Drone maker DJI technology currently dominates the consumer drone market, controlling about 60% of the market. The US government recently restricted the company’s access to chips and other components by placing it in the same entity that had Huawei, ByteDance, SMIC, and others.

The US ban is already taking its toll on the company’s North American business, according to a Reuters report. The report shows that DJI’s North American business concern is presently plagued by internal wrangling which is an offshoot of the US ban.

Although DJI still performing well in the market, the company decided to cut its staff strength to reflect the ban. One-third of its entire staff strength of 200 persons in the US were reportedly laid off. As a result, some key managers decided to resign and take their services to rival companies. For instance, the head of DJI’s R&D team is reported to have resigned in February as a result of his displeasure over the job cuts. After the resignation, the company is said to have laid off the remaining ten R&D staff at its Palo Alto, California flagship research center.

Although some of the key execs who have resigned projects that the ban could affect the growth of the company but DJI’s founder Frank Wang insists that the company’s North American sales were growing strongly.

“Despite misleading claims from competitors, our enterprise customers understand how DJI products provide robust data security. Despite gossip from anonymous sources, DJI is committed to serving the North American market,” he added.

The US ban has led to the growth of rivals such as US firm Skydio but the company focuses on military drones. Thus, DJI’s market share in the consumer drone market may not be under too much stress.

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Following stringent restrictions by the US government that have essentially blacklisted Chinese drone manufacturers from the US market, US drone makers are now filling the huge void and thereby shore up their worth.

One of the companies that have benefitted tremendously from the Chinese ban is Skydio, and this is further confirmed with its recent valuation of more than a billion dollars. This is a fallout of the freezing of drones from China by several security agencies, as a result of what the US government insists is credible evidence that Chinese drones and their components are covert tools for espionage by the Chinese government.

The military and security segment of the market is most affected by the ban. However, a few Chinese drone makers are still active in the market, although they can only provide consumer-grade devices. Chinese drone giant DJI remains a strong player in the consumer market, although it could have fared better if the restrictions were not in place.

Skydio is expected to supply its high-end military-grade drones to the US Army and other security agencies, as well as several other applications.

However, market analysts are of the view that the consumer segment of the drone market holds huge potential in the next few years. It is seen as the fastest-growing segment of the drone market and holds up to 35 billion dollars in four years. Therefore, pursuing investment along these lines may hold some hope for Chinese drone makers, as they continue to adapt to the seeming unfair regulatory and uncertainty,- driven business climate put in place by the government.

These Chinese firms may just be unfortunate to be caught in the crosshairs of a battle of wits between the Chinese and US government.

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(source)

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