
Xiaomi Corp shares dropped by 11% after the Trump Administration blacklisted China’s No. 2 smartphone maker and 10 other companies. The U.S. has targeted scores of Chinese companies for the stated purpose of protecting national security, but going after Xiaomi has come out as a surprise. The company, which compete with Huawei Technologies Co. for the title of China’s No. 1 mobile device brand.
The Trump administration’s has focused on blacklisting Chinese companies with military ties and strategic value to the industry’s growth. Semiconductor Manufacturing International Corp., China’s largest chipmaker and critical to the country’s ability to build a self-sufficient tech industry, was included in December.
The move against Xiaomi sent its suppliers south on Friday: FIH Mobile Ltd., which helps it assemble smartphones, dropped as much as 14% after a strong rally in recent days. Component suppliers including Largan Precision Co., Sunny Optical Technology Group Co. and AAC Technologies Holdings Inc. also fell. Spreads on Xiaomi’s dollar bonds widened as much as 40 basis points Friday morning, according to credit traders.
Some investors are hoping that the Biden administration will reverse actions taken in the last days of Donald Trump’s presidency. The White House also blacklisted China’s No. 3 oil company, China National Offshore Oil Corp, the nation’s main deepwater explorer, and Skyrizon, which develops military equipment on Thursday.
In the latest actions, the Defense and Commerce departments released new targets. In the defense list of nine companies, Xiaomi is joined by lower-profile firms, including Luokong Technology Corp., Gowin Semiconductor Corp. and Global Tone Communication Technology Co. Advanced Micro-Fabrication Equipment Inc. is publicly traded in the mainland. They join index stalwarts like China’s three biggest telecom firms on the list.