Seagate sales to Huawei result in US$300 million fine in US for the world’s biggest hard-drive maker

The fine represents the largest stand-alone settlement in the history of the Bureau of Industry and Security, which first blacklisted Huawei in 2019

Rules introduced in 2020 barred sales of devices with US-origin technology to Huawei without authorisation

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Published: 12:09pm, 20 Apr 2023Updated: 7:00pm, 20 Apr 2023

Seagate Technology Holdings, the biggest maker of computer hard drives, will pay a US$300 million civil penalty to the US Commerce Department to resolve alleged violations of export controls in selling millions of units to Huawei Technologies Co.

The deal announced on Wednesday is the largest stand-alone settlement in the history of the Bureau of Industry and Security, which is in charge of export controls, Commerce said in a statement.

The penalty includes a mandatory multi-year audit requirement and five-year suspended denial order. As part of the settlement, Seagate admitted to the accusations, Commerce said.

The news should be positive for Seagate because discussions with investors had indicated that they expected a fine of US$500 million to US$1 billion, Wells Fargo analysts including Aaron Rakers said in a research report. The company first revealed the accusations against it in October.

Seagate is scheduled to report earnings on Thursday. The company's shares fell 2.2 per cent to US$62.86 on Wednesday before the announcement.

The penalty is roughly equivalent to a quarter of net income for the company, according to its financial performance over the last few years. Seagate is projected to have a net income of about US$400 million in calendar 2023 as it suffers weaker demand for its products.

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