The United States Department of Commerce (DoC) announced on Wednesday that it had imposed a historic fine of 300 million dollars on the Singaporean subsidiary of the Californian company Seagate, accused of having supplied hard drives to the Chinese giant Huawei without prior authorization from the American administration.
The sanction is based on a rule issued by the DoC’s Bureau of Industry and Security (BIS) in August 2020, imposing an authorization request for foreign companies selling equipment to Huawei if it contains American technology. However, Seagate, which specializes in the manufacture of hard drives, used as memory media in particular for smartphones and computers, continued to supply the Chinese group, via its subsidiary in Singapore which manufactured and delivered the parts, without prior authorization, selling in just over a year for about $1.1 billion in revenue, according to the ministry.
“Seagate acted in this way when its only two competitors stopped supplying Huawei, effectively becoming its sole source of supply,” the DoC said in a statement to justify its decision. Moreover, the Californian group signed a “three-year strategic cooperation agreement, becoming a strategic supplier of Huawei and having priority over other suppliers”, added the Commerce Department.
“These choices have consequences: it is the most important administrative sanction in the history of our agency (the BIS, editor’s note)”, underlined a DoC official, John Sonderman, quoted in the press release. “Any company that will export to a restricted entity must ensure that its industrial process does not incorporate American technologies into its products. If so, they must let us know,” he said. In a statement, group chief executive Dave Mosley said that “although we thought we were complying with regulations when we made these sales, we felt that reaching an agreement with the BIS was the best thing to do” .
The administration of former US President Donald Trump has banned companies in the country from doing business with Huawei. His successor Joe Biden has tightened the sanctions, in particular prohibiting the sale of the brand’s new products on American territory. As one of the tech giants, the Chinese group has been in the crosshairs of Washington in recent years for cybersecurity reasons and suspicions of espionage. The firm had to find new supply channels for semiconductors, these components essential to the operation of smartphones and other electronic devices.
