US Export Controls: Bosch’s $36m Huawei Penalty Explained

On 17 June 2026, the US Department of Commerce's Bureau of Industry and Security (BIS) announced that Robert Bosch GmbH, headquartered in Stuttgart, Germany, had agreed to pay a penalty of $36,184,680 for shipping items to Huawei Technologies Co. and its affiliates without the required US licence. BIS press release

The detail that matters most is easy to miss. Bosch is not a US company. The items were foreign-produced and were exported from outside the United States. Yet they were still subject to US export control law, and the shipments still required authorisation from BIS.

For UK exporters, this is the clearest recent illustration of a point we have been making for years: US export controls can apply to your transactions even when nothing in them appears to touch the United States. UK businesses must consider both UK and US export controls, and in some cases, US rules restrict supplies that never cross a border.

What is export control?

Export control laws regulate the movement of goods, software, and technology that have military, dual-use, or other strategic significance. It determines when a licence is required to export, transfer or otherwise supply an item, as well as to whom an item may not be supplied at all.

In the UK, the framework is built on the Export Control Act 2002, the Export Control Order 2008, and the assimilated Dual-Use Regulation, with licences issued by the Export Control Joint Unit (ECJU). In the United States, exports of commercial and dual-use items are governed by the Export Administration Regulations (EAR), administered by BIS. The two regimes operate independently, and compliance with one does not necessarily satisfy the other.

The Bosch settlement: what happened

According to the BIS press release, between 16 September 2020 and 26 September 2024, Bosch exported from abroad approximately $72.4 million worth of micro-electro-mechanical systems (MEMS) sensor products and software for mobile phones to Huawei and its affiliates on the US Entity List, without the required licence or other authorisation from BIS.

The items were subject to the EAR under the Foreign Direct Product Rule. In other words, they were made outside the United States, but because they were the direct product of certain US-origin technology or software, US export control law followed them.

Bosch filed a voluntary self-disclosure and cooperated with the investigation. It agreed to pay a penalty of $36,184,680 to BIS, and to disgorge $11,430,098 of profit made from illegal sales, of which $3,601,029 will be credited against the $36 million penalty, as conditionally agreed with the US Department of Justice. The voluntary disclosure and cooperation will have significantly reduced the final penalty, and BIS said the settlement emphasises both its pledge to enforcement and the incentive to disclose past violations voluntarily.

When are items subject to the EAR?

US export control law imposes licensing requirements on items, including goods, software and technology, that are 'subject to the EAR'. We set out the tests in detail in our earlier article, When are items subject to US Export Controls (§ 734.3 Items subject to the EAR) , but to summarise, an item is subject to the EAR when it is:

1. located in the United States, including in a US Foreign Trade Zone or moving in transit through the US from one foreign country to another;
2. of US origin, wherever it is located, so US-made items remain subject to the EAR after export from the US;
3. a foreign-made item containing more than the de minimis amount of controlled US-origin content, generally 25 per cent by value, and less in certain circumstances;
4. a foreign-made item that is the direct product of US technology or software controlled for national security reasons on the US Commerce Control List (CCL), where the foreign-made item is also classified on the CCL and controlled for national security reasons;
5. a foreign-made item that is the direct product of a complete plant, or a major component of a plant, which is itself the direct product of such US-origin technology or software; or
6. Caught by an entity-specific foreign direct product rule, such as the rule targeting Huawei and its designated non-US affiliates, which extends the EAR to foreign-produced items that are the direct product of specified US technology, software or plant, when destined for those entities.

It was limb (f) above , the entity-specific Foreign Direct Product Rule, that caught Bosch's German-made sensors and programs.

Why UK exporters must consider both UK and US export control law

Most UK exporters know they must check whether their goods, software or technology need a licence from the ECJU. Few appreciate that US export rules can apply to the same transaction at the same time, because US export controls attach to the item rather than to the border.

There is a further point that regularly surprises UK businesses. The EAR not only controls exports and re-exports, it also controls transfers (in-country): supplying an item subject to the EAR for a restricted party within a single country. A licence requirement can therefore arise in a supply from one UK company to another, with no international movement involved.

