A digital neuro chip with proliferating neuron architecture is described. This chip simulates a neural network model called the adaptive segmentation of quantizer neuron architecture (ASQA). It has proliferating neurons, and can automatically form the optimum network structure for recognition according to the input data. To develop inexpensive commercial hardware and implement a proliferating neuron architecture, we adopt a virtual neuron system for hardware implementation. Namely, this chip is implemented with only an arithmetic unit for network computations, and the network information such as network structure, synaptic weights and so on, are stored in external memories. We devise our original architecture which can efficiently memorize the network information, and moreover, construct a structured network using the ASQA model. As a result, we can recognize about 3,000 Kanji characters using a single chip and a recognition speed of 4.6 msec/character is achieved on a PC.