US Adds Drone Maker DJI To Investment Blacklist

A drone manufactured by China's DJI. Image credit: DJI

US Treasury adds Chinese drone giant DJI to financial blacklist, prohibiting investors from owning shares, as trade war with China intensifies

The US has added drone maker DJI and seven other Chinese firms to an investment blacklist, increasing pressure on the country’s businesses.

The US Treasury Department said the move was in response to allegations that DJI’s drones had been used for the surveillance of Uyghur Muslims in Xinjiang and other ethnic minorities.

The department said private firms were “actively cooperating with the government’s efforts to repress members of ethnic and religious minority groups”.

DJI and the other firms were already on the US “entity list”, a blacklist that effectively prohibits US companies from doing business with them.

IoT Data analyticsInvestor ban

The latest move means US investors are not allowed to own shares in the companies.

At the same time the US Commerce Department added dozens more Chinese companies and organisations to the entity list, saying this was to limit the use of US technology for military purposes or in response to alleged human rights violations.

DJI declined to comment, referring Silicon UK to a statement made in response to previous sanctions in December, when it said it had “done nothing to justify being placed on the entity list”.

DJI is privately held, but amongst its backers are Silicon Valley venture capital companies such as Sequoia Capital China and Kleiner Perkins.

Sequoia Capital China is operated as a separate legal entity from the US firm, meaning it is unlikely to be affected by the investment ban.

The company had about 80 percent market share in consumer drones last year, according to Drone Industry Insights, and its products are used by more than 900 US public safety agencies, including the New York City Police Department and the National Park Service.

The Treasury measure does not prohibit US consumers from owning or using DJI drones.

AI sanctions

The move came after the Treasury instituted the same investment ban on Chinese artificial intelligence start-up SenseTime earlier this month, also due to an alleged role in human rights abuses.

One of SenseTime’s subsidiaries was placed on the entity list in 2019.

SenseTime has strongly denied the Treasury’s accusations. But last week it postponed a planned stock market debut in Hong Kong.

It said the move was “to safeguard the interests of the potential investors of the company” and allow them to “consider the potential impact of” the US measure on their investments.

Separately, US officials are considering imposing stricter sanctions against Chinese chipmaking giant SMIC, according to multiple reports. SMIC was placed on the entity list in 2020.

SMIC did not respond to a request for comment.

The company’s acting chairman and chief financial officer, Gao Yonggang, said last month that the sanctions had caused “tremendous challenges in production and operations”.

Chinese telecoms equipment giant Huawei remains on the entity list, but in May the Biden administration removed DJI from a blacklist for companies with ties to the Chinese military, where it had been placed in January by the outgoing administration.