U.S. Defense Department adds Tencent, CATL, and CXMT to Chinese military-linked companies list

The U.S. Department of Defense has broadened its Section 1260H list of companies it says are connected to China’s military, bringing in major names like tech powerhouse Tencent Holdings, battery supplier CATL, and memory chip producer Changxin Memory Technologies (CXMT), among other notable newcomers.

With this update, the roster now sits at 134 companies and still features previously designated businesses such as SMIC (a chip manufacturer), YMTC (a memory maker), Huawei (a telecom titan), and Inspur (a server manufacturer). Also added this round are drone-maker Autel Robotics and telecom equipment firm Quectel Wireless.

Quectel Wireless has already challenged its inclusion and plans to fight the label, while other recently added companies have yet to release statements.

At the same time, the Defense Department removed six entities from the list, saying they no longer meet the criteria: AI-focused Beijing Megvii Technology, China Railway Construction, China State Construction Group, China Telecommunications, Shenzhen Kosun, and China Ocean Information Electronics.

Being included on the Section 1260H list doesn’t instantly slap companies with legal or economic penalties, but it’s definitely a big deal. It puts a spotlight on them, with the U.S. Treasury Department likely to keep a closer eye on their activities, which could eventually lead to limits on transactions or investments. On top of that, the U.S. Commerce Department’s Bureau of Industry and Security might toss these companies onto its Entity List, cutting off their access to American tech, like advanced manufacturing tools and software.

That said, for companies like CXMT, CATL, and Tencent, the real-world effects might not be all that massive. Many Chinese businesses are already blocked from accessing cutting-edge semiconductor gear and GPUs used for AI and high-performance computing.