The Pentagon blacklisted Chinese chip maker SMIC and oil producer CNOOC

Aerial view of the Pentagon building photographed on September 24, 2017.

Bill Clark | CQ-Roll Call Group | Getty Images

WASHINGTON – China’s largest chip maker and nationwide offshore oil and gas company was blacklisted for alleged Chinese military companies on Thursday, the Pentagon said in an evening statement.

The Department of Defense has designated a total of four companies owned or controlled by the People’s Liberation Army.

  • Semiconductor Manufacturing International Corp.
  • China National Offshore Oil Corp.
  • China Construction Technology Co. Ltd.
  • China International Engineering Consulting Corp.

The four more companies listed on Thursday will increase the total number of blacklisted companies to 35.

U.S. officials have long complained that Chinese companies are being ignored with the People’s Republic of China and collecting sensitive information on behalf of the People’s Liberation Army. The Chinese Communist Party has previously said it will not engage in industrial espionage.

The Chinese Embassy in Washington did not respond immediately to CNBC’s comments.

This move is likely to escalate tensions between the world’s two largest economies and add to the list of geopolitical issues awaiting President-elect Joe Biden.

In September, the Pentagon said it was discussing whether to add SMIC to the Department of Commerce’s entity list, which essentially restricts these companies from receiving specific goods manufactured in the United States.

Read more: U.S. sanctions against chip maker SMIC have been at the heart of China’s technological ambitions

That same month, the U.S. Department of Commerce informed some companies that they had to obtain a license before delivering goods and services to SMIC after finding that there was an “unacceptable risk” that the equipment supplied to it could be used for military purposes. SMIC relies heavily on U.S. suppliers.

SMIC is seen as a key player in China’s efforts to boost the domestic semiconductor industry, an ambition accelerated by the US-China trade war. Export controls on SMIC would have an impact on US companies selling chip manufacturing technology to Chinese manufacturers.