Seagate Technology said in a filing Wednesday the US government warned that the company may have violated export control laws by supplying hard drives to a customer on a trade blacklist.
The customer is from China HuaweiA source familiar with the matter told Reuters the company is on the US Commerce Department’s entity list and is prohibited from buying US exports and certain foreign-made items without government approval.
Seagate was warned in a “charge proposal letter” it received from the Commerce Department on August 29, according to a filing with the Securities and Exchange Commission.
But the company’s position, according to the filing, is that the hard drive is not subject to U.S. export regulations, and that it does not engage in prohibited behavior as alleged by the Commerce Department.
The application did not identify the client in the organization list.
Seagate, a Dublin-based company that also operates in California, said it was working with the Department of Commerce and trying to resolve the issue.
The products in question were made available to the blacklisted company and its affiliates between August 2020 and September 2021, according to the disclosure.
The person said the company halted its shipments to Huawei a year ago.
Seagate said the timing of any final results was unclear, as were the terms. It also couldn’t estimate the extent of the loss or penalty, although it said there could be a serious impact on business.
The company can face civil penalties of up to $300,000 (nearly 2.4 crore) for each breach or double the value of the transaction, whichever is greater, for fees administrative.
The company hopes to make its case in an upcoming meeting with the Commerce Department, the source said. It sent an initial response to the letter in late September and provided more information this week.
© Thomson Reuters 2022
