President Trump Includes Xiaomi To Military Blacklist

The outgoing President Donald Trump-led United States government has added Chinese smartphone maker Xiaomi to its military blacklist.

The Department of Defense on Thursday added nine more companies to its list of alleged Chinese military companies, including Xiaomi.

Xiaomi was the world’s third-largest smartphone maker as of Q3 last year, coming ahead of Apple and trailing behind Samsung and Huawei, according to market researcher IDC.

President Trump had in November signed an executive order, which was set to take effect in January, to bar investment in companies designated as supporting efforts of China’s military, intelligence, and security apparatuses. Huawei, China’s major chipmaker SMIC, and the country’s three largest telecoms operators are among the targets of the list.

The military blacklist is different from the Commerce Department’s entity list, which famously cuts Huawei, DJI, SenseTime, and other Chinese tech firms off their U.S. suppliers over national security concerns.

Xiaomi “confirms that it is not owned, controlled, or affiliated with the Chinese military, and is not a ‘Communist Chinese Military Company’ defined under the NDAA [National Defense Authorization Act].

READ MORE: Trump Bans WeChat Pay, Seven Other ‘Chinese’ Apps

The company will take the appropriate course of actions to protect the interests of the company and its shareholders,” a Xiaomi spokesperson said in a statement.

Like the entity list, the U.S. government’s military blacklist has caused confusion around compliance, causing the New York Stock Stock Exchange to delist, then reverse its decision regarding affected Chinese telcos. 

“The company is reviewing the potential consequences of this to develop a fuller understanding of its impact on the group. The company will make further announcements as and when appropriate,” the Xiaomi representative said.

Xiaomi is listed in Hong Kong, and the executive order could force American investors to divest their holdings in the phone maker, whose shares tumbled more than 11% to $29 apiece on the blacklist announcement.

While Xiaomi’s operations and technology access are unaffected in the latest round of U.S. government assault, a supply chain ban could become a sword of Damocles.

The Chinese phone maker has been working closely with Qualcomm and was notably the first to get the high-end Snapdragon 888 chips.

To evade restrictions imposed by the entity list, Huawei spun out its budget phone unit Honor in a bid to save its supply chain. It remains to be seen how Joe Biden will tackle Trump-era policies towards Chinese tech giants.