US Blacklists Xiaomi and 9 Other Chinese Companies (Update)

Recently, the USA trump administration US blacklisted Xiaomi and 9 other Chinese companies. Previously, Huawei was made out of the smartphone markets in USA as well as interacting with any American company. Now the time looks crucial for the Chinese companies like Xiaomi.

The US department of defense released a list containing Xiaomi and 9 other Chinese firms. The list mentions, these firms are alleged to have ties with “Communists Chinese government”. This is in accordance with the statutory requirement of Section 1237 of the National Defense Authorization Act for Fiscal Year 1999.

Xiaomi is now the world’s third-largest smartphone company around the world. Huawei had the position of 2nd earlier before the ban. Now, things may get worse for the 3rd positioned Xiaomi. Though as for now the list is “alledged” and not proved yet. Though Xiaomi is making only the consumer products it’s not clear how they made it to the blacklists.

US Blacklists Xiaomi and Other 9 Firms

After the list is released, the US investors will not be able to invest in these 9 Chinese companies. They will have to divest their existing investment till November 2021, as per Reuters. Under section 1237 of NDAA for FY 1999, the USA blacklisted the companies with alleged ties with the Chinese communist government.

President Trump signed the order in November 2020. Now the US investors will not be able to invest in any of these black listed companies. Its quite shocking for Xiaomi to get on this list. Previously, the firms banned was making some crucial products and technologies. Like, Huawei was making telecommunications, SMIC semiconductor technology firm. Also, earlier US banned the DJI and and China’s top semiconductor firm SMIC.

UPDATE

Xiaomi has released an official statement regarding the USA blacklisting. They stated, they have no interactions with the Chinese military and will surely look into this matter.

THE COMPANY HAS BEEN IN COMPLIANCE WITH LAW AND OPERATING IN COMPLIANCE WITH THE RELEVANT LAWS AND REGULATIONS OF JURISDICTIONS WHERE IT CONDUCTS ITS BUSINESSES. 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. THE COMPANY WILL TAKE APPROPRIATE COURSE OF ACTIONS TO PROTECT THE INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS.
THE COMPANY IS REVIEWING THE POTENTIAL CONSEQUENCES OF THIS TO DEVELOP A FULLER UNDERSTANDING OF ITS IMPACT ON THE GROUP. THE COMPANY WILL MAKE FURTHER ANNOUNCEMENTS AS AND WHEN APPROPRIATE.
Official statement

What are consequences?

You all may have known about Huawei. After the USA backlisted Huawei, American firms had to cut ties with Huawei. Their smartphones can’t use any technology related to the USA. The US blacklists Xiaomi and other 9 firms’ effects will be seen in the coming days. So for Xiaomi, if they remain on the blacklists, they will have no access or business with US-based companies. Though last year, Xiaomi’s global product manager told XATAKA,

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

Also, they will be barred from using US based tech like software or hardware. It also includes chip designs, chip foundries will be having a trade ban with Xiaomi. It will be interesting to see the Qualcomm already invested in Xiaomi. If the blacklists stay, they will have to divest the amount from Xiaomi. Though the blacklist may not have an impact soon. As Joe Biden is going to become President, all eyes will be on his actions on handling this situation.

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