Seagate is going through a tough time as it has to pay $175 million over a big settlement with an investor lawsuit that claims the company has concealed its hard disk drive sales to Huawei. Amid geopolitical tensions, this is another major obstacle.
One of the world’s largest manufacturers of data storage devices, Seagate mainly focuses on HDDs (hard disk drives) and SSDs (solid-state drives) for personal and enterprise data storage. They also make internal PC drives and gaming storage.
At the present scenario, Seagate struck a $175 million deal with investors on a lawsuit over hard drive sales to Huawei in China, calling it a violation of the US regulations.
Since Huawei considers hard drives still a major challenge for the Chinese tech chain, it might have been using Seagate HDDs. Though that appears to be a big problem now.
Investors like Bernstein Litowitz Berger & Grossmann, Motley Rice, and Wilson Sonsini Goodrich & Rosati proposed the lawsuit against Seagate, Chief Executive Dave Mosley, and Chief Financial Officer Gianluca Romano last Friday.
The lawsuit was filed in the San Francisco federal court and currently needs a judge’s approval. As per the details shared by shareholders in Arkansas, Mississippi, Germany, and Luxembourg, stated that Seagate expanded its profit and share price by hiding its sales of over 7.4 million hard disk drives to Huawei.
Even though the company denied all of these allegations, it settled the case through a penalty anyway. The firm already faced such a penalty ($300 million) in April 2023 from the US Department of Commerce Bureau of Industry and Security.
Lawyers are planning to gain 25% of the settlement fund for legal fees from the Seagate shareholders. Though, how things will proceed in this case is unclear at the moment.
(Image Credits: Seagate)
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