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Seagate Technology Holdings shares were battered Wednesday on a double dose of negative news. The data storage company announced it would lay off 8% of its workforce and a report claimed the U.S. is accusing the firm of violating export rules by selling hard drives to China’s Huawei Technologies.
The provider of data storage technology and solutions said in its quarterly earnings report released ahead of Wednesday’s opening bell that it would slash its headcount by roughly 3,000 employees as part of a plan to restructure and cut costs citing “current economic conditions.”
Seagate Technology Holdings announced layoffs Wednesday and reported that it was accused by the U.S. government of violating export laws. (Seagate Technology)
In a Securities and Exchange Commission filing the same day, Seagate revealed that the Commerce Department’s Bureau of Industry and Security (BIS) had accused it of providing hard disk drives to a customer on the BIS Entity list, and therefore violating U.S. Export Administration Regulations. Seagate did not name the customer.
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But Reuters, citing a source familiar, reported that the customer was Chinese telecommunications giant Huawei, which is currently under investigation by the U.S. government for an alleged conspiracy to steal trade secrets from U.S. technology firms. Huawei has been on the BIS Entity List since 2019 due to U.S. national security concerns.
Seagate Technology
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| STX | SEAGATE TECHNOLOGY HOLDINGS PLC | 54.06 | -3.94 | -6.78% |
Seagate shares fell more than 8% by early afternoon Wednesday.
The firm, based in Ireland with operations in California, said in the SEC document that it has responded to the U.S. government’s claims and argues it “did not engage in probated conduct as alleged by BIS, because, among other reasons, Seagate’s [hard disk drives] are not subject to the EAR.”
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The disclosure also stated that the hard disk drives sales that were flagged by the U.S. government occurred between Aug. 2020 and Sept. 2021. A source told Reuters that Seagate halted shipments to Huawei a year ago.
In this photo taken Sunday, Mar. 8, 2020, residents wearing masks against the coronavirus walk past Huawei advertisement in Beijing. (AP Photo/Ng Han Guan / AP Images)
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If the Commerce Department finds Seagate in violation of the export rules, the company could face civil penalties of up to $300,000 per violation or twice the value of the transaction, according to Reuters.
FOX Business’ Paul Best and Reuters contributed to this report.
