The United States has included Tencent and CATL in the list of “military-related companies”

On January 6, the U.S. Department of Defense said that it would include Tencent Holdings, a large Chinese Internet service company, and Contemporary Amperex Technology (CATL), the largest automotive battery company, on the list of “Chinese military-related companies” with ties to the Chinese military, and that the list would be published in the government gazette on January 7.

The U.S. Department of Defense reported the list of Chinese military-related companies to Congress in accordance with the law and urged U.S. companies to avoid transactions with Chinese companies on the list. Huawei and other companies have been included in the list before.

The U.S. government is wary of China’s application of cutting-edge civilian technology to the military field through “military-civilian integration” to promote technological development. The U.S. believes that it is necessary to identify companies that are integrated with the military sector and restrict their transactions with U.S. companies.

U.S. companies will not be severely punished even if they trade with Chinese companies on the list. However, if they continue to trade after the list is announced, they may be regarded as engaging in acts that undermine national security in the United States, thus facing reputational risks.

As the confrontation between China and the United States intensifies, the number of U.S. companies avoiding transactions with Tencent or CATL may increase. Although Tencent and CATL will not be directly sanctioned by the US government, their operations will be hit.

After the implementation of this measure, Tencent, which is committed to AI development, will find it more difficult to purchase dedicated chips from large US semiconductor companies such as Nvidia. CATL has cooperated with US companies such as Tesla and Ford Motor in the production of pure electric vehicle batteries, and the US move may have an impact on the strategies of each company.

The US government introduced regulatory measures in January to restrict US companies and US citizens from investing in China in the fields of semiconductors, artificial intelligence (AI), quantum computers, etc. This is to prevent advanced technologies that may be diverted to military use from flowing to China through private investment.