A group of eight leading Japanese firms, including Toyota Motor Corp. and Sony Group Corp., has set up a new company to ramp up the domestic production of next-generation semiconductors, sources familiar with the matter said Thursday.

The joint effort by the consortium, which also includes SoftBank Corp. and Nippon Telegraph and Telephone Corp., comes amid intensifying global competition to develop advanced chips to be used in quantum computers and artificial intelligence as well as military weapons such as missiles.

The government plans to extend ¥70 billion ($478 million) in subsidies to the new company, while the eight firms will invest a total of around ¥7 billion in it, the sources said.