By adding the company to the Export Administration Regulations "entity list", the USA commerce department makes "all exports, re-exports, software, and technology" to Jinhua subject to a licence, and applications for that licence "will be reviewed with a presumption of denial".
The use of the "entity list" - which governs what companies US firms can do business with - to protect the economic viability of a USA industry appears to be unprecedented, said Washington trade lawyer Douglas Jacobson.
On Monday, the Commerce Department accused the supplier, Fujian Jinhua Integrated Circuit Co., of sourcing its chip technology from the U.S. and positioning itself to push out American suppliers of U.S. military systems. It said such applications "will be reviewed with a presumption of denial".
It said in a statement that Fujian Jinhua "poses a significant risk of becoming involved in activities that are contrary to the national interests of the United States".
Fujian Jinhua had filed a countersuit against Micron in Chinese court in January.
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ZTE Corp., China's second-biggest maker of telecoms equipment, faced possible bankruptcy this year after Washington imposed a seven-year ban on sales of US technology to the company over its exports to Iran and North Korea.
Calls to Fujian Jinhua's offices rang unanswered Tuesday and there was no immediate response to an inquiry made through their website.
He added the ban would limit the company's ability to "threaten the supply chain for essential components in our military systems". Negotiations have reportedly stalled ahead of a planned meeting between US President Donald Trump and Chinese President Xi Jinping on the sidelines of the upcoming G20 summit in Argentina. ZTE agreed to pay a large fine, reshuffle its leadership and undergo compliance monitoring by the United States.
Reuters noted in their coverage that the Trump administration cut off the Chinese state-backed chipmaker from us suppliers amid allegations the firm stole intellectual property from usa semiconductor company Micron Technology Inc.
Fujian Jinhua, based in China's Fujian province, was founded in 2016 and has financial backing from the provincial government.