The Trump administration has added Xiaomi to the US military list under the National Defense Authorization Act of 1999. That means the US has designated the third-largest smartphone maker in the world — according to IDC, Counterpoint Research and Gartner — as a company owned by the Chinese military. As a result, American investors can’t buy Xiaomi shares or related securities anymore. Also, due to an order Trump recently signed, they’ll be required to sell any shares they own by November 11th this year.
In the Defense Department’s announcement of the updated list, it said:
“The Department is determined to highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy, which supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities.”
Xiaomi, however, denies its connection to the Chinese military and said that it will take steps to protect the company and its shareholders. It said in a statement:
“The Company reiterates that it provides products and services for civilian and commercial use. The Company 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.”
CNBC reports that Xiaomi’s shares fell 10.6 percent at the open on Friday (China time) after the news broke. The US military blacklist is separate from the entity list, the country’s trade blacklist that’s been preventing US companies from working with Huawei. Aside from Xiaomi, the administration has also added planemaker Comac to the military blacklist, where it joins state-owned oil giant CNOOC and China’s largest chipmaker SMIC.