Smartphone maker Xiaomi has become the latest tech giant to fall victim to the Trump administration’s so-called “blacklist”.
According to Reuters, Xiaomi is one of nine companies added to the list of Chinese firms suspected of having dealings with the nation’s military.
The news means that American investors will not be able to purchase securities of these companies and existing investors will have to divest from these companies by November this year.
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However US lawmakers also recently agreed to a multi-billion-dollar plan to remove technology made by Huawei and ZTE from the nation’s telecom network.
Since Trump has just five more days left to remain in power, these decisions will remain unless the incoming Biden Administration overturns them.
Xiaomi has released a statement denying any links with the Chinese Army, saying that it will, “take appropriate course of actions to protect the interests of the Company and its shareholders.”
According to CNBC, Xiaomi said, “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.”
Impact on Xiaomi
This blacklist is different from Entity list that has companies like Huawei, SMIC and DJI and only limits US investors from investing in the company. The Department of Defence in its statement has stated that it is “determined to highlight and counter the People’s Republic of China’s military-civil fusion development strategy.”
The Trump Administration has not been able to furnish proof of any wrongdoing by Xiaomi nor has it been able to establish its connection with the Chinese military.
However, we’ve already seen the impact of similar action against Huawei, which has seen revenues shrink following a US ban drying up its supplies and technology.
And while there are over 60 Chinese companies that have been blacklisted by the US Government, Xiaomi, unlike Huawei, can still import and use US technology like Google’s Android Operating System or Qualcomm’s chipsets.
That said, Xiaomi may not be immediately impacted, but if the decision does not get overturned with the arrival of the new administration, the company stands to lose significant liquid capital.
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