Canon will spend more than 50 billion yen ($350 million) to build a plant in Tochigi, Japan to expand production of its existing lithography machines for chip manufacturing.
Canon will start construction in Utsunomiya in 2023 and the plant will start operation in 2025, Canon spokesman Hiroki Kobayashi told Bloomberg News.

The company may also use the facility to produce next-generation chipmaking equipment — around a technique it calls Nanoimprint — however it hasn’t made a final decision yet as that technology is still under development.

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 and is ratcheting up efforts to further restrict China’s access to more mature lithography equipment as well.

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

Canon’s move to build an entire new plant signals an expectation of demand for older chip technology, the report said.