The U.S. government announced on Friday that it will bar telecom equipment giant Huawei Technologies from using U.S. technology and software to design and produce semiconductors, an escalation in its hostility toward the Chinese firm.  

The new rule, unveiled by the Department of Commerce, could significantly reduce U.S. exports to and cripple the supply chain of the world’s largest telecom equipment maker and second-largest smartphone maker.

The commerce department said the move will cut off Huawei’s efforts to "undermine U.S. export controls". The department is amending long-standing export control rules and the Entity List to "target Huawei’s acquisition of semiconductors" directly related to U.S. software and technology, according to a statement released on the website of the department.

“We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests,” Commerce Secretary Wilbur Ross tweeted on Friday.

Huawei, one of China’s innovation champions, has firmly denied that it poses a security risk. Its founder and CEO Ren Zhengfei has always cautioned against China’s potential retaliation against U.S.-based tech giant Apple.

Prior to the announcement on the new restrictions, the Commerce Department on Friday gave Huawei a 90-day extension to the existing Temporary General License (TGL) authorization to allow U.S. users of Huawei equipment or services, particularly those in rural U.S. areas, to transit smoothly to alternative suppliers. The department warned that it was expected to the final extension.

Taiwan-based TSMC, the world’s largest semiconductor manufacturer and a supplier to Huawei, Apple and Qualcomm, was affected negatively by the announcement. Its stock on Friday closed down 4.41% from Thursday that saw a surge on the news of its plan to build a chip factory in Arizona, the United States.

Beijing-based state-run Global Times respondedly swiftly by publishing an article, claiming that China was ready to put U.S. companies, including Qualcomm, Apple, Cisco and Boeing, on an “unreliable entity list,” as part of retaliatory measures, citing a source with the knowledge of the matter.