The United States Department of Defense expanded their list of companies with alleged connections to the Chinese military today with Xiaomi and 8 other groups. A June 12, 2020 version of the list added Huawei to the same list (alongside 19 other China-based or China-associated companies). Entities on the list are effectively blacklisted from business with companies in the United States as authorized by Section 1237 of the National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261). The Department of Defense says the list names “Communist Chinese military companies.”
The otherwise most-recent additions to the Section 1237 list (read: Communist Chinese military companies list) published by the Defense Department included SMIC (Semiconductor Manufacturing International Corp) and CNOOC (China National Offshore Oil Corp.) A document viewed by SlashGear set to be published in the Federal Register on January 15, 2021, by the Department of Commerce adds CNOOC to the USA Entity List.
Some hours after the release about the addition of CNOOC to the Industry and Security Bureau’s Entity List, Xiaomi was added to the Defense Departments’ Communist Chinese military companies list. As noted by the Financial Times, an executive order signed by Trump in November of 2020 “Americans are banned from investing in companies on that list.”
As noted by the Defense Department’s latest release, “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.”
This isn’t great news for Xiaomi. It’s not immediately clear the effect this will have on the company, especially given our proximity to the changing of power in the United States government to a new presidential administration.