Seagate, the US-based technology company, is to pay a fine of $300m to the US Department of Commerce for providing Huawei, the controversial Chinese manufacturer, with hard drives between August 2020 and September 2021, despite Huawei being on a US embargo list. The Bureau of Industry and Security (BIS), a Commerce Department agency, has imposed the largest fine it has ever issued on Seagate. The company sold approximately 7.4 million hard drives worth more than $1.1bn to Huawei, earning a profit of almost $150m. Seagate’s fine is more than twice its profit from those sales.
Seagate argues that it was compliant with existing control laws because the hard drives were not manufactured in the USA. However, the BIS insists that Seagate is a US manufacturer, with US technology in foreign-made models. Western Digital and Toshiba immediately stopped selling to Huawei after the trade embargo was imposed. In a statement, Seagate’s CEO, Dave Mosley, said: While we believed we were in compliance… we’ve concluded that reaching an agreement with the BIS is the best solution.
Seagate is to pay the fine at $15m per quarter for five years, and has also agreed to several other restrictions. Both parties have agreed to multi-year audit obligations, and Seagate will not sell to Huawei for the next five years.