U.S. Claims Seagate Broke Export Rules By Selling Hard Drives To Huawei

Seagate Technology Holdings said in a filing that the US government has warned that the company may have violated export control laws by providing hard disk drives to a customer that a source identified as Huawei Technologies, Karen Freifeld reported for Reuters.

Photo Insert: Seagate could face civil penalties of up to $300,000 per violation or twice the value of the transaction, whichever is greater, for administrative charges.

Reuters was the first to report the disclosure on Wednesday and to identify Huawei as the customer. Huawei is on the US Commerce Department's entity list and banned from receiving US exports and certain foreign-made items without government approval.

Seagate was warned in a "proposed charging letter" it received from the Commerce Department on Aug. 29, according to the filing with the US Securities and Exchange Commission (SEC).

The filing said the company's position is that the hard disk drives are not subject to the US export regulations, and that it did not engage in prohibited conduct as alleged by the Commerce Department.

Seagate's filing did not identify the customer. Seagate paused its shipments to Huawei a year ago, said a source familiar with the matter.

Seagate, a Dublin-based company that also operates in California, said it was cooperating with the Commerce Department and sought to resolve the matter. The products at issue were provided to the entity-listed customer and its affiliates between August 2020 and September 2021.

The company said the timing of any final outcome is unclear, as are the terms. It also could not estimate the range of loss or penalty, although it said a material impact on the business was possible.

The company could face civil penalties of up to $300,000 per violation or twice the value of the transaction, whichever is greater, for administrative charges.

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