The US Department of Defense on Thursday added Semiconductor Manufacturing International Corp (SMIC), China’s biggest chipmaker, to a blacklist of alleged Chinese military companies, in its latest move to restrict Chinese firms from trading with American investors and corporates, Reuters reported.

While being part of the list doesn’t trigger any penalties, an executive order issued by President Trump in November sought to prohibit US investors from buying securities of blacklisted firms from January 2021. Along with SMIC (HKEX:0981; SSE: 688981), oil and gas producer China National Offshore Oil Corp, China Construction Technology, and China International Engineering Consulting Corp, were also designated as being either owned or controlled by the People’s Liberation Army.

SMIC responded in an official statement on Friday that it’s evaluating the potential influence of the defense list. “Investors are advised to be aware of the investment risks,” reads the statement.

Later, in a filing with the Hong Kong Exchange, SMIC said that its inclusion in the blacklist has no essential impact on the company’s operations, emphasizing that it always complied with the regulations of countries where it operates. “SMIC’s services and products have never had any military applications and are used for both civilian and commercial purposes,” it said. “SMIC strongly objects to the decision of the US Department of Defense, which reflects a fundamental misunderstanding of the usage of the company’s business and technology.”

Its Hong Kong-listed stock sank by 2.25% to HKD 21.70 at the open and was halted several minutes later. Trading resumed at 1 p.m. In Shanghai, its shares dipped 3.62% to RMB 58, while the Chinese semiconductor sector opened higher overall, with Jilin Sino-Microelectronics (SH:600360) rallying 10.05%.

SMIC is considered the top chipmaker in China, holding about 4% of the global foundry market, per market research firm TrendForce. Last year, it bade farewell to the New York Stock Exchange citing limited trading volume in the US relative to its worldwide volume, and significant administrative burden and costs of maintaining its listing in New York. The company said that neither the Sino-US trade war nor Huawei’s blacklisting by the US Department of Commerce played a role.

For the third quarter of 2020, SMIC booked a record-high USD 1.1 billion in revenue, up 32.6% year-on-year (YoY) and 15.3% quarter-on-quarter (QoQ). Its profit reached USD 255 million, representing a YoY increase of 122.6% and 85.5% QoQ.