The U.S. Department of Defense said Saturday that it was considering adding SMIC to the Commerce Department's so-called Entity List, which would make it more difficult for the company to obtain parts made in the U.S., potentially hurting production.
On Monday, Chinese Foreign Ministry spokesman Zhao Lijian accused Washington of "blatant hegemony," adding that Beijing was "firmly opposed" to such actions.
"China has made a solemn stand on (the) U.S.' unprovoked suppression on Chinese companies," Zhao told reporters, according to a CNBC translation of his comments in Mandarin. "For a period of time, the U.S. has generalized the concept of national security, used state power to set all kinds of restrictions on Chinese companies."
"What the U.S. has been doing uncovers the fig leaf of market economy and fair competition which the U.S. has long been touting," he added. "This not only breaks international trade rules, global industry chain, supply chain and value chain, but also spoils national interests and image of the U.S. itself."
U.S. officials have long alleged that Chinese tech companies pose national security risks. For instance, Huawei was added to the Entity List last year, a move that severely dented the telecom giant's international business. The government is also forcing ByteDance to divest the U.S. operations of its popular TikTok app.
"DoD is currently working with the interagency in assessing available information to determine if SMIC's actions warrant adding them to the Department of Commerce's Entity List," a Defense Department spokesperson said Saturday. "Such an action would ensure that all exports to SMIC would undergo a more comprehensive review."
President Donald Trump's administration is reportedly concerned SMIC aids China's military. SMIC denied this Saturday, calling such claims "untrue statements and false accusations."
Shares of SMIC plunged over 23% Monday, closing at 18.24 Hong Kong dollars. Shanghai-listed shares of the company closed over 11% lower at 58.80 Chinese yuan.
- CNBC's Arjun Kharpal and Iris Wang contributed to this report.