The U.S. has imposed export restrictions on another company from China. The Commerce Department has imposed restrictions on China's largest chipmaker by sales, Semiconductor Manufacturing International Corp.
It is expected to place more strain on already escalated tensions between two of the world's largest economies. Unlike other China companies such as Huawei Technologies and ZTE, SMIC has not been placed on the country's Entity List.
In a letter dated Sept. 25, the department said American companies dealing with SMIC would now be required to obtain a license to continue exporting products to the company. The decision was based on an assessment made by the department's industry and security bureau - which found that SMIC presented an "unacceptable risk of diversion to a military end use."
Department senior official and export control lawyer Kevin Wolf said the restriction placed on SMIC was for a "subset of listed U.S. origin items" only. Meanwhile, the restrictions imposed on companies such as Huawei applied to all U.S. origin and selected foreign-origin items.
In a statement SMIC said it hadn't received an official notice from the U.S. agency. It denied all accusations and said it had no relationship with China's armed forces and it didn't manufacture products for military use.
The restriction is the latest in a series by the U.S. to reduce China's dominance in the technology industry.
The restriction will affect SMIC's operations - particularly because around 50% of its equipment is supplied by U.S.-based companies. SMIC, which has an estimated market valuation of more than $29 billion, counts U.S. companies such as Qualcomm and Broadcom as some of its largest partners. Earlier this month, SMIC's share price dropped by as much as 23% after reports emerged that the U.S. was considering adding it to the Entity List.