Five countries account for nearly 91 percent of the global semiconductor market. Canada is not like that.
A group of semiconductor and technology industry associations has released a report asking the federal government to create a Canadian version of the US Chips and Science Act to make the country more competitive on the global stage.
“For Canada, the semiconductor sector represents both a strategic vulnerability and a once-in-a-generation growth opportunity.”
A report released today says Canada is “well positioned” to lead the next generation of semiconductor innovation. It presents five policy recommendations as the basis for a future national semiconductor industrial strategy.
As the only G7 country without a national semiconductor strategy, the consortium warns there is a gap that could threaten Canada's competitiveness, its ability to scale innovation and its ability to exercise technological sovereignty over the digital economy.
“For Canada, the semiconductor sector represents both a strategic vulnerability and a unique growth opportunity,” says the report published by the Canadian Semiconductor Council (CSC), CMC Microsystems, the Information and Communications Technology Council (ICTC) and VentureLAB.
Canada's advantage, according to the report, is that it specializes in the “key tools” of artificial intelligence, defense innovation and advanced computing. These specializations include research and development (R&D), design, photonics and advanced packaging, while other jurisdictions focus on mass production and Canada does not currently have the capabilities to do so.
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To support these benefits, the report calls for Canada to significantly increase public investment in R&D, invest in targeted semiconductor industry training programs, deepen partnerships with other strong semiconductor manufacturing countries, provide targeted regulatory and procurement support, and make the expansion of domestic semiconductor manufacturing and packaging capacity an initiative of the Office of Major Projects.
The consortium hopes Canada can follow the example of countries such as the United States, which has invested more than US$50 billion ($70 billion CAD) in its semiconductor industry through the CHIPS Act, or the European Union, which has its own €43 billion ($70 billion CAD) EU Chip Act.
Five countries—South Korea, Japan, Taiwan, China and the United States—account for approximately 90.7 percent of the global semiconductor market. The US represents more than 50 percent of the global market share. At the same time, the European Union accounts for 9.2 percent.
The countries will collectively share a global semiconductor market worth US$631 billion (C$883 billion) in 2024, according to the report. This market is expected to exceed US$800 billion (C$1.1 trillion) by 2026 as demand for artificial intelligence applications and cloud infrastructure grows.
“Other countries, recognizing the central role of semiconductors in the global economy, are already mobilizing to increase their share of the global market,” the report warns. “Canada needs to act quickly or risk losing talent, intellectual property, investment and its position as a globally competitive country.”
Executives from Canadian semiconductor manufacturers BetaKit spoke with HardTech VentureLab Summit argued in October that Canada should do more to support its own chip companies, especially at later stages, as many promising Canadian chip startups either moved to the south or received clicked up To larger American players over the past year.
“We Canadians have this modest trend, and I think overall it's great,” Chris Smith, AMD's corporate vice president and head of the company's design center in Toronto's Markham, said at the summit. “However, we are talking about a global war for talent and innovation, and I think we need to be bold in that capacity.”
Image provided Vishnu Mohanan on Unsplash.
