As reported by a source with direct knowledge of the situation, Japan is negotiating subsidies worth approximately 15 billion yen ($110 million) for a chip facility that South Korea's Samsung Electronics Co is considering developing near Tokyo.

According to rumours, Samsung, the world's largest memory chip producer, intends to create the facility near its existing research and development base in Yokohama, which will contain its first chip packaging test line.

The IT firm's investment would come at a time when tensions between Japan and South Korea are easing, as the US wants its allies to work together to counter China's rising influence in chips and other technology.

According to the source, who declined to be named because the information is not public, the facility might cost roughly 40 billion yen to build, with the Japanese government subsidising about a third of the cost.

According to Japan's economy ministry, no decisions on subsidies for Samsung have been made, and no particular proposal has been received from the firm.

Japan's Prime Minister, Fumio Kishida, is to meet with executives from leading semiconductor companies, including Samsung, on Thursday to strengthen multilateral collaboration.

Kishida met with South Korean President Yoon Suk Yeol in Seoul last month, the first such visit in 12 years, and the two leaders pledged to strengthen ties.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's largest contract chipmaker, constructed a research facility in Tsukuba, northeast of Tokyo, last year at a cost of approximately 37 billion yen, including 19 billion yen in Japanese government subsidies.

Japan said last month that it would provide 260 billion yen in subsidies to domestic chipmaker Rapidus, which is constructing a facility on the northern island of Hokkaido, on top of the 70 billion yen in government support already obtained.