The US Commerce Department has asked American companies to obtain licenses before exporting certain technology to China's largest manufacturer of semiconductors, the Semiconductor Manufacturing International Corp (SMIC).
According to a letter Friday by the Commerce Department, American suppliers of certain technology products to SMIC will need to apply for individual licenses before they can export to the Chinese company.
SMIC has not received an official notice of the sanctions, the company said in an emailed statement. SMIC for their part denied making any parts specifically for military use and denies any relation with the Chinese armed forces.
SMIC and other chip manufacturers depend on US software and chip-making machinery to produce semiconductors. The company was quoted as saying that it "has no relationship with the Chinese military, and does not manufacture for any military end-users or end-uses". The Pentagon said earlier this month that it was considering adding SMIC to the entity list.
According to a report by The Wall Street Journal, The Commerce Department laid out the requirement in a letter to the computer-chip industry on September 25. He adds that "What it has done has violated worldwide trade rules, undermined global industrial supply and value chains and will inevitably hurt US national interests and its own image".
SMIC is the latest leading Chinese technology company to face USA trade restrictions related to national security issues or United States foreign policy efforts. This, per Reuters, makes it hard to get any export licence approved.
The Commerce Department would not comment on the matter specifically, but a spokesperson with its Bureau of Industry and Security said they are "constantly monitoring and assessing any potential threats to U.S. national security and foreign policy interests" and "will take appropriate action as warranted".
The US federal government has actually approved China's biggest chipmaker, dealing additional damage to the nation's semiconductor market after cutting Huawei off from its chip providers.
Separately, about 3,500 USA companies, including Tesla, Ford Motor Co, Target Corp, Walgreen Co and Home Depot have sued the Trump administration in the last two weeks over the imposition of tariffs on more than $300 billion in Chinese-made goods.
The legal challenges from a wide variety of companies argue the Trump administration failed to impose tariffs within a required 12-month period and did not comply with administrative procedures.
The Commerce Department wouldn't immediately confirm the contents of the letter.