As the world recovers from a severe chips shortage during the pandemic, building a domestic semiconductor industry in Canada has become increasingly urgent—especially as artificial intelligence adoption accelerates and the need for massive computing power becomes greater.

It’s an opportunity Canada is eager to seize, with the federal government pledging $250 million for semiconductor projects from the Strategic Innovation Fund this spring. It’s also aiming to collaborate with the U.S., where the Biden administration has introduced its own US$52.7-billion CHIPS and Science Act that is designed to counter China. 

To provide a look at how the semiconductor industry is developing in Canada, The Logic conducted an extensive analysis of data from PitchBook, surveyed recent media coverage and announcements, and interviewed several experts and executives in the industry. While this methodology doesn’t capture every possible corner of Canada’s semiconductor ecosystem, it aims to show the key players and hurdles ahead.

Despite the industry’s ambitions and the potential to reshape chip manufacturing at home, the goals for the future of Canada’s semiconductor ecosystem are still being shaped, sparking debate about whether the country should invest in chip fabrication manufacturers, or fabs, to support its industry of “fabless” design-based firms. 

Innovation Minister François-Philippe Champagne said earlier this year that “Canada is very, very, very recognized” for semiconductor design and applied research, as well as for packaging and testing, but needs to “combine what we do well on the front end, what we do well in the back end, and make sure that we build everything in between, so that we have the full value chain here in Canada.”

Ben Bergen, president of the Council of Canadian Innovators, pointed to energy-efficient chips and autonomous vehicles as two end markets where the country could grow. “We now find ourselves in a completely new reality around where we can be successful in semiconductors,” he said. 

Here’s a look at Canada’s semiconductor footprint by sector, and the industries that are served by more than 100 companies conducting microchip R&D, over 30 applied research laboratories and five commercial facilities in the country: 

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The semiconductor major leagues

Canada is home to offices of some of the major integrated device manufacturers—semiconductor companies that cover wide swaths of the supply chain, like Intel—as well as some of the world’s biggest fabless firms and Big Tech companies that dabble in the chip supply chain. But the extent to which major chip firms play a role in the Canadian ecosystem varies. 

A snapshot of the players: 

• AMD (Santa Clara, Calif.): The multinational firm has a large presence in Canada and a representative on the country’s semiconductor council after acquiring Markham, Ont.-based ATI Technologies for US$5.4 billion in July 2006. 
• IBM (Armonk, N.Y.): Has a packaging and testing centre, which focuses on the tail end of the manufacturing process, and an accelerator in Quebec. 
• Intel (Santa Clara): Has offices in Toronto, Vancouver and Montreal. Its website says its Canada division is developing new modem semiconductor technologies and graphics solutions.
• Marvell (Santa Clara): Has offices in the Ottawa, Toronto and Vancouver areas and partnerships with the University of Toronto, Carleton University and the University of Waterloo. 
• Microchip Technology (Chandler, Ariz.): Has B.C., Ontario, Quebec, Alberta and Saskatchewan offices focusing on applications like data centres. 
• Nvidia (Santa Clara): The company (which recently became the world’s most valuable chipmaker on investors’ AI enthusiasm) has a Toronto-based artificial intelligence lab.
• NXP (Eindhoven, Netherlands): Its Ottawa business focuses on software and silicon IP development for dataplane processing, as well as image cognition IP for autonomous vehicles. 
• Onsemi (Scottsdale, Ariz.): Has a Burlington, Ont., manufacturing facility. 
• Qualcomm (San Diego, Calif.): The company has offices in Vancouver and Markham, Ont., after acquiring Nuvia, which opened its first international office in the latter city in 2020. 

The hurdles and opportunities ahead: The U.S. CHIPS Act is prompting big investments south of the border, and Canada is getting in on the action. IBM will expand packaging and testing capabilities at its facility in Bromont, Que., as part of a cross-border packaging corridor, and the U.S. promised US$50 million for corresponding U.S. and Canadian semiconductor packaging or circuit-board printing. 

The CHIPS Act also prompted spending on U.S. fabs, the core manufacturers at the centre of the supply chain. For certain chip sizes, fabs have been nearly monopolized by giant Asian firms. 

Should Canada go after a big fab of its own? Stefano Gregori, who leads the University of Guelph’s microelectronics research group, said restoring Canada’s chip-manufacturing industry is important because foundries can be hotbeds for innovation. 

But Nizar Rida, vice-president of engineering and Canada country manager at Marvell, said building a big fab requires huge investments and was a tough sell even in the heydey of telecom giant Nortel. Packaging, like the work being done by IBM, could be a better “next frontier” for Canada, he said. 

The lab and services ecosystem

Canada’s semiconductor companies depend on hubs that share access to expensive equipment, as well as accelerators and advisers that help connect startups to the massive foundry industry overseas. 

