Jinhua is completing "substantial production capacity" for integrated circuits, possibly using USA technology, which "threatens the long-term economic viability of US suppliers of these essential components of USA military systems", said a Commerce Department statement.
In a statement, Commerce Secretary Wilbur Ross said, in any case of a foreign company acting against United States "national security interests", his Department "will take strong action to protect" them.
The move could cripple Jinhua, which relies on American components for its semiconductors, and followed similar action taken by the Commerce Department this year to block sales of components to ZTE, a Chinese telecom company.
Ross said the ban would limit the company's ability to "threaten the supply chain for essential components in our military systems".
The restriction is similar to the Commerce Department's move that almost put Chinese telecommunication equipment company ZTE Corp out of business earlier this year, . after it was cut off from USA suppliers.
The Commerce Department said that ZTE lied to American officials about punishing employees who violated U.S. sanctions against North Korea and Iran.
Derek Scissors, a China expert at the American Enterprise Institute, said the company was one of the country's potential national champions and is in a dispute with its main competitor, USA chipmaker Micron Technology Inc.
The US move will likely add to growing friction between the world's 2 largest economies.
Calls to Fujian Jinhua's offices rang unanswered Tuesday and there was no immediate response to an inquiry made through their website. The firm was accused of lying to American officials about punishing employees who violated United States sanctions against North Korea and Iran.
The Commerce Department cited a "significant risk" that the Chinese firm's new memory chip capacity will threaten the viability of US suppliers of chips for military systems.
Fujian Jinhua is nearing completion of a mammoth $5.7 billion factory in China's Fujian province, a factory that is said to dwarf any existing plants.