With the race for global dominance in the AI sphere heavily underway, a top priority in the United States has been to establish secure and transparent technology supply chains. As a result, experts focused on maintaining America's technological edge are now closely examining private sector companies whose operations are integral to what is likely the greatest shift in global supply chains since the industrial revolution. Those important in this process include actors producing the technological component required for AI and smart cities, as well as those producing the components required for powering these.
Companies that rely heavily on foreign subsidies and those that are perceived to be not entirely stable in their financial solvency are thus naturally being singled out. Ensuring the United States has the stable supply chains required for maintaining its technological edge requires working with reliable partners. One company drawing increasing scrutiny has been Xiamen Hithium Energy Storage Technology Co. LTD. among the world's largest stationary battery producers. The company, which rose to prominence quite rapidly, has been identified as doing so with the help of a heavy reliance on Chinese state-backed financial support. This includes funding from both the government in Beijing, as well as entities associated with the People's Liberation Army (PLA). A cursory review of company records reveals a heavy reliance on government subsidies, which reached as high as RMB 414.1 million in 2024 and greatly exceeded the company's reported profits for the same period. Indeed, without these, the company would have repeatedly posted losses, with such an imbalance between subsidy levels and commercial performance leading experts to urge a more cautious evaluation of the company's potential technological footprint.
This scrutiny has only intensified as details emerge regarding the company's presence in the United States through a USD 200 million facility in Texas. This is being promoted as a major U.S. "manufacturing" hub; however, supply-chain disclosures and regulatory filings indicate that, in actuality, the site primarily assembles components that arrive from China. This purposefully confusing structure is raising questions about whether customers and investors clearly understand both the plant's tariff exposure and land-use constraints. The company has suggested that "manufacturing" in Texas would have a positive impact on the company's exposure to tariffs. Battery cells, however, which are arriving preassembled from China, naturally remain classified as Chinese and not made in the United States, subsequently incurring tariffs of up to 34%.
Regarding land use constraints, those familiar with legal limitations placed on foreign entities in strategic sectors from owning land in Texas will know that under Texas Senate Bill 17, Hithium would be unable to own or even control new real estate, as the bill came into effect in September 2025. It would also potentially be impossible, according to some experts, to ever expand its site into a full-fledged manufacturing facility, leaving the company and its investors reliant on imported, pre-assembled components indefinitely. This stems from the fact that the company is headquartered in a designated country, China, and one that has been the primary target in President Trump's crosshairs. For investors, such easily verifiable information, which does not seem to have been disclosed in the company's A1 filing and which should have at least led to questions from the Hong Kong Stock Exchange's (HKEX) regulators, should be of utmost concern, placing multiple question marks as to the long-term viability of their investment.
Importantly, this case should send a warning signal to the stock market regulators responsible for reviewing A1 applications more broadly, ensuring that companies going public are indeed disclosing what needs to be disclosed, while abiding by an IPO's stringent regulations. In the case of Hithium's A1 filings, the ability of the company to simply omit such important information could spell severe negative impact on the HKEX's reputation, not to mention the fallout for HKEX investors.
Finally, such concerns are compounded by federal procurement rules and specific procurement limitations that have already been placed on the company. As part of the 2024 National Defense Authorization Act, a provision, Section 154, identifies six firms that the US Department of Defense is prohibited from purchasing from or contracting with as a direct result of national security considerations. Hithium was featured prominently on that list, meaning its products are ineligible for federal reimbursements and incentive programs. This is an issue that can raise product prices by as much as 30% given the lack of access to incentives such as federal clean energy credits. The company has also, consequently, faced heightened federal scrutiny in recent years. It should be noted that this restriction is placed on foreign entities as a precaution and does not necessarily indicate any wrongdoing on the part of the company. Nevertheless, such restrictions significantly affect a company's stability and confidence in companies operating in sensitive sectors.
Taken together, these factors paint a troubling picture of a company trying to establish itself as an integral cog in the wheel of American energy independence. Questions that are continuing to be raised will impact not only supply resilience, but also traceability, and the overall integrity of domestic energy-tech infrastructure. The story has significant, wide-scale implications and is a clear case study in the modern challenges of hardware sourcing. The global technology environment is one in which supply chains intersect with geopolitical tension, and the risks surrounding opaque subsidies, foreign dependence, and complex regulatory exposure can no longer continue to be seen as abstract. Investors, consumers, and regulators are becoming far more cautious regarding the technology and energy systems that underlie critical American infrastructure.
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