WASHINGTON, Dec 16 (Reuters) - The Biden administration still has not decided whether to block more sales of U.S. technology to Chinese chipmaker SMIC, but raised the possibility of discussing with allies further restrictions on selling chip-making equipment to China, sources familiar with a Thursday meeting on the topic said.

Officials at the meeting of deputies from various U.S. agencies talked about a proposal to toughen sales to SMIC and other chipmakers in China, the sources said. The officials appeared to agree that the U.S. should work with friendly countries on a more restrictive policy, one source said.

A spokesperson for the White House declined to comment.

The Trump administration placed Semiconductor Manufacturing International Corp (SMIC) on the U.S. Department of Commerce's trade blacklist late last year over concerns of SMIC's aiding China's military.

The listing, which requires U.S. suppliers to obtain a license before shipping chipmaking equipment and other goods, allows most sales to be decided on a case-by-case basis. However, equipment that can be used to make only the most advanced, 10-nanometer and smaller chips is held to a higher standard and is likely to be denied.

The policy change being considered would restrict sales of items that could also be used for less advanced chips.

However, chip equipment makers argue that if SMIC is not supplied by U.S. equipment makers, the company will buy from other countries.

Reuters has reported that export license requests for SMIC were already slow to get approval. (Reporting by Karen Freifeld; Editing by Christopher Cushing, Chris Sanders and Leslie Adler)