Workers of HC Semitek, a leading Chinese LED chip maker, produce chips at its subsidiary in Yiwu in East China's Zhejiang Province. (Photo: Yang Hui/GT)

Shenzhen Yitoa Intelligent Control Corp said Monday its acquisition of a Japanese microchips producer, which also makes lithography machines, has been approved by the Japanese government. 

Yitoa Intelligent signed a deal on March 3 to purchase 100 percent of Pioneer Micro Technology Corp, held by Pioneer Corp, with a value of 3 billion yen ($28.3 million), according to Yitoa Intelligent.

Yitoa does not rule out providing chip manufacturing  support to other companies, but it does not have such cooperation currently, the company announced on a public share trading platform Monday.

Analysts said the acquisition will have a positive effect on China's chips industry. But it will take a long time for domestic lithography machine technology to reach international levels, and the technology will not help Huawei get high-end chips for its mobile phones.

"This is a commercial partnership that does not violate US prohibitions. Part of Japan's economy depends on the Chinese market, and the approval of the acquisition can be seen as a signal of continued cooperation between China and Japan," Zhang Xiaorong, director of the Cutting-Edge Technology Research Institute, told the Global Times Monday.

Apart from Japan, South Korea, which is also a semiconductor giant, could cooperate with China in relevant industries, said Zhang.

"It is very likely that the US will try to form a united front for a chip blockade against China, although at the moment the measures are mainly aimed at Huawei rather than China. The policy is based on the 'Make America Great Again' strategy, and how long it will be in effect depends on whether Trump is re-elected," Zhang noted.

According to public records, Pioneer Micro is involved in chip manufacturing and testing. Its lithography machines are mainly used to produce analog chips. 

Analysts said that analog chips, low-end chips that are in the range of hundreds of nanometers, are mainly used in automobiles, rail transit, power and other industrial fields. High-end microchips include 7-nanometer mobile phone chips designed by Huawei and Qualcomm. Therefore, Pioneer Micro's lithography machine technology will not help Huawei phones.

An industry analyst based in Beijing, who asked to remain anonymous, said that although the acquisition shows the efforts of domestic enterprises to develop their chip business and technology, the prospects remain uncertain.

"The manufacturing of lithography machines involves the use of the world's most advanced technology, including that from the US, Japan and Germany. It is a common view in the industry that it may take more than 10 years for China to catch up with international technology levels in making lithography machines," the analyst told the Global Times on Monday.

Shares of Yitoa Intelligent rose 4.43 percent to 7.07 yuan ($1.02)  Monday, with a market capitalization of 7.56 billion yuan.