Hesai Technology is a national security threat, according to the Pentagon, and Nvidia’s new lidar partner

Here’s a situation that would make any compliance lawyer reach for antacids. Hesai Technology, the Chinese lidar manufacturer listed on NASDAQ, was formally designated a Chinese military company by the U.S. Department of Defense in January 2024. A federal court upheld that designation in July 2025. And in January 2026, Nvidia chose Hesai as a lidar supplier for its next-generation autonomous driving platform.

The blacklist, the lawsuit, and the court’s answer

The DoD added Hesai to its Section 1260H list of Chinese military companies on January 31, 2024. The list is essentially Washington’s way of flagging firms it believes contribute to China’s military capabilities, even if those firms operate primarily in commercial markets.

Hesai pushed back immediately, filing a lawsuit to challenge the designation. The argument was straightforward: the company makes sensors for self-driving cars, not weapons systems. A U.S. District Court disagreed, upholding the Pentagon’s designation on July 11, 2025.

The road to that ruling had a strange detour. Hesai was temporarily removed from the list in late 2024, only to be reinstated after the DoD said new information had come to light.

In September 2025, Senators Scott, Blackburn, and Moreno wrote to the SEC and Treasury Department calling for Hesai’s delisting from NASDAQ, arguing that American investors shouldn’t be funding a company the Pentagon considers a national security concern.

Nvidia apparently read a different memo

In January 2026, Nvidia selected Hesai to supply lidar technology for the DRIVE AGX Hyperion 10 platform, a hardware and software stack designed for Level 4 autonomy. Level 4 means the vehicle can handle all driving tasks in defined conditions without human intervention.

This partnership didn’t come from nowhere. Hesai and Nvidia had already integrated Hesai sensors with Nvidia platforms under a 2023 agreement. Then, in March 2026, Hesai joined Nvidia’s Halos AI Systems Inspection Lab, a safety validation program for autonomous systems.

Hesai claims a 37% share of the global lidar market and plans to push production capacity past 4 million units in 2026.

What investors are actually dealing with

Hesai trades on both NASDAQ under the ticker HSAI and on the Hong Kong Stock Exchange under the code 2525. A NASDAQ delisting wouldn’t end the company’s public market life, but it would significantly reduce liquidity for American investors and likely compress the stock’s valuation.

The company held its Annual General Meeting on June 26, 2026, alongside Q1 2026 financial results that showed revenue growth.

Foreign investment restrictions in Chinese tech companies tied to military applications add another layer. U.S. regulations in this area have been tightening, and Hesai sits squarely in the category of companies those rules are designed to target.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.