[Update: Statement] US blacklists Xiaomi, preventing American trade and investment in firm

Damien Wilde | Jan 15 2021 - 4:17 am PT

The US government has blacklisted prominent Android manufacturer Xiaomi, along with other Chinese firms for alleged military links.

[Update]: Since the news broke, Xiaomi has now issued a statement via it’s social channels that reads:

Dear Partners and Mi Fans,
The Company noted that the Department of Defense of the United States released a news release on January 14, 2021 (U.S. time) adding the Company to the list of qualifying entities prepared in response to section 1237 of the National Defense Authorization Act for fiscal year 1999 (the “NDAA”).
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 stakeholders.
The Company will make further announcements as and when appropriate.

While not quite the same as the situation that its compatriot Huawei has faced, being added to a US blacklist means that Xiaomi will lose US investors according to this latest executive order issued by the outgoing president Donald Trump. A total of nine firms were also added to this blacklist.

Xiaomi will also be blocked from acquiring goods and services from US-based vendors under Section 1237 of the National Defense Authorization Act. Reuters reports that American investors will have until November 11, 2021, to divest their holdings of any blacklisted firms — some 12 months after President Trump’s executive order signed in November 2020.

By placing Xiaomi on a blacklist rather than issuing an outright ban, the US government is not quite barring trade completely with the Chinese firm. This should not directly affect Xiaomi’s supply chain, as it would if the firm were to be placed upon the Entity List — such as Huawei.

Qualcomm recently invested in Xiaomi, which may have a long-term effect. By adding Xiaomi to a US blacklist, the chipmaker may be forced to divest its acquired holdings by November 21, 2021. This may allow Xiaomi to make necessary arrangements and preparations should these sanctions be increased.

It’s not clear how this US blacklisting may affect Xiaomi within large swathes of Europe and the rest of the globe. However, it is not known if this change in US stance will affect certain supply chains, but Xiaomi saw a 9% dip in trading after this decision was made public. It’s likely that this will also affect all Xiaomi subsidiaries such as Poco, Redmi, and others.