Toymaker Lego said today it will invest more than $1 billion in its first factory in the US, which will be carbon-neutral, to shorten supply chains and keep up with growing demand for its coloured plastic bricks in one of its biggest markets.

The factory in Chesterfield County, Virginia, will be the Danish company's second in North America and seventh worldwide, after it announced a new factory in Vietnam last year.

The investment is in line with a decade-old strategy of placing production close to its key markets, which the company says has been beneficial as the global retail industry faces pandemic-related supply chain issues. The plant will also be carbon neutral.

"Our factories are located close to our biggest markets, which shortens the distance our products have to travel," Chief Operations Officer Carsten Rasmussen said in a statement.

"This allows us to rapidly respond to changing consumer demand and helps manage our carbon footprint," he said.

The factory will be powered by renewable energy produced at an onsite solar park, the company said.

Lego has pledged to replace oil-based plastic bricks with ones made from sustainable materials by the end of the decade.

The 160,000-square-metre factory is scheduled to be operational in the second half of 2025 and will employ more than 1,760 people.

The US market is currently supplied from a factory in Mexico.

The company now employs around 2,600 people in the US, where it operates 100 stores.

The family-owned company outpaced growth in the toy industry last year, with sales growing 27% to 55.3 billion Danish crowns ($7.8 billion).

Lego produces roughly 100 billion bricks each year and employs around 24,000 people worldwide.