04/20/seagate-to-pay-300-million-penalty-over-billion-dollar-deal-with-huawei.html

Pc storage firm Seagate can pay a $300 million penalty for allegedly persevering with an unauthorized $1.1 billion relationship with Chinese language expertise agency Huawei after the corporate was added to a U.S. commerce blacklist in 2020. The $300 million settlement, introduced by the Division of Commerce on Wednesday, is the biggest ever imposed by Commerce’s Bureau of Business and Safety, which enforces export controls in opposition to blacklisted corporations like Huawei. Federal regulators stated Seagate was Huawei’s sole supplier of exhausting drive disks, or HDDs, leading to round $150 million in revenue for the exhausting drive maker.

Seagate shipped over 7.4 million HDDs to Huawei from Aug. 2020 to Sept. 2021, federal regulators stated. Neither Huawei nor Seagate made an obvious effort to cover their relationship, based on federal charging paperwork. “Seagate effectively seized the chance and efficiently gained the large share,” Huawei allegedly stated. Seagate additionally allegedly prolonged strains of credit score totaling $1 billion to the Chinese language firm. These strains of credit score allowed Huawei to order an “rising quantity” of HDDs, federal regulators stated, that Huawei wouldn’t have been capable of pay for in any other case. “All of the whereas, Seagate’s opponents declined related exports,” a Commerce Division press launch stated. Even after export controls had been imposed, a senior Seagate govt publicly justified the continued relationship with Huawei, regulators alleged. “I don’t see any explicit restriction for us,” the chief reportedly stated.

Seagate prioritized its relationship with Huawei over not less than one U.S. buyer, federal regulators alleged, with one govt writing that the corporate “moved provide to help China,” even after export controls had been imposed. “Even after Huawei was positioned on the Entity Checklist for conduct inimical to our nationwide safety, and its opponents had stopped promoting to them as a result of our overseas direct product rule, Seagate continued sending exhausting disk drives to Huawei,” assistant secretary for export enforcement Matthew Axelrod stated in a press release.