The American government has set its eyes on the next major Chinese smartphone manufacturer, Xiaomi, now that Huawei is essentially out of the picture. The US government blacklists Xiaomi alongside nine other businesses on Thursday to its blacklist of companies connected to the Chinese military, which includes Xiaomi, the third-largest smartphone manufacturer in the world.
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On Thursday morning, the Commerce Department placed Cnooc on its “entity list,” meaning that US organizations will be unable to export goods or technologies to the corporation in the absence of a license that is difficult to obtain.
U.S. investors will no longer invest in the companies attached to this unique blacklist as a result of this change. They can’t buy shares and securities of companies such as Xiaomi that are part of this list and will have to dispose of their current holdings by 11 Nov. 2021.
On the news on the Pentagon’s list of companies with suspect links to the Chinese military, Xiaomi shares trading in the US fell by as much as 14 per cent.
Even worse, the Trump administration so far has given no facts as to how Xiaomi or other firms are in relation to the Chinese military. In view of how Xiaomi is basically a smartphone and electronics business, blacklisting Xiaomi was quite sudden and very surprising.
The Trump administration focused on blacklisting companies from key sectors such as telecommunications (Huawei) and semiconductor technology before this move (SMIC). Today, the US has blacklisted over 60 Chinese firms, including DJI, the world’s largest drone producer, and SMIC, China’s top semiconductor group.
The companies previously included in this blacklist include Huawei and SMIC. It is not immediately clear what this means for the future of Xiaomi, as though it is not an absolute ban on all trade, Xiaomi can still import US technology without a license, at least for the moment being.
It is also possible that Xiaomi could exit from this US government blacklist by the upcoming Biden administration, but the reversal is not yet confirm. Until then, however, it remains to be seen how to react to this sudden blacklisting by Xiaomi as well as other Chinese companies.