The market is abnormal after the supply of American companies, and foreign media speculate about the reasons for the unexpected changes
Seagate is the world's largest hard drive manufacturer, with a staggering 42% global market share in 2019. Seagate's high market share is due to its strategic positioning to value relationships with partners and provide them with the right products within their capabilities.
Among Seagate's partners, Huawei is expected to be the main presence. It is reported that Huawei is the world's largest smartphone manufacturer and the largest communications equipment manufacturer. With these advantages, Huawei has developed rapidly in the fields of storage, cloud computing, and servers, which has also made the demand for Huawei hard disks strong.
Huawei has a strong demand for hard drives, and Seagate also attaches great importance to the relationship between the two parties, so in the past ten years, Seagate has provided Huawei with a large number of hard disk drive products, and the relationship between the two parties is very good.
It is reported that between August 2020 and September 2021, Seagate sold a total of $1.1 billion of hard disk drive products to Huawei, accounting for 4% of Seagate's annual revenue. This shows that Huawei's order is extremely important to Seagate and is a testament to the good relationship between the two parties.
Of course, Seagate is not without risk in doing so. You must know that in May 2020, the former United States updated its suppression policy against Huawei, stipulating that the use of former American equipment and production chip technology must obtain a license from the former United States before it can be sold to Huawei.
A number of U.S. companies, including Qualcomm and Intel, have complied with relevant U.S. regulations and only sold their products to Huawei after obtaining authorization. Only Seagate Technology is different, even though the former United States has exerted a lot of pressure, Seagate has insisted on supplying Huawei.
After Seagate supplied Huawei, a strange phenomenon occurred. The former U.S. authorities even fined Seagate $300 million, equivalent to 2.1 billion yuan.
The fact that the former U.S. authorities wanted to crack down on Huawei, and now they have fined Seagate, is a strange phenomenon. Someone joked: This is the flood that washed the Dragon King Temple, and the family doesn't know the family.
The question is: why didn't Seagate listen to the agreement of the United States and insist on selling hard drive products to Huawei?I think there are a couple of aspects to consider.
First and foremost, Seagate values its partnership with Huawei. Huawei and Seagate have a long history of cooperation, and Seagate has been providing Huawei's best hard disk products since 2007. After more than 10 years of cooperation, Huawei has become one of Seagate's most important partners.
If Seagate were to follow the Commerce Department's agreement, it would lose an important customer like Huawei, losing more than $1 billion a year in production orders. With the global server market weakening and Huawei's rise, Seagate has no reason to give Huawei a reason to stop hard drives.
Second, Seagate argues that its hard drives are not directly produced by U.S. equipment and do not involve U.S. technology, so it believes that its supply to Huawei does not fall within the scope of the ban. It is understood that Seagate has factories all over the world, and the equipment of these factories is not old American equipment, so these hard drives have nothing to do with old American equipment and technology in the production process.
Seagate believes that its hard drives do not fall within the scope of the ban, so it can ship to Huawei normally, but the original US side believes that Seagate did not understand the content of the ban. In the U.S., as long as the hard drives produced do not have the equipment and technology, Seagate should have a license to supply Huawei.
Due to the cognitive bias, the United States eventually fined Seagate $300 million.
In the end, Seagate believes that the partnership with Huawei is far more than $300 million, which is why Seagate insists on supplying Huawei. Huawei has a huge influence in the fields of communications, cloud computing, smartphones, and servers. Huawei has established a good relationship with Seagate, which is extremely important to Seagate's revenue and profits.
Seagate is not unaware of the U.S. fine for supplying Huawei, but Seagate believes that the fine and the damage caused by Huawei's order are not worth mentioning. Weighing the pros and cons, Seagate insisted on supplying Huawei.
The United States and the United States have always acted hegemonically, but whenever American companies find it difficult to compete with an adversary, the United States wields it"Sanctions stick"Suppress these rivals, and eventually these rivals lose to American companies, which grab market share.
Seagate insists that supplying Huawei is a normal partnership and should not be subject to the ban. But Seagate didn't expect that the former United States"Fight your own family", and was fined $300 million. Do you think the $300 million fine is reasonable?