A Pentagon spokesperson told Reuters on Friday the Department of Commerce was considering adding SMIC to a trading blacklist called the Entity List, which would force US buyers to obtain a special license before doing business with the company.
SMIC is China's largest semiconductor foundry, supplying microchips to American tech companies such as Qualcomm, Broadcom and Texas Instruments.
SMIC is just the latest Chinese tech company to come under attack by the Trump administration, which has already placed companies such as phone-maker and high-speed internet provider Huawei, phone-maker ZTE and broadband internet and data control center operator Dr. Peng Telecom on the list, alongside dozens of others. Warnings about the use of other tech companies' products, such as commercial drones made by Da-Jiang Innovations (DJI) and video messaging app TikTok, have also come down.
According to the US government, the companies in question pose security risks to users due to their proximity to the Chinese government, which US intelligence alleges can force the firms to turn over user data or use them to spy on users in other ways. Beijing and the leadership of companies such as Huawei have staunchly denied the accusations.
SMIC is a publicly-held company and has collaborated extensively with firms on the blacklist, including Huawei.