The move means that US companies will need to get a license to sell sophisticated technology to SMIC.
US President Donald Trump's administration has announced it had imposed export controls on China's biggest chipmaker, SMIC, restricting its access to US technology over its alleged ties to the Chinese military.
"We're adding SMIC to the entity list mostly because we need to make sure US intellectual property and manufacturing capabilities are not being used by SMIC's clients to continue to support the military-civil fusions efforts within China," a senior official in the Commerce Department said.
The designation means US companies must apply for a license before exporting to SMIC, and specifically targets the Chinese firm's ability to acquire materials for producing chips of 10 nanometers or smaller, the best class in the industry.
Commerce is putting more than 60 other firms on the list for such things as allegedly supporting the Chinese military, being involved in the theft of trade secrets and aiding Beijing’s efforts to claim territory in the South China Sea.
But SMIC is the most high-profile target.
The Commerce Department said it was adding DJI, the world's largest dronemaker, AGCU Scientech; China National Scientific Instruments and Materials and Kuang-Chi Group because the four companies "enabled wide-scale human rights abuses within China through abusive genetic collection and analysis or high-technology surveillance."
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Ties with Beijing
The Commerce Department official said Washington has evidence SMIC has worked with the Chinese military on developing short- and medium-range ballistic missiles and exoskeletons for soldiers, but had been discussing with SMIC for months on a way to avoid the designation.
"We simply no longer could stand by and watch our adversary using our technologies to support its military capabilities," the official said.
The decision increases pressure on the chipmaker that has received billions of dollars in support from Beijing and is at the heart of its efforts to improve the country's technological self-sufficiency.
SMIC has previously said it has no ties to the Chinese government.
Under Trump, the United States has repeatedly targeted its global rival through the entity list, which now includes a few hundred Chinese companies and subsidiaries.
Trump is set to hand power to President-elect Joe Biden on January 20.
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