Huawei is the leading example. Huawei and a large number of its non-US affiliates are on the US Entity List, and the licence requirement for those entities covers all items subject to the EAR, including low-technology EAR99 items that appear nowhere on a control list.

For example, a UK distributor holding US-origin electronic components, or foreign-made items caught by the de minimis or foreign direct product rules, may not supply those items to Huawei's UK operations without prior licence approval from BIS, even though the goods never leave the UK. Entity List licence applications relating to Huawei are subject to a general policy of denial, so, in practice, such supplies cannot lawfully proceed.

A UK supplier in that position would face no UK licensing requirement at all for a purely domestic supply, which is precisely why the US rules are so often missed.

Frequently asked questions

What are the key compliance requirements under UK export control law?

UK exporters of controlled goods, software, and technology must classify their items against the UK Strategic Export Control Lists, determine whether their activity is licensable (including export, electronic transfer of technology, brokering, and the provision of technical assistance), and obtain the appropriate licence from the ECJU before proceeding. Core obligations include:

• classifying items against the UK Strategic Export Control Lists, including the military list and dual-use lists, and considering the end-use ('catch-all') controls that can apply to unlisted items;
• selecting and obtaining the correct licence, whether an open general licence, a standard individual export licence (SIEL) or an open individual export licence, and registering where required;
• complying with licence conditions, including end-user undertakings and reporting requirements;
• keeping records of relevant transactions, which must be available for compliance audits by the ECJU;
• Screening customers and end-users against UK sanctions designations, since sanctions under the Sanctions and Anti-Money Laundering Act 2018 apply alongside export controls.

Businesses trading internationally in sensitive sectors should also assess whether foreign regimes, particularly US export controls, apply to their items and counterparties.

What are the key regulations for dual-use items in the UK?

Dual-use items are goods, software and technology that can be used for both civil and military purposes. In Great Britain, they are controlled principally by the assimilated Council Regulation (EC) No 428/2009 (the assimilated Dual-Use Regulation), which contains the main dual-use control list at Annex I together with end-use controls, and by the Export Control Order 2008, made under the Export Control Act 2002, which contains additional national controls on dual-use goods, software and technology at Schedule 3. In Northern Ireland, under the Windsor Framework, the EU's Dual-Use Regulation (EU) 2021/821 applies, meaning that EU export control legislation and current licencing requirements continue to apply in Northern Ireland.. Sanctions regulations made under the Sanctions and Anti-Money Laundering Act 2018 can impose further restrictions on the same items.

What are the penalties for violating export control laws in the UK?

Breaching UK export controls is a criminal offence. Enforcement is carried out under the Customs and Excise Management Act 1979, and for offences connected with export controls on military and dual-use items, the maximum sentence on conviction on indictment is 10 years' imprisonment, an unlimited fine, or both. HMRC can also deal with breaches by way of compound settlement, a financial penalty in lieu of prosecution, and goods can be seized and licences revoked. Separately, as the Bosch case shows, conduct in the UK can also breach US export control law, with its own penalties.

What are the penalties under US export control law?

Under the US Export Control Reform Act of 2018, criminal penalties for violating the EAR can include up to 20 years' imprisonment and up to $1 million in fines per violation, or both. Civil (administrative) penalties can reach the greater of $374,474 per violation or twice the value of the transaction, and violators can also be denied US export privileges, which prohibits any participation in transactions subject to the EAR. Bosch's $36 million penalty, reduced by its voluntary disclosure and cooperation, shows the scale of exposure for non-US companies.

How AM Skinner Solicitors can help

If your business exports goods, software, or technology, or supplies items that may be of US origin or made using US technology, we can help you determine whether UK or US export controls, or both, apply, and what that means in practice. See more information here on Export Controls and Sanctions.

Contact AM Skinner Solicitors  for specialist legal advice in all areas of trade law, including export controls, sanctions, import and customs controls, commercial contracts, supply chain and other domestic and international trade law matters.