TOKYO, Feb 2 (Reuters) - Japan components manufacturer TDK 6762.T said on Monday that it is being affected by Chinese export restrictions on rare earths and is taking steps to diversify its procurement sources.

China last month banned exports of dual-use items that can be used for military purposes to Japan, with the items including rare earths, amid a diplomatic dispute.

"Procurement of materials has reached an extremely difficult stage," TDK Chief Financial Officer Tetsuji Yamanishi told an earnings briefing.

The impact began last year, not in January, with the company maintaining production using stockpiled materials, Yamanishi said.

"Long term, we must diversify our procurement sources, and we are currently making various advances," he said.

The company is developing technology to produce magnets without rare earths or using them as little as possible, Yamanishi said.

(Reporting by Kentaro Okasaka; Writing by Sam Nussey; Editing by Jacqueline Wong)

((sam.nussey@tr.com;))