The government plans to invest ¥100 billion ($635 million) in domestic chipmaker Rapidus under its fiscal 2025 budget, officials said Wednesday.

The company is building a plant in the city of Chitose in Hokkaido to start mass production of next-generation semiconductors with a circuit line width of 2 nanometers in 2027.

With mass production of such chips requiring as much as some ¥5 trillion in funds, the government hopes that its investment will encourage private funding for Rapidus.

The government plans to provide the company with financial assistance of up to ¥920 billion. The investment is expected to be made in the second half of the 2025 calendar year.

The government will continue to support Rapidus' production plan, economic revitalization minister Ryosei Akazawa told a news conference after a visit to the building site.

The government plans to submit legislation to parliament early next year to enable it to provide financial aid, including investment and debt guarantees, to support mass production of next-generation semiconductors.

A panel of experts, who met Wednesday to discuss the legislation, agreed that the government should not interfere excessively in corporate management after its investment in order to avoid becoming a hindrance to quick decision-making.