TLDRs;
Contents
- US court affirms Pentagon’s classification of Hesai as a national security threat.
- Hesai’s lidar tech seen as dual-use, raising concerns over potential military applications.
- The ruling could reshape global supply chains in emerging tech sectors.
- Hesai faces major financial strain as US market access remains restricted.
A US federal court has ruled that Chinese lidar manufacturer Hesai Group will remain on a Department of Defense blacklist, citing national security concerns linked to the company’s technology.
The decision, handed down by the US District Court for the District of Columbia, upheld the Pentagon’s position that Hesai contributes to China’s defense industrial base, even if the company itself denies any military affiliations.
Hesai, the world’s largest supplier of automotive lidar sensors, had sought to overturn the listing, arguing that its products are designed solely for civilian use, including applications in autonomous vehicles and mapping.
However, the court found that the potential for the technology to be deployed in military settings was too significant to ignore. According to the judgment, even in the absence of direct military contracts, lidar systems such as those manufactured by Hesai could support battlefield operations, including surveillance and target identification.
The US District Court for the District of Columbia ruled that 🇺🇸 Defense Department's finding that 🇨🇳 Hesai contributes "to the Chinese defense industrial base" is supported by substantial evidence reflecting lidar's military application, national security concerns around Chinese… https://t.co/d4qYBvEc00 pic.twitter.com/XZgvnHlAla
— Byron Wan (@Byron_Wan) July 12, 2025
Dual-Use Technology at Center of Controversy
At the heart of the case is the concept of dual-use technologies, which can serve both commercial and military functions. Lidar, originally developed for military satellite tracking, now plays a role in everything from self-driving cars to industrial robotics. Yet the same capabilities that aid civilian progress can also be redirected toward defense goals.
The court acknowledged that the lines between military and civilian technologies have become increasingly blurred, particularly in fast-moving sectors like artificial intelligence, quantum computing, and sensors. Hesai’s reported collaboration with Chinese government agencies added further weight to concerns, even as the firm insisted that its operations are entirely commercial in nature.
The ruling sends a clear message to other global tech firms that supplying civilian products is no guarantee of escaping national security scrutiny, particularly when those products have potential defense implications.
Business Fallout as Hesai Faces Market Barriers
The ruling also brings financial consequences for Hesai. Since the company was first blacklisted by the Pentagon, it has suffered a nearly 50 percent drop in share value. With approximately 40 percent of its revenue reportedly tied to the US market, being cut off from American partners and clients represents a significant blow.
This decision forms part of a broader trend in US-China relations, where technology has become both a battleground and a bargaining chip. American firms, too, have faced restrictions in China, especially under Beijing’s longstanding “Great Firewall” policy.
The growing barriers on both sides are reshaping the global tech economy and leaving firms like Hesai stranded between competing national interests.
Global Tech Supply Chains Under Renewed Scrutiny
Hesai’s setback comes amid rising anxiety in Washington over the global dominance of Chinese firms in critical technologies. With Chinese manufacturers reportedly accounting for more than 80 percent of global lidar sales, security analysts have warned that overreliance on these suppliers could introduce risks to sensitive infrastructure.
Calls are growing within the US to bolster domestic production and collaborate with trusted allies to build secure, resilient supply chains for lidar and other emerging technologies. The court’s decision in the Hesai case is likely to intensify these efforts and may influence future regulatory approaches to dual-use technologies across multiple industries.
