The US Department of Defense has added tech giant Tencent and lithium-ion battery maker CATL to its list of Chinese military companies, a move that could make it more difficult for the companies to operate in the US. The designation, reported earlier by Bloomberg, does not impose sanctions or a ban, but it may lead to increased scrutiny and hurdles for the companies' business dealings in the country.

Tencent, the owner of popular messaging app WeChat, is a significant player in the gaming industry, with stakes in League of Legends developer Riot Games, Epic Games, Larian Studios, Ubisoft, and FromSoftware. Meanwhile, CATL is the world's largest electric vehicle battery maker, supplying batteries to major automakers such as Tesla, Ford, Volkswagen, BMW, and more. The companies' inclusion on the list could have far-reaching implications for their partnerships and operations in the US.

The designations stem from President-elect Donald Trump's executive order in 2020, which prohibited US companies from investing in entities with ties to the Chinese military. DJI, a drone manufacturer, was added to the list in 2022 and has since faced difficulties, including blocked drone imports and lost business deals. The company has filed a lawsuit claiming the designation has resulted in a stigma "as a national security threat."

It is worth noting that companies do not always remain on the Department of Defense's list. Chinese phone maker Xiaomi was removed from the list just months after being added in 2021. Both Tencent and CATL plan to contest the designations, with Tencent stating that it is "not a military company or supplier" and CATL calling its inclusion "clearly a mistake."

The implications of this move are still unfolding, but it is clear that the designation could have significant consequences for Tencent and CATL's business operations in the US. As the companies work to address the "misunderstanding" with the Department of Defense, the tech industry will be watching closely to see how this development plays out.

In a statement to The Verge, Tencent spokesperson Danny Marti emphasized that the listing has no impact on their business, but the company will nonetheless work with the Department of Defense to address any concerns. CATL, on the other hand, did not immediately respond to a request for comment from The Verge.

This development is the latest in a series of moves by the US government to scrutinize Chinese companies operating in the country. As tensions between the US and China continue to escalate, the tech industry is likely to face increased regulatory hurdles and geopolitical challenges.