Canada's Semiconductor Council releases 30-year action plan to boost semiconductor manufacturing

Sebastian Leck
December 15, 2021

Canada's lack of a semiconductor manufacturing base poses a national security risk amid a global shortage, says Canada's Semiconductor Council in a new report.

The report lays out a 30-year action plan to develop Canada's semiconductor industry. With semiconductor manufacturing concentrated in Asia, Canada has been left highly dependent on international supply chains, says Salim Teja, a founding member of the council and a partner at venture capital firm Radical Ventures.

"When you look at the semiconductor sector itself, about 75 percent of the supply chain today exists in China and East Asia," he said in an interview with Research Money. "That means that anytime there's any sort of regional disruption in that part of the world, it affects the whole world."

A confluence of events during the COVID-19 pandemic, including worsening U.S.-China relations, natural disasters and a surge in global demand, caused a semiconductor shortage that may go on for years. Canada's auto industry has been hit particularly hard, with car sales down almost 18 percent in October from 2020 due to the shortage.

Semiconductors are critical for creating integrated circuits and are essential components for computers, cars, smartphones, home appliances like refrigerators, medical devices and any other device that needs computing power.

"The first area of concern is how do we start to address this significant concentration that exists in the world and build a better resiliency?" Teja said.

He added that geopolitical tensions with China are also concerning. The Canadian government will soon be issuing a decision on whether to allow Huawei to become a 5G provider, which could have wider implications.

"There is a growing conversation about China's role in technology, and what that may mean for the way that we procure technology for things like telecommunications and sensors, and how concerned we should be about geopolitical conflicts," he said.

Canada needs strong brand and specialization: action plan

The action plan lays out four priority areas: strengthening and diversifying Canada's supply chain, developing onshore manufacturing, establishing a specialization and strong brand for Canada, and fostering innovation and supporting market development.

Canada's semiconductor industry is concentrated in Southern Ontario and Southern Quebec. The Semiconductor Council says that global giants like AMD, Qualcomm, Synopsys, Intel, IBM, Teledyne Dalsa/Micralyne and Semtech have a strong presence in the regions and have grown by acquiring Canadian companies over the last 20 years.

Canada is strongest in design, and very few Canadian companies have established foundries or packaging facilities. Semiconductor fabrication facilities, known as "fabs," are very expensive, with advanced analog fabs requiring around USD $5 billion and advanced logic and memory fabs costing up to USD $20 billion, according to the report.

That's why it is important to establish a specialization that plays on Canada's strengths, such as AI, the automotive sector and sensors more broadly, Teja said. The report notes several regions already have established centres of research that could be leveraged.

"I don't think we can match the firepower of other regions around the world. But I do think that we have an ability to pick and choose areas where we can win," he said.

He added that Canada's approach to AI is an example of a successful strategy, where government drove funding into research and used the immigration system to bring in international talent.

The action plan lays out short-term goals for 2021-2025, medium-term goals for 2021-2035 and long-term goals for 2021-2050. In the long-term, the Semiconductor Council says that Canada should encourage innovation to lower the amount of time and resources required to build fabs and produce semiconductors at scale.

Teja says that the federal government hadn't paid attention to semiconductors until about two or three years ago, but it is now urgent to adapt to the changing world economy.

"I don't fault them necessarily. Because priorities were different," he said. "But the world now is very different. We have to take a fresh new look at where the world is going and how Canada's domestic policy and trade policy needs to evolve."


Other News

Events For Leaders in
Science, Tech, Innovation, and Policy

Discuss and learn from those in the know at our virtual and in-person events.

See Upcoming Events

You have 1 free article remaining.
Don't miss out - start your free trial today.

Start your FREE trial    Already a member? Log in


By using this website, you agree to our use of cookies. We use cookies to provide you with a great experience and to help our website run effectively in accordance with our Privacy Policy and Terms of Service.