The United States has imposed a $300 million penalty on Seagate for violating tech export controls of hard disk drives (HDDs) to Huawei. According to a press release [PDF] by the U.S. Bureau of Industry and Security, Seagate shipped goods worth more than $1.1 billion to Huawei for about a year, despite the export ban that was introduced by the Trump administration in 2020.
Seagate sold 7.4 million hard disk drives to Huawei between August 2020 and September 2021. The Fremont company became Huawei"s sole supplier of hard drives since its other hard disk suppliers, Western Digital (WD) and Toshiba, stopped their shipments due to the ban. Seagate thought that its foreign-made drives were not subject to export controls since they were not the direct product of the "U.S. equipment". The U.S. government disagreed and said that Seagate misinterpreted the rule and evaluated only the last stage of the manufacturing process, rather than the entire one. Seagate has now reached a resolution where it will pay installments of $15 million every three months for the next five years.
Since 2019, the U.S. government has imposed multiple sanctions and restrictions on Huawei and its affiliates, citing national security and foreign policy concerns. The United States claims that Huawei"s products and services could be used by China"s military or intelligence agencies to spy upon or harm the U.S. and its allies.
The export rules have affected not only Chinese companies but also the ones in the U.S. that had a magnitude of trade involved with China. Companies such as Qualcomm, Intel, Google, and Microsoft - have all lost a major customer base and potential revenue source, and have faced uncertainty and delays in obtaining export licenses from the U.S. government. Some of these companies have also warned of potential retaliation from China as well as the loss of market share to other Chinese competitors.
Via: Bloomberg