Abstract:
In October 2024, China designated Skydio and its CEO under the Anti-Foreign Sanctions Law (AFSL) in retaliation for U.S. approval of defense assistance to Taiwan. Although Skydio manufactures dual-use drones, it denied providing technology to Taiwan's Defense Ministry, claiming it was targeted because it had raised national security concerns about U.S. purchases of Chinese-made drones. Skydio's exposure to PRC supply chains made it particularly vulnerable. Following sanctions, Skydio's valuation fell sharply, it was forced to raise additional funds, and it began a new publicity campaign highlighting new defense-related contracts. Despite U.S. government support for domestic battery manufacturing, Chinese measures continue to affect Skydio's access to battery technology and pending PRC measures could impact other U.S. drone manufacturers' production. Sanctions on Skydio suggest PRC officials are now willing to use new legal tools to both send signals and impose costs when strategic industries are involved.
