Xiaomi shares fall 10% after US blacklists smartphone maker | Check company's reaction here

In a major development, the US government has added Chinese conglomerate Xiaomi to a list of “Communist Chinese military companies”. After Huawei and ZTE, the outgoing Donald Trump administration continues to target major Chinese companies.

Soon after the announcement, the shares of Xiaomi nosedived more than 10% in early Friday trading, the news agency IANS reported.

In a fresh list, the US Department of Defense has targeted Xiaomi, which means that the company is also vulnerable to the outgoing President Donald Trump's executive order that bans the US firms from investing in such companies. The move may force US companies and other investors to divest in Xiaomi this year.

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According to Counterpoint Research, Xiaomi was the third largest smartphone maker globally in the third quarter of 2020, and India is its biggest market.

"The Department is determined to highlight and counter the People's Republic of China's (PRC) Military-Civil Fusion development strategy, which supports the modernisation goals of the People's Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programmes that appear to be civilian entities," the Department said in a statement late Thursday.

The Department released its initial list of companies to Congress in June 2020 and has now included Xiaomi,

Meanwhile, hitting back at the US, Xiaomi has strongly said that it is not linked to China’s military.

“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," a Xiaomi spokesperson said in a statement.

 "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 National Defense Authorization Act (NDAA). The Company will take appropriate course of actions to protect the interests of the Company and its shareholders, a spokesperson further added.
 
Xiaomi is reviewing the potential consequences of this to develop a fuller understanding of its impact on the Group. The Company will make further announcements as and when appropriate, the Chinese conglomerate said.