US Tech Company Agrees to $175 Million Settlement Over Hidden Sales to China’s Huawei

The hard drive maker has agreed to a $175 million payout to resolve a shareholder lawsuit over undisclosed sales to blacklisted Chinese tech firm Huawei.

Seagate Vice President Fergus O'Donnell poses holding an external hardrive unit at the U.S.-owned technology company's manufacturing plant in Londonderry, Northern Ireland, on Sept. 11, 2025. Paul Faith/AFP

Seagate Technology has agreed to pay $175 million to settle a class action lawsuit alleging the company misled investors about its sales of hard disk drives to China’s Huawei Technologies following tightened U.S. export controls.

The proposed settlement was filed late on May 29 in federal court in San Francisco and requires approval from U.S. District Judge Rita F. Lin.

The lawsuit covers investors who purchased Seagate shares between Sept. 14, 2020, and April 19, 2023. Lead plaintiffs include pension funds from Arkansas, Mississippi, Germany, and Luxembourg.

Shareholders alleged that Seagate, Chief Executive Dave Mosley, and Chief Financial Officer Gianluca Romano failed to adequately disclose the extent and risks of the company’s business with Huawei after changes were made to U.S. export regulations.

The complaint states that Seagate sold more than 7.4 million hard drives worth over $1.1 billion to Huawei during the period, contributing to higher profits and an inflated share price.

Seagate denied wrongdoing in agreeing to the settlement. Court filings show the company is expected to contribute approximately $105 million, while insurers will provide roughly $70 million.

Lawyers representing shareholders plan to seek up to 25 percent of the settlement fund for legal fees. The agreement was reached following mediation and negotiations between the parties.

The dispute stems from a series of U.S. actions targeting Huawei. In 2019, the China-based technology company was placed on the U.S. Entity List, restricting its access to certain American technology. Additional rules introduced in August 2020 expanded those restrictions to cover some foreign-made products produced using U.S. technology.

According to the U.S. Commerce Department’s Bureau of Industry and Security (BIS), Seagate continued supplying hard drives to Huawei after the 2020 rule changes without obtaining the required authorization. Competitors largely halted comparable shipments during that period, BIS findings show.

On April 19, 2023, BIS announced a $300 million civil penalty against Seagate, describing it as the largest civil administrative export-control penalty not connected to a criminal case in the agency’s history. The settlement required Seagate to make payments over five years, submit to compliance audits, and accept a suspended denial order.

The BIS action publicly detailed Seagate’s Huawei-related sales and became a key basis for subsequent shareholder claims. Investors alleged that the company’s prior public disclosures did not fully reflect the regulatory risks associated with those transactions.

At the time of the BIS settlement, Seagate said that resolving the matter was in the interests of the company, its customers, and shareholders. Mosley stated that while Seagate believed it had complied with export-control regulations based on its interpretation of the rules at the time, settling the case would allow the company to focus on its business and future operations.

Seagate is incorporated in Ireland, headquartered in Singapore, and maintains significant operations in Fremont, California.

The U.S. government in 2019 added Huawei to its Entity List—a trade blacklist that restricts access to American technology–because it determined the company engaged in activities contrary to American national security or foreign policy interests. This included alleged violations of sanctions on Iran cited in a Department of Justice indictment.

If the shareholder settlement receives final court approval, compensation will be distributed to eligible investors under a court-approved allocation plan. A final approval hearing has not yet been scheduled.

Huawei, based in Shenzhen, China, has denied that it poses a threat to U.S. national security.

In May, the European Commission recommended that EU member states exclude Huawei and ZTE equipment from telecom operators’ connectivity infrastructure. The move aims to strengthen cybersecurity in critical digital networks across the 27-nation bloc.

Reuters contributed to this report.