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Tech executives, investors form group to seek support for Canadian chip industry

OTTAWA — As a chip shortage disrupts global supply chains, a group of tech executives and investors is launching a new industry association to push for more support for the industry in Canada.

Canada’s Semiconductor Council argues that more government backing and private investment in the industry will help create and grow more IP-rich chip companies, taking advantage of homegrown talent and attracting complementary foreign firms.

Ottawa has high hopes for the AI, quantum and cleantech sectors, all of which rely on chips. “We cannot be leaders without the hardware and semiconductor piece being developed and scaled in this country,” said Melissa Chee, CEO of Markham, Ont.-based VentureLab.

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Tech executives, investors form group to seek support for Canadian chip industry

By Murad Hemmadi
Photo: Luis Gonzalez/Unsplash
May 5, 2021
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OTTAWA — As a chip shortage disrupts global supply chains, a group of tech executives and investors is launching a new industry association to push for more support for the industry in Canada.

Canada’s Semiconductor Council argues that more government backing and private investment in the industry will help create and grow more IP-rich chip companies, taking advantage of homegrown talent and attracting complementary foreign firms.

Ottawa has high hopes for the AI, quantum and cleantech sectors, all of which rely on chips. “We cannot be leaders without the hardware and semiconductor piece being developed and scaled in this country,” said Melissa Chee, CEO of Markham, Ont.-based VentureLab.

Talking Point

Canada’s Semiconductor Council says greater government backing and private capital can help more chip firms set up and scale, foster homegrown talent and attract investment from multinationals. The new industry group plans to propose a national strategy for the sector.

Policymakers in the U.S., EU and elsewhere have pledged to strengthen supply chains as the semiconductor shortage, prompted by increased demand for consumer electronics during the pandemic, disrupts everything from electronics manufacturing to automaking. The council will propose a national strategy for supporting the domestic industry. “It’s a foundational technology,” said Salim Teja, partner at Toronto-based Radical Ventures. 

Last month’s federal budget included $443.8 million to extend the Pan-Canadian Artificial Intelligence Strategy and $360 million to establish a new National Quantum Strategy. It’s also backed several companies in both fields via its flagship Strategic Innovation Fund, and signalled it’ll closely scrutinize foreign investments involving them.      

Members of the council say the country needs a chip plan to realize governments’ goals of growing those sectors, as well as other priorities like electric vehicles and biotech. “It actually is the foundational piece for every one of those strategies,” said Chee.  

Other council members include Sarah Prevette, CEO of Future Design School, a Toronto-based educational-programming organization; Kevin O’Neill, Canada managing director of processor giant AMD Canada; and Pamela Pelletier, Canada country manager for Dell. 

While Canadian post-secondary institutions train plenty of skilled workers for computing and electronics roles, the council says chip startups have difficulty finding domestic investors, particularly to scale up. “This type of deep-tech space requires fairly significant capital commitments,” said Teja; Radical has backed Toronto-based Untether AI, whose other investors include Intel Capital. He said the strategy will focus on opportunities to promote research, design and manufacturing activity.  

Domestic chip production has declined in recent years. Exports by manufacturers of semiconductors and other electronics components dropped from a recent high of $4.18 billion in 2005 to $2.74 billion in 2019, Statistics Canada data shows. 

Many chip developers are now “fabless,” outsourcing production (or “fabrication”) to giant foundries like Taiwan Semiconductor Manufacturing (TSMC) and Samsung, companies with plants concentrated in East Asian countries. 

But as with COVID-era shortages of other critical goods like health equipment, policymakers around the world are now trying to increase domestic fabrication capacity. Teja predicts more production will shift to the U.S. and Europe over the next decade. “There are one or two areas of specialization where there could be manufacturing capability set up in Canada,” he said, citing chips specially designed for machine learning, edge or distributed computing, and quantum applications. 

Foreign competitors have bought out past cohorts of Canadian chip firms. In July 2006, AMD acquired Markham-headquartered ATI Technologies for US$5.4 billion; it now has more than 2,000 staff in Canada. Semiconductor giants Qualcomm and Intel have offices in the Greater Toronto Area and Vancouver, while the latter also has facilities in Kanata, Ont. and Brossard, Que. Last month, Toronto-based Alphawave announced plans to list on the London Stock Exchange, after moving its corporate domicile to the U.K.  

“We do need to develop a strategy that puts Canada first,” said Teja, but domestic firms will need the design and manufacturing capabilities of multinational firms to develop their technology and grow. “This will continue to be a global industry.” He also sees opportunities for Canada to cooperate with the U.S., U.K. and EU as they develop plans to boost their own semiconductor sectors. 

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The industry needs both Canadian innovators launching companies and multinationals drawn by local talent investing here, said Chee, citing the assistance that global semiconductor firms like ARM and TSMC provide to startups in VentureLab’s incubator. For example, ATI “became a global chipmaker and then exited [to] a multinational at the end,” she said. “But AMD has a massive footprint in Canada.” (Ottawa has also awarded VentureLab a total of $9.7 million to build out its hardware incubator.) 

Neither AMD’s O’Neill or Dell’s Pelletier were available for interviews Tuesday.  

Chee said policymakers have been “very receptive” to the prospect of a national semiconductor strategy. The council will consult with other companies and organizations in the sector over the next two months, and also plans to solicit input from chip-reliant industries.

#federal government #Radical Ventures #semiconductors #VentureLab

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