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US govt adds Xiaomi to investment blacklist

In Business by Alora Uy GuerreroLeave a Comment

Just some time after Xiaomi ended 2020 and welcomed 2021 by successively launching the Mi 11, Redmi Note 9T 5G, and Redmi 9T, it receives a big blow from the United States.

(March 13: There’s an update to this story! Read Xiaomi wins case to block US investment ban on company.)

Today, January 15, the Trump administration has added Xiaomi and eight other Chinese firms to a list of alleged Communist Chinese military companies operating directly or indirectly in the U.S.

Now, this is different from the U.S. Commerce Department’s Entity List, in which entities like Huawei are banned from working with companies based in the United States. However, American investors will be required to divest their holdings of Xiaomi by November 11, 2021, pursuant to an executive order signed by outgoing President Donald Trump in November 2020.

American investors will be required to divest their holdings of Xiaomi by November 11, 2021

So while the world’s third-largest smartphone vendor still has access to software and hardware developed in the U.S., it will be cut off from liquid capital. Its stock price could be affected as well.

Xiaomi, which celebrated its 10th anniversary in 2020, went public in Hong Kong in July 2018 below its initial-public offering price. Its shares rallied last year when rival Huawei was prevented from even working with semiconductor suppliers, making Xiaomi HK’s best-performing stock. One of its American investors is Qualcomm Ventures.

In case an outright ban happens sometime in the future, Xiaomi has a reassurance. The manufacturer’s head of global product marketing, Abi Go, earlier told Spain-based technology publication Xataka that “we have a plan B. Among other things, we are investing heavily in various semiconductor manufacturers in China,” adding that “our business strategy should not be conditioned by decisions made by politicians.”

Update, 7:30 p.m.: Xiaomi just published a clarification statement online. Read the release below.

Via XDA Developers

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Alora Uy Guerrero

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Editor-in-chief: Alora Uy Guerrero has 22 years of experience as an editor for print and digital publications such as Yahoo. She took time off journalism to manage OPPO’s digital-marketing campaigns. When not busy with her babies, she’s working on Revü, a passion project — or probably traveling or obsessing over her favorite bands, movies, TV shows, and basketball teams.