Xiaomi blacklisted: Trump administration gives until November 11 to divest
What's the story
In its final days, US President Donald Trump-led administration has added nine companies to Pentagon's list of suspected "communist Chinese military companies". The list includes plane maker Commercial Aircraft of China (COMAC) in addition to smartphone manufacturer Xiaomi as per a Reuters report. The US government has advised investors to refrain from investing in these companies and divest funds before November 11.
In a spot
American investment into Xiaomi banned
The US government has not specified why the companies have been blacklisted. Their addition to the list, however, implies that they will not receive further investment from US investors. XDA-Developers pointed out that Qualcomm Ventures, the American chip maker's investment arm, has holdings in Xiaomi stocks. It is unclear how the ban on investment will affect Xiaomi's business.
Wait and watch
Xiaomi not yet on US Commerce Department Entity List
However, Xiaomi has not been placed on the US Commerce Department Entity List yet. That means American suppliers of hardware and services can still work with the company. It remains open to speculation how President-elect Joe Biden's administration will proceed with this. Xiaomi has already taken a hit in stock prices since this announcement, and things might heat up further.
Sliding
Xiaomi's stocks take sharp hit after being blacklisted
Xiaomi had surpassed Apple as the world's third-largest smartphone manufacturer by sales last year. The company is listed in Hong Kong and not in the US. Meanwhile, Xiaomi's stocks took a 10 percent fall since the blacklisting. The panic selling wiped out $10 billion in Xiaomi's market value. Other blacklisted companies such as China Mobile saw buyers from China offsetting the sell-off.
Blast from the past
Events reminiscent of 2019 Huawei ban
These developments are reminiscent of another Chinese smartphone maker Huawei being banned from working with the US entities since 2019. The company was debarred by the US Commerce Department from using any goods and services of the US companies. Qualcomm, however, was later allowed to sell 4G technology to Huawei. Popular drone maker DJI was recently added to the same list.