A snapshot of the players: 

• Accenture (Dublin, Ireland): The global consulting firm recently acquired Ottawa-based XtremeEDA, which offers semiconductor engineering services.
• Applied Nanotools (Edmonton): Offers fabrication services for photonic integrated circuits and helps groups like CMC manufacture prototypes for researchers.
• C2MI (Bromont, Que.): Offers more than $175 million worth of equipment in Quebec’s innovation zone that supports semiconductor tech.  
• Canadian Photonics Fabrication Centre (Ottawa): The only compound semiconductor foundry in North America that is publicly operated and “open to all for use.”
• CMC Microsystems (Ontario and Quebec): Helps hundreds of academics as well as some companies to manufacture prototype chips.
• DA-Integrated (Ottawa): Conducts testing to help improve semiconductor quality. 
• Digitho (Bromont): Helps the semiconductor industry reduce recalls and improve yields.
• VentureLab (Markham, Ont.): The organization’s Hardware Catalyst Initiative has a $7-million prototyping and testing lab.
• Zebra Technologies (Lincolnshire, Ill.): Owns Montreal-based Matrox Imaging, which makes machine-vision technology that can be used in semiconductor inspection.

The hurdles and opportunities ahead: VentureLab’s outgoing president and CEO Melissa Chee said foreign direct investors want to see a robust domestic ecosystem, so it’s important that startups and scale-ups are able to not just research but also design and commercialize chips, if Canada wants to be a “serious contender.” 

Gregori at the University of Guelph said Canada also needs to do more to encourage students to get master’s or doctoral degrees in semiconductor-related engineering, a credential that’s often needed to work at high-tech companies. 

“Our graduate students with a master’s have an opportunity to design and manufacture their own computer chip,” said Tony Pialis, co-founder and CEO of Alphawave Semi. “That’s why you have U.S. companies up here competing for talent.” 

The semiconductor ecosystem around AI

Canadian startups are homing in on AI as one of the top applications for their chip designs or related semiconductor research and software—as are American companies like Astera Labs. 

What’s helped the growth of this corner of the Canadian semiconductor industry is deeply rooted talent. Marvell’s Rida said companies like ATI, Bell-Northern Research and Nortel have left Canada with a strong supply of workers with expertise in graphics processing, networking and switching, as well as optical technology. The latter, in particular, is becoming key to scaling AI technology quicker, he said. 

A snapshot of the players:

• Astera Labs (Santa Clara, Calif.): Works on chip technology for data centres, and has a Vancouver lab dedicated to AI and an R&D centre near Toronto.
• Blumind (Ottawa/Toronto): Does “brain-inspired” processing.  
• Epic Semiconductors (Vancouver): Is creating a battery-free, microscopic AI chip.
• Movellus (San Jose, Calif.): Has a Toronto R&D centre and focuses on technology for edge AI and cloud computing chips.
• Ranovus (Ottawa): Creates power-efficient technologies for AI and data centres.
• The Six Semiconductor (Markham, Ont.): The subsidiary of South Korea-based OpenEdges develops high-speed technology for AI/machine learning, high-performance computing, mobile devices and the automotive sector. 
• Tartan AI (Toronto): Works on intellectual property that helps semiconductor companies boost performance and energy efficiency for deep learning.
• Tenstorrent (Toronto): Aims to make “a highly programmable chip at an accessible price point” for data centres being transformed by AI. 
• Untether AI (Toronto): Creates chips designed for AI with applications like autonomous vehicles and quantitative functions in financial services.

The hurdles and opportunities ahead: Rida said the growing demand and interest in generative AI means that more data will be crunched in real time, requiring a new class of training servers. That could be an opportunity to leverage Canadian-made technology like optical technology. 

“That’s the reason why it’s important for us to be here in Canada,” said Rida. 

Consumer electronics, data centres, WiFi and 5G 

Data centres are closely aligned to the AI boom, but are also powering other tech trends like the increased transmission of data on 5G networks, cloud computing and the Internet of Things. 

“As the world becomes so data centric, everything’s actually flowing into the cloud, right? So think about the Zoom call … it’s being hosted in a cloud data centre up in Seattle,” said Nigel Alvares, vice-president of global marketing and business planning at Marvell.

A snapshot of the players:

• Aeponyx (Montreal): Designs chips that aim to minimize data-centre downtime. 
• Alphawave (London, U.K., and Toronto): The company, which is listed in the U.K. but houses most of its executive team in Toronto, offers chiplet solutions, custom silicon and works with data centres, as well as 5G and other applications.
• Bonsai Micro (Vancouver): Uses machine learning to create semiconductor technology for wireless networks, including 5G and satellite infrastructure.   
• Boréas Technologies (Bromont, Que.): A fabless company that creates high-voltage, low-power technology for smartphones, trackpads and wearables, as well as for automotive and industrial applications.
• Eleven Engineering (Edmonton): Designs and manufactures semiconductor components for wireless audio. 
• MEMS Vision (Montreal): Powers Internet-of-Things sensors for appliances, wearables, smartphones and tablets, as well as for automation in buildings and industrial systems. 
• Peraso (San Jose, Calif.): The company, which also has a Toronto headquarters, works on 5G-related chips, as well as VR, consumer electronics and broadband. 
• Sheba Microsystems (Toronto): A fabless semiconductor company that develops solutions for cameras in smartphones, tablets, cars, VR, barcode scanners and wearables.
• Skyworks (Ottawa): The maker of analog and mixed-signal semiconductors has a design centre for controllers and other devices for sectors like Wi-Fi and broadband. 
• Spark Microsystems (Montreal): The fabless semiconductor company develops ultra-wideband technology that can make wireless devices and sensors more energy efficient. 

