A $240 million federal investment in Canada’s semiconductor sector could help automakers and other Canadian manufacturers reduce their reliance on chips made overseas, industry experts say, though it is likely just a first step towards that goal.
Sarah Prevette, chair of Canada’s Semiconductor Council, an independent group that advocates on behalf of the industry, said shortages over the past two years have exposed how dependent Canada is on other countries for chips, despite the electronic components being fundamental.
“They’re a part of virtually everything these days. Your phone, your computer, your television, your toaster, your printer, your car — even your car keys — and we are not producing semiconductors at scale.”
Currently, 92 per cent of the most advanced chips are made in Taiwan by firms such as Taiwan Semiconductor Manufacturing Co. (TSMC), Prevette noted.
Automotive has been particularly hard hit by the chip shortage. According to AutoForecast Solutions, about 3.1 million vehicles were struck from North American production schedules last year because of a lack of chips. Another 282,600 vehicles have been removed so far this year.
The two-part federal investment, announced Feb. 28, could help address the problem.
The department of Innovation, Science and Economic Development pledged $90 million for new equipment at the National Research Council of Canada's Canadian Photonics Fabrication Centre (CPFC). The facility in Ottawa is the only research foundry, or fab, of its type in North America.
Another $150 million will back “transformative” projects under what Ottawa has billed the Semiconductor Challenge Callout. The government is calling on industry to propose research, commercialization or manufacturing initiatives that will help add to Canada’s footprint in semiconductors.
Jim Witham, CEO of GaN Systems, said he was pleased to see talk turn to action on the chip shortage and that the Ottawa-based company is already looking at ways it could partner of research and development work.
GaN, which took its early steps at the research fab in Ottawa, uses what’s known as the fab-lite business model.
“We do all the design, we have our own IP, we own our own processes and then we outsource the manufacturing to the fabs and the packaging houses,” Witham said.
While still doing most of its design in Canada, the company has partnered with TSMC to produce its gallium nitride transistors, a type of semiconductor device, for the past seven or eight years. Smaller and more efficient than their traditional silicon counterparts, GaN transistors offer particular promise in electric vehicles, the company says.
While GaN System has no plans to abandon the fab-lite model and set up its own manufacturing operations, Witham said the company would be a willing customer if an appropriate fab were set up in Canada.
“If we could actually make some things here, that would be very — not just cool — but it would be very substantial for the company because it makes fast learning cycles, and it would be very substantial for the country because it reduces imports and it fuels local industry and creates jobs.”