TOKYO, March 31 (Reuters) – Japan mentioned on Friday it should limit exports of 23 varieties of semiconductor manufacturing gear, aligning its expertise commerce controls with a U.S. push to curb China’s capability to make superior chips.

Japan, dwelling to main chip gear makers reminiscent of Nikon Corp (7731.T) and Tokyo Electron Ltd (8035.T), didn’t specify China because the goal of the restrictions, saying producers would wish to hunt export permission for all areas.

“We are fulfilling our responsibility as a technological nation to contribute to international peace and stability,” Minister for Economy, Trade and Industry Yasutoshi Nishimura instructed a information convention.

Japan desires to cease its superior expertise getting used for army functions and doesn’t have a selected nation in thoughts, he mentioned.

But the choice, coming forward of a weekend visit to Beijing by Japanese Minister for Foreign Affairs Yoshimasa Hayashi, will probably be seen as a serious win for the U.S., which in October introduced sweeping restrictions on entry to chipmaking expertise to gradual China’s technological and army advances.

“Politicising, instrumentalising and weaponising economic and technological issues, and artificially disrupting the stability of global production and supply chains will only harm others and harm themselves,” Chinese overseas ministry spokesperson Mao Ning mentioned at a briefing when requested about Japan’s new export guidelines.

The U.S. wants the cooperation of trade heavyweights Japan and the Netherlands for its measures to be efficient and to make sure its firms don’t face a aggressive drawback.

Those two international locations in January agreed to hitch the U.S. in limiting exports to China of apparatus that may very well be used to fabricate sub-14 nanometre chips, however didn’t announce the pact to keep away from upsetting China, sources beforehand instructed Reuters.

A nanometre, or one-billionth of a metre, refers to a semiconductor trade expertise, with fewer nanometres typically that means extra superior chips.

The Netherlands this month mentioned it deliberate to limit the export of chipmaking gear, reminiscent of from ASML Holding NV (ASML.AS) which dominates the marketplace for lithography methods used to create chips’ minute circuitry.

China has accused the U.S. of being a “tech hegemony” and urged the Netherlands to not observe it.

IMPACT

Effective July, Japan will impose export controls on six classes of apparatus utilized in chip manufacturing, together with cleansing, deposition, lithography and etching.

Chinese corporations “will lose access to more products from Japanese companies that produce chipmaking equipment. Chinese fabs (chip plants) are mostly focused on mature nodes by now, which this isn’t supposed to effect, but we’ll have to see how this plays out,” mentioned Stew Randall, who tracks China’s chip sector at Shanghai-based consultancy Intralink.

The controls are prone to have an effect on gear made by no less than a dozen firms, reminiscent of Screen Holdings Co Ltd (7735.T) and Advantest Corp (6857.T), although minister Nishimura – with out elaborating – mentioned he anticipated restricted influence on home corporations.

A Nikon spokesperson mentioned gross sales of two of its lithography machines will seemingly be affected although the earnings influence was unclear.

“We will continue to comply with any rules and work to maximize our results within them,” the spokesperson mentioned.

Tokyo Electron, Advantest and Screen additionally mentioned they’ll observe the brand new export restrictions, however didn’t say what influence the management might have on their companies.

The curbs will probably be a blow for Japanese gear makers given the absence of a robust home chip market, mentioned Takamoto Suzuki, head of financial analysis for Marubeni in China.

“It will undermine the market development of Japanese companies and certainly reduce their competitiveness from a regulatory aspect,” Suzuki mentioned.

Japan as soon as dominated chip manufacturing however has seen its market share slip to about 10%. Still, it stays a major supplier of chipmaking machines and semiconductor supplies. Tokyo Electron and Screen make round a fifth of the world’s chipmaking instruments, whereas Shin-Etsu Chemical Co Ltd (4063.T) and Sumco Corp (3436.T) produce most silicone wafers.

“If you take a long-term view, the effect will be diminished, with new semiconductor plants coming into operation in places like the United States and Japan,” mentioned Takahiro Shinada, a professor at Tohoku University.

Following the announcement, Nikon’s share value rose 0.9%, in keeping with the broader market (.N225), whereas Advantest completed up 2.4%. Tokyo Electron and Screen had been little modified from the day before today.

Reporting by Tim Kelly, Miho Uranaka, Kiyoshi Takenaka and Mayu Sakoda; Additional reporting by Josh Horwitz and Eduardo Baptista; Editing by Christopher Cushing

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