Seagate Technology Holdings stated in a submitting Wednesday that it has been warned by the US authorities that the corporate could have violated export management legal guidelines by offering exhausting disk drives to a buyer on a enterprise blacklist.
The buyer is China’s Huawei, a supply conversant in the matter informed Reuters, which is on the US Department of Commerce’s entity record and banned from US exports and shopping for sure foreign-made items with out authorities approval.
According to a submitting with the U.S. Securities and Exchange Commission, Seagate was warned in a “proposed charge letter” it acquired from the Commerce Department on Aug.
But the corporate’s place, in response to the submitting, is that arduous disk drives are usually not topic to U.S. export rules, and that it doesn’t have interaction in prohibited conduct allegedly by the Department of Commerce.
The Commerce Department didn’t instantly reply to a request for remark.
Seagate, a Dublin-based firm that additionally operates in California, stated it was cooperating with the Commerce Department and attempting to resolve the matter.
The merchandise issued had been offered to the listed firm and its associates between August 2020 and September 2021, pursuant to the disclosure. The submitting didn’t determine the client on the record.
The individual stated that the corporate stopped its shipments to Huawei a 12 months in the past.
Seagate stated the timing of any closing outcomes is unclear, as are the phrases. It additionally couldn’t estimate the extent of damages or fines, though it stated a fabric affect on the enterprise was attainable.
For administrative prices, the Company could face civil penalties of as much as $300,000 per violation or twice the worth of the transaction, whichever is larger.
The supply stated the corporate hopes to current its stand within the upcoming assembly with the commerce division. It despatched an preliminary response to the letter in late September and filed extra particulars this week.
The subject is a US regulation that governs the best way during which sure foreign-made gadgets destined for Huawei change into topic to US export rules.
The Foreign Direct Products Rule, as amended in August 2020, prohibits corporations from delivery items exterior the United States to Huawei if they’re a direct product of sure U.S. expertise or software program, or are produced by important gear that’s required by the U.S. Direct product of the unique software program or expertise. Such shipments can solely be made with a US license.
The rule was designed to chop off international provides of semiconductors to Huawei, which in 2019 was positioned on the entity record for actions opposite to US nationwide safety pursuits.
Seagate is of the view that its foreign-made exhausting drives are usually not topic to the ban, the individual stated, as a result of they’re neither a direct product of any US semiconductor expertise or software program nor any gadget that’s itself a direct product of any US semiconductor expertise. Is. or software program.
However, the individual stated, the Commerce Department’s proposed tariffs are based mostly on the interpretation that foreign-made gadgets are topic to the rule if gear that could be a direct product of US semiconductor expertise or software program is used to supply any part of the ultimate merchandise. it was completed. , regardless of how far alongside within the manufacturing course of.
The individual stated the exhausting disk drives are made in China and Thailand and likewise don’t comprise sufficient US materials to make them topic to US export rules.
The firm has not utilized for a US license for exhausting disk drives, however has utilized for licenses for different gadgets when it was decided they had been crucial, the individual added.
Republicans on the Senate Commerce Committee launched a report final October that discovered Seagate could have shipped banned merchandise to Huawei for as much as a 12 months, leaving it behind Toshiba (6502.T) and Western Digital (WDC.O). ) had a aggressive benefit. The different main provider of exhausting disk drives.
Huawei didn’t instantly reply to a request for remark.
With inputs from TheIndianEXPRESS
