The largest Chinese lidar manufacturer somehow got rid of US sanctions

The US Department of Commerce, in cooperation with other federal agencies, is constantly adding to the list of Chinese companies that are subject to sanctions based on suspicions about their connections to the Chinese defense complex. It is noteworthy that lidar manufacturer Hesai left this list, having appeared on it for the first time only in January of this year.

Image Source: Hesai

In other words, as the Financial Times explains, in just a few months, American officials have changed their minds about Hesai’s involvement in possible cooperation with representatives of the Chinese defense industry. Since 2021, the powers to compile such “blacklists” of foreign companies have been granted to the Pentagon. Close attention was paid to Chinese companies that produce dual-use products and cooperate with both civilian clients and the PRC defense department. In May of this year, the Chinese company Hesai, whose shares are represented in both Hong Kong and New York, filed a lawsuit against the Pentagon, demanding to be removed from the US sanctions list, since the American agency did not provide convincing evidence that Hesai has ties with People’s Liberation Army of China.

Hesai managed to reach the federal court in Washington, which was supposed to issue its opinion on this case next month. In 2021, similarly, American officials had to lift sanctions on the Chinese company Xiaomi because the court did not find the evidence of its connection with the PLA sufficiently convincing. Representatives of the Pentagon and the White House declined to comment on the Financial Times publication. Hesai called the inclusion of the company on the US sanctions list erroneous, and the Chinese Embassy in Washington expressed its satisfaction with the elimination of the discriminatory attitude of the US authorities towards Chinese companies.

Hesai is a major manufacturer of optical radars (lidars), which use laser light in the invisible spectrum to form a three-dimensional picture of the surrounding reality, which is used by on-board vehicle systems to determine the distance to objects and estimate their shape and size. In fact, many passenger cars with advanced active driver assistance features are equipped with lidar. However, Hesai’s revenge in this area is unlikely to help Chinese-made components take root in self-driving cars sold in the United States if the country’s authorities ban the use of Chinese-developed software on their territory. The data received by lidars and other sensors still needs to be processed correctly, and this is what the on-board software of cars does. According to the Financial Times, optical sensors such as lidars will be excluded from the relevant restrictions being prepared by US regulators.

Hesai controls just under half the global lidar market and the US accounted for nearly 40% of its revenue last year, so it is keen to maintain its presence in the local market. According to some experts, American legislators may adjust the standards by which the activities of Chinese companies are assessed. Thus, if the US legislation changes, Hesai will have a chance to be blacklisted again. Company representatives continue to insist that Hesai products are not used in any type of military equipment in any country in the world.