Canada should leverage Taiwan to boost its semiconductor industry: Think tank analyst

智庫分析師：加拿大應利用台灣促進其半導體產業

Backing Taiwan’s CPTPP bid will help remove barriers between countries’ tech industries


TAIPEI (Taiwan News) — Canadian policy think tank the MacDonald Laurier Institute has released a report exploring how Canada could better build on trade ties with Taiwan to spur the development of its homegrown ICT industry.

The in-depth report, written by Taiwan tech analyst Matthew Fulco, describes a variety of ways by which Canada can gain benefit by partnering with Taiwan’s tech titans.

Fulco points to the recent economic pain the auto chip shortage has brought the Canadian auto industry, with vehicle production dropping to its lowest point in four decades.

Though Taiwan Semiconductor Manufacturing Company (TSMC) announced it will increase the supply of automotive microcontroller units (MCUs) by 60% in 2022 to alleviate the squeeze, building stronger partnerships between Taiwanese suppliers and Canadian automakers would better guard against further disruptions going forward, Fulco writes.

“For Canada, the automotive chip shortage has been especially painful given… the auto sector is one of the largest of Canada’s manufacturing industries,” he says, adding, “The ongoing automotive chip shortage shows how a stable semiconductor supply is crucial for Canada’s economic well-being.”

Though Canada has been slower in moving toward supply chain onshoring than other Western countries, Fulco says Ottawa could kick start its localization efforts by first tapping into its great natural abundance of rare earth elements (REE), which are crucial for manufacturing ICT products. Since China still dominates the global REE ecosystem and has a history of weaponizing its grip on the elements, an alternative Canadian supply chain would have geopolitical significance.

“As a trusted partner of the US, Taiwan, Japan and other key semiconductor-producing nations, Canada has an opportunity to be at the forefront of a new, secure supply chain,” he writes.

The country is already building its first processing plant in Saskatoon, along with a new REE mine in Nechalacho. Fulco recommends Canada continue this momentum by extending its manufacturing capacity further downstream through partnerships with TSMC.

“Given its dominance in the foundry segment, TSMC could potentially play a large role in helping Canada develop its semiconductor manufacturing capability,” he writes.

The fact that TSMC already has a research design center in Ottawa speaks to the company’s belief in Canada’s strong base of tech talent. Yet if the country wants TSMC to go deeper still, Fulco suggests, Canada will need to win the company over and provide generous incentives for it to build a fab on Canadian soil, as the governments of the U.S., Japan, and Germany have done.

Fulco also recommends Canada support Taiwan’s bid to join the CPTPP since Taiwan's membership would lower tariff barriers between the countries and enable Ottawa to better partner with Taiwanese tech companies. The two countries should also push forward with the Foreign Investment Promotion and Protection Arrangement (FIPA) the two sides are currently negotiating, he says.