The US Department of Defense (DoD) has added Tencent Holdings, Contemporary Amperex Technology Co., Limited (CATL), and ChangXin Memory Technologies (CXMT) to its blacklist of entities allegedly tied to the Chinese military. This annual update to the Section 1260H list now includes 134 companies, as published on the Federal Register's website.
US expands defense blacklist, Tightens supply chain rules
Reports from Reuters, the Financial Times, and Nikkei Asia reveal that starting in 2024, blacklisted companies will be barred from commercial cooperation with the DoD. By June 2026, the DoD will prohibit procurement from these firms, and by 2027, products containing components from the blacklist will be excluded from supply chains.
The updated blacklist also includes IoT module maker Quectel and drone manufacturer Autel Robotics, alongside Tencent, CATL, and CXMT. Gene sequencing equipment maker MGI Tech and cell banking specialist Origincell Technology are new additions to the blacklist.
Blacklisted firms reject allegations, highlight business impacts
Tencent responded by calling the decision a mistake, stating it is not a military company or supplier and has no ties to the Chinese military. The company pledged to work with the DoD to clarify misunderstandings, emphasizing that the blacklist is distinct from sanctions or export control lists, with no direct business impact. Despite this, Tencent's US stock dropped nearly 10% following the announcement.
CATL also called its inclusion on the blacklist a mistake, asserting it has no military-related activities. The company, which controls nearly 38% of the global EV battery market, supplies Tesla and collaborates with Tesla and Ford to license its battery technology for US-based production.
Quectel denied any military ties and plans to request a review from the DoD. Autel Robotics, MGI Tech, and Origincell Technology have not yet commented.
The DoD also added SenseTime to the "Chinese Military Companies (CMC)" list. SenseTime strongly opposed the decision, calling it baseless, and pledged to engage with stakeholders to protect its interests and those of its shareholders.
The DoD's actions are seen as a response to China's "Military-Civil Fusion (MCF)" strategy, which leverages private enterprises, academia, and research to acquire advanced military technologies amid rising US-China tensions.
While the Section 1260H list does not trigger immediate sanctions from the US Department of Treasury or Commerce, it is likely to harm the listed companies' reputations and warns US businesses of the risks of working with them.
Craig Singleton, a senior China expert at the Foundation for Defense of Democracies, stated that blacklisting these firms increases scrutiny on US-China tech collaborations, as these companies play key roles in China's military modernization. He added that the US is expanding its scope of restrictions on sensitive technologies beyond a few key areas, as per Foreign Policy.
Blacklist updates reflect escalating US-China tech export controls
The updated blacklist includes new additions but also removes six companies: Beijing Megvii Technology, China Marine Information Electronics, China Railway Construction, China State Construction Group, China Telecommunications, and Shenzhen Consys Science & Technology, as they no longer meet the criteria. However, drone leader DJI and lidar maker Hesai Technologies remain on the list.
The US has ramped up export controls in recent years to restrict China's development of advanced semiconductors and AI for military use. In response, China has tightened its export controls on key raw materials, including a ban on exports to the US of metal minerals essential for semiconductor production and military equipment.