Taiwan-based Powerchip Semiconductor Manufacturing Corp (PSMC) has announced its plans to construct a new facility in Miyagi prefecture, Japan, reported Nikkei Asia.

This new chip plant is designed to offer a more consistent supply of chips used in a variety of sectors, including cars.

The facility is scheduled to begin operations in early 2026.

Earlier in July this year, PSMC and Japan-based investment company SBI Holdings agreed to set up the plant.

PSMC and SBI will invest approximately Y400bn ($2.6bn) for the first phase of the facility. The schedule and preparations for the second phase will be confirmed in future.

The total investment in this project is said to be Y800bn.

The project will receive subsidies from Japan's Ministry of Economy, Trade, and Industry (METI).

Construction of the first phase of the facility is predicted to commence early next year.

The METI intends to contribute roughly Y3.4tn to the semiconductor fund in its planned 2023 supplementary budget and seeks to allocate a total of Y140bn for PSMC in the first phase of the project

PSMC and SBI will run the facility through a joint venture company in Japan.

SBI is considering financing the new company through its affiliate, SBI Shinsei Bank, as well as other regional partner banks.

Meanwhile, PSMC will offer technology and staff for the factory.

Once operational, the facility will manufacture semiconductors for arithmetic processing with circuit line widths ranging from 28nm to 55nm to cater to the vehicle and IT sectors.

The monthly production capacity of the plant is expected to be 10,000 silicon wafers with a 12in diameter.

This new facility is intended to boost Japan's chip supply network, as well as enable local enterprises to easily obtain semiconductors for their own use.