Seagate was recently slapped with a fine by the US Department of Commerce (DOC) for shipping off 7.4 million units of its hard drives to Huawei. the storage manufacturer agreed to pay a penalty of US$300 million (~RM1.33 billion) for its transgression.
The Seagate penalty was decided upon, after the conclusion by the DOC’ Bureau of Industry and Security (BIS) found that the company had shipped all those millions of drives to the Chinese multinational technology corporation between August 2020 and September 2021 without a valid export license from the US. This was a blatant and direct violation of the US embargo and the fact that the Shenzhen-based company had already been on a blacklist since the Trump administration.
Yesterday's historic action would not be possible without the deep commitment to justice and tireless work of our agents and analysts, who are contributing to the wider effort of protecting our national security.
Learn more from @BISgov: https://t.co/IgmnEOk8Np pic.twitter.com/YQHb0Nn1KB
— Deputy Secretary Don Graves (@DepSecGraves) April 20, 2023
For the uninitiated, Huawei was first placed on the US’ Entity list back in 2019, primarily due to concerns that the company’s communications technology was enabling the Chinese government to spy on American networks. Some of you may even remember that this move was essentially what took away Huawei’s ability to continue using Google Mobile Services (GMS) on its mobile devices, effectively rendering the brand unattractive to consumers outside of the Chinese market. In the following year, the BIS expanded its trade requirements by requiring companies that wanted to trade with the Chinese brand to obtain a special license.
Seagate argues that its hard drives were not subject to the restrictions and with that belief in mind, it continued to supply Huawei with the millions of hard drives mentioned earlier. In light of the fine, the storage brand has agreed to pay the US$300 million fine in quarterly instalments of US$15 million (~RM66.6 million) over five years, beginning 31 October 2023.
In addition to the fine, Seagate also agreed to a multi-year audit and a five-year suspended “denial order” that can be activated the moment the company fails to pay any of its instalments or even complete its audit requirements.
