National semiconductor strategy key for Canada’s economic growth and recovery

Canada is at a crossroads. We’re navigating a pandemic, climate change, and economic uncertainty like we haven’t seen in years; all while being asked to weigh in on the country’s future in a federal election. Crises are competing for our attention, but there’s one overlooked issue that deserves a seat at Canada’s policy table: the global chip shortage. Sure, it might not seem high on the list of priorities; after all, what can we do about it if we’re not a producer of semiconductors? As a member of Canada’s Semiconductor Council, a newly formed national coalition with a mandate to strengthen Canada’s domestic chip capacity, I want to shed light on why addressing the chip shortage deserves to be a high priority for all leaders. Semiconductors are small but mighty; think of them as the “brains” behind our essential sectors and emerging technologies, including oil and gas, automotive, green energy, consumer electronics, quantum computing, medtech, and artificial intelligence (AI). Regardless of political persuasion, Canadians are clamouring for jobs they can rely on and an economy that can support them. To get there, we need a political commitment at the federal level to a reimagined, modern economy. Addressing the chip shortage by establishing Canada as a major player in the US$7-trillion global semiconductor industry is a complicated and costly endeavour, but it’s also one of the smartest ways to build a reliable, sustainable, and future-proof economy. Melissa Chee is the president and CEO of ventureLAB, and serves as the vice-chair for Canada’s Semiconductor Council. Photograph courtesy of Canada’s Semiconductor Council The perfect storm The global chip shortage has wreaked havoc on Canada’s economy for nearly a year now, most notably on the auto sector. According to newly released figures from Statistics Canada, supply chain disruptions led to a decline in new passenger vehicle sales (-7.2 per cent) and a drop in demand for buses and medium and heavy trucks (34.2 per cent). Meanwhile, plant shutdowns due to supply constraints resulted in an 18.9 per cent drop in exports of new vehicles and light trucks, and an 8.7 per cent drop in exports of engines, tires, and other auto parts. What caused it? In the early days of the pandemic, people were staying home, which meant they were driving less. This sudden change in consumer behaviour led to a drop in demand for new vehicles, which caused auto producers to pump the brakes on production. Less manufacturing meant less need for the sensors and electronics that all new vehicles—and especially electric vehicles (EVs) —rely so heavily on. At the same time, working and schooling from home drove demand for everyday electronics such as tablets, laptops, and monitors. As a result, when appetite for new vehicles rebounded more quickly than anticipated, boom: there simply weren’t enough chips to meet the spike in demand. So why should the chip shortage be a priority for whatever party forms the next government? Because there is perhaps no single issue that offers more wide-ranging benefits to Canada’s environment, supply chain resiliency, and economy than the development of a domestic semiconductor industry. The future is green For Canada to reach its net-zero emissions targets, we need a steady supply of semiconductors. As technology-intensive green technologies get smarter, the demand for chips and semiconductors will only continue to grow. Similarly, becoming a leader in EVs is an important priority for Canada, and doing so requires the capacity to build specialized batteries. Currently, batteries account for 30 to 40 per cent of the cost of a typical EV, and by 2030, the cost to produce a new car will be 50 per cent in sensors and electronics. Thanks to our dependence on imported chips, Canada’s green energy and autotech sectors are especially vulnerable to the whims of offshore manufacturing and global supply chains. If we want a green economy we can count on, it’s time we change that. Emerging industries Last month, Canada signed a deal with Moderna to build an mRNA vaccine production facility in Canada, capable of delivering 640 million doses annually. This is promising news, but complex facilities such as this are only as robust as the supply of semiconductors upon which they depend. Vaccine production is just one example of an emerging industry—alongside the likes of quantum computing, cybersecurity, AI, and agritech—that is wholly reliant on chips. Fortunately for us, Canada is rich in copper, nickel, cobalt, lithium, and other critical minerals needed to manufacture chips here at home. What remains to be seen is if we have the bold vision and co-ordinated policy required to forge a new and competitive advanced manufacturing industry. Jobs, jobs, jobs Perhaps the most tangible benefit of a made-in-Canada semiconductor industry, aside from shoring up our supply of chips for everyday products such as vehicles, consumer electronics, and medical devices, is job creation. Every new semiconductor job creates almost five other high-paying tech jobs, and a thriving domestic chip industry has the potential to generate billions for our economy. What’s more, a commitment from the federal government to a rejuvenated semiconductor supply chain will empower Canada’s next generation of tech leaders, attract global investment, and keep tech talent and IP-rich companies in Canada, rather than seeing them exit at low valuations to other markets. If our federal politicians are serious about establishing Canada as a leader in green energy, emerging technologies, and advanced manufacturing, we need to view the global chip shortage not as crisis, but as a once-in-a-generation opportunity to move beyond volatile imports and begin supplying ourselves with the chips that will enable an economy of the future. Melissa Chee is the president and CEO of ventureLAB, a leading tech hub in York Region, and home to Canada’s only hardware and semiconductor lab and incubator. She serves as the vice-chair for Canada’s Semiconductor Council. The Hill Times

National semiconductor strategy key for Canada’s economic growth and recovery

Regardless of political persuasion, Canadians are clamouring for jobs they can rely on and an economy that can support them. To get there, we need a political commitment at the federal level to a reimagined, modern economy.

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National semiconductor strategy key for Canada’s economic growth and recovery

Regardless of political persuasion, Canadians are clamouring for jobs they can rely on and an economy that can support them. To get there, we need a political commitment at the federal level to a reimagined, modern economy.

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