The US has barred Intel from supplying thousands of computer chips that would have been used in a supercomputer in China due to fears about how the machines would be used.
Intel had applied to the US government for an export licence on the hardware last August, but this has now been refused.
The official concern is that the equipment was destined for the 33 petaflop Tianhe-2 computer, which is housed at China's National University of Defence Technology, and is used in the pursuit of nuclear research.
"The TianHe-1A and TianHe-2 supercomputers are believed to be used in nuclear explosive activities," said the US Department of Commerce in a report about its recent decision (PDF).
Tianhe-2 is one of the biggest computers in the world, and the Intel chips were expected to double its powers, according to reports.
The decision comes after China's National University of Defence Technology was blacklisted by an assessment panel called the End-User Review Committee, which includes the Departments of Commerce, State, Defence, Energy and Treasury.
Organisations placed on the so-called Entity list have officially "been determined by the US government to be acting contrary to the national security or foreign policy interests of the US".
Three other Chinese operations were added to this list recently: the Guangzhou Supercomputer Centre, the Tianjin Centre and the Changsha National Supercomputing Centre.
V3 has asked Intel for its respons to the story.
However, in a statement to the HPCwire website, the firm appeared to acknowledge the decision and that it would abide by it as required.
"Intel was informed in August by the US Department of Commerce that an export licence was required for the shipment of Xeon and Xeon Phi parts for use in specific previously disclosed supercomputer projects with Chinese customer Inspur," said Intel.
"Intel complied with the notification and applied for the licence which was denied. We are in compliance with US law."
Intel was recently awarded US government money to build a environmental supercomputer at the Argonne National Laboratory as part of a deal with the US Department of Energy (DoE) that will deliver performance of 180 petaflops.
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