Seagate Technology LLC and Seagate Singapore International Headquarters Pte. Ltd. have been fined $300 million by the US Department of Commerce's Bure

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has imposed a $300 million civil penalty against Seagate Technology LLC and its subsidiary in Singapore for alleged violations of U.S. export controls related to selling hard disk drives (HDDs) to Huawei Technologies in violation of the foreign direct product (FDP) rule. The FDP rule prohibits the sale of U.S.-origin products to Huawei if those products are produced using certain U.S. technology or software.

Seagate continued to do business with Huawei despite the imposition of controls over certain foreign-produced items related to Huawei in August 2020. This resulted in Seagate becoming Huawei's sole provider of HDDs after its only two competitors stopped selling to Huawei. Seagate then entered into a three-year strategic cooperation agreement with Huawei, naming Seagate as “Huawei’s strategic supplier” and granting the company “priority basis over other Huawei suppliers.”

BIS investigated Seagate's conduct and found that Seagate engaged in conduct prohibited by the Export Administration Regulations (EAR) by ordering or causing the reexport, export from abroad, or transfer (in-country) of more than 7.4 million HDDs subject to the Huawei FDP rule without BIS authorization. As part of the settlement, Seagate admitted to the conduct set forth in the Proposed Charging Letter involving Seagate US and Seagate Singapore.

The settlement is significant because it represents the largest standalone administrative penalty in BIS history. The settlement also includes a multi-year audit requirement and a five-year suspended Denial Order, which means that Seagate may face additional penalties if it violates U.S. export controls during the next five years.