No chips for Canada

Ciao, from the new big chip player in town. 

What happened: Italy is close to clinching a ~$5 billion deal with US-based Intel to build an advanced semiconductor (chip) packaging and assembly plant in the country, per Reuters

  • The investment is part of the chipmaker’s plans to invest $88 billion in building capacity across Europe, part of an effort to cut its reliance on Asian chip imports. 

Catch up: Right now, one company in Taiwan makes ~90% of the world’s most advanced semiconductors, so if China were to invade Taiwan, you can guess what would happen next. 

Fearing this scenario, the European Commission sprung into action by announcing the European Chips Act early this year, committing €45 billion to the industry by 2030. 

  • In the US, the White House is close to signing a similar bill (the Chips and Science Act, a standout investment worth US$280 billion) into law. 
  • Meanwhile, in Canada, the federal government announced a (pretty measly) $240 million investment, split between the semiconductor and photonics industry. 

So if you’re wondering why Intel isn’t building a factory in Canada, it might have something to do with the readiness of others to subsidize these projects on a large scale. 

  • Canada was once home to a promising semiconductor industry based out of Ottawa, but it mostly collapsed during the dot-com bust.

Why it matters: Chip supplies impact our everyday lives and every sector of the economy. But with billions being put towards incentivizing their production in other countries, Canada will continue to struggle to attract this critical industry.