The Department of Commerce on Monday said it has taken action to restrict exports to Chinese semiconductor firm Fujian Jinhua, due to the belief that Jinhua poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States.

According to the Department of Commerce, it accomplished this by adding the Chinese firm to the Entity List.

Pursuant to Section 744.11(b) of the Export Administration Regulations (EAR), the Entity List identifies entities reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.

The EAR imposes additional license requirements on, and limits the availability of most license exceptions for, exports, re-exports, and transfers (in-country) to listed entities.

As a result of adding Jinhua to the Entity List, a license is required for all exports, re-exports, and transfers of commodities, software and technology subject to the EAR to Jinhua. Such license applications will be reviewed with a presumption of denial.

“When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security,” Secretary of Commerce Wilbur Ross said in a prepared statement.

“Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems,” he added.

The administration is concerned the Chinese firm could flood the market with cheap chips that are also made by U.S. companies that supply the U.S. military.

“Jinhua is nearing completion of substantial production capacity for dynamic random access memory (DRAM) integrated circuits,” the Department of Commerce stated.

“The additional production, in light of the likely U.S.-origin technology, threatens the long term economic viability of U.S. suppliers of these essential components of U.S. military systems.”

Should the U.S. chipmakers go out of business, the military would lose a supplier for an item that must come from the United States.