Xiaomi Corporation has been branded a “Communist military company” and blacklisted by the Donald Trump-led US government. In addition to Xiaomi, the US Department of Defense (DOD) has also blacklisted 8 other Chinese companies including China’s third-largest oil company as well as the state-owned Commercial Aircraft Corp. of China (COMAC).
The US government alleges that the nine banned Chinese companies have ties to or are controlled by the Chinese military. Since the time of this move, Xiaomi’s shares have plunged by 11%.
Xiaomi is China’s second-largest and the world’s third-biggest smartphone maker. Qualcomm Ventures, the venture capital arm of Qualcomm, has invested in Xiaomi. If the decision is not overturned, the San Diego-based chipmaker might have to divest its holdings in Xiaomi by November.
All the existing American investors will also have to divest their holdings in the backlisted firms by November 11, 2021. Huawei is already a part of this blacklist. According to an executive order signed by outgoing US President Donald Trump in November last year, US investors will no longer be able to invest in Xiaomi and the other eight Chinese companies. Not only are people banned from purchasing new securities and shares of these companies, but those with existing holdings will also have to divest the same by November 11th, 2021.
The November order states China is “increasingly exploiting United States capital to resource and to enable the development and modernisation of its military, intelligence, and other security apparatuses, which continues to allow the PRC to directly threaten the United States homeland and United States forces overseas.”
