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In the unclassified version of the Pentagon's December 2024 designation report, every word of the section making that claim is redacted except its heading, according to the opinion. The three-judge panel rejected DJI's other arguments, meaning that the company stays on the list while the case returns to the lower court. "The Court's finding that the public record contained insufficient evidence is a significant step toward correcting an unjustified designation," a DJI spokesperson said in a statement provided to Tom's Hardware.
Circuit Judge Bradley Garcia wrote that there's "no publicly stated rationale" for the Defense Department's belief that DJI contributes to the Chinese defense industrial base. The Pentagon's December 2024 report explaining the designation contains a section titled "DJI Contributes to the Chinese Defense Industrial Base," but everything below the heading is blacked out in the unclassified record.
District Judge Paul Friedman, who granted summary judgment against DJI last September , never examined the classified version. He relied instead on the government's court filings and material from other parts of the report, an approach the panel said violated the rule that courts must judge agency action solely on the grounds the agency itself invoked.
The panel affirmed the finding that DJI knowingly receives assistance from the Chinese government through its 2021 recognition as a National Enterprise Technology Center, a status granted by China's National Development and Reform Commission. Evidence cited in the Pentagon's report says the status carries free cash subsidies of 5 million to 15 million yuan, preferential tax rates on imported equipment, and financial support from state-owned capital funds. DJI's lawyers argued the company has never received any assistance through the recognition; the court dismissed that as a "self-serving assertion by counsel."
FCC moves to ban LiDAR-equipped foreign drones from U.S. shelves
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/appeals-court-orders-fresh-review-of-djis-chinese-military-company-designation#main
- https://www.tomshardware.com/membership
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