Seagate Technology will have to pay a fine of 300 million dollars after reaching an agreement with the US authorities for violate United States export control laws. Specifically, for sell hard drives to Huawei for a value of 1,100 million dollars. The government has reportedly said that Seagate misinterpreted the foreign product rule because the company thought evaluation was required only of the last stage of the manufacturing process, rather than the entire process.
Seagate sold the units to Huawei between August 2020 and September 2021, despite the fact that in August 2020 the United States had approved a rule that restricted the sale of certain products made with American technology to the Chinese company. Huawei also entered the Entity List in 2019, a US trade blacklist that reduces the sale of US products to companies that are on it. In the case of Huawei, due to various concerns about international politics and national security.
This sanction is the latest in a series of measures taken by the government in Washington to prevent the most sophisticated cutting-edge technologies from falling into the hands of China, for fear that the authorities could use them for military activities, allow rights abuses humans or threaten the security of the United States.
Seagate sold about 7.4 million drives to Huawei in a year after the aforementioned 2020 rule went into effect. But it is not the only company that has done it. According to a 2021 report on Seagate by the US Senate Commerce Committee, there are two others that have: Western Digital and Toshiba.
According to Reuters, the Assistant Secretary for Export Law at the Department of Commerce of the US Bureau of Security and Industry, Matthew Axelrod, has noted that even after his competitors “stopped selling to them, Seagate continued to ship hard drives to Huawei. Today’s measure is the consequence.”
Axelrod has also pointed out that the administrative penalty imposed on Seagate is the highest in the agency’s history that is not related to a criminal case. As for the Seagate CEO Dave Mosleyhas indicated in a statement that although they believe they complied “all relevant export control laws when they made the sales of hard drives the subject matterThey came to the conclusion thatreaching an agreement on this matter was the best way forward«.
Last August, the US Department of Commerce sent the company a letter with its proposed sanction, warning the company that it may have violated export control laws. This letter is the one that has given rise to the negotiations that have ended with the aforementioned sanction, and which have lasted eight months.
Payment of the fine will be made in several installments. Thus, the company will pay 15 million dollars for each quarter for the next five years, with the first payment to be made in October. In addition, Seagate’s management has agreed to three audits of its compliance program, and is subject to a five-year period of denial of its export privileges, which is suspended.
