In the coming months, the United States government may impose hefty fines on companies that illegally export technology to China and other countries, according to a former senior official from the Department of Commerce. The investigations related to this matter are currently ongoing.
Matthew Axelrod, who recently resigned and served as the Assistant Secretary of Commerce for Export Enforcement during the Biden administration, stated that the U.S. government has been imposing stricter penalties on companies violating export controls in recent years, particularly targeting the export of restricted technologies to China, Russia, and Iran.
He approved a $300 million fine against Seagate Technology in 2023 for shipping 7 million hard drives to Huawei, a company listed on the U.S. Department of Commerce’s Entity List. Major investigations that were initially expected to conclude in 2024 may now extend into 2025. Axelrod also predicted that the Trump administration would more aggressively enforce export controls.
Prior to joining the Department of Commerce, Axelrod worked at the Department of Justice. This week, he joined Gibson Dunn law firm to co-lead a new business department focusing on sanctions and export enforcement.
Several technology companies are currently under investigation by the U.S. government for suspected violations of export control regulations. One of these companies is Cadence Design Systems, a chip design software company based in San Jose, California.
Cadence recently disclosed in a statement that discussions with the U.S. Department of Commerce and the Department of Justice since December last year involve business dealings with Chinese clients and related investigation outcomes.
Applied Materials, a global semiconductor equipment manufacturer, is also under investigation by the U.S. government for shipments to China’s largest chipmaker, SMIC. The company is undergoing a joint investigation by the U.S. Department of Commerce and the Department of Justice.
Applied Materials stated in a recent document that since 2022, they have received subpoenas from the U.S. government and are actively cooperating with the investigation, but the final outcome remains uncertain.
In addition to strengthening civil penalties, Axelrod established the Disruptive Technology Strike Force in 2022 in collaboration with the Department of Justice to prosecute individuals and companies criminally for illegally transferring sensitive U.S. technology to foreign adversaries. He aims for this initiative to continue even if its form evolves in the future.
A spokesperson from the Department of Justice stated that they do not comment on “matters that may or may not be under investigation,” but emphasized that the National Security Division will continue to actively combat violations of export controls to safeguard U.S. advanced technology from illegal acquisition by hostile nations.
As the U.S. tightens its supervision of Chinese technology companies, it is expected that more companies will face significant fines and legal responsibilities for violating export control regulations in the future.
During a confirmation hearing last month, Commerce Secretary Howard Lutnick stated that strict enforcement of export controls on China will be implemented to prevent China from “using American technology to compete with America.”