BROMONT, QUE. — The federal government is providing $59.9 million in financing for a $226.5-million expansion of IBM’s semiconductor packaging plant in Bromont, Que., and for the tech giant to develop quantum technologies with a local R&D lab, The Logic has learned. 

IBM is planning to spend more than $1 billion over five years on the plant, a key asset in Canada’s plans to create continental chip supply chains. 

IBM opened its campus in the Eastern Townships city in 1972. It assembles and tests microelectronic components for the firm’s hardware products and external clients. The facility is also the largest packager of semiconductors in North America, a crucial late stage in the manufacturing process that adds housing to protect the device and connects it to external circuits.

The plant’s expansion signals Canada’s “important role in securing and strengthening the semiconductor supply chain right here in North America,” Innovation Minister François-Philippe Champagne said at an on-site announcement of the funding Friday morning.

As The Logic first reported Friday, money will come from the federal government’s flagship Strategic Innovation Fund and help pay for IBM to increase the facility’s manufacturing capacity and capabilities.

The federal award will contribute to the first phase of IBM’s buildout, which will cost $187 million. It includes $24.9 million for IBM and Centre de Collaboration MiQro Innovation (C2MI), a neighbouring non-profit R&D lab backed by the federal and Quebec governments, to develop manufacturing processes for hardware used in photonics and quantum computing, specialized spaces within the chip field. IBM’s Bromont facility houses an advanced quantum computer, unveiled in September 2023.

Quebec is providing the tech firm another $40 million in financing for the project, including a $30-million forgivable loan for equipment. 

The federal government first announced plans to back the plant expansion in March 2023, during U.S. President Joe Biden’s visit to Ottawa. The facility is the only non-U.S. site qualified under the U.S. Defense Department’s Trusted Foundry Program, which sets out the suppliers from which the Pentagon can buy. 

Just three per cent of advanced semiconductor packaging takes place in North America, according to a November 2021 report from IPC, an electronics industry association. Most chip companies based here currently outsource to companies or facilities in China, Taiwan and other Asian sites.  

Amid simmering geopolitical tensions with Beijing, Washington is making a push to reshore semiconductor production. The US$52.7-billion U.S. CHIPS and Science Act offers significant subsidies for companies to build new fabrication facilities in the U.S. Canadian policymakers and companies have jockeyed to participate in the strengthened continental supply chains. It also includes US$3 billion for packaging R&D, training and plants. 

Innovation Minister François-Philippe Champagne has repeatedly touted a chip manufacturing and development corridor between Bromont and Albany, N.Y., where IBM has its semiconductor research site. The tract encompasses production facilities run by GlobalFoundries and Teledyne DALSA Semiconducteur, as well as Canadian accelerators 3IT, CMC Microsystems and C2MI.  Canadian and U.S. officials met in Albany in October to discuss potential cooperation areas.

Ottawa sees the northeastern corridor as the first installment of a broader North American semiconductor strategy, a confidential source familiar with the government’s approach said last year. The Logic granted the source anonymity to discuss the plans. The federally subsidized facility expansion will help secure its role. “If you have the only advanced packaging capabilities on the continent—I’m speaking of IBM Bromont—obviously that makes you a key player in the supply chain,” the source said.

U.S. Ambassador David Cohen, who attended the announcement, called the expansion a major step towards rolling out the bilateral “vision for a corridor that covers everything from chip manufacturing, to assembly, packaging and testing.” The two countries have complementary capabilities, with the U.S. focused on the production stage and Canada the other three, he told The Logic in an interview. 

With new semiconductor foundries popping up across the U.S., “all those wafers need to be packaged,” said Stephane Tremblay, the site lead for IBM Bromont site, in an interview. The facility’s expansion and new technology will let it compete for that business. The firm’s $1-billion spend will cover capital and operating costs over the next half-decade.

In recent years, the plant has primarily served clients focused on the aerospace, defence, telecommunications and high-performance computing markets. But IBM sees new opportunities in the components that outfit the data centres enabling AI applications, autonomous vehicles and other uses. Tremblay said the plant will soon be able to package optical components and processors closely together, an increasingly sought-after combination as server data and bandwidth needs grow. 

“We’re at the junction [where] the packaging is becoming so critical in chip innovation,” said Tremblay, noting that manufacturers can’t simply keep increasing the density of the transistors on their circuits to keep improving performance. He said the quantum R&D is a longer-term effort, with manufacturing still a way off.

Ottawa has pledged $250 million in total from the Strategic Innovation Fund for semiconductor manufacturing projects. 

This story has been updated with interviews and details from the funding announcement