Xiaomi blacklisted in US’ China attack
Xiaomi Corp. plunged a record 10% after the Trump administration blacklisted China’s No. 2 smartphone maker and 10 other companies, broadening efforts to undercut the expansion of the country’s technology sector.
The US has targeted scores of Chinese companies for the stated purpose of protecting national security, but going after Xiaomi was unexpected. The Beijingbased company has been viewed as China’s answer to Apple Inc., producing sleek smartphones that draw loyal fans with each new release. The company, which vies with Huawei Technologies Co. for the title of China’s No. 1 mobile device brand, also makes electric scooters, earphones and smart rice cookers.
The news was “really surprising to me,” said Kevin Chen, a Hong Kong-based analyst at China Merchants Securities Co.
The US defense department identified Xiaomi as one of nine companies with alleged ties to the Chinese military—which means American investors will be prohibited from buying their securities and will have to divest holdings by November.
Other firms targeted include Luokong Technology Corp., Gowin Semiconductor Corp., Global Tone Communication Technology Co. and Advanced Micro-Fabrication Equipment Inc. Index stalwarts such as China’s three biggest telecom firms are already on the list.
Xiaomi said in a statement it is not owned or controlled by the Chinese military, adding that it would take appropriate actions to protect its interests.
Unless the ban is reversed, the smartphone maker risks being delisted from US exchanges and deleted from global benchmark indexes. China Mobile Ltd, China Telecom Corp. and China Unicom Hong Kong Ltd. were removed by MSCI Inc. last week.
The Trump administration’s blacklistings have targeted Chinese firms with military ties and strategic value to the industry’s growth. Semiconductor Manufacturing International Corp., critical to China’s ability to build a self-sufficient tech industry, was included in December.
THE US DEFENSE DEPARTMENT IDENTIFIED XIAOMI AS ONE OF NINE COMPANIES WITH ALLEGED TIES TO THE CHINESE MILITARY