The Department didn’t directly comment on SMIC, but told Reuters it was “constantly monitoring and assessing” possible threats to US security and foreign policy.

SMIC, meanwhile, appeared to have been caught by surprise. A spokesperson said the chip giant hadn’t received any official word of restrictions and reiterated denials of any military link. The company offers chips and services “solely for civilian and commercial end-users and end-uses,” according to the representative.

The semiconductor producer is just the second top-tier company added to the entity list after Huawei. While the effect of the ban won’t be clear until the Commerce Department decides who (if anyone) gets a license, it could represent a significant blow to Chinese tech as a whole. SMIC may have to turn to non-US technology whenever it wants to upgrade its manufacturing or maintain hardware, and there’s no guarantee it will find what it needs. It could find itself trailing behind rivals that have access to a wider range of equipment.

This could have a knock-on effect for companies that depend on SMIC. Huawei needs SMIC to make some of the Kirin chips in its phones, especially after losing access to partners like TSMC — it might have further trouble if SMIC can’t meet demands under the new restrictions. It won’t be surprising if the Chinese government retaliates with comparable restrictions on American companies.