Seagate, the data storage manufacturer, has been issued with the largest fine in the history of the US Department of Commerce (DOC), according to a report by Ars Technica. The DOC’s Bureau of Industry and Services imposed a fine of $300 million on Seagate for selling hard drives to Huawei, a Chinese technology company. In addition, the company violated the US export controls that were established in August 2020.
Reuters reports that Seagate sold hard drives to Huawei between August 2020 and September 2021, despite the US Department of Commerce (DOC) placing Huawei on the Entity List due to national security concerns. The Bureau of Industry and Security (BIS) criticized Seagate’s business dealings with China in a statement, noting that the company continued to sell to Huawei while the two other companies capable of making hard disk drives, Western Digital and Toshiba, had ceased sales to Huawei.
The BIS imposed a $300 million fine on Seagate, more than double the company’s profits from the “alleged illegal exports” to Huawei. As part of the settlement, Seagate agreed to a multi-year audit and a five-year suspended denial order that prohibits the company from exporting goods, but this order is suspended as long as Seagate complies with the settlement.
Under the settlement, Seagate has agreed to make quarterly payments of $15 million for the next five years. Unfortunately, the company recently reported a net loss of $433 million on $1.86 billion in revenue for Q1 2023. However, Seagate maintains that they complied with trade sanctions as the hard disk drives were made in their manufacturing plants located in China, Northern Ireland, Malaysia, Singapore, Thailand, and the United States.
