VueReal team in Waterloo Ontario (Credit: VueReal)

By now, most people have begun to appreciate that semiconductors are the bedrock of the global economy — and our way of modern life. These tiny chips power everything from smartphones and computers to vehicles, medical devices, and advanced AI systems. What is more, the demand for semiconductors is only accelerating, as everyday tools and vital infrastructure now increasingly incorporate 5G network connectivity, artificial intelligence systems.

But semiconductors do not just underpin our digital world — the industry is also a massive economic engine. Semiconductor companies invest billions annually in research, manufacturing, and high-skilled labor. The semiconductor value chain employs millions globally, creating a ripple effect that boosts local businesses, drives innovation, and generates tremendous wealth.

Securing a solid foothold in this industry is vital for nations looking to the future. The countries leading in semiconductors will reap out-sized economic benefits and technological advantages for decades to come. This is why global powers like the United States, China, and Europe are pouring hundreds of billions into semiconductor manufacturing, research, and workforce development.

Canada cannot afford to be left behind. Instead, we should strive for a smart, tailored strategy.

We should not try to match the manufacturing might of larger nations, but we possess unique strengths that position us to play a significant role across the semiconductor value chain.

Canada should double down on our strengths rather than trying to lead in capital-intensive semiconductor manufacturing. Moreover, we should avoid getting stuck in low-value commodity niches. We should prioritize the highest value, most knowledge-intensive segments like advanced packaging, testing, semiconductor IP, and systems integration. We should invest in emerging areas like semiconductor-powered AI hardware and neuromorphic computing architectures.

There is every reason to believe that we have the capacity to succeed here. Canada is a leader in cutting-edge research in materials science and quantum computing. We also have world-class AI capabilities and a highly educated workforce skilled in chip design, testing, and systems integration.

In the federal government’s recent $120 million announcement, we see that they’re interested in spurring growth in semiconductor production, and investments like this one could be a good step on a path toward a strategic, targeted approach.

This focused strategy requires far less upfront capital than building multibillion-dollar fabrication plants. But it allows us to cultivate new industries and thousands of high-skilled jobs while bolstering established sectors. Every successful semiconductor company, regardless of where it manufactures chips, relies on a vast supply chain for R&D, design, testing, packaging, and integration services. Canada can become an indispensable source for these high-value-added activities.

Crucially, this approach enhances supply chain resilience and reduces our dependence on geographic semiconductor clusters. The COVID-19 pandemic exposed the fragility of our over-centralized supply chains. As semiconductors become even more critical to national infrastructure, security, and economic competitiveness, relying on limited production hubs is risky. A distributed, globally integrated semiconductor ecosystem is safer and more robust.

Realizing this vision does not mean moving mountains, or investing staggering amounts of money, but it does require a sustained commitment from government, innovation, and academia to all pull in the same direction. The public sector must provide R&D funding, incentives for semiconductor companies to expand in Canada, and policies that make us a welcoming destination for semiconductor talent and investment.

Semiconductor firms must embrace ambitious growth strategies, forge R&D partnerships with universities, and engage in workforce training programs. Academic institutions should prioritize semiconductor research and produce the next generation of engineers, physicists, and computer scientists.

By leveraging our complementary strengths, we can transform Canada into a semiconductor powerhouse. The economic stakes are too high to remain on the sidelines. Seizing this opportunity will generate prosperity for decades and secure our place as a global innovation leader. The time to act is now.