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Seagate stung $300m for promoting sanctioned storage to Huawei • The Register

Seagate stung $300m for promoting sanctioned storage to Huawei • The Register

2023-04-20 07:24:45

The USA Division of Commerce has fined Seagate $300 million for promoting disk drives to Huawei, regardless of the Chinese language firm’s presence on its record of entities to which sure merchandise can’t be bought with out first securing a license.

In 2021 Seagate told our sibling publication Blocks and Recordsdata that it did all the time stays on the best aspect of the legislation. However in October 2022 the corporate notified investors [PDF] that the Division of Commerce’s s Bureau of Trade and Safety (BIS) had despatched it a letter alleging violations of the U.S. Export Administration Rules.

Seagate once more insisted it complied with all related guidelines, and that in any case its exhausting disk drives weren’t lined by export bans.

That place has now been discovered to be improper: Seagate on Wednesday posted a filing [PDF] that states it has reached a settlement settlement with the Division that can see it pay $300 million over 5 years, in quarterly chunks of $15 million.

The submitting reveals the specifics of Commerce’s grievance: after the 2019 addition of Huawei to its entity record, two of the world’s three exhausting disk makers – a reference to Toshiba and Western Digital – introduced they’d cease promoting to Huawei. Seagate continued and between August 2020 and September 2021 bought 7.4 million exhausting drives to China, in 429 transactions price a mixed $1.1 billion.

Making issues worse, Seagate’s manufacturing processes used third occasion merchandise that additionally want licenses earlier than they are often put to work producing equipment bought to China.

However wait, there’s extra: in December 2020 Seagate additionally signed a three-year Strategic Cooperation Settlement with Huawei that earned it the standing of a “strategic provider”.

Huawei had no different exhausting disk suppliers on the time.

Seagate CEO Dave Mosely has spun the settlement as an illustration the corporate is an upstanding company citizen. “Integrity is one among our core values, and now we have a robust dedication to compliance as evidenced by our world crew of worldwide commerce compliance and authorized professionals – complemented by exterior consultants and out of doors counsel,” he stated in a press release. “Whereas we believed we complied with all related export management legal guidelines on the time we made the exhausting disk drive gross sales at situation, we decided that partaking with BIS and settling this matter was the most effective plan of action.”

The matter is so severe Seagate has introduced its third quarter outcomes announcement ahead by 5 days to Thursday, April twentieth, and warned traders there might be a $300 million gap in its numbers. Seagate’s final full monetary yr noticed it win $11.66 billion in income and produce $1.65 billion of internet revenue, however latest quarters have been much less type.

See Also

This settlement will due to this fact sting.

Now for the fallout: it’s conceivable senior figures at Seagate could also be moved on due to this mess. The corporate will virtually definitely go after its exterior counsel.

And the remainder of the tech business has an instance of the US authorities being very keen to implement its commerce sanctions on China. ®

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