What does this mean to you ?
DJI, the world’s largest commercial drone maker, was placed on the investment block list by the US government as of Tuesday, December 21, 2021. This means that Americans and US entities can no longer buy or sell aircraft. ‘DJI shares.
What will this news mean for corporate customers and the commercial drone industry? Will you still be able to buy and import DJI drones?
More American investment
Besides DJI, Washington DC’s latest move affects seven other large Chinese companies considered by the US Treasury Department to be part of the Chinese military-industrial complex. According to their press release, these companies play an active role in systemic surveillance and abuse against Uyghur Muslims and other minorities.
“Today’s action highlights how private companies in China’s defense and surveillance technology sectors are actively cooperating with government efforts to suppress members of ethnic and religious minority groups,” said the Minister. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “The Treasury remains committed to ensuring that the US financial system and US investors do not support these activities.”
Key DJI investors include Sequoia Capital China and Kleiner Perkins. Since Sequoia Capital China is a company registered in China and based in Beijing, it is not affected by the sanction. However, the move would impact Silicon Valley-based investment giant Kleiner Perkins.
Broadening of US sanctions
In 2020, the United States added DJI and several other Chinese tech companies to the U.S. Department of Commerce’s list of entities, preventing them from purchasing unlicensed U.S. products or technologies.
This move ensures that American technology does not help build the army of an increasingly belligerent adversary. According to former Commerce Secretary Wilbur Ross, the restrictions are necessary measures so that China cannot take advantage of advanced American technology to support its military activities.
The U.S. Department of Commerce press release said items needed to produce advanced 10nm and smaller semiconductors are likely to be refused for export. It could also mean that companies on this list cannot purchase chips with this technology.
The addition of DJI to the list of entities affected their operations and development. After all, their products use products and services from several US companies. These include Amazon Web Services, Texas Instruments, Intel, FLIR, Apple, and Google.
This new expansion, where the company cannot use US money for any purpose, will severely limit its future growth.
However, despite the 2020 ban, DJI went ahead and continued with the release of new products. In the second half of 2021, the company released the latest version of its popular Mavic Series drone. They also created the new and revolutionary DJI Ronin 4D Cinematic Camera.
Since the company hasn’t made any further announcements, we can only look ahead and anticipate what 2022 and beyond has in store for their drone and camera products.
Declining market share
According to research firm DroneAnalyst, one of the significant changes in the drone market has been DJI’s declining commercial market share. In 2020, it captured 69% of the market. But in 2021, that figure fell to 54%. While DJI still holds the majority, this drastic 15-point drop could be a harbinger of bad news.
This drop is accompanied by significant growth in spending related to drone programs, which means that DJI is losing sales compared to its competitors.
Until these sanctions are lifted, DJI could lose future sales, especially to the United States and its allies. This is because companies are reluctant to invest thousands of dollars in DJI products, knowing that the government could reduce their support at any time.
There is also the suspicion that DJI is secretly collecting data on its customers. And with Chinese law that requires Chinese companies to hand over information at the request of the government, it further increases concerns about data privacy and security.
Can you still buy DJI drones?
Despite the adversity that DJI is currently facing, they are still the clear leader in consumer drones, holding over 94% of the market. Until the United States completely ban the company like it did with Huawei, the general public can expect the availability of the company’s Mavic, FPV, and Phantom drones, as well as its Osmo and RoboMaster.
Since these drones are typically not used for vital public services or sensitive security applications, the government has little reason to ban them. So, if you want to buy a DJI drone for personal or creative use, you can still do so for the foreseeable future.
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