This article originally appeared in National Newswatch.
By Erik Henningsmoen, March 30, 2026
These chips are crucial to strategic Canadian industries—like aerospace and defence, health tech, automotive manufacturing, and telecommunications—which rely on secure semiconductor supply chains and innovative chip designs. Semiconductors are crucial in advanced computing applications, including artificial intelligence (AI) and quantum computing. Specialized AI chips provide the immense computing power needed in modern datacenters for tasks such as training and operating large language models. McKinsey & Company forecasts that the global semiconductor market will be valued at USD $1 trillion by 2030.
That’s why secure semiconductor supply chains are crucial to the continued development of Canada’s digital economy and advanced manufacturing. Yet semiconductor supply chain risks—like geopolitical tensions, foreign ownership, and natural disasters—could disrupt the flow and present a strategic threat. Presently, the industry is highly geographically concentrated among just five countries: the United States, South Korea, Japan, Taiwan, and China.
Today, Canada is home to a small but innovative semiconductor industry—a mix of domestic companies and multinational firms operating in Canada. They are located primarily in Ontario and Québec, with secondary industry clusters in British Columbia and Alberta. The industry is particularly strong in research and development and chip design. Economic analysis by Statistics Canada estimates that in 2020 Canada’s semiconductor industry created $28.8 billion in total economic output and accounted for nearly 10 per cent of total in-house R&D spending.
While Canada does not currently have a large‑scale fabricator capable of mass-producing advanced logic and memory chips—like those found in several of the top semiconductor producing countries—it does have some specialized semiconductor fabrication facilities, most notably the Canadian Photonics Fabrication Centre, which focuses on photonic and compound semiconductor devices.
Innovative Canadian firms are at the forefront of semiconductor technology and compete globally. Canada’s strengths include AI chip design, photonics, advanced packaging, and compound semiconductors, all of which have important applications for next-generation AI datacentres.
Yet all of this is being carried out without the backbone of a national semiconductor strategy. Canada’s small but innovative industry could benefit from a coherent plan to maximize our economic potential with a focus on digital sovereignty. Such a strategy would dovetail well with Canada’s 2024 sovereign AI compute national strategy and the federal government’s forthcoming renewed national AI strategy.
The strategy should include provisions to attract investments in domestic chip fabrication and advanced packaging capacity, promote industrial clusters around newly established fabrication facilities, and support targeted R&D investments to foster and protect Canadian IP in advanced chip technology.
With significant portions of Canada’s semiconductor workforce heading to retirement in the next five to ten years, the strategy should seek to attract Canadian STEM talent through education and workforce development.
Furthermore, it must foster international linkages and secure chip supply chains with allies. Canada’s wealth of critical mineral resources, required for chip production, could be an important asset in these relationships.
When it comes to semiconductors, sovereignty does not equate to autarky—developing full self-reliance would be astronomically expensive and divert resources away from other important national priorities. The semiconductor industry is hyper-globalized; no country has the capability to cover all the steps and inputs needed to produce the most advanced chips.
Instead, semiconductor sovereignty should be thought of as having deployable semiconductor technology that Canada’s trade partners and allies need, while also having enough self-sufficiency to be able to absorb a major chip supply chain disruption and still have its digital economy function. Sovereignty in this regard would buy the Canadian economy time to adapt to economic and geopolitical shocks.
Canada does not need to compete directly with leading semiconductor-producing countries, nor does it need to become fully self-sufficient in chip production to protect its digital sovereignty.
Rather, a Canadian semiconductor strategy needs to highlight the important role that semiconductors play in Canada’s modern digital economy, understand current risks and uncertainties in the global semiconductor supply chain, and further foster Canada’s already successful semiconductor industry. It needs to play towards the country’s existing technological strengths and mitigate supply chain risks, while developing the talent needed to drive the industry forward and create national resilience.
Erik Henningsmoen is a senior research and policy analyst with the Information and Communications Technology Council (ICTC) and a contributor to the Macdonald-Laurier Institute.
