CMC Microsystems pitches Ottawa on $120-million chip manufacturing plan amid global shortage

CMC Microsystems is pitching the federal government on a $120-million proposal to shore up Canada’s domestic supply of semiconductor chips at a time when global supply chains have seen major delays due to the COVID-19 pandemic and skyrocketing demand for smartphones and PCs.

They are also proposing that the Quebec and Alberta governments contribute an additional $20 million each.

CMC manages one of the major science initiatives funded by the Canada Foundation for Innovation. The National Design Network provides over 60 universities and colleges and 1,000 companies with advanced design tools, manufacturing technologies and engineering support for making micro-nanotechnologies.

Now, the not-for-profit wants to significantly expand its national role by establishing the Fabrication of Integrated Components for the Internet’s Edge (FABrIC). It filed a Letter of Intent on May 7 to fund the proposal through the National Ecosystems stream of the Strategic Innovation Fund.

The Letter of Intent describes FABrIC as a “national ecosystem that will accelerate the development and commercialization of intelligent sensor technology and secure Canada’s leadership in three areas of semiconductor manufacturing technology: photonics, microelectromechanical systems (MEMS), and quantum devices."

FABrIC would bring together over 200 partners, including service providers, equipment manufacturers and component suppliers, according to the CMC. It would build on existing capabilities across the country to help academia and companies—particularly smaller firms—design, develop and manufacture new Internet-of-Things (IoT) sensors for healthcare, industry 4.0 and the environment.

CMC plan would expand access to semiconductor manufacturing

Semiconductors have become a mainstay of modern electronics, including major industrial sectors, notably in the automotive sector, which has seen slowdowns in vehicle production amid the prolonged chip shortage.

Targeting niche areas with smaller production runs is more realistic for Canada than building a full service state-of-the art semiconductor foundry, which can cost anywhere from $10 billion to $100 billion, says CMC’s president and CEO Gordon Harling.

The U.S. recently earmarked $50 billion to boost the country’s semiconductor production as part of a $2.3-trillion infrastructure plan. Even this amount of investment falls short, according to the Semiconductor Industry Association, which has said more than $1.4 trillion in government investments and incentives are needed to secure domestic chip production in the U.S.

“Modern foundries aren’t only expensive,” said Harling. “They also don’t create a lot of jobs because they’re so highly automated.”

The cost of designing and fabricating microchips is beyond the means of most researchers and small companies. CMC is able to reduce this cost, however, by combining many designs together for larger fabrication runs at major foundries. FABrIC would go further to expand access to prototyping and low- and high-volume manufacturing by upgrading existing semiconductor fabrication facilities across Canada, including:

• Silicon photonics: Investments would be made at Applied NanoTools (University of Alberta), Teledyne Micralyne (Edmonton) and Teledyne DALSA (Bromont, QC) as well as university-associated laboratories such as the University of British Columbia (UBC), University of Toronto and Laval.
• MEMS: Teledyne is the world’s largest merchant foundry for MEMS but does not offer low- to- mid-level capacity. CMC proposes to address this by investing in university labs at UBC, University of Alberta, Simon Fraser University, Université de Sherbrooke’s 3IT (Interdisciplinary Institute for Technological Innovation) and the MiQro Innovation Collaborative Centre (C2MI).
• Quantum technology: Quantum devices would be built and assembled in Canada with the help of partners like IBM and the quantum institutes at UBC, Sherbrooke and the University of Waterloo.

CMC would bring these facilities customers from both Canada and internationally. Last year, for example, it facilitated the fabrication of 326 designs, including 19 for industry.

“Our industry clients help us with economies of scale so that CMC can purchase [fabrication] capacity to build those devices,” Harling said in an interview with Research Money. “This would allow us to heavily subsidize our Canadian customers, who would pay far less than international or industrial clients.”

CMC also plans to use part of the $120 million, leveraged with funding from Mitacs and the Natural Sciences and Engineering Research Council, to commercialize components and IoT devices.

“We want to take all of these Canadian-built components… and put them into IoT devices. For example, we’re talking to Telus about putting these devices into their 5G marketplace," said Harling.

Part of the government funding would also go towards commercializing promising IoT projects being supported by CMC, including a brain monitoring device that transmits data wirelessly, and an atmospheric COVID sensor.

CMC is looking to both the federal and Quebec governments to contribute an additional $40 million each over five years to bring an IBM quantum computer to Canada, which would be the third such machine outside the US.

New semiconductor council launches

The need to ensure a sustainable domestic supply of chips was also the impetus behind the creation of Canada’s Semiconductor Council. Launched on May 5, the industry-led group of business leaders, chip manufacturers and investors is looking to strengthen trade partnerships, bolster supply chain resilience and to make Canada a global hub for semiconductor research, design and manufacturing.

The council is now interviewing major stakeholders across the country to inform a national strategy and action plan scheduled for release this fall. The council's areas of focus include creating a critical mass of IP-rich anchor companies designing and manufacturing semiconductors, attracting and retaining Canadian skills and talent, scaling Canadian pools of investment capital and bringing more investment to Canada.

“Our first step is really listening and trying to understand the current state and identifying gaps and opportunities, and then working with all the stakeholders across industry, government and academia on how we can build an ecosystem that gives us a global advantage," Sarah Prevette, founder and CEO of the Future Design School and inaugural chair of Canada’s Semiconductor Council, said in an interview with Research Money.

The council aims to address issues such as the supply of minerals, domestic manufacturing, skills and training related to materials science, and supporting entrepreneurship. Another major priority will be access to capital, especially in pre-seed, seed and early-stage rounds as well as later stages.

“One of the biggest hurdles facing Canada’s domestic hardware and semiconductor companies is the lack of access to venture capital. As a result, many technology founders are forced to seek foreign capital, often resulting in early exits at low values to foreign ownership,” Salim Teja, council member and partner at Radical Ventures, said in a news release.

Members of Canada’s Semiconductor Council

Melissa Chee, President and CEO, ventureLAB

Kevin O’Neil, Managing Director, Advanced Micro Devices

Pamela Pelletier, Country Manager, Dell

Sarah Prevette, Angel Investor, CEO Future Design School, Founder of BetaKit (chair)

Salim Teja, Partner, Radical Ventures

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