Seagate hit with $300m penalty for selling sanctioned storage to Huawei The United States Department of Commerce has stung Seagate for $300 million for selling disk drives to Huawei, despite the Chinese company’s presence on its list of entities to which certain products can’t be sold without first securing a license. In 2021 Seagate told our sibling publication Blocks and Files it always stays on …
That's not the point. If you do business in the US or in US currency, the US considers you to be under its sphere of control. Ask Standard Chartered (a UK entity) how well it worked out for them when they shuffled money around for Iran when the Europeans no longer had sanctions against Iran but the US did. It never went through the US, but SCB does business in the US and it was in US currency, so the US went after them and made them pay.
So, Huawei might want to look for harddrives elsewhere, but if any of the harddrive vendors want to do business in the US (which they all do), they better take note of the Seagate ruling and consider whether the fine levied is worth the extra dosh that China happens to be sloshing about in their direction. Remember, China has going on $4 trillion in *cash* and securities in US denomination in its foreign reserves, and China is the US' biggest creditor...
Well, that will change because of this cretinous US policy. There will soon be a fourth, 100% Chinese, one. Just like the US policy will cause China to develop best-of-breed suppliers in all areas subject such policy. What you see is the USA voluntarily destroying its high-tech leadership.
Surely the fine should be similar to the value of the goods shipped. $300mn fine on $1.1bn may well have been priced in as a risk... make it a $1.1bn fine instead and there's no way they can have profited from this. Heck make it 2x that if there's evidence that they maliciously acted, and it wasn't just a "mistake".
Seagate may have been forgiven for thinking that they were OK shipping these drives since they are older technology that's not actually made in the USA. Unfortunately, the rules are essentially elastic -- you're in violation because we say you are and you get to pay the penalty we dictate because we will simply smother you in legal proceedings if you protest.
This kind of extortion is becoming increasingly common in the US, and not just with the Department of Commerce. Civil penalties from government and quasi-government organizations are seemingly arbitrary, you read about it being imposed for this or that by some bureaucracy or another and its all done in a vacuum, it doesn't further the public's interests but merely that of the bureaucracy that's imposing it. This in a sense is a microcosm of the US as a whole today -- we stopped manufacturing a lot of stuff decades ago with the intention of merely profiting from others' doing the work for us and that expectation is now interpreted as a right to control what others do regardless of where they are and what they're doing.
See my post earlier... If you don't ever want to enter the orbit of any US authority, don't do business in USD, don't use any US services, any US software, don't sell to any US citizen or any US entity, or any entity that does business in the US or is in the orbit of any US entity or authority.
You'll probably notice that it will become extremely difficult to do business in this global world without having to cross their path somehow, even if removed by a degree or three.
Extraterritorial sanctions that are unilaterally imposed put you on a very slippery slope.
Both the EU and China have anti-sanctions legislation in place.
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:01996R2271-20180807
The EU has used this type of legislation in the past to protect EU companies.
China has yet to do so but has reminded the world that the legislation exists and it will use it when the time comes. So far it has shown restraint.
China will get its drives 3rd party or 4th party for a bit extra. Just like the IS got their Toyota trucks.
Plus, US customers will be paying more for Seagate drives, and the USG will be paying a lot more.
Hard drives are generic tech. They are not military specific. So this is just US protectionism - because it can't win on a level playing field. Embarrassing.
That is a ridiculous position that Seagate maintained. They knew that they were in violation and intentionally fabricated a reason to ship the drives in violation of the ban. There is no excuse. Whoever pushed or approved that sale in flagrant violation of the trade law needs to go to jail. A message must be sent that you will go to prison if you intentionally make a decision like that.
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