The U.S. government is considering further measures targeted at China’s Huawei Technologies Co. Ltd. that would restrict the company’s access to American-made semiconductor equipment.

Reuters reported that government officials are considering making changes to the Foreign Direct Product Rule, which places certain foreign-made goods that are based on U.S. technology under domestic regulations. Under the proposed changes, which are being drafted by the Commerce Department, U.S. chip makers would be required to obtain a special license to use American equipment to produce chips for Huawei.

Huawei has been in the crosshairs of U.S. President Donald Trump for some time, having been placed on a blacklist last year that prevents most American firms from doing business with it. The U.S. is also trying to persuade allied nations to exclude Huawei’s equipment from their next-generation 5G networks on the grounds that it could be used for spying. Huawei has repeatedly denied the accusations against it.

Now, the U.S. wants to target supply chains that are currently beyond its reach, Reuters said.

The aim of the proposed changes to the Foreign Direct Product Rule is to slow down China’s technological advancement, but there is a risk that tighter regulations could also disrupt the global semiconductor supply chain and hurt U.S. firms, industry sources told Reuters.

The report added that the changes have been under discussion for weeks but were only recently proposed and are yet to be reviewed by President Trump.

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE that the U.S.’s move to block Huawei from accessing third party equipment is the right thing to do, assuming that it’s correct in its accusations about the company.

“It remains to be seen though if the accusations are material,” Mueller said, noting that the U.S. has never offered any actual proof of its claims. “In the meantime it’s bad news for Huawei and the 3rd country suppliers. The risk is that we will end up with two high tech supply chains soon, one for Huawei and one for the rest of the world, operating in total isolation from each other.”

Photo: Kārlis Dambrāns/Flickr