US-based semiconductor equipment supplier Applied Materials has halted deliveries and services to Chinese companies including San’an Optoelectronics that were named in a red-flag list of “unverified” entities announced by the U.S. Commerce Department on April 10, 2019, reported Nikkei Asian Review.

The U.S. Commerce Department added 37 Chinese companies and schools to a red-flag list of “unverified” entities, noting that U.S. companies should treat the listed organizations with caution. San’an Optoelectronics, the biggest LED chip producer in China, was named in the list, along with 36 firms and research institutes specialized in optics, electronics and machine tools and others.

According to a report of Reuters, the list has come to effect on April 11, 2019 and the U.S. suppliers will have to apply for new license when selling products to those companies on the list.

Nikkei Asian Review covered that Applied Materials had decided to stop business with its Chinese customers who were named in the red-flag list, including San’an Optoelectronics. The industry source cited by Nikkei noted that Applied Materials demanded all staff involved with the listed firms should “immediately stop all pending and future equipment delivery.” The company also asked its employees to withdraw from the sites of those companies and cease all service activities.

Xian Jiaotong University and Chinese Academy of Sciences were also clients of Applied Materials who were identified on the “unverified list.”

Reuters quoted Kevin Wolf, a former assistant secretary of commerce for export administration, noting that although the list does not equal to an embargo, some U.S. suppliers might treat it as one. The movement of Applied Materials might bring further impacts to other U.S. suppliers when working with the red-flagged Chinese companies.