WASHINGTON, June 26 (Reuters): Chinese manufacturer SZ DJI Technology Co Ltd, the world's largest producer of consumer drones, said it plans to use a company warehouse in California to assemble them, a move that follows security concerns raised by some US lawmakers.
DJI said it will assemble its Mavic 2 Enterprise Dual drones in Cerritos, California, after the US Customs and Border Protection determines that the US produced value of its drones will qualify under the US Trade Agreements Act.
That designation should make it easier for some US government agencies to buy the drones, the company said
"This new investment will expand DJI's footprint in the US so we can better serve our customers, create US jobs, and strengthen the U.S. drone economy," the company said in a statement.
DJI has come under fire from some lawmakers and security experts in the United States and was criticized last week at a US Senate Commerce subcommittee hearing by security researchers.
Senator Rick Scott, a Republican, asked at the hearing if Congress should outlaw the US sale of Chinese-made drones.
"I think we're crazy to do business with the Chinese," Scott said during the hearing.
"We ought to be buying American products in every way we can.... They are not our friend," said Scott.
Senator Ed Markey, a Democrat, said at the hearing that Americans who own Chinese-made drones are worried about individual privacy and security concerns.
"Chinese animate (drones) with their values, which are inconsistent with ours," Markey said.
On June 10, US President Donald Trump said in a memo "the domestic production capability for small unmanned aerial systems is essential to the national defense."
Harry Wingo, a faculty member at the National Defense University, told the Senate panel "the US is over-reliant" on DJI, saying its market share may exceed 70 per cent globally.
"The glaring gap between U.S. and Chinese companies like DJI in the (drone) platform market should be a wake up call," Wingo said.
He suggested the issue "presents a national risk, similar to that highlighted by President Trump in calling out the risk of using 5G equipment from Huawei in US telecommunications networks."
Last month, the US Homeland Security Department (DHS) warned US firms of the risks to company data from Chinese-made drones.
On June 13, three House Republicans wrote DHS seeking more information about that alert.
DJI said in May it gives "customers full and complete control over how their data is collected, stored, and transmitted."
On Monday, DJI introduced Government Edition, a package of hardware and software controls to create a data firewall for the photos, videos and flight logs created by a drone. The company said it is currently available on some of its products but not yet on Mavic 2. Those drones "cannot access the internet and only stores information on the device."
The company's drones are used by many US government agencies, including the New York Police Department. Police in Fremont, California in February used a DJI drone to find an emotionally troubled deaf boy, and last week game wardens in Coleman County, Texas used a DJI drone to find two kayakers missing along a rural river after dark.
DJI told the Senate Commerce Committee in a letter that it was "deeply concerned that, left unchecked, the unsubstantiated speculation and inaccurate information presented during your subcommittee hearing will put the entire US drone industry at risk, causing a ripple effect that will stunt economic growth and handcuff public servants who use DJI drones to protect the public and save lives."
In 2017, the US Army ended its use of Chinese-made drones. Last month, the Senate Armed Services Committee agreed to a provision banning future purchases of Chinese-made drones by the Pentagon.
As recently as last year, the Pentagon has been buying and operating DJI drones, said Senator Chris Murphy, author of the drone provision.
