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The Trump administration is dubbing Xiaomi a national security threat in a fashion similar to how it did Huawei and ZTE. However, the “Communist Chinese military company” label has a greater effect to this particular tech manufacturer than the others.
Under the authority of Section 1237 of the National Defense Authorization Act, Xiaomi will not be able to acquire goods and services from U.S. vendors — many Chinese companies are already subject to this restriction being placed on the Commerce Department’s Entity List. One of the consequences that hasn’t been relevant as much up until now is the requirement for U.S. investors in the company to divest their holdings in the company.
Whereas Huawei and ZTE are backed primarily by government-held funds or domestic traders, for Xiaomi — which raised billions of dollars from global sources for a public listing in 2018 — this may not only affect its consumer output of smart home appliances and accessories not to mention its smartphones, but its prized presence in foreign markets including Western Europe.
Xiaomi has published a statement, clarifying that it’s been in compliance “with the relevant laws and regulations of jurisdictions where it conducts business.” The company emphasizes that it “is not owned, controlled or affiliated with the Chinese military and is not a ‘Communist Chinese Military Company.’”
— Xiaomi (@Xiaomi) January 15, 2021
The US Defense Department release states that investors would be given until November 11 to clear their stakes — perhaps enough time to let the government or patriotic stock buyers ease the sting.
Donald Trump’s White House has been pushing big position appointments and policy declarations ahead of the inauguration of President Joe Biden seemingly in attempts to make lasting marks on the federal government. Chinese drone maker DJI was recently added to the Entity List.
Xiaomi share price on over-the-counter markets dropped 9% in U.S. daytime trading yesterday while its Hong Kong listing went down 10%.
If you’re looking to import a Mi 11 with that fancy new Snapdragon 888, you may need to do it now.
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