US storage company Seagate has been dealt a $300 million fine by the United States Department of Commerce for selling storage to Huawei.
Huawei is on a list of entities to which certain products can’t be sold without a license, an addition made in 2019 that saw other hard drive makers Toshiba and Western Digital stop sales to the company.
Despite this, Seagate sold Huawei 7.4 million hard drives in 429 transactions worth a combined $1.1 billion between August 2020 and September 2021 and even signed a three-year Strategic Cooperation Agreement with Huawei that earned it the status of a “strategic supplier” in December 2020.
The company was accused of violating US Export Administration Regulations in October 2022. At the time, Seagate insisted that it had complied will all relevant rules and that its hard disk drives were not covered by export bans.
Seagate has now posted a filing that states a settlement with the US government which will see the company pay $300 million over five years in $15 million installments.
In addition, the filing revealed that Seagate also uses third-party products in its manufacturing process that also need licenses before being sold to companies in China.
Seagate CEO Dave Mosely said: “Integrity is one of our core values, and we have a strong commitment to compliance as evidenced by our global team of international trade compliance and legal professionals – complemented by external experts and outside counsel.
“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.”
The announcement has forced Seagate to bring forward its third-quarter results announcement and warn investors of a $300 million hole in its numbers. The results show the company's third straight quarter of shrinking turnover, with a reported loss of $433 million compared to the previous year's profit of $346 million for the same period. Seagate’s shares have seen a sharp drop in the last five days, dipping by 12.05 percent.
Huawei is also facing sanctions in Europe, with the UK government planning to remove Huawei’s 5G kit from its networks by the end of 2027, and with Germany announcing plans to remove Huawei and another Chinese vendor ZTE from parts of its network in March 2023.
In November 2022, the US government further banned sales and imports of telecommunications from Huawei and ZTE in the country.
