On September 26, 2025, DJI, the world’s leading drone manufacturer, suffered a significant blow in its battle against the U.S. Department of Defense (DoD) as a federal judge upheld the Pentagon’s decision to designate the company as a “Chinese Military Company.” This ruling marks a pivotal moment in the ongoing U.S.-China tech conflict and raises serious concerns for the future of drone operations in the United States.
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The Pentagon’s Blacklist and DJI’s Legal Battle
The controversy began when DJI was placed on the Pentagon’s Section 1260H list in 2022, which includes companies allegedly linked to China’s military-industrial complex. The move effectively blacklisted DJI from federal contracts and made it difficult for the company to conduct business with U.S. government agencies.
DJI, which commands more than half of the global drone market, fought back with a lawsuit, arguing that it is a civilian company with no military ties and no ownership by the Chinese Communist Party. It emphasized that its drones, widely used for commercial, consumer, and industrial purposes, were not designed for military use.
U.S. District Judge Paul Friedman ruled against DJI, despite the company’s arguments. He confirmed the Pentagon’s classification of DJI as a “military-civil fusion contributor.” This classification is based on the company’s ties to China’s National Enterprise Technology Center (NETC).
This designation allows DJI to receive subsidies and support from the state, placing it within China’s defense-industrial system. The court noted that the evidence the Department of Defense had against DJI was not conclusive. However, the ruling highlighted the Pentagon’s wide authority in matters of national security.
Consequences for DJI and the U.S. Drone Industry
The legal defeat is a heavy blow to DJI’s standing in the U.S., where its drones are ubiquitous, from consumer use to law enforcement and public safety applications. The company’s presence in the U.S. drone market is undeniable, with models like the Mavic, Mini, and Matrice being integral to industries such as construction, agriculture, and surveillance.
However, being on the Pentagon’s blacklist has far-reaching consequences. DJI’s legal team argued that the company had been unfairly stigmatized, losing contracts and facing reputational damage. In fact, some private businesses are now hesitant to work with DJI due to its national security designation.
This stigma is likely to grow as more state-level bans are implemented, with states like Florida, Texas, and Arkansas already restricting DJI drones for public safety use. DJI’s legal defeat only compounds these restrictions, and the looming December 2025 deadline for the U.S. government to complete a comprehensive national security review of DJI’s products could result in an automatic ban on the company’s drones in the U.S.
The ruling has already triggered a cascading effect throughout the drone ecosystem. DJI’s market share in the U.S. is an astounding 76%, meaning that any restrictions on its products would disrupt the entire industry. Retailers have reported widespread inventory shortages, with key suppliers like Amazon and Best Buy struggling to keep DJI products in stock.
The situation is expected to worsen as DJI faces mounting supply chain disruptions, with U.S. Customs detaining shipments of the company’s drones due to forced labor allegations under the Uyghur Forced Labor Prevention Act.
For smaller drone businesses, the impact could be devastating. The Drone Service Providers Alliance has reported that 67% of small drone businesses in the U.S. could go under without access to DJI’s products, resulting in a loss of hundreds of thousands of jobs.
Public safety agencies, too, will face immense challenges as they are forced to turn to more expensive domestic alternatives, which lack the performance and reliability that DJI drones are known for.
Potential Bans and DJI’s Response
Despite the ruling, DJI’s drones are not outright banned in the U.S. yet, but the writing is on the wall. With federal agencies prohibited from purchasing DJI drones starting in 2026 and additional restrictions on private businesses, the company faces a future where its U.S. operations may be severely limited.
The upcoming December 2025 security review looms large—if the U.S. government fails to complete the review, DJI will automatically be placed on the Federal Communications Commission’s (FCC) Covered List, which would effectively prevent the company from introducing new products to the U.S. market.
DJI is not backing down, however. In a statement, the company expressed disappointment with the court’s ruling, but reiterated its commitment to serving U.S. customers and partners. DJI’s spokesperson emphasized that the company remains dedicated to providing reliable, safe, and accessible products and called for fair competition in the U.S. market.
The company’s legal team has indicated that they are exploring further legal avenues, including the possibility of an appeal. However, given the judge’s strong deference to national security considerations, the likelihood of overturning the decision is slim.
The Bigger Picture: U.S.-China Tech War
DJI’s legal battle is only one aspect of the larger geopolitical fight between the U.S. and China. In recent years, the U.S. has placed several sanctions and restrictions on Chinese companies in different areas, including semiconductors, surveillance gear, and telecommunications. DJI’s situation reflects this larger separation of the two economies, with national security worries coming first over free-market competition.
For U.S. drone pilots, the impact of this ruling could be major. While DJI drones are still available for purchase, their future in the U.S. market is unclear. If DJI is banned or faces strict limits, American drone pilots might have fewer options and pay more for alternatives, many of which do not match DJI’s performance and versatility.
Conclusion
DJI’s legal defeat in the Pentagon lawsuit is a decisive moment in the ongoing U.S.-China tech rivalry and a pivotal event for the American drone industry. While the company’s drones are still in the skies today, the long-term future of DJI in the U.S. is far from guaranteed.
As the situation unfolds, drone pilots, businesses, and public safety agencies will need to brace for the potential consequences of a market reshaped by legal and political battles. The decision underscores the growing tension between national security and global trade, and its implications will likely resonate across industries far beyond drones.
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