The Trump administration is reportedly considering adding China's largest chipmaker to the Commerce Department's list of companies, which will severely limit the company's business with US firms.
A spokeswoman told Reuters that the Department of Defense is working with other agencies to determine whether Semiconductor Manufacturing International Corporation should be blacklisted, similar to other Chinese companies like Huawei and ZTE.
The proposal was confirmed by a Pentagon official, but the reasons for the action were not disclosed. However, sources told Reuters that the Trump administration is reviewing SMIC-Chinese military relations.
In response to the matter, SMIC said it was "completely shocked" that the Trump administration is considering putting the company on a trade blacklist. SMIC said its alleged links with the Chinese military are "false statements and false allegations" but it remains open to working with the US government to resolve "possible misunderstandings".
If SMIC is blacklisted, US suppliers must acquire a difficult-to-source license before they can continue to supply components to the chip maker.
USA versus Huawei
It remains to be seen whether SMIC will suffer the same fate as Huawei, one of the Chinese companies hardest hit by the Trump administration's restriction. New rules issued by the U.S. government in May have further restricted Huawei's business.
However, a report by the Federal Communications Commission found that replacing the devices from Huawei and Chinese manufacturer ZTE currently used on their networks will cost at least $ 1.8 billion.