This week, the U.S. Department of Commerce’s Bureau of Industry and Security fined Seagate $300 million for violating U.S. export control regulations. The storage company admits it shipped 7.4 million hard drives to Huawei between 2020 and 2021, in direct violation of restrictions imposed by the US government on Chinese companies in 2020. I was. imposed the largest single fine in the department’s history against Seagate. This is something that Seagate will take years to pay off.
In 2019-2020, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) added Huawei and nearly all of its subsidiaries to the Entity List, allowing any company (U.S.-based or foreign) to export. Imposes required export regulations. A license from the US DoC to supply Huawei with products, items or services incorporating US technology.
export regulation Placed on Huawei mainly related to semiconductor. especially, chips developed or manufactured in the US or elsewhere ‘from you.S. “Software or Technology” means US chips under rules that went into effect in August 2020. however, Seagate hard drive Because it uses an EDA designed in the United States, it is classified as an export controlled item. Tools and USA-made equipment for controllers and memory.
It is worth noting that many of the licenses were actually granted by BIS. As a result, Huawei acquired many necessary items from US companies and multinational companies. However, that was not the case with Seagate, which chose to proceed without a license. The company has shipped about 7.42 million hard drives worth $1.14 billion to Huawei 429 times between August 17, 2020 and September 29, 2021 without permission. This was not a single error, but rather an intentional business practice, as the company acknowledges as part of the settlement.
In August 2020, both Toshiba and Western Digital stopped selling HDDs to Huawei without approval from US authorities, making Seagate the sole hard drive provider for Huawei. The two companies then signed his three-year strategic cooperation agreement, acknowledging Seagate’s preference over other Huawei suppliers. Additionally, in March 2021, Seagate and Huawei signed a long-term deal involving the purchase of over 5 million HDDs. As a result, Seagate became Huawei’s “important strategic supplier” as other hard drive manufacturers refused to export their products.
Matthew S. Axelrod says: Assistant Secretary for Export Enforcement.
Under the terms of the settlement agreement, Seagate will pay the US Department of Commerce $300 million in damages. The company says that starting October 31, 2023, he will make quarterly installments of $15 million over a five-year period to pay off the finer details. BIS claims $300 million is double his profits Seagate made for violating export regulations.
The parties also agreed to conduct three audits to ensure Seagate’s compliance with Export Administration Regulations. Likewise, BIS will not initiate any further administrative proceedings against Seagate for breaches relating to the trading of the Agreement.
“Today’s action is the result. It is the largest independent administrative resolution in the history of our agency,” Axelrod added. It is a clear demonstration of our ambition and our enforcement team is working to ensure both national security and a level playing field.”
sauce: seagate, U.S. Department of Commerce, Bureau of Industry and Security
