Seagate continues to sell hard drives to Huawei despite stricter export controls imposed on Huawei in 2020, the Commerce Department said.
Two subsidiaries of Seagate Technology Holdings PLC (STX) agreed to pay $300 million for violating export restrictions on Huawei Technologies Co. The export restrictions stem from U.S. government concerns that Huawei poses a threat to U.S. national security.
The U.S. Commerce Department said on Wednesday that the data storage equipment provider continued to sell hard drives to Huawei despite tougher export controls imposed on the company in 2020. U.S. officials have expressed concern for years that Huawei equipment could be used to spy on Americans.
It was the largest single administrative fine ever issued by the U.S. Department of Commerce’s Bureau of Industry and Security. The department is responsible for administering and enforcing U.S. export control policies.
Seagate acknowledged the deal in a statement Wednesday, saying it had agreed to plead guilty to the Commerce Department’s allegations, in part to turn the page on the matter so it could focus on immediate business challenges and long-term strategy.
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Two subsidiaries of Seagate Technology Holdings PLC (STX) agreed to pay $300 million for violating export restrictions on Huawei Technologies Co. The export restrictions stem from U.S. government concerns that Huawei poses a threat to U.S. national security.
The U.S. Commerce Department said on Wednesday that the data storage equipment provider continued to sell hard drives to Huawei despite tougher export controls imposed on the company in 2020. U.S. officials have expressed concern for years that Huawei equipment could be used to spy on Americans.
It was the largest single administrative fine ever issued by the U.S. Department of Commerce’s Bureau of Industry and Security. The department is responsible for administering and enforcing U.S. export control policies.
Seagate acknowledged the deal in a statement Wednesday, saying it had agreed to plead guilty to the Commerce Department’s allegations, in part to turn the page on the matter so it could focus on immediate business challenges and long-term strategy.
Seagate said that while the company believes it complied with all relevant export control laws when selling the hard drives involved, the company believes that engaging with BIS to resolve the matter is the best course of action.
National security concerns surrounding Huawei prompted the Commerce Department under the Trump administration to add the Chinese company to what the agency calls its “Entity List.” The list would prohibit companies from supplying Huawei with U.S.-origin technology without a license. Huawei has long denied posing a threat to U.S. national security.
Since then, the United States has stepped up restrictions on Huawei. In 2020, the U.S. Department of Commerce issued regulations prohibiting the sale to Huawei of products produced overseas using U.S.-origin technology or software.
Seagate’s public announcement in September 2020 that it would continue to do business with Huawei violated these restrictions, the Commerce Department said.
Seagate told investors at the time that it did not believe it needed a license to continue selling to Huawei. Later, Seagate signed a three-year cooperation agreement with Huawei and became Huawei’s only hard disk supplier.
Seagate Chief Financial Officer Gianluca Romano said in September 2020: “I don’t think there are any particular restrictions on our continued shipments to Huawei or any other Chinese customers.”
In 2021, a group of Republican members of the U.S. Senate released a report accusing Seagate of violating U.S. export control orders and calling on the U.S. Department of Commerce to better enforce restrictions on Huawei.
The U.S. Commerce Department said on Wednesday that Seagate subsidiaries in California and Singapore violated the 2020 export rules and ultimately provided more than 7.4 million hard drives to Huawei entities. The Commerce Department said the drives were worth about $1.1 billion.
The Commerce Department executive order puts Seagate’s handling of U.S. technology under increased scrutiny, including requiring the company to conduct a series of multiyear audits.
The audits will focus on Seagate’s export control compliance program; the audits will be conducted in three phases and will involve an independent third-party consultant, the Commerce Department said.
The Wall Street Journal previously reported that the Joe Biden administration had considered revoking the export licenses issued to U.S. suppliers needed to supply Huawei in recent months, completely cutting off the Chinese company from U.S. technology. connect.
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