After China’s biggest LED chip manufacturer Sanan Optoelectronics was named in the red-flag list of “unverified” entities last week, American top chip equipment supplier Applied Materials reportedly stopped business with Sanan “immediately.”

The response of Sanan Optoelectronics noted that Applied Materials as an equipment provider has limited impact on Sanan’s business operation since the US company is not an exclusive equipment provider for the chip maker. Sanan said that it can also purchase equipment from other Chinese supplier when expanding production.

Meanwhile, Sanan has sent a team to the US to fully understand the reason for being red-flagged and sent an application asking for being removed from the “unverified” list.

According to industry sources from LEDinside, Applied Materials’ business halt may have more impact on Sanan’s semiconductor business such as GaAs and GaN products for 5G communication. Instead of LED, the US government probably has more concern about the development of 5G in China.

Moreover, as Sanan was named in the red-flag list, clients from the US and other countries might shift their orders to other LED chip firms like Taiwan-based Epistar.