Companies that supply the chip sector with sophisticated and expensive equipment plan to warn the Trump administration against a proposal to blacklist China's top chipmaker, Semiconductor Manufacturing International Corp 0981.HK, arguing it would be "detrimental" to U.S. industry.

The companies are represented by the semiconductor and electronics manufacturing suppliers industry group SEMI, which drafted a letter seen by Reuters that could be sent as soon as this week to Commerce Department Secretary Wilbur Ross.

In the draft letter, the group argued that blacklisting SMIC would jeopardize the United States’ technological edge by making it harder for U.S. companies to supply the company, which accounts for as much as $5 billion in annual U.S. origin equipment and material sales.

They also argue that such a move would “contribute to a growing perception” that the delivery of U.S. goods is “unreliable” and hit U.S. market share worldwide.

"We urge the Department to carefully consider the immediate and long-term detrimental impacts to U.S. industry, economic and national security that may result from the addition of SMIC to the Entity List," said the group, which has 2,400 members worldwide, including SMIC and U.S. chip equipment makers Lam Research Corp LRCX.O and Applied Materials Inc AMAT.O.

The Commerce Department did not immediately respond to a request for comment.

Joe Pasetti, SEMI’s vice president of global public policy, said: “We don’t comment on draft letters leaked to the press.”