By Tetsushi Kajimoto and Sam Nussey

TOKYO (Reuters) -Japan’s government will allocate roughly 2 trillion yen ($13 billion) to support efforts to boost its chip industry, marking the latest move by the Asian nation to reclaim its past glory in the critical sector.

The country is a leading provider of chipmaking tools and materials that lost its edge in manufacturing in recent decades and is now providing subsidies to chipmakers to build capacity.

Some of the funds, which will be earmarked through a supplementary budget for this fiscal year, are expected to be used to support Taiwanese chipmaker TSMC and chip foundry venture Rapidus, which aims to manufacture cutting-edge chips in Hokkaido.

The chip industry allocation is part of Prime Minister Fumio Kishida’s 13.1 trillion yen spending promised in the 2023/24 extra budget which his government approved on Friday.

To fund the spending, Japan is set to issue close to 9 trillion yen ($59.8 billion) in bonds, raising some concerns about ballooning debt.

($1 = 151.3400 yen)

(Reporting by Tetsushi Kajimoto and Sam Nussey; Editing by Chang-Ran Kim and Muralikumar Anantharaman)

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