China's AMEC sues U.S. defence department over 'military company' label

BEIJING (Reuters) - One of China's leading chip equipment makers, Advanced Micro-Fabrication Equipment (AMEC), said on Friday it had filed a federal lawsuit against the U.S. defence department, challenging its designation as a "Chinese Military Company".

AMEC has played a key role in China's push to develop the domestic semiconductor industry and cut reliance on foreign technology, with major chip foundries, such as Semiconductor Manufacturing International Corp, among its clients.

In a statement, AMEC called the designation "erroneous, factually incorrect, without legal basis, and in violation of due process."

It was one of a group of companies added to the list of Chinese Military Companies by the Department of Defense (DoD) in January.

"We are deeply shocked by the designation of AMEC again on the military-related list by the DoD," Chairman and CEO Gerald Yin said in the statement. "Such designation was wrong and groundless."

The department did not immediately respond to a request for comment.

The company had no success in efforts to get the defense department to remove it from the list, it said.

The lawsuit, filed in U.S. District Court in Washington, D.C., seeks a court order removing AMEC from the list. The company said it has never been involved in military activities and strictly complies with all laws and regulations.

While the designation does not directly affect AMEC's business operations, it could affect its reputation and serves as a stark warning to U.S. entities about the risks of doing business with the company, analysts have said.

(Reporting by Beijing newsroom; Editing by Clarence Fernandez)