TOKYO Taiwanese chipmaker Powerchip Semiconductor Manufacturing Corp and Japanese financial firm SBI Holdings said on Tuesday they have selected Miyagi prefecture in northern Japan as the location for a $5.4 billion planned fab.

Reuters reported this month that talks with the government regarding subsidies were progressing in what would become the latest commitment by Taiwanese chipmakers to manufacturing in Japan.

The fab will manufacture chips in the 28-nanometre, 40-nanometre and 55-nanometre categories with a planned monthly output of 40,000 wafers, the two companies said.

Powerchip and SBI announced its plan to build a fab in July and received proposals from more than 30 local governments, with the agreement with Miyagi based on the premise the factory will receive government subsidies.

(Reporting by Sam Nussey; Editing by David Dolan and Jamie Freed)