Canada’s Semiconductor Industry: Challenges, Investments & Future Prospects

I’ve always been captivated by the hidden forces shaping our world, and few are as transformative as semiconductors. These tiny chips are the unsung heroes of modern innovation, fueling AI breakthroughs, 5G connectivity, electric vehicles (EVs), and even the rise of quantum computing.

However, I was surprised when I learned that Canada’s share of the global semiconductor market is less than 1%. For a country known for its innovation, this gap raises an important question:

Why hasn’t Canada established itself as a major player in semiconductor production?

My recent podcast conversation with a semiconductor veteran (see my Medium post here: Link) pushed me to explore Canada’s position in this sector and write this article for those who are interested.

While global semiconductor powerhouses like Taiwan, South Korea, and the United States dominate the sector, Canada has started taking some strategic steps to expand its role in this high-value industry.

But is Canada doing enough? Can it truly compete in a global market where semiconductor manufacturing is largely concentrated in Asia and the United States?

Let’s explore Canada’s position in the global semiconductor race, its recent investments, roadmap to 2050, challenges, and what the future holds.

Where Does Canada Stand in the Global Semiconductor Industry?

Right now, Canada holds less than 1% of the global semiconductor market, significantly behind industry giants like Taiwan (TSMC), South Korea (Samsung), U.S. (Intel), and China (SMIC). While Canada does not have large-scale chip fabrication capabilities like these countries, it excels in research and development, chip design, photonics, and AI-driven semiconductor applications.

Unlike the US, Taiwan, and South Korea, which have invested in mega-fabs to produce high volumes of advanced chips, Canada is focusing on niche markets like photonics, intelligent sensors, and AI-powered chips.

Canada has recently stepped up its game with several investments aimed at boosting domestic semiconductor capabilities.

To strengthen its semiconductor ecosystem, Canada has recently introduced several strategic funding initiatives and collaborations, as outlined in the table below. However, compared to other countries such as the United States with its $53 billion CHIPS Act, Canada’s investments remain significantly smaller.

Canada’s Recent Semiconductor Investments

Canada’s Semiconductor Roadmap to 2050

Canada’s Semiconductor Action Plan outlines a long-term vision to position the country as a global leader in specialized semiconductor technologies. The roadmap includes short-term (2021–2025), medium-term (2021–2035), and long-term (2021–2050) strategies focused on four key pillars:

Canada’s Semiconductor Roadmap

Canada’s Semiconductor Supply Chain & IP Challenges

Despite its strengths in chip design, R&D, and AI integration, Canada faces several obstacles that limit its potential in the semiconductor space.

1. Lack of Fabrication Facilities

Unlike Taiwan (TSMC) and South Korea (Samsung), Canada lacks large-scale semiconductor fabs capable of mass production.

This heavy reliance on foreign manufacturers (TSMC, Intel, and Samsung) creates supply chain vulnerabilities.

2. IP Protection & Talent Retention

While Canada is a leader in semiconductor research and development, much of its intellectual property (IP) is commercialized abroad.

Canadian semiconductor engineers and researchers are often recruited by U.S. companies, making it difficult to retain top-tier talent.

3. Limited Access to Raw Materials & Manufacturing

Canada has abundant critical minerals, including lithium, cobalt, and nickel, which are essential for semiconductor manufacturing. However, the country lacks refining and processing capabilities.

This dependence on foreign supply chains raises costs and slows production.

Can Canada Achieve its 2050 Semiconductor Vision?

Canada’s semiconductor industry stands at a critical crossroads. With some investments in chip design, photonics, and AI-driven semiconductors, Canada has the potential to become a key player in specialized semiconductor applications.

However, to truly establish itself as a major semiconductor hub, it seems that Canada must:

✔ Expand domestic fabrication by making more investments✔ Strengthen intellectual

property (IP) protection✔ Retain high-tech talent✔ Build global partnerships

What’s your take on Canada’s semiconductor future? Drop your thoughts in the comments!

References:

1. Government of Canada supporting manufacturing and commercialization of semiconductors

   
   

   Innovation, Science and Economic Development Canada, July 4, 2024.

2. Canadian semiconductor industry

   
   

   Innovation, Science and Economic Development Canada, May 2024.

3. Semiconductors — Canada

   
   

   Statista Market Forecast, 2025.

4. Semiconductor materials market revenue worldwide from 2019 to 2023, by region

   
   

   Statista, May 6, 2024.

5. Government of Canada supporting Acentury Inc. in developing semiconductor technologies for wireless communications

   
   

   National Research Council Canada, March 15, 2024.

6. Empowering Canada’s future: Why compound semiconductors matter to Canadians

   
   

   National Research Council Canada, July 8, 2024.

7. Canadian semiconductor technology co-innovation mission to Taiwan

   
   

   National Research Council Canada, May 24, 2024.

8. Annual report 2023–2024 | Investment Canada Act

   
   

   Innovation, Science and Economic Development Canada, December 2024.

9. From AI innovations to market-ready solutions

   
   

   Federal Economic Development Agency for Southern Ontario, June 2024.

10. Chapter 2: Investing to Raise Wages | 2024 Fall Economic Statement

    
    

    Department of Finance Canada, November 2024.