Japan said Tuesday it will provide chipmaker Rapidus with an additional subsidy of ¥260 billion ($1.9 billion) for a new factory to be built in Hokkaido in an effort to boost domestic chip production.

The industry ministry had already announced a subsidy of ¥70 billion to the chipmaker for development purposes, bringing the total amount of government support for Rapidus to ¥330 billion.

"We would like to continue promoting the next-generation chip project in cooperation with relevant parties in the country and abroad," Economy, Trade and Industry Minister Yasutoshi Nishimura said at a news conference.

Rapidus was established through an initial ¥7.3 billion investment by Toyota, Sony Group and six other major Japanese companies last year.

Kajima said separately Tuesday that the constructor won an order to build the plant and plans to start construction in September and complete the work in January 2025.

The state-of-the-art, 2-nanometer chips, set to be produced at the new factory near New Chitose Airport, are seen as indispensable for next-generation industries, such as autonomous driving and artificial intelligence.

Rapidus plans to set up a trial production line in 2025 and begin mass-producing advanced semiconductors by 2027 in partnership with U.S. tech giant IBM.

The state-backed company selected Hokkaido for the project because of the ample water supply and availability of renewable energy, as the advanced semiconductor microchips need to be rinsed with ultrapure water.