Xiaomi added to US blacklist of Chinese military companies

GUANGZHOU, China – The Trump administration has added smartphone maker Xiaomi to a blacklist of so-called Chinese military companies.

Shares of the Chinese firm listed in Hong Kong were down 10.6% at the opening Friday on this news.

Beijing-based Xiaomi was the world’s third-largest smartphone maker in the third quarter of 2020, according to Counterpoint Research.

The move means Xiaomi is now subject to a November executive order prohibiting U.S. investors from purchasing shares or related securities of any company designated by the Defense Ministry as a Chinese military company.

Trump’s initial executive order was subsequently broadened to force investors to divest, or sell, affected holdings by November 11 of this year.

Xiaomi was not immediately available for comment when contacted by CNBC.

The company is listed in Hong Kong, not in the United States

“The Department is committed to highlighting and countering the Civil-Military Fusion Development Strategy of the People’s Republic of China (PRC), which supports the People’s Liberation Army (PLA) modernization goals by ensuring its access to cutting-edge technologies and expertise acquired and developed by even the 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 “Communist Chinese 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 tech giant Huawei and semiconductor maker SMIC are also on the list.