Asian Tech Press (Dec 10) -- U.S. officials are seeking to block China's largest chipmaker, Semiconductor Manufacturing International Corp. (SMIC), from buying U.S. manufacturing tools, the Wall Street Journal reported Thursday.

The report, citing sources, said officials plan to discuss a Defense Department proposal this month to close a regulatory loophole that allows SMIC to buy critical U.S. technology.

SMIC has been able to continue buying U.S. tools to make chips despite being on the U.S. Department of Commerce's list of entities designed to restrict key U.S. exports.

The U.S. Department of Defense, with the support of officials at the State and Energy Departments, as well as the National Security Council, wants to change the wording to restrict SMIC's access to items "capable of" producing semiconductors with 14-nanometer circuits and smaller, expanding the list of items SMIC cannot obtain, people familiar with the matter said. The fastest supercomputer in the U.S. is using chips made at that size.

In addition, SenseTime, a leading Chinese developer of facial recognition technology, will be added Friday to the Treasury Department's blacklist of Chinese companies that support China's military.

U.S. officials are also considering adding more Chinese technology companies to the Commerce Department's list of entities and to the Treasury Department's list barring U.S. investments in the coming months, said sources.

However, some Commerce Department officials are trying to block the Defense Department's proposal to close loopholes for SMIC, the people with knowledge of the matter added.

Commerce Department officials and U.S. toolmakers have told other officials that any change in restrictions on SMIC would hurt the bottom line of U.S. companies and exacerbate a global chip shortage that already affects a wide range of industries.