The US Department of Defence under the Trump administration has listed out nine different Chinese firms as investment blacklist. In the list, there are nine different Chinese firms and Xiaomi being one of them. All nine firms have been added to the list of Communist Chinese military companies that are working directly or indirectly with the United States.
The Defence department announced its latest list the other day. Under section 1237 of the NDAA for FY 1999, the US defines “Communist Chinese military companies” as anyone identified in the defense intelligence agency publication numbered VP-1920-271-90, dated September 1990 or PC-1921-57-95, dated October 1995, and any update of those publications for the purposes of this section” as well as “any other person that–(i) is owned or controlled by the People’s Liberation Army; However, it still remains unclear about how Xiaomi managed to end up in this bill, as the company is only making consumer products.
According to the Reuters reports, American investors will need to divest their holding in each of the firms that have been blacklisted earlier today. The time limit to divest their holdings is November 11, 2021. This is because of an executive order signed by the former President Donald Trump in November 2020 stopping Americans from investing in any companies that have been added to the DOD’s list.
Previously Huawei and SMIC have been part of this list, and we know Huawei has been banned to deal with any firms in the United States. However, it is very early to say about what Xiaomi will be facing with this. As it may or may not be banned from selling their smartphones in the United States, or if they will be allowed to use the American software and hardware like the google services.
If somehow Xiaomi ended on the U.S commerce department’s entity list, the company would be prohibited from making any business with U.S based firms. Furthermore, any company using hardware or software developed primarily in the U.S., which includes many chip foundries and chip design firms, would also be subject to a trade ban with Xiaomi.
Fortunately, for Xiaomi, they have had enough time to prepare for the worst, which isn’t even here yet. “In any case, if in the future something happens, we have a plan B. Among other things, we are investing heavily in various semiconductor manufacturers in China, but we believe that our business strategy should not be conditioned by decisions made by politicians.
Until now, we have opted for integrating the best components into our products, and we will continue to do so in the future”, Abi Go, Xiaomi’s global product manager, told Xataka early last year.
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