- April 20, 2023
- 3 minutes read
Hard Disk Maker Seagate Fined $300M For Trading With Huawei
Seagate Technology (NASDAQ: CTX), an American hard disk drive manufacturer, will pay a significant fine for violating export regulations. The…
Seagate Technology (NASDAQ: CTX), an American hard disk drive manufacturer, will pay a significant fine for violating export regulations. The company has agreed to pay $300mn to the U.S. Department of Commerce to resolve allegations of trading with Huawei, a Chinese telecoms giant under export restrictions since 2019.
According to the U.S. Commerce Department, Seagate shipped 7.4 million hard disk drives to Huawei from August 2020 to September 2021. The company brought in $1.1bn in revenue and around $150mn in profits from the hard disk sales. Seagate allegedly loaned over $1bn to Huawei to finance the purchases.
- Seagate will pay the fine in $15mn quarterly installments over the next five years. For reference, the company reported an average of $425mn in net profit per quarter in 2022. Yet, $300mn represents the largest ever fine imposed by the U.S. Commerce Department’s Bureau of Industry and Security (BIS), which oversees export controls against blacklisted companies like Huawei.
- The U.S. Commerce Department placed Huawei on a trade blacklist in May 2019 for its alleged involvement in “activities contrary to the national security or foreign policy interests of the United States.”. The U.S. government has long alleged that Huawei is beholden to the Chinese government and threatens its national security. Sanctions against the telecoms company picked up under former President Trump’s administration and have been maintained by the current Biden administration.
“While we believed we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that engaging with BIS and settling this matter was the best course of action,” Seagate CEO Dave Mosley said in a press statement. The company’s rationale was that its hard disk drives manufactured outside the U.S. were not subject to domestic export regulations, but that apparently didn’t fly with the Commerce Department.
Seagate is the world’s biggest hard disk drive manufacturer. It reported a $1.7bn net profit on $9.4bn in revenue in 2022.