Xiaomi Blacklisted by the US Government
23-01-2021 | By Robin Mitchell
Recently, the US government announced that it has blacklisted Chinese electronics company Xiaomi. Why has the US government taken this action, what does this mean for Xiaomi, and how will it affect the electronics world?
US Government Blacklists Xiaomi
Recently, the US government under President Donald Trump announced that it has blacklisted the consumer electronics company Xiaomi. Like Huawei, Xiaomi will no longer be allowed access to US technologies, or the stock market, and all those who have stocks, shares, and securities in Xiaomi will need to divest these investments by November 2021.
Xiaomi is not the only company to have been blacklisted by the US government. Huawei has been blacklisted due to its potential ties with the military as well as China’s third-largest oil company and the state-owned Commercial Aircraft Corporation of China.
Many US consumers will not see the effects of the blacklist from a mobile technology perspective as Xiaomi does not provide US users with smartphones. However, Xiaomi provides a wide range of everyday consumer products including IoT devices, electric scooters, and household electronics.
Why has US Government Blacklists Xiaomi
The blacklist has been issued after the US government has determined that Xiaomi works in tangent with the People’s Liberation Army (PLA). While Xiaomi themselves do not develop military technologies such as defensive infrastructure, the relationship between the PLA and Xiaomi may allow the PLA to develop cyber technologies surrounding consumer electronics with military intentions.
For example, Xiaomi’s reach around the globe with low-cost IoT devices could allow the PLA to gain control of devices in other nations including the US. Xiaomi also develops camera technology (such as IoT cameras), and recent reports showing that China is working on facial recognition to identify minority groups raise concern that the PLA could track individuals based on their race, gender, or religion.
What does this mean for Xiaomi?
While Xiaomi has been blacklisted by the US government, it has not been added to the US Commerce Departments Entity List. This means that while Xiaomi itself cannot be invested in by US entities, it can still trade with the US. Furthermore, Xiaomi still has access to key technologies such as Android which powers many of their products.
Huawei, however, was also added to the US Commerce Departments Entity List which means that Huawei cannot deal with the US in any shape or form. Despite Xiaomi not being added to the US Commerce Department Entity List, its share price has still fallen by 11%. Furthermore, adding to the blacklist will increase the difficulty of Xiaomi products entering the US markets as customers are made aware of the blacklisting.
How will this affect the electronics industry?
The blacklisting of Xiaomi alone is not enough to stop Xiaomi products from entering the US market. However, negative press from such a blacklist followed by a potential trading ban in the future would mean that the consumer electronics market would see a sharp increase in demand.
Furthermore, this increase in demand will also be amplified by the need for secure IoT devices, and as IoT standards unify (thus becoming more practical), customers will be looking for secure IoT devices to improve their homes. Since Chinese products will not be able to fill that need, many US companies could seize the opportunity to create a boost in the electronics market.
This will have a domino effect on the electronics market in general with an increase in demand for IoT SoCs, high-efficiency DC-DC converters, and wireless modems. From there, software and internet services will see an increase in demand from the increased sales of IoT devices.
Of course, it’s also possible that the market could stagnate if IoT SoCs developed by western nations remain relatively expensive. Chinese SoCs such as the ESP32 provide excellent low-cost platforms for IoT developers, but these would be inaccessible in the event that Chinese products cannot be allowed to enter the US.
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