Rapidus, which in February picked Chitose, near Sapporo, as the site for a cutting-edge two-nanometre chip factory, previously secured an initial 70 billion yen funding from the government.

The additional grant will be used to help Rapidus build a prototype line scheduled to launch in 2025, the Hokkaido Shimbun paper said, citing multiple unidentified sources.

Rapidus chair Tetsuro Higashi told Reuters in February that it would need about 7 trillion yen of mostly taxpayer money to begin mass-producing advanced logic chips in around 2027, with support from American chip giant IBM Corp (IBM.N).

The Japanese government is also offering up to 476 billion yen in subsidies to a Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW) plant in Kyushu, in which Sony Group Corp (6758.T) and Denso Corp (6902.T) each have a minority stake