The United States, Japan and the Netherlands have sealed an alliance to limit China’s access to advanced semiconductor machinery.

Japan and the Netherlands are about to join usa to limit China’s access to advanced semiconductor machineryforging a powerful alliance that will undermine Beijing’s ambitions to build its own national security capabilities. chipsaccording to people familiar with the negotiations.

US, Dutch and Japanese officials are set to conclude talks as early as Friday US time on a new set of limits to what can be supplied to Chinese companiesthe people said, asking not to be named because the conversations are private. Negotiations continued late Thursday in Washington. There are no plans for a public announcement of the restrictions that will probably just be applied, the sources claimed.

The Netherlands will extend the restrictions to ASML Holding NV, which will prevent it from selling at least some of its deep ultraviolet lithography machines, crucial for making some types of advanced chips and without which attempts to set up production lines may be impossible. Japan will impose similar limits on Nikon Corporation.

A spokeswoman for the National Security Council declined to comment.

The joint initiative expands the restrictions that the administration of the President of the United States, Joe Bidenunveiled in October in order to limit China’s ability to make its own advanced semiconductors or buy next-generation chips abroad that could contribute to its military and artificial intelligence capabilities. The three countries are home to the main companies producing chip manufacturing equipment, such as ASML, Japan’s Tokyo Electron Ltd. and US Applied Materials Inc.

American equipment manufacturers have complained that the unilateral action by the Biden administration allowed foreign competitors to continue operating in one of the largest markets for their products and undermined the goal of restricting China’s military advances.

Tokyo Electron, which has sold chipmaking equipment to China, reversed gains and fell about a one% after the report of Bloomberg.

Chinese chipmakers also fell. Semiconductor Manufacturing International Corp. Shanghai extended its descents to the 2.1%while Hua Hong Semiconductor Ltd. fell down to a 1.5%.

Also, the Chinese yuan reversed previous gains against the dollar, weakening a 0.1% to 6.7448 after the report. The Chinese currency had reached its highest level in two weeks thanks to signs of a revival in tourism and consumption during the Lunar New Year holidays. The shortage of operations has also amplified movements in the foreign exchange market, with the continental markets closed.

“This makes the next escalation in the US-China tech war a a bit more significant and could weaken yuan sentiment a bit in the near term“, it states fiona limecurrency strategist at Malayan Banking Berhard in Singapore.

China has struck back. In December, Beijing filed an appeal with the World Trade Organization to overturn US-imposed export controls.

Even the executive director of ASML has warned that the US campaign could have unintended consequences. On January 25, Peter WenninkCEO of ASML, stated that the export control measures against China promoted by the United States could push Beijing to successfully develop its own advanced chip manufacturing technology.

“If they can’t get those machines, they will develop them themselves”he said in an interview with BloombergNews. “That will take time, but eventually they will get it.”

(With information from Bloomberg)

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