In a letter to Defense Secretary Pete Hegseth, nine Republican lawmakers, including several committee chairs, urged the Pentagon to add 17 Chinese tech companies to its Section 1260H list of businesses allegedly supporting China’s military growth. The request, which was made late on Thursday following the signing of a $1 trillion military budget bill by President Donald Trump, focuses on DeepSeek, an AI business, and Xiaomi, a major player in the smartphone market.
The list already flags heavyweights like Tencent Holdings and battery powerhouse CATL, serving as a stark warning to U.S. government suppliers and contractors about doing business with these outfits. While no outright bans come with the tag, it ramps up scrutiny and often sparks further restrictions from agencies or Congress. Lawmakers framed the push as vital to choke off American tech flowing into China’s war machine, citing dual-use risks where civilian gadgets morph into military tools.
Letter Targets AI, Chips, Displays in Tech Crackdown:
DeepSeek drew fire for reportedly dodging U.S. export controls while feeding China’s military AI needs, per a senior official’s June callout. Xiaomi, the budget phone kingpin, landed on the hit list alongside BOE Technology Group, an Apple display supplier lawmakers want booted from U.S. supply chains by 2030. The full roster packs punches across sectors: battery maker Gotion High-Tech; chip players Hua Hong Semiconductor, Kingsemi, and Shennan Circuit; display firms Tianma Microelectronics; plus sensing and robotics outfits like CloudMinds, LeiShen, Livox, RoboSense, Tiandy Technologies, and Unitree Robotics; and biotech name GenScript Group.
These selections highlight lawmakers’ concerns about “civilian” technology that could be used in combat, like as drones, surveillance cameras, and sophisticated batteries, all of which the People’s Liberation Army could seize. The letter urges prompt action to update the annual roster, which is required by a 2021 defense statute that Trump just extended through 2030. Heavyweights like John Moolenaar, the chair of the House Select Committee on China, as well as chairs of the Armed Services, Homeland Security, and Intelligence panels, are among the signatories, indicating the bipartisan strength behind the anti-China tech pressure.
Section 1260H List Packs Heat Without Formal Bans:
The 1260H roster, last refreshed in January, doesn’t hit with sanctions but broadcasts Pentagon red flags to defense vendors, nudging them to drop risky ties. Firms like Huawei and others have sued over inclusions, but the label sticks as a compliance headache and investor chill. For contractors, it means extra audits, potential blackballing from bids, and boardroom headaches. Wall Street often dings stocks on news, as seen with past adds like Tencent, whose shares wobbled amid U.S. investor pullbacks.
DeepSeek’s nod ties into broader AI wars-U.S. curbs on chips to China already slowed rivals, but lawmakers see holes where startups slip military-grade smarts home. Xiaomi, fresh off a 2021 U.S. investment ban reversal, faces renewed heat over alleged Communist Party links and global data risks. BOE’s Apple ties amplify stakes; lawmakers want it phased out, hitting iPhone assembly lines and testing supply chain resilience.
Timing Ties to Trump’s Defense Bill, China Hawk Push:
The letter arrived just hours after Trump signed the crucial legislation, securing financing and modifications for 1260H to combat Beijing. Trump, who renamed Defense the “Department of War,” intends to hinder China’s technological rise through forceful decoupling through ally agreements, export restrictions, and tariffs.
It follows a pattern: Lists from the Biden administration have grown to dozens; in light of Taiwan tensions, South China Sea flares, and spy balloon consequences, Republicans are now strengthening them. Trump’s choice, Hegseth, who has Fox News connections, will have to balance industry backlash with hawk calls in the early going. China condemns these actions as defamatory and promises WTO or rare earth limits as retribution. While companies like Xiaomi promote a civilian emphasis, U.S. intelligence uses talent pipelines and governmental subsidies to create dual-use webs. India and Vietnam benefit as “China-plus” hubs, while Europe investigates Huawei and Japan monitors chip flows. AI tools such as DeepSeek’s face app store restrictions may cause Xiaomi phones to disappear from U.S. carriers.
Stakes Rise for Tech Decoupling in New Cold War:
The list would surpass 60 if these 17 were added, forcing businesses to decide between Beijing loyalty and U.S. markets. Nvidia chip smuggling busts are echoed in DeepSeek’s export dodge charges, and Xiaomi faces potential resale prohibitions.Lawmakers wager that the label delays PLA modernization, starves R&D, and compels divestitures. Opponents caution against overreach-BOE’s involvement with Apple demonstrates collateral suffering for American behemoths. However, expect quicker adds and entity-list crossovers now that Trump is back.Hegseth’s answer looms huge; rapid nods spark trade salvos, while quiet draws attention. 1260H strengthens technology as a battlefield in the standoff between the United States and China as it affects bids and stocks.
