US hits Seagate with record fine for export controls breach

Legislation | | MIC Customs Solutions |

Seagate has been fined $300 million by the US government for breaching export controls on shipments to China.

The US Department of Commerce has issued a $300 million fine to technology manufacturer Seagate for breaching export control rules with shipments to China.

It comes after the company exported hard disk drives worth more than $1.1 billion to Huawei after the Chinese firm was added to the US' Entity List in 2020.

In total, around 7.5 million drives were sent to China over the course of a year after the restrictions came into place. The US government noted that the penalty amounts to more than double the net profit Seagate earned while in violation of the export controls rules.

The fine marks the single largest administrative penalty ever imposed by the Commerce Department's Bureau of Industry and Security (BIS), with the US government stating it highlights how seriously it takes non-compliance with national security requirements.

Assistant secretary for export enforcement Matthew Axelrod said: "This settlement is a clarion call about the need for companies to comply rigorously with BIS export rules, as our enforcement team works to ensure both our national security and a level playing field."

The penalty will be paid in quarterly installments of $15 million for the next five years, while BIS has also imposed a multi-year audit requirement and a five-year suspended Denial Order.

David Mosley, chief executive at Seagate, said resolving the matter is in the best interests of the company's customers and shareholders, adding that integrity and commitment to compliance are among the firm's core values.

He stated: "While we believed we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that engaging with BIS and settling this matter was the best course of action."

The fine illustrates the tougher stance the US government has been taking on exports to China in the last couple of years, as well as the importance of firms having robust solutions in place to check buyers against restricted party lists and ensure they are in compliance with export controls.