Posco Holdings said Wednesday it has joined forces with a Chinese cryogenic equipment and engineering firm to produce rare gases essential for chip fabrication in South Korea, securing a domestic supply chain.

Rare gases, or noble gases, are a group of chemically inert gases that include krypton, neon and xenon. While found in extremely small amounts in the atmosphere, these gases are widely used in the production of semiconductors, displays and satellite technology.

On Friday, Posco Holdings and Zhongtai Cryogenic Technology signed a deal to build a rare gas production plant in Gwangyang, an industrial city in South Jeolla Province.

Posco Holdings has a 75.1 percent stake in the joint venture, while Zhongtai owns the remainder. The size of the deal was not disclosed.

According to the steelmaker, the Gwangyang plant is capable of producing 130,000 normal cubic meters of gases per year. While the nation’s chipmakers are heavily reliant on the US, China and Ukraine for their noble gas supply, the new plant’s capacity is expected to meet 52 percent of escalating domestic demand, Posco added.

Posco Holdings will first supply neon to the new plant as a raw material, labeling it as “crude” neon. The steelmaker started mass production of crude neon gases last year in a bid to achieve the complete localization of neon. The firm plans to diversify its product portfolio to crude xenon and krypton from next year.

Zhongtai is then to take charge of equipment and technology needed in gas purification to produce higher purity rare gases.

Construction is scheduled to kick off next year, with an aim to begin commercial production by the end of 2025.