Canada Steps Up Semiconductor Investment – EE Times

The Canadian federal government recently stepped up its support of the country’s semiconductor industry directly and indirectly with recent funding announcements, but there is more work to be done if Canada’s chip sector is to scale up and not repeat past mistakes.
In early April, Prime Minister Justin Trudeau announced $2.4 billion CAD (about $1.75 billion) for AI-related investments, with most of it—$2 billion CAD (about $1.5 billion)—directed at a new AI Compute Access Fund aimed at providing access to computing capabilities and technical infrastructure. The Canadian government also plans to launch a $50 million CAD (about $36.5 million) AI safety institute to help establish guardrails that will protect against what it calls “advanced or nefarious AI systems.”
The Trudeau government followed up the AI investment with more semiconductor specific announcements, including a $187 million CAD (about $136.7 million) investment to help expand chip packaging capacity and capabilities at IBM Canada’s Bromont plant, as well as strengthen its research and development.
These two announcements were in advance of the beleaguered Trudeau government’s budget that attempted to address many other critical issues facing Canadians and restore its low polling numbers. This suggests there will be a significant political change after the next federal election in 2025.
The likely change in government raises a key question around the consistency of funding, which is something that has stymied investment in Canada’s semiconductor industry over the past few decades.
Not all semiconductor funding ideas are coming from government. In early July, CMC Microsystems and Innovation, Science and Economic Development Canada (ISED) announced the launch of FABrIC, an initiative to secure Canada’s future in semiconductors and advanced manufacturing.
FABrIC will be funded with an investment of $120 million CAD (about $87.7 million) over five years from ISED’s Strategic Innovation Fund (SIF). It is an initiative that CMC president and CEO Gord Harling has been championing for some time.
FABrIC will provide financial and technical resources, mentorship, and training for semiconductor businesses, engineers, and scientists in Canada. The initiative also focuses on Canada’s strength’s, Harling said, including resources to create new manufacturing processes for compound semiconductors, quantum technologies, photonics and microelectromechanical systems (MEMS).
Funds from FABrIC will be distributed across startups and established firms, as well as post-secondary and research institutions. These funds will be use to train 25,000 students and 1,000 professors over five years, while providing Canadian universities and colleges with technical resources for students and researchers to design and manufacture advanced semiconductor devices during their studies.
Harling said consistent, stable funding for semiconductor activity is critical if the industry is to grow and scale over the long term—something FABrIC provides. Meanwhile, IBM’s commitment to Canada after having shut down U.S. facilities in New York and Vermont is a positive sign for the country’s semiconductor sector, even if the investment is being given to a multinational, he said.
Canada has been challenged to attract investment into semiconductors since the Nortel fiasco more than two decades ago, Harling noted.  “Nobody wanted to invest in it, certainly not government, and it had too long an investment cycle to attract VC money,” he said.
The federal government’s allocation of (about $1.76 billion) is not very much money when compared to Meta spending $30 billion on data centers to support AI, Harling said, and that Canada’s AI play—like semiconductors—should be all about playing to the country’s strengths.
“There are a bunch of companies doing low-power AI devices for the edge, and they’re all in Canada and they could stay here,” Harling said. “If we concentrate on that and we spent some money on that, we’d have some interesting plays.”
In an interview with EE Times, Stephane Tremblay, executive director at IBM Bromont, said that the significant investment made by the federal government aligns with the company’s growth ambitions for the site, including additional capacity and modernization to support its advanced packaging capabilities. The facility is heavily focused on flip chip interconnect techniques. “That technology evolves quite rapidly,” Tremblay said.
IBM Bromont’s growth strategy is in response to shifting geopolitical circumstances post-Covid, Tremblay said.  “Everybody is realizing that semiconductors are crucial in every angle of our economy.” The pandemic disrupted supply chains and emphasized a strong dependency on Southeast Asia, he added, and the need to bring back a healthy and resilient North American supply chain for semiconductors.
With the U.S. driving major investments on shore with initiatives like the CHIPs Act, Tremblay believes a complementary approach is a good strategy for Canada—the country simply does not have the financial clout to attract or build a multi-billion dollar leading edge fab. “But there’s a lot of other arenas where Canada can play and be a crucial part around the table of that North American supply chain,” he said. “Packaging is an example.”
Tremblay said it is important that investment in the country’s semiconductor sector is opportunistic with an understanding of where Canada is now and expanding where it has strength already in place so it can be a critical link in a successful North American supply chain—rather than competing for the same piece of cake. “There’s so much to be done,” he said. “Let’s be wise here and collaborate strongly with our local partners.”
