The Trump administration is tightening trade restrictions on China's largest chipmaker, Semiconductor Manufacturing International Corporation, or SMIC.
With the move, American computer chip companies will be prohibited from importing SMIC's technology without a prior export license.
This is similar to the restrictions imposed on Huawei.
The U.S. Commerce Department expressed concerns over an (quote) "unacceptable risk" that equipment SMIC has imported could be used for military purposes.
In response, SMIC told Reuters that the company provides services solely for commercial end-users and end-uses, stressing it has no relationship with the Chinese military.
The move will hit Beijing's aggressive plan to develop its semiconductor sector.
Pundits also say it could benefit South Korean chip manufacturers like Samsung Electronics and SK Hynix, especially with Samsung being able to mass produce memory chips using the 7 nano-meter process, which SMIC aimed to achieve by late 2021.
In a separate move, American lawmakers are mulling subsidies of about 25 billion U.S. dollars to boost U.S. chip production capacity.
While it's uncommon for Washington to pour such large subsidies to any sector, Japanese media reports that the move comes as the Trump administration wants to protect its own industries over fears that excessive outsourcing to China could be a national security risk.
Kim Hyo-sun, Arirang News.