computer storage company seagate It will pay a $300 million fine for continuing an unauthorized $1.1 billion relationship with Chinese tech company Huawei after the company was added to the US trade blacklist in 2020.
$300 million settlement, announced The Commerce Department’s imposition on Wednesday is the largest ever imposed by the Commerce Department’s Bureau of Industry and Security, which enforces export controls on blacklisted companies like Huawei.
Federal regulators have said Seagate is Huawei’s sole provider of hard drive disks (HDDs), making hard drive makers about $150 million in profits.
Seagate shipped more than 7.4 million HDDs to Huawei from August 2020 to September 2021, according to federal regulators.Neither Huawei nor Seagate made any apparent effort to hide the relationship, according to federal officials charging documents“Seagate seized the opportunity and succeeded in capturing a large share,” Huawei is quoted as saying.
Seagate is also said to have extended credit lines totaling $1 billion to Chinese companies. These lines of credit allowed Huawei to order “increase amounts” of his HDDs, federal regulators say, which Huawei otherwise would not have been able to pay.
“All the while, Seagate’s competitors declined similar exports,” said a Commerce Department press release.
Even after the export controls were imposed, senior Seagate executives publicly justified their continued relationship with Huawei, regulators claim. The executive reportedly said, “We don’t see any particular restrictions.
Seagate has prioritized its relationship with Huawei over at least one U.S. customer, according to federal regulators, and one executive said the company has been “going to help China,” even after the export controls were imposed. We have moved the supply,” he wrote.
“Even after Huawei was placed on the Entity List for conduct against U.S. national security and competitors stopped selling them because of our foreign direct product rule, Seagate continued to sell hard drives to Huawei. We kept sending,” said Matthew the Assistant Secretary for Exports. Axelrod said in a statement.
Seagate shares fell more than 2% in pre-market trading in a disappointing third quarter. result.
Representatives for Huawei and Seagate did not immediately respond to requests for comment.