US Dept. of Defense Lists CATL and Tencent as Military Linked Companies

The U.S. Department of Defense announced on Monday, January 6, that it had added several prominent Chinese technology companies, including Tencent Holdings, CATL, and others, to its "Section 1260H list," which identifies firms alleged to have links to China's military. The list, updated annually and mandated under U.S. law, now includes 134 companies, according to a notice in the Federal Register.

Among the newly designated companies are Tencent, a leader in gaming and social media and the parent of WeChat, as well as CATL, the world's largest electric vehicle battery manufacturer. Other notable additions include chipmaker Changxin Memory Technologies, telecommunications firm Quectel Wireless, and drone manufacturer Autel Robotics.

The designation has sparked significant market reactions. Tencent’s Hong Kong-listed shares plunged up to 7% in early trading, and its U.S.-traded shares fell 8% in over-the-counter trading. CATL’s Shenzhen-listed shares dropped over 5%, and Quectel's stock fell nearly 7%.

Tencent responded to the designation by calling it "clearly a mistake" and asserted that it is neither a military company nor supplier. "Unlike sanctions or export controls, this listing has no impact on our business," the company added in a statement. Similarly, CATL denied any military involvement, emphasizing that it is not engaged in any military-related activities. A Quectel spokesperson also denied ties to any military and indicated plans to request a reconsideration of the designation.

The other companies listed, as well as the Chinese embassy in Washington, have not yet commented on the matter. The Pentagon's list is part of broader U.S. efforts to scrutinize Chinese companies over perceived national security risks and alleged ties to China’s military.