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Seagate hit with $300 million penalty for proceeding $1 billion dating with blacklisted company Huawei, in spite of U.S. export controls

Huawei is again within the highlight in Europe after a file instructed Germany might ban some apparatus from the Chinese language telecommunications massive in its 5G community.

Pau Barrena | AFP | Getty Pictures

Laptop garage corporate Seagate can pay a $300 million penalty for allegedly proceeding an unauthorized $1.1 billion dating with Chinese language era company Huawei after the corporate was once added to a U.S. industry blacklist in 2020.

The $300 million agreement, introduced by way of the Division of Trade on Wednesday, is the most important ever imposed by way of Trade’s Bureau of Business and Safety, which enforces export controls towards blacklisted corporations like Huawei.

Federal regulators stated Seagate was once Huawei’s sole supplier of laborious power disks, or HDDs, leading to round $150 million in benefit for the laborious power maker.

Seagate shipped over 7.4 million HDDs to Huawei from Aug. 2020 to Sept. 2021, federal regulators stated. Neither Huawei nor Seagate made an obvious effort to cover their dating, in line with federal charging paperwork. “Seagate smartly seized the chance and effectively gained the massive proportion,” Huawei allegedly stated.

Seagate additionally allegedly prolonged traces of credit score totaling $1 billion to the Chinese language corporate. The ones traces of credit score allowed Huawei to reserve an “expanding quantity” of HDDs, federal regulators stated, that Huawei don’t have been ready to pay for in a different way.

“The entire whilst, Seagate’s competition declined equivalent exports,” a Trade Division press unlock stated.

Even after export controls have been imposed, a senior Seagate government publicly justified the ongoing dating with Huawei, regulators alleged. “I do not see any specific restriction for us,” the chief reportedly stated.

Seagate prioritized its dating with Huawei over a minimum of one U.S. buyer, federal regulators alleged, with one government writing that the corporate “moved provide to make stronger China,” even after export controls were imposed.

“Even after Huawei was once positioned at the Entity Listing for habits inimical to our nationwide safety, and its competition had stopped promoting to them because of our overseas direct product rule, Seagate persisted sending laborious disk drives to Huawei,” assistant secretary for export enforcement Matthew Axelrod stated in a remark.

“Whilst we believed we complied with all related export regulate rules on the time we made the laborious disk power gross sales at factor, we decided that attractive with BIS and settling this subject was once the most efficient plan of action,” Seagate CEO Dave Mosley stated in a remark.

Seagate stocks slipped slightly over 7% on Thursday, after reporting disappointing third-quarter effects.

Seagate showed that it had settled with the Trade Division however didn’t be offering additional remark past the corporate’s press unlock.

Huawei didn’t in an instant reply to a request for remark.

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