US storage technology company Seagate has been fined $300m by the US Department of Commerce (DOC) for illegally selling hard drives worth $1.1bn to Chinese tech giant Huawei, violating US export controls established in August 2020.
Seagate sold the hard drives to Huawei between August 2020 and September 2021. Despite the fact that the DOC had placed Huawei on its Entity List due to concerns over US national security.
The DOC’s Bureau of Industry and Services (BIS) said that the $300m fine was more than double Seagate’s profit from selling to Huawei. Seagate has agreed to a multi-year audit and a five-year suspended denial order as well as paying the fine.
Seagate has argued that it was operating within trade sanctions. As the hard disks sold to Huawei were manufactured outside the US. The BIS noted that two other firms capable of making HDDs, Western Digital and Toshiba. It had stopped sales to Huawei, whereas Seagate had not.
Exclusive: Data storage company Seagate agrees to pay a $300 million penalty in a settlement with the US for shipping $1.1 billion of hard drives to China's Huawei in violation of US export laws https://t.co/p4LtNKcAlP https://t.co/p4LtNKcAlP— Reuters (@Reuters) April 19, 2023
The fine against Seagate comes as tensions between the US and China remain high. The US government has expressed concern that Huawei equipment could be used by China for espionage, allegations that Huawei has repeatedly denied.
The US has also restricted other Chinese firms, including TikTok and WeChat, on national security grounds. Tensions between the two nations could be exacerbated by the recent admission of Taiwan into the World Trade Organisation.
In recent years, the US has taken a more assertive stance on export control violations. And, It imposes fines and sanctions on companies that breach regulations.
These include the recent fines imposed on Deutsche Bank and Standard Chartered for money laundering and sanctions breaches. The Seagate case highlights the importance of compliance with US export controls. The risks that companies face if they breach these regulations.
The issue of export controls has become increasingly important due to growing concern about the role of technology in national security. With the advent of new technologies such as artificial intelligence and 5G, the risks posed by breaches of export controls have increased significantly.
Overall, the Seagate case highlights the importance of compliance with US export controls. The risks that companies face if they breach these regulations.
The fine against Seagate is likely to be seen as a warning to other firms that they need to take export controls seriously. Ensure that they comply with these regulations.
As tensions between the US and China remain high, the Seagate case is also likely to exacerbate these tensions. Further strain relations between the two nations.