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Canada to Invest C$120 Million in National Chip Network
Canada is set to invest C$120 million over the next five years to bolster its semiconductor sector. This move comes amid rising calls for the government to strengthen its lagging semiconductor industry. Industry Minister François-Philippe Champagne revealed that the funds would come from the federal Strategic Innovation Fund, emphasizing the critical role of the initiative in the country’s technological advancement.
Fabric Network to Propel Canadian Startups
The funding will support a C$220 million project led by the nonprofit research accelerator CMC Microsystems. Known as the Fabrication of Integrated Components for the Internet’s Edge (Fabric) network, this initiative aims to help Canadian startups commercialize new technologies. Fabric will subsidize prototype production and provide affordable access to essential tools, software, and training. Moreover, it offers substantial funding of up to C$10 million for hardware development in key sectors such as semiconductors, superconductors, smart sensors, and photonics.
CMC President Gordon Harling emphasized the significance of this support, stating, “Support for Fabric secures Canada’s future in semiconductors and advanced manufacturing.”
Comparisons and Criticism
This new financial boost follows another significant investment announced in April, wherein IBM and the governments of Canada and Quebec pledged a joint C$187 million to expand IBM Canada’s chip packaging facility in Bromont. Despite these efforts, some critics argue that Prime Minister Justin Trudeau's administration is trailing behind global competitors, particularly following the enactment of the US Chips Act in 2022.
The US Chips Act allocated $39 billion in direct grants, alongside loans and loan guarantees totaling $75 billion, to stimulate American semiconductor production. In comparison, Trudeau's government has been more focused on providing subsidies to attract electric vehicle battery manufacturers to Canada, attempting to match the incentives provided by the US Inflation Reduction Act.
Call for a Robust Industrial Strategy
Paul Slaby, director of Canada’s Semiconductor Council, has voiced concerns about the lack of a coherent industrial strategy for the chip sector. Speaking at the International Economic Forum of the Americas conference in Montreal, Slaby pointed out that the Canadian government only recently began building a specialized team for the industry. He proposed that Canada could make its mark in international trade by concentrating on a niche part of the semiconductor supply chain, similar to how the Netherlands has specialized in photolithography machines through ASML Holding NV.
Slaby also highlighted the competitive landscape shaped by the US Chips Act, which has already spurred more than 50 semiconductor projects in the US. He suggested that Canada could benefit from aligning its semiconductor strategy with American interests, especially amid ongoing competition between the US and China. “We need a semiconductor pact with the US,” Slaby asserted.
Conclusion
Canada's latest investment marks a crucial step towards strengthening its semiconductor sector, yet the journey to global competitiveness remains challenging. With strategic alignment and focused initiatives, Canada aims to carve out a significant role in the burgeoning global semiconductor market.
