The cost of not knowing your supply chain: why due diligence is a boardroom capability

Five years ago, companies asked: “are we compliant?” Today, regulators ask: “can you prove you understand your supply chain?”

Compliance can’t be demonstrated through policies or supplier declarations alone. Organisations need evidence showing how products are manufactured, which technologies are used, where raw materials originate, and who ultimately receives them.

“The greatest compliance risk is the one that was never mapped.”

Export control jurisdiction follows technology

The U.S. Foreign Direct Product Rules (FDPR) demonstrate how regulatory exposure travels through supply chains. Goods manufactured outside the United States can still fall under U.S. export controls if produced using specified U.S.-origin technology, software, or equipment. Manufacturing overseas does not remove U.S. jurisdiction.

“Modern due diligence begins before products reach borders.”

• Seagate: $300 million

In April 2023, the U.S. Bureau of Industry and Security imposed a $300 million civil penalty on Seagate after it continued supplying foreign-manufactured hard disk drives to Huawei. Although produced outside the United States, BIS determined the drives remained subject to the FDPR because they relied on U.S.-origin manufacturing equipment. It remains the largest standalone administrative penalty in BIS history.

• Applied Materials: approximately $252 million

In February 2026, Applied Materials and its Korean subsidiary agreed to pay approximately $252 million in connection to exports of U.S. semiconductor-manufacturing equipment to China. BIS described it as the agency’s second-highest penalty, emphasising that cross-border corporate structures do not remove accountability for controlled transactions.

• Bosch: $36.2 million

In June 2026, Germany-based Robert Bosch agreed to a $36.2 million BIS penalty concerning unlicensed shipments of foreign-produced items to Huawei and its affiliates. Bosch filed a voluntary self-disclosure and cooperated with the investigation: both factors were reflected in the settlement.

Your Bill of Materials is a governance document

Export controls are only part of the picture. A finished product can be detained because of a non-compliant material, party, or component buried deep within its Bill of Materials.

Forced-labour enforcement requires firms to identify the origin of materials and components throughout the production chain. Under the U.S. Uyghur Forced Labor Prevention Act, goods made wholly or partly in Xinjiang are presumed to involve forced labour and are prohibited from import unless the importer can rebut that presumption.

“Visibility has replaced paperwork as the currency of compliance.”

This direction of travel is broader than the United States. The EU now prohibits products made with forced labour, while the UK Modern Slavery Act requires qualifying organisations to report on measures taken across their supply chains.

Due diligence protects commercial resilience

“The practical response is not investigating every supplier with equal intensity. 

It is building proportionate governance in the areas where exposure is greatest.”

For leadership teams, poor supply chain visibility can lead to:

• Goods being detained or excluded
• Export privileges being restricted
• Contracts becoming impossible to fulfil
• Products requiring expensive redesign
• Key suppliers becoming unusable
• Financial and reputational damage

That means understanding:

1. Which products contain controlled / high-risk inputs
2. Where U.S.-origin technology or equipment enters production
3. Which suppliers and end users require enhanced screening
4. Where raw-material traceability is weakest
5. Who owns the evidence and decision-making process internally

The strongest organisations build enough visibility to identify risk early, make better commercial decisions, and demonstrate control when scrutiny arrives. The cost of due diligence is measurable; but the cost of not knowing can be far greater.