Shin-Etsu Chemical said Tuesday that it will build a new semiconductor materials plant in the city of Isesaki, Gunma Prefecture, at a cost of some ¥83 billion.

The plant, slated to be completed by 2026, will make photoresists, including extreme ultraviolet resists used for state-of-the-art chips for generative artificial intelligence systems, and other semiconductor-related materials. The investment includes the cost to buy a 150,000-square-meter site for the factory.

It will be the Japanese company's first new domestic production base since its plant in the city of Kamisu, Ibaraki Prefecture, was built in 1970. The Isesaki plant will also carry out research and development in the future.

Currently, the company makes photoresists and related products at its plants in the prefectures of Niigata and Fukui, both along the Sea of Japan, and in Taiwan. It selected Gunma, an inland prefecture, which borders Niigata, for the new plant in order to hedge risks.

Japanese companies have strengths in the production of semiconductor materials. Shin-Etsu Chemical is among the world's leading makers of photoresists and silicon wafers.

Shin-Etsu Chemical's move comes as the government is strengthening chip supply chains as part of efforts to beef up economic security, at a time when chip-related companies in the nation are in fierce competition with foreign rivals.

As part of the government initiative, state-backed Japan Investment Corp. is aiming to acquire domestic semiconductor materials maker JSR Corp. through a tender offer that is set to close on April 16.