(Bloomberg) -- Japan’s government approved as much as ¥192 billion ($1.3 billion) in subsidies for Micron Technology Inc.’s Hiroshima factory, part of Tokyo’s efforts to bolster next-generation chip production at home.

The subsidies will help the Boise, Idaho-based company install Dutch firm ASML Holding NV’s extreme ultraviolet lithography equipment to make advanced chips, Economy Minister Yasutoshi Nishimura said Tuesday. Such chips will be essential to power generative AI, data centers and self-driving technology, he said. The support covers almost 40% of Micron’s investment plans in Japan.

“The market is rough now, but it’s essential that we invest in times like these,” Nishimura said at a regular news conference, referring to an industry-wide slump that’s weighed on the US company’s earnings. “This is to secure a supply of cutting-edge chips that Japan will need for its future economic security.”

The approval marks a win for Micron as it grapples with uncertainty in China, one of its largest markets. A bipartisan group of US senators hopes to meet President Xi Jinping next week in the country, where the company faces an ongoing probe by regulators. Micron has said the investigation put half of its China sales at risk.

Tokyo has set aside a maximum ¥167 billion to help cover Micron’s production costs and as much as ¥25 billion for development costs, Nishimura said. Micron has said it plans to spend about ¥500 billion and produce what it calls one-gamma technology in Japan. The government was preparing subsidies of around ¥200 billion for Micron’s Hiroshima factory, Bloomberg previously reported.

Tokyo’s support comes as similar efforts by the US to bolster domestic chip production are getting stymied by labor issues and slow delivery of promised funding. The world’s biggest chipmaker, Taiwan Semiconductor Manufacturing Co., said in July that it was delaying the start of production at its planned Arizona factory to 2025.

Construction at a TSMC plant in southern Japan has been proceeding relatively smoothly through round-the-clock shifts and a government pledge to pay for almost half the cost. 

Prime Minister Fumio Kishida’s administration has earmarked billions of dollars in subsidies in a bid to triple domestic production of chips by 2030 and help an aging Japan regain some of its former leadership in tech. It’s in talks about support for a second TSMC plant in Japan, and it’s funding homegrown Rapidus Corp. to make the country’s own cutting-edge chips.|

Micron, which bought former Japanese DRAM maker Elpida Memory Inc.’s operations in 2013, said it employs more than 4,000 engineers and technicians in Japan.

“If there are good jobs, young people will stay closer to home and create positive ripple effects for the regional economy,” Nishimura said. “We hope this will also help nurture chip-related talent.”

--With assistance from Vlad Savov and Edwin Chan.

(Updates with details of Micron’s capex plans. A previous version corrected ASML’s name in the second paragraph.)

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