Chinese lidar technology faces increased scrutiny in US amid security and trade tensions

Chinese lidar technology has come under increased scrutiny by the United States government amid broader concerns about China’s potential technological dominance and escalating trade tensions between the Asian nation and the West.  

The Department of Defense on January 31, 2024, updated its list of Chinese companies it alleges are aiding Beijing’s military to include Hesai Technology, a leader in automotive light detection and ranging (lidar) technology.

Other key players from across the technology, energy, and automotive sectors added to the Section 1260H list of “Chinese military companies” included memory chipmaker Yangtze Memory Technologies and AI firm Megvii.

Being placed on the list does not currently immediately restrict a company’s ability to operate in the US but could damage its reputation or discourage American firms from pursuing partnerships, among other negative impacts.

Lidar technology has come to the attention of the Department of Defence as this unique technology has advanced, according to Brunno Moretti, Senior Vice President of Product & Commercial Operations at San Jose, California-based lidar firm Cepton, Inc. (NASDAQ:CPTN).

Key concerns are about the technology’s potential surveillance and military applications.

Moretti told Proactive that lidar can produce highly precise and very detailed 3D images and enables extremely intelligent analytics.

“These lidars are becoming more and more compact and embeddable, so people may not even be aware of their existence,” he explained.

“The other risk is cybersecurity, data breaches and unauthorized access. It could be extremely dangerous when foreign manufacturers collect excess data from the US.”

Moretti said that as a result of being included on the “Chinese military companies” list, Hesai faces negative legal, financial and reputational impacts.

“This could include losses due to supply chain disruption, loss of government contracts, legal and regulatory costs, negative government and national media attention, and an impact on market valuation and stock performance,” he said. 

While he noted that the scrutiny of lidar technology by the US government also brings risks to American lidar firms, Moretti does not expect it to impact the company’s position as a leading lidar supplier as it develops and deploys this technology with a focus on safety and strong data security.  

“We follow all the standards in the industry to make sure that our technology is airtight from overall functional safety to reliability,” he said.

“We are making sure our products are ready to be mass marketed and adopted in automotive systems and also smart infrastructure.”

Cepton is a Silicon Valley innovator of lidar-based solutions for automotive, smart cities, smart spaces, and smart industrial applications.

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