The hurdles and opportunities ahead: Companies that can set themselves apart in this market, said Alvares, are chasing the “fastest, biggest growing market.”

Rida agreed: “We now see data centres rebuilt every year and a half—it used to be four to five.” 

Alphawave’s Pialis said chiplets, which are modular and can be combined into more powerful processing systems, are “critical for data centres, critical for the automotive sector, even for consumer electronics.” 

“It’s a growing trend,” he said. 

The semiconductor ecosystem for machines

Chips are important not only in tech products like VR headsets, but are also of growing importance in non-tech industries. Several Canadian companies are creating chips for cars, health care and other machines.

The players: 

• Canon (Tokyo): The camera giant owns Saanichton, B.C.-based Redlen Technologies, which has a proprietary process for making Cadmium Zinc Telluride semiconductors for X-ray and imaging machines.
• Comport Data (Montreal): Develops and tests application-specific technology and chips for commercial, industrial and medical fields, such as X-ray scanners and CT scan systems. 
• Daanaa (Vancouver): Chip-based technology used in electric vehicles, solar power and other devices with batteries. 
• Infineon (Neubiberg, Germany): Acquired Ottawa-based GaN Systems, which makes more efficient wide-bandgap semiconductors and plans to maintain its team in Canada’s capital.
• Macom (Lowell, Mass.): The company, which offers foundry and design services, has an office in Burlington, Ont. It creates semiconductor technology for the aerospace, defence, industrial, scientific and medical fields in addition to networking. 
• Matrox Video (Montreal): Offers an IP portfolio for video-broadcasting chip designs. 
• One Silicon Chip Photonics (Montreal): Fabless integrated optics-sensor company providing navigation sensors for autonomous vehicles.
• Teledyne (Thousand Oaks, Calif.): The Waterloo, Ont.-based subsidiary, called Dalsa, develops and manufactures imaging technology used in scientific applications, medicine, manufacturing and aerospace, and offers foundry services.
• VueReal (Waterloo): Developed a new manufacturing solution for semiconductor applications, underpinning new technology for the health-care and automotive fields.

The hurdles and opportunities ahead: VentureLab’s Chee said Canada has an opportunity to put itself in the “driver’s seat” of the vehicle supply chain. Electronics account for 40 per cent of a car’s value, and the Boston Consulting Group estimates the market for automotive chips will grow nine per cent a year through 2030. 

She noted that while the chip industry puts much of its focus on the advanced three-nanometer nodes, there’s still huge global demand for larger, mature chips, which are used in sectors with longer life cycles, like vehicle makers and defence contractors. Making those chips is still geopolitically important, she said. 

Rida at Marvell noted that BlackBerry QNX, the Canadian firm’s software operating system for vehicles and other machinery, has drawn other companies that are interested in vehicle cybersecurity, creating potential for a related chip hub in Canada.

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What’s next   

Emerging high-tech industries like space, batteries and quantum computing could all provide opportunities for growth, but experts say Canada should be strategic about what will give it the biggest advantage in the geopolitical tug of war. 

“We need to figure out what we want as a country,” Chee at VentureLab said. 

The University of Guelph’s Gregori said Canada’s aerospace industry could make it a strong candidate to develop semiconductors that are used in extreme conditions, like space or the bottom of the ocean. Gregori also said the country’s active cleantech sector could be an opportunity to nurture an industry for chips that improve battery performance and energy efficiency. 

Canada is also home to a growing quantum-computing ecosystem including companies like Pasqual, Efinix, Quantum Silicon, Nord Quantique and Xanadu. Rida said quantum computing, particularly for encryption, will be a big opportunity for chips in the future. 

And, while China limited the export of gallium and germanium this week, Canada is jockeying to supply more of its critical minerals to the world, including chipmaking metals found in the Yukon and Northwest Territories as well as recovered from Teck’s British Columbia smelter. 

Just as the Netherlands has branded itself as the epicentre of chipmaking machines and Taiwanese giant TSMC has cornered the foundry market for many types of chips, CCI’s Bergen said, Canada will have to “support some winners.” He said Canada should focus on intellectual property its companies already own, and on entering the highest-value parts of the production chain.

“We as Canadians have to determine, through doing an assessment: What are the great companies that we have?” said Bergen. “And where’s the future going?”