Robert Bosch GmbH’s resolutions with BIS and DOJ is both a cautionary tale about how inadequate compliance with the Foreign Direct Product Rule pulled a German company into the crosshairs of U.S. export-control enforcement and a noteworthy example of how voluntary self-disclosure, cooperation and remediation can mitigate the worst consequences of a compliance failure and avoid criminal prosecution.
Robert Bosch GmbH (“Bosch”) subsidiaries in the E.U. exported approximately $72 million worth of Micro-Electro-Mechanical Systems (“MEMS”) sensor products and automotive software to Huawei Technologies Co., Ltd. (“Huawei”), and its affiliates on the Entity List without an export license from the Commerce Department’s Bureau of Industry and Security (“BIS”) in violation of the Export Administration Regulations (“EAR”). The MEMS sensors at issue have a broad range of consumer applications – they are used in smartphones, wearable technology, and automobiles. Although the items were subject to the EAR pursuant to the Foreign Direct Product Rule (“FDP Rule”) and consequently required a BIS license because they were going to Huawei, Bosch failed to obtain the required license, leading to the violations. Bosch, a German multinational headquartered in Stuttgart, ultimately recognized that it had a U.S. export controls compliance issue. By making a voluntary disclosure, cooperating, remediating, and agreeing to pay a $36 million civil penalty and disgorge its profit from these transactions, Bosch was able to reach a settlement with BIS and receive a criminal prosecution declination from DOJ.
The Underlying Conduct
From around September 2020 through September 2024, two of Bosch’s German subsidiaries—BST and ETAS—exported approximately $72.4 million worth of foreign-produced MEMS sensors and foreign-produced automotive software to Huawei Technologies Co., Ltd., and affiliates on the BIS Entity List. Bosch realized approximately $11.4 million in pre-tax profits from the transactions. Notably, the MEMS sensors and automotive software were themselves classified as EAR99 items yet required a BIS license to send to Huawei because certain U.S.-origin technology, software, or equipment was used in their production.
Bosch’s export violations originated with its inadequate FDP Rule compliance. This matter illustrates the complex risks that the FDP Rule imposes on businesses operating multi-jurisdictional manufacturing operations utilizing U.S.-origin technology. Through the FDP Rule, BIS extends U.S. export-control jurisdiction to items that are produced entirely outside the United States, by non-U.S. companies, utilizing non-U.S. component parts, when certain U.S. technology or software is used in connection with the product’s fabrication or design. The FDP Rule application has two steps: first, if a foreign-produced item’s production lineage traces back to specific U.S.-origin technology, software, or equipment (specified in the ECCNs identified in the FDP Rule), then the item itself becomes “subject to the EAR”; and second, once the item has become subject to the EAR, the company must then determine whether any BIS license requirements apply to that item. Under the FDP Rule, a foreign-produced item is subject to the EAR if it is either (i) the direct product of specified U.S.-origin technology or software, or (ii) produced by a plant or “major component of a plant” that is itself a direct product of such U.S.-origin technology or software—and there is “knowledge” that the item will be incorporated into products for, or is destined to go to, a Footnote 1 Entity List entity such as Huawei.
The Enforcement Actions
On June 15, 2026, DOJ issued a criminal prosecution declination letter to Bosch declining prosecution for potential violations of the Export Control Reform Act. In a parallel civil resolution, BIS settled the same underlying conduct through an Order and Settlement Agreement.
DOJ declined criminal prosecution under its Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP”). This is the first declination under the DOJ’s department-wide CEP which was adopted last year. The Bosch declination letter cited four key factors: (1) timely voluntary self-disclosure while its internal investigation was still ongoing; (2) full cooperation, including disclosure of relevant facts, preservation and production of documents, and prompt voluntary responses to government requests; (3) meaningful remediation, including engagement of external counsel to conduct a review, significant organizational changes, the addition of 66 employees to Bosch’s trade compliance organization, expansion of U.S. trade compliance resources, and updates to internal policies and procedures; and (4) the adequacy of regulatory remedies, specifically noting the approximately $36 million civil penalty imposed by BIS. Additionally, Bosch agreed to disgorge about $11.4 million in pre-tax profits, with DOJ crediting a portion of the amount paid to BIS in connection with the parallel resolution.
On the civil side, BIS identified 109 specific violations of the EAR. Bosch admitted the conduct and agreed to settle. BIS assessed a civil penalty of just under $36.2 million, with about $3.6 million of the penalty suspended subject to payment of the disgorgement Bosch agreed to pay under the DOJ resolution. Full and timely payment is a condition of Bosch’s continued export privileges; failure to pay would expose Bosch to denial of all of its export privileges for one year.
In the Declination, DOJ emphasized its view that Bosch’s then-existing trade compliance personnel were “ill-equipped to provide accurate guidance” on the FDP Rule and noted that the government’s investigation identified “several missed opportunities where third-party companies identified potential applications” of the FDP Rule to Bosch’s products or equipment.
The BIS Order paints a more detailed picture of how a sophisticated company may nonetheless ran afoul of the FDP Rule: (1) Bosch’s U.S. export-control compliance team consisted primarily of two employees, only one of whom was fully dedicated to export controls compliance matters (2) the company erroneously conflated the de minimis rule (export control depends on whether the item contains more than a specified percentage of U.S. content) with the FDP Rule (export control depends on whether certain specified U.S. software, technology and equipment are used to produce the item), and (3) Bosch personnel repeatedly overlooked red flags—including an explicit warning from an outsourced assembly-and-test provider, a prospective supplier’s reference to the $300 million Seagate penalty, and supplier certifications that Bosch signed without recognizing that Huawei was subject to the FDP Rule.
Lessons Learned
The FDP Rule creates compliance obligations for companies around the world that use U.S.-origin technology in their manufacturing processes, even if those companies never export from, import into, or transact directly with the United States. Thus, Bosch—a German parent company with German subsidiaries—conducting extra-territorial sales of foreign-produced goods, was subjected to U.S. export-control jurisdiction because the goods at issue traced back to specific U.S.-origin technology in the production chain.
The consequences were significant. Bosch agreed to pay a $36 million BIS civil penalty and disgorge its profits—and, but for its voluntary disclosure, cooperation, and remediation, it likely would have faced criminal prosecution on top of those civil consequences, along with the risk of substantial additional monetary penalties, debarment from U.S. Government contracts, denial of future export privileges, and reputational damage. DOJ’s declination notably does not provide protection to any individuals, and DOJ has expressly reserved the right to reopen the investigation if new information comes to light or disgorgement is not timely paid. The Bosch resolutions are the latest in a line of enforcement actions in which both DOJ and BIS have promoted the benefits of self-disclosure to encourage companies to come forward.
As the Bosch investigations show, navigating the complex network of regulations applicable to the global trade ecosystem is a challenging task that poses the risk of unintentional—and sometimes surprising—violations. Moreover, when violations are discovered, businesses and individuals must carefully weigh the strategic considerations of whether, when, and how to self-disclose. Foley Hoag’s experienced international trade and government investigations attorneys are available to help clients at every stage of the process.
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