TOKYO/TAIPEI (Oct 5): Canon Inc will spend more than ¥50 billion (US$350 million or RM1.6 billion) to build a plant in the central Japanese prefecture of Tochigi to expand production of its existing lithography machines for chipmaking.

Construction will begin in Utsunomiya in 2023 and the plant will start operation in 2025, Canon spokesman Hiroki Kobayashi told Bloomberg News by phone on Wednesday. The company may also use the facility to produce next-generation chipmaking equipment — around a technique it calls Nanoimprint — however it has not made a final decision yet as that technology is still under development, Kobayashi said.

Lithography machines are critical equipment in the chipmaking process. Washington has ensured that China cannot procure the most advanced lithography technology from industry leader ASML Holding NV and is ratcheting up efforts to further restrict China's access to more mature lithography equipment as well.

Tokyo-based Canon trails compatriot Nikon Corp and the Netherlands' ASML in the supply of chipmaking gear, and its products are used to fabricate less advanced semiconductors on mature production nodes. According to China's Founder Securities, Canon's lithography machines can make chips only as advanced as 130 nanometers, a technology that first became available more than 20 years ago.

Canon's move to build an entire new plant signals an expectation of enduring demand for older chip technology.