Xiaomi headquarters
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GUANGZHOU, China – The Trump administration has added smartphone maker Xiaomi to a blacklist of alleged Chinese military companies.
Shares in Hong Kong of the Chinese firm fell 10.6% in the opening on Friday for this news.
Beijing-based Xiaomi was the third-largest smartphone maker in the world during the third quarter of 2020, according to Counterpoint Research.
The move means Xiaomi is now subject to a November executive order restricting U.S. investors from buying shares or related securities from any company designated by the Department of Defense to be a Chinese military company.
Subsequently, Trump’s initial executive order was extended to force investors to divest or sell the affected stakes on November 11 this year.
Xiaomi was not immediately available for comment when contacted by CNBC.
The company is listed in Hong Kong and not in the United States
“The Department is determined to highlight and counter the development strategy of the military-civilian merger of the People’s Republic of China (PRC), which supports the modernization goals of the People’s Liberation Army (PLA), ensuring their access to advanced technologies and experience gained and developed by even those PRC companies, universities and research programs that appear to be civilian entities, ”the DOD said in a statement.
Xiaomi is one of nine entities designated as “Chinese communist military enterprises.” Comac, a Chinese aircraft manufacturer, is also on the list.
The DOD released its initial list of companies in June 2020. Companies such as Chinese technology giant Huawei and semiconductor maker SMIC are also on the list.