Is Canada up for the 'semiconductor challenge'?

As a microchip shortage continues to idle the automotive industry in Windsor, the federal government is set to spend $150 million to develop domestic production of electronic components.

“This investment will help position Canada as a critical mobile supplier of niche semiconductor technologies, “according to Francois-Phillipe Champagne, federal minister of innovation, science and industry.

“Whether it’s high-value or large-scale manufacturing, we want to see Canada be home to the world’s leading semiconductor manufacturers,” Champagne said in a news release.

The government has launched the ‘Semiconductor Challenge Callout’ they’re looking for “ambitious” ideas from researchers and manufacturers for how to start producing semiconductors in Canada.

“This targeted investment will help to address semiconductor disruption issues and really allow Canada to build on its natural strengths. It will build additional Canadian capabilities,” Champagne told reporters at a news conference Monday in Ottawa.

It was held inside the Canadian Photonics Fabrication Centre (CPFC), which the government says is the only publicly-funded lab of its kind in North America.

“It’s special,” says Iain Steward, president of the National Research Council. “It goes all the way back to Nortel, and in fact, some of the stuff we’re blessed to have and some of the staff we’re blessed to work with go all the way back to Nortel.”

The CPFC will be getting $90 million to spend on upgrades to the facility, to assist with the semiconductor challenge.

“That gives us a real edge to attract talent to make sure that we do the research,"msays Minister Champagne.

“The investment is good,” writes Peter Frise, director at the centre for automotive research and education at the University of Windsor, in a statement to CTV News.

But Frise notes the investment is “largely” around research and design, rather than around the large-scale manufacturing of semiconductors and it doesn’t take into account the necessary natural resources.

“As I understand it, the major silicon wafer manufacturing facilities (sometimes referred to as “foundries”) are all located in Asia rather than in the west,” writes Frise.

“The current semiconductor shortage would be alleviated if more chip foundries were built for security of supply,” says Frise. “It would be best if they were located here in North America.” 

According to Frise there is just one foundry in Canada built in 1980.

“In contrast, there are literally dozens of silicon foundries operating in China, Taiwan, Japan and elsewhere in Asia,” writes Frise.

“We need to get out in front of something for a change,” says Tim Little, vice president of Unifor local 200 in Windsor who he says have been “hammered” by the supply crisis.

Little represents Ford workers at two engine factories who have faced repeated shutdowns because of a lack of semiconductors.

“$150 million and starting now? Yes, thank you! But come on. Let’s get going,” says Little “That’s just the tip of the iceberg.”

In June 2021, the American senate passed legislation, worth $52 billion, to bring semiconductor manufacturing to the United States.

And in January 2022, Intel announced plans to spend $20 billion on a new semiconductor factory in Columbus, Ohio.

“We’re always late to the game,” says Little. “Let’s use our people, our natural resources and let’s get going because absolutely we can do it here. And I honestly believe we can do it better than anywhere else.”

As tough as the shortage is on the automotive industry, today, Little fears, it will only get worse, as the entire industry shifts to electrification.

“We have electric vehicles coming that take three times the semiconductor chips as an ICE vehicle: an internal combustion engine (vehicle)," says Little.

In Ontario, the government has created the ‘Invest Ontario’ fund, which according to Vic Fedeli, minister of economic development, is meant to help “replace” the reliance on foreign semiconductors.

“We want life science, advanced manufacturing and IT and so of course chips are within there,” says Fedeli. “We’ve got a large pool of money that’s ready for anybody’s ideas.”

Fedeli says $400 million has been set aside for Invest Ontario.