Federal judge blocks US trading ban on Xiaomi

Stock price jumps after judge blocks restrictions on Chinese phone maker

Xiaomi Mi Note 10 on a table

Xiaomi is China’s largest smartphone company, and with its roster of competitively priced smartphones, it overtook Apple last year as the world’s third-largest phone manufacturer. But a ban enacted late in the Trump administration was about to block all American investment in the Chinese smartphone giant.

Now a US federal judge has blocked that ban, paving the way for domestic companies to continue investing in Xiaomi. As a result, the company’s stock price spiked by at least 10% Monday.

In early January, in the final month of the Trump administration, the US Department of Defense put Xiaomi on a list of “Communist Chinese military companies,” also known as CCMC — companies that reportedly have links to the Chinese military. 

That designation triggered restrictions that were to go into effect next week. American investors and companies would no longer be allowed to trade shares of Xiaomi.

However, US District Judge Rudolph Contreras issued an injunction over the weekend, temporarily stopping Xiaomi’s inclusion on the CCMC list.

Siding with Xiaomi in a lawsuit, the judge wrote that the Defense Department’s move was “arbitrary and capricious” and deprived the company of its due process rights. He also noted Xiaomi was likely to suffer “irreparable harm” without the injunction.

Contreras noted that since the CCMC designation, Xiaomi’s stock price dropped nearly 10%, it lost contracts worldwide, and major banks suspended its stock trading. 

Although the judge’s injunction is temporary, he added that Xiaomi was likely to win a full reversal of the ban, as its lawsuit against the Defense Department continues to be litigated in court. 

Contreras wrote that the Defense Department’s decision against Xiaomi was on “shaky ground” and that he was “skeptical that weighty national security interests are actually implicated here.” 

Featured Resources

Modern governance: The how-to guide

Equipping organisations with the right tools for business resilience

Free Download

Cloud operational excellence

Everything you need to know about optimising your cloud operations

Watch now

A buyer’s guide to board management software

Improve your board’s performance

The real world business value of Oracle autonomous data warehouse

Lead with a 417% five-year ROI

Download now

Recommended

US companies have less than a five-day supply of semiconductors
components

US companies have less than a five-day supply of semiconductors

26 Jan 2022
Google accused of 'deceptive' location tracking in fresh US lawsuit
Policy & legislation

Google accused of 'deceptive' location tracking in fresh US lawsuit

25 Jan 2022
Federal Reserve warns foreign centralised digital currencies could decrease global use of dollar
digital currency

Federal Reserve warns foreign centralised digital currencies could decrease global use of dollar

21 Jan 2022
Singapore and Madrid named biggest movers in latest data centre rankings
data centres

Singapore and Madrid named biggest movers in latest data centre rankings

20 Jan 2022

Most Popular

Dell XPS 15 (2021) review: The best just got better
Laptops

Dell XPS 15 (2021) review: The best just got better

14 Jan 2022
Sony pulls out of MWC 2022
Business operations

Sony pulls out of MWC 2022

14 Jan 2022
How to speed up Windows 11
Microsoft Windows

How to speed up Windows 11

7 Jan 2022