As part of the clamp down of shipping U.S. technology to China, Seagate Technology Holdings has agreed to pay $300 million in penalties due to shipping hard disk drives (HDDs) to China’s Huawei Technology.
According to a report from Reuters, Seagate sold the HDDs to Huawei in August 2020 through September 2021 despite restrictions put in place in 2019 by the Trump Administration when it added Huawei to the Entity List of the U.S. Department of Commerce. The move was done to protect 5G technologies in the U.S., but it also effectively blacklisted Huawei from doing business with U.S. companies.
The penalty is part of a larger semiconductor arm’s race taking place between the U.S. and its allies to keep advanced semiconductors and equipment from China. The fear is China may use the technology to support its military, continue human rights abuses or threaten U.S. national security from hacks or breaches.
Seagate shipped about 7.4 million drives to Huawei worth about $1.1 billion in profit during this period after the export restrictions were put in place and became the sole supplier of HDDs to the Chinese communication equipment giant. Western Digital and Toshiba had already ceased shipments to Huawei after the export restrictions were put in place.
Even after "its competitors had stopped selling to them ... Seagate continued sending hard disk drives to Huawei," said Matthew Axelrod, assistant secretary for export enforcement at the Commerce Department's Bureau of Industry and Security said in a statement. "Today's action is the consequence."
"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 ... settling this matter was the best course of action," said Dave Mosley, CEO of Seagate in a statement.
