(Bloomberg) -- Japanese chip startup Rapidus Corp. is seeking to raise ¥100 billion ($696 million) from existing and new investors by issuing new shares to finance its chip development efforts.

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Rapidus is gauging appetite for investments totaling ¥80 billion from existing shareholders including Toyota Motor Corp., Sony Group Corp., SoftBank Corp. and MUFG Bank, according to people familiar with the matter. It’s also seeking ¥5 billion each from Mizuho Bank and Sumitomo Mitsui Banking Corp. and another ¥10 billion from the Development Bank of Japan, the people said.

The proceeds will help finance the construction of Rapidus’s foundry in Hokkaido, along with billions of dollars’ worth of subsidies the startup’s slated to receive, the people said. Rapidus has asked shareholders and potential investors for a response by the end of this month, according to the people, who asked not to be named as the discussions remain private.

The startup, which seeks to challenge industry leader Taiwan Semiconductor Manufacturing Co., had initially planned to seek a bank loan of ¥100 billion. But given how far the startup is from commercialization, Rapidus opted to seek investments, rather than a large loan, the people said. Rapidus hasn’t ruled out the possibility of a bank loan in the future, they added.

Representatives at MUFG Bank, Mizuho Bank and Sumitomo Mitsui Banking declined to comment. A Rapidus representative said many financing options are currently under review, without elaborating.

Rapidus was set up in 2022 with the long-shot goal of mass producing next-generation chips by 2027. Both company executives and Ministry of Economy, Trade and Industry officials have said that such an effort would require years of consistent investment. The Japanese government has already committed as much as ¥920 billion in subsidies to Rapidus, with Economy Minister Ken Saito promising to draft a bill that would allow the government to directly invest in the startup. Raising money from the private sector has been a challenge, however.

--With assistance from Min Jeong Lee, Natsuko Katsuki and Yuji Okada.

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