The choice comes in the midst of claims that the state-sponsored organization has stolen protected innovation from U.S. chipmaker Micron Technology, as indicated by reports.
The Chinese company was caught up in the legal battle between Micron and UMC.
The US Commerce Department said it would confine the fare of programming and innovation merchandise from American firms to Chinese chipmaker Fujian Jinhua. Commerce Secretary Wilbur Ross noted that the State would ban USA firms from exporting software and technology goods to the Chinese chipmaker.
Recently, the United States hindered China's ZTE from working with USA organizations after it discovered it had disregarded U.S. sanctions against Iran and North Korea.
Under the move, American companies without a special license are restricted to sell components to Fujian Jinhua.
The US move will likely add to growing friction between the world's 2 largest economies.
A Commerce Department spokesman said the agency would review any appeal by Fujian Jinhua. "The additional production, in light of the likely USA -origin technology, threatens the long-term economic viability of US suppliers of these essential components of US military systems". "Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems", said Wilbur Ross, Secretary of Commerce.
In a statement released by the US Department of Commerce (DoC), officials said the Chinese chipmaker posed "a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States".
Jinhua is opening a $5.7 billion factory in China's Fujian province and has become increasingly ambitious in its desire to become a global player in the memory chip business.