U.S.-based Seagate Technology Inc. is the world’s largest manufacturer of hard drives.
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS), which oversees export control compliance, is investigating whether hard drive maker Seagate Technology Inc. violated a U.S. ban on China.
The Washington Times on Tuesday (March 23) quoted two sources familiar with the investigation as saying that California-based Seagate allegedly improperly sold hard drives containing microchips subject to export controls to Chinese tech giant huawei Technologies Inc. after the Commerce Department strengthened its restrictive order last August.
The Commerce Department’s Bureau of Industry and Security issued a notice in August saying the new curbs prohibit Huawei or its affiliates from buying “foreign-made chips developed or produced abroad based on U.S. software or technology to the same extent as similar chips in the United States. The regulation means that the U.S. is prohibited from supplying Huawei with most of its technology products.
The Commerce Department’s Bureau of Industry and Security did not comment, and Seagate did not respond to an email seeking comment.
White House spokeswoman Jen Psaki recently said Huawei is an example of an untrusted telecommunications provider that could pose a security threat to the U.S., suggesting the Biden administration may not drop the Trump (Trump) administration’s sanctions against Huawei.
Seagate CFO: Doesn’t think export license is needed to export to Huawei
Seagate executive vice president and chief financial officer Gianluca Romano said at a technical conference last September that it does not believe an export license from the U.S. Commerce Department is required to sell hard drives to Huawei.
“We’re still in the process of finalizing our assessment, but from what I’ve seen so far, I don’t see that we have any particular restrictions in terms of continuing to maintain Huawei or other Chinese customers,” Romano said. “So, we don’t think we need to have a specific license.”
Online site Tom’s Hardware first reported the comments when they asked Seagate if it was selling hard drives to Huawei after September.
A Seagate spokesperson told Tom’s Hardware that the company is “continuously monitoring and complying with global policies and regulations. We are aware of the U.S. Department of Commerce’s action to add multiple Chinese entities to the entity list, and we will continue to review the situation and will fully comply with those rules and regulations.”
The Washington Times quoted an administration source as saying that the appointment of Steven Emme to head BIS is troubling and suggests that the new administration may loosen export controls on China.
Emme, an attorney, worked in export control compliance at the law firm Akin Gump Strauss Hauer and Feld. According to a report disclosed by Congress, Emmy received $300,000 in lobbying fees in 2020 from ZTE, a telecommunications company with ties to the Communist Party’s military.
Beijing Seeks to Infiltrate U.S. Through Telecoms, U.S. Commander Warns
The Huawei sanctions are being closely watched by Rep. Michael McCaul, R-Texas, chairman of the House China Task Force.
McCaul has asked BIS to inform him of the threat posed by Chinese technology companies and for a detailed list of China-related export license applications and approvals.
Glen VanHerck, commander of U.S. Northern Command, said during an appearance before Congress this week that the Chinese Communist Party could disrupt U.S. military supplies with a missile attack on the West Coast.
He noted that Beijing is seeking to infiltrate the telecommunications sector in both China and the United States, while seeking to expand trade and investment in Mexico; background has also invested in tourism in the Bahamas through infrastructure projects over the past few years.
A military source told The Washington Times that China had breached a sensitive U.S. military program by infiltrating electronic equipment that was in operation. The breach was discovered during a security review of the equipment and had to do with electronic components made by a company with Chinese ties.
A 2017 report by the Pentagon’s Defense Science Board had warned that microelectronic components included in modern weapons systems are increasingly vulnerable to attack.
“Exploitation of microelectronics and embedded software vulnerabilities can lead to mission failure in modern weapons systems,” the report said. “Such exploits are particularly harmful because they can be difficult to distinguish from electrical or mechanical failures, and the effects can range from system degradation to system failure and then to system subversion.”
The report also said supply chain vulnerabilities can be inserted into components or software through cyber operations, and malicious insertions can be so difficult to detect that they can look like design flaws.
While military systems have not been detected in the 2017 report, civilian systems have been found to have vulnerabilities. For example, Volkswagen created a “defeat device” in its vehicles to thwart U.S. emissions testing.
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