Integrated circuits on a printed circuit board. The semiconductor industry was in focus during the trade war between the US and China.
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The Trump administration is considering imposing export restrictions on Semiconductor Manufacturing International Corporation, China's largest semiconductor manufacturer, according to a Defense Department spokesman.
The Department of Defense is currently debating whether to add SMIC to the Department of Commerce's entity list, which essentially prevents these companies from obtaining certain US-made goods.
"DoD is currently working with the agency to assess the information available and determine whether SMIC's actions warrant adding it to the Department of Commerce entity list," said a Department of Defense spokesman. "Such a measure would ensure that all exports to SMIC are subject to a more comprehensive review."
The government move is part of an ongoing effort to put pressure on China's tech companies and would mark a major escalation in the US-China tech battle.
SMIC is seen as a key player in China's efforts to boost the domestic semiconductor industry, a goal accelerated by the US-China trade war. The introduction of export controls on SMIC would affect US companies selling chip manufacturing technology to Chinese manufacturers.
According to Reuters, the US company list now includes more than 275 China-based companies that first reported that SMIC could be blacklisted.
US officials recently announced that they would tighten restrictions on China's Huawei Technologies to prevent the telecommunications company from accessing commercially available chips.
The restrictions prevent Huawei from receiving semiconductors without a special license. SMIC is one of the manufacturers of Huawei.
As US-China tensions escalate, US officials are urging other governments around the world to impose restrictions on Huawei, arguing that the company will provide data on espionage to the Chinese government. Huawei has denied that it is spying for China.
The Trump administration last month also issued executive orders banning transactions with ByteDance, forcing the company to divest the US operations of the popular TikTok app.
– CNBC's Lauren Feiner contributed to the coverage