IBM Bromont is part of what’s been dubbed the “northeast corridor,” which includes Albany’s semiconductor ecosystem in New York, as well as MEMS fabrication in Ottawa and activity in Toronto, Tremblay noted, which comprises a complete “lab to fab” ecosystem. “We believe that there’s a lot of components in the northeast corridor that can support all that value chain from the IP generation up to commercialization,” he said.
C2MI CEO Marie-Josée Turgeon is also bullish on this corridor—her organization recently announced an initiative with NY Creates to enhance research opportunities, expand potential for economic and workforce development.
Aside from the recent investments by the federal government, Turgeon said C2MI has been fortunate that the Quebec provincial government understands that semiconductors are a growing part of its economy and that it makes sense to strategically invest in its strengths.
She said it would not be strategic right now to build a full fab in Canada given the many that are being built south of the border, but there are other technologies the country can play around with, including compound semiconductors and MEMs. Turgeon highlighted Toronto as a hotbed of semiconductor design, especially for AI chips.
She believes the federal government, with its recent funding announcement for AI, understands the link between the hardware and the future of AI. “Canada has a very good position right now as leaders in terms of AI applications and AI.”
Turgeon added that the hardware portion is strategic because of the specific computing needs AI has, which links back to the custom and advanced packaging that IBM is doing in Bromont.
Paul Slaby, managing director of Canada’s Semiconductor Council (CSC), has seen some positive momentum in the past 18 months, with the federal government realizing the importance of the country’s semiconductor industry—even though it has other priorities in its latest budget and is thinking about the next election.
Slaby said the implementation of the funding has yet to be worked out, but the AI funding announcements along with the Bromont and FABrIC investments are positive signs. He said the federal ministry overseeing semiconductor initiatives has also been bolstered with more staff and is more prepared to support the industry. “It’s very different than what it was 18 months ago when we were groping in the dark and the machinery of the federal government was not ready.”
There has been a lot of interaction between the Ontario and Quebec governments, too, and the Albany ecosystem in upper New York, Slaby added. CSC has also been establishing links in Europe and the U.K.
“Our standing in the community and in government relations is just night and day compared to where we were 18 months ago, even 12 months ago,” he said.
Canada still needs to put its money where its mouth is, Slaby said, as the country is still far behind compared to other countries when it comes to semiconductor investment. Announcements like the AI investment is a good start, he said, “but there’s a lot more work to be done.”
Slaby said Canada still needs to ramp up at the policy level with its own equivalent of the CHIPs Act, even though awareness of the semiconductor industry and its importance is much higher. He said there is a lack of a specific policy followed by initiatives to implement that policy, such as a strategic semiconductor investment fund or collaborative funding.
Slaby cited the FABrIC proposal as a significant and elaborate initiative, noting that Canada is at its best when it takes a targeted, strategic approach that clears a space for its innovators and entrepreneurs to compete.
Like Slaby, Untether AI CEO Chris Walker sees recent government investment announcements as a good start, but modest given the infrastructure necessary to support AI. What is needed, he said, is a virtuous cycle that will both propel and perpetuate leadership in the sector. “It’s an area where I think the funding hasn’t been focused or could do a better job.”
Untether AI is a Canadian startup with its headquarters in Toronto. “Most of our development remains here, but there’s other pieces of the puzzle that we need that aren’t necessarily here,” Walker said.
Walker added that the market for Untether AI’s chips is outside of Canada, but there is many Canadian industries that could benefit from its technology and AI innovation, including agriculture and mining. He said there needs to be more of focus on the downstream use of AI and semiconductor technology at home—not just research or setting up a supercomputer.
Consistency and persistence are important given the long design cycles of semiconductors, Walker said, and that means government initiatives must span administrations.
He said Canada does an exceptional job of supporting its university system to get people trained in semiconductor-related disciplines. “As they grow their experience, you also want them to stay in Canada. You want a vibrant set of companies where people move around and ideas flow from that.”
At the province of Ontario level, Walker said there has been international trade missions that have given companies like Untether needed visibility. “It’s not dollars upfront, it’s the action to make things happen and make the connections,” he said. “That’s been definitely valuable for us.”

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Gary Hilson is a freelance writer and editor who has written thousands of words for print and pixel publications across North America. His areas of interest include software, enterprise and networking technology, research and education, sustainable transportation, and community news. His articles have been published by Network Computing, InformationWeek, Computing Canada, Computer Dealer News, Toronto Business Times, Strategy Magazine, and the Ottawa Citizen.
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