According to a settlement with US authorities, Seagate Technology Holdings has agreed to pay a $300 million fine for exporting hard disk drives worth more than $1.1 billion to Huawei in China in violation of US export control regulations, the US Department of Commerce announced on Wednesday.
Between August 2020 and September 2021, Seagate supplied the drives to Huawei against a rule from August 2020 that prohibited the corporation from selling certain foreign products created using American technology. Due to concerns about its national security and foreign relations, Huawei was added to the Entity List, a U.S. trade blacklist, in 2019.
The assistant secretary for export enforcement at the Commerce Department, Matthew Axelrod, stated in a statement that Seagate continued supplying hard disk drives to Huawei even after “its competitors had stopped selling to them.” “The result is what we did today.”
In essence, Seagate claimed that because its drives were built elsewhere and not directly from American machinery, they were not subject to export control laws in the United States.
The government claimed that Seagate erroneously construed the law to call for review of only the final stage rather than the full production process in a ruling published on Wednesday.
According to the ruling, Seagate produced drives in China, Northern Ireland, Malaysia, Singapore, Thailand, and the United States and used testing equipment that was subject to the rule.
The company received a “proposed charging letter” from the U.S. Department of Commerce in August, alerting it to the possibility that it had broken export control regulations. A period of eight months of discussions began after the letter.
The charge letter was first reported by Reuters in October.
The $300 million fine owed by Seagate is payable in five payments. A five-year suspended order restricting its export permits is also a part of the agreement, along with three audits of its compliance procedures.
Upon hearing of the settlement, Seagate’s stock somewhat increased. An inquiry for comments was not immediately answered by the business.