Eight major Japanese companies are teaming up to develop next-generation semiconductors. They aim to start domestic production in 5 years.

The consortium includes Toyota Motor, Sony Group and telecom giant NTT. They plan to set up a company called Rapidus.

The new firm will develop advanced chips essential for technologies such as self-driving vehicles, supercomputers and digital smart cities.

Chipmakers around the world are competing to create designs with thinner circuits for better performance.

Thinness is measured in nanometers. South Korean company Samsung began mass-producing 3-nanometer chips in June. The new Japanese firm will aim for 2-nanometers or less.

Japanese government officials see domestic semiconductor production as vital for economic security. They plan to help the new firm build a research and development center with a subsidy of 480 million dollars.