By Michael Martina, David Shepardson and Karen Freifeld
WASHINGTON/NEW YORK (Reuters) – The U.S. Department of Defense said on Monday it has added Chinese technology giants, including gaming and social media leader Tencent Holdings (OTC:) and battery maker CATL, to a list of firms , who are said to be collaborating with the Chinese military.
Chipmaker Changxin Memory Technologies, Quectel Wireless and drone maker Autel Robotics were also on the list, according to a document released Monday.
The annually updated list of Chinese military companies, officially required under U.S. law as the “Section 1260H list,” includes 134 companies, according to a notice published in the Federal Register.
Hong Kong-listed shares of Tencent fell as much as 7% in early trading, while U.S.-traded shares of the company, which is also the parent of Chinese instant messaging app WeChat, fell 8% in after-market trading.
Tencent said in a statement that its inclusion on the list was “clearly a mistake.” It continues: “We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business.”
CATL, the world’s largest maker of electric vehicle batteries, whose Shenzhen-listed shares fell more than 5%, also called the designation a mistake and said the company is “not involved in any military-related activities.”
A Quectel spokesman said the company “does not work with the military in any country and will ask the Pentagon to reconsider its designation, which appears to have been made in error.” Quectel shares fell nearly 7%.
The other companies and the Chinese embassy in Washington did not immediately respond to requests for comment.
IMPACT ON BUSINESS
The updated list is one of numerous measures Washington has taken in recent years to highlight and restrict Chinese companies that it says pose security risks and strain strained relations between the world’s two largest economies.
Jefferies said in a research note that the purpose of the list of Chinese military companies (CMC) is to express the opinion of the Ministry of Defense, which can serve as a reference for other government departments.
“The most serious consequence for CMC companies is the US investment ban, but it is entirely up to Trump and his team.”
Craig Singleton, a China expert at the Foundation for Defense of Democracies, said the additions show it is “reckless” for American companies to do business with a growing number of Chinese corporations.
“The U.S. is no longer protecting just a handful of technologies,” he said. “The garden of sensitive technologies is growing and the fence that protects them is being strengthened. Today’s list makes it clear that these are not just commercial companies. They are key enablers of China’s military modernization and directly advance Beijing’s strategic ambitions.”
Other companies added include MGI Tech, which makes genome sequencing tools, and Origincell Technology, which lawmakers allege operates a cell bank network and biostorage technologies. Neither company immediately responded to requests for comment.
US lawmakers had pushed the Pentagon over the course of 2024 to add some of the companies, including CATL, to the list. Ford Motor (NYSE:) is building a battery plant in Michigan and plans to license CATL technology to make low-cost lithium-iron batteries there, a move that has raised concerns among some lawmakers. Ford did not immediately comment Monday.
Although the designation does not carry any immediate bans, it can damage the reputation of the affected companies and represents a clear warning to U.S. companies and firms about the risks of doing business with them. It could also increase pressure on the Treasury to sanction the companies.
Two previously listed companies, drone maker DJI and lidar maker Hesai Technologies, both sued the Pentagon last year over their previous designation but remain on the updated list.
The Pentagon also removed six companies that it said no longer met requirements for the designation, including AI company Beijing Megvii Technology, China Railway Construction Corporation Limited, China State Construction Group Co and China Telecommunications Corporation .
