KYOTO, Japan -- Towa, a Japanese manufacturer of chipmaking devices, will build a plant for molding equipment used in advanced semiconductors near its headquarters in Kyoto, looking to address economic security concerns by establishing a domestic supply framework.

The company previously made such equipment only in its production bases abroad and at outsourcing partners in Japan.

Towa will spend 5 billion yen ($31.6 million) to construct the plant on the premises of its existing production base in Kyoto, the company's home prefecture, Chairman and CEO Hirokazu Okada told Nikkei. The structure, with a floor area of around 5,000 sq. meters, comes onstream as early as 2029.

The planned factory will churn out molding equipment that encapsulates chips with a plastic for protection against damage, dust and moisture. Towa controls about 60% of the global market for this product. AI chips have a stacked structure to improve performance, so they require highly advanced packaging technologies.

Towa will manufacture the next-generation equipment at the new plant. (Towa) The plant will produce next-generation equipment that hit the market in August, featuring higher yields and double the processing capacity. It will be marketed for chips used for automobiles and industrial machinery.

This equipment is currently assembled at Towa's production bases in China, Malaysia and South Korea. The bases were opened near customer factories.

Towa seeks to establish a structure for manufacturing next-generation products on its own. The company also considered other factors, such as rising wages abroad and the yen's weakness, Okada said.

"By having a new plant in Japan, we'll be able to build technological expertise, in turn raising the quality levels overall, including overseas plants," he said.