The U.S. government took over the Chinese conglomerate Xiaomi from Huawei and ZTE and now blacklisted it as “Communist Chinese military company”. In early Friday trading after the news broke, Xiaomis stock nosedged over 10 per cent.
The US Defense Department has targeted Xiaomi in a new list that indicates that it is vulnerable to the executive order of outgoing President Donald Trump, which forbids the US investors from investing in these companies.
This move could lead to a split this year in Xiaomi by American companies and other investors.
Xiaomi was the world’s third largest smartphone producer in the late 2020s according to Counterpoint Research.
‘The Department is determined to highlight and counter the strategy of military-civil fusion of the People’s Republic of China (PRC) which supports the PLA’s modernisation objectives by ensuring its acquisition and production of state-of-the art technology and skill by even those PRC companies, universities or research programs that seem to be civilian agencies.
In June 2020, the Department published its original company list and now it has included Xiaomi.
Xiaomi, who first overtook Apple in Q3 2020, was to respond to the move of the US in order to take the third position on the world smart phone market.
The majority of the other companies in the list are industry-oriented, air, aerospace, shipbuilding, pharmaceutical, telecom, construction and other facilities.
In July 2020, China’s telecommunications companies Huawei and ZTE were classified as national security threats for US communication networks by the US Federal Communication Commission (FCC).