Seagate acquires $1.1bn in HDD sales from Huawei for $300m.

The Commerce Department alleges the tech company violated US export laws by supplying a Chinese firm.

The US Department of Commerce disclosed on Wednesday that Seagate Technology Holdings will pay a $300 million penalty in a settlement for breaching US export control laws. Seagate sold over $1.1 billion worth of hard-disk drives to Huawei from August 2020 to September 2021, despite a rule implemented in August 2020 prohibiting sales of specific foreign items, made with US technology, to Huawei. In 2019, the US government added Huawei to the Entity List to curtail US product sales to the company, citing national security and foreign policy concerns.

According to the Commerce Department, Seagate remained Huawei’s exclusive hard drive supplier, sending 7.4 million drives for about a year post the 2020 rule. The department noted the cessation of supply by the other two main hard drive providers to Huawei following the rule’s enactment, without disclosing their names. However, a 2021 report from the US Senate Commerce Committee identified Western Digital and Toshiba Corp as the two additional suppliers for Seagate.

Axelrod stated that the largest non-criminal administrative penalty in the agency’s history was imposed on Seagate. Seagate argued that its drives, produced outside the US, were exempt from US export control regulations as they were not directly manufactured using US equipment.