Evidence suggests that Seagate Technology continued shipping hard disk drives to Huawei after Foreign Direct Product Rule went into effect.

Today, U.S. Sen. Roger Wicker, ranking member of the Senate Committee on Commerce, Science, and Transportation, released a report following a committee investigation that finds Seagate Technology likely in violation of the Foreign Direct Product Rule implemented by the Bureau of Industry and Security (BIS) at the Department of Commerce.

The Foreign Direct Product Rule restricts Huawei’s access to sensitive technology. The Senate Committee on Commerce, Science, and Transportation’s investigation found that Seagate disregarded the regulation. Seagate says it complies with regulations.

“My investigation highlights the need for stronger monitoring and enforcement efforts at BIS,” said Senator Wicker. “Our national security interests are being threatened by Communist China, and companies need to take this situation seriously by following the law. I hope the administration will work to make BIS more vigilant in its actions, particularly when it comes to protecting critical supply chain components like semiconductors and hard disk drives.”

The report states that the Minority Staff on the U.S. Senate Committee on Commerce, Science, and Transportation found, “evidence [suggesting] that Seagate Technology, a California-based company, continued shipping hard disk drives to Huawei after the rule went into effect. Seagate officials told Minority Staff that the company does not hold a valid license to continue shipping hard disk drives to Huawei, likely making transactions for this product unlawful after the effective date.”

Seagate Technology is a leading global supplier of hard disk drives and has controlled about 43% of the world market as of mid-2021. In the report, the Minority Staff estimated that Huawei spends around $800 million a year on hard disk drives for use in data centers, servers, and other bulk-data storage uses. Shipping these prohibited products to Huawei, “benefitted Seagate from an uneven playing field to the detriment of national security and at the expense of its competitors who abide by the rule designed to combat threats posed by companies with known connections to the Chinese government.”

The Minority Staff will continue this investigation into Seagate Technology to promote industrywide compliance by the private sector. They will also continue performing surveillance of BIS to determine why no enforcement action has been taken against Seagate Technology. They vow to ensure that the agency conducts thorough investigations at the scale and urgency required by the security interests that are at stake.

You can read the full report here.