IBM invests $730 million to grow Canadian semiconductor manufacturing facility

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International Business Machines plans to invest more than C$1 billion ($730 million) over the next five years to expand its semiconductor packaging and test facility in Canada.

IBM's 800-acre site in Bromont, Quebec, about 80 miles east of Montreal, focuses on advanced semiconductor components, is the largest facility of its kind in North America, and is home to Canada's first general-purpose quantum computer. It is also the home base.

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Packaging, the technological process that transforms chips into microelectronic components, is a critical part of the supply chain and requires a skilled workforce. There is little semiconductor packaging capacity on the continent, most of which is located at the 1,000-employee Bromont facility.

“Even if we produce the processors in a factory in the U.S. or Canada, we still have to send them back to Taiwan for packaging,” Jamie Thomas, IBM's general manager of technology lifecycle services, said in an interview. “What we really need is a complete onshore supply chain.”

IBM's C$1 billion Bromont growth plan will be rolled out between now and 2029, he acknowledged. After months of consultation with the government, IBM on Friday announced the first phase of creating 280 skilled jobs.

The first phase is an investment worth C$227 million that includes IBM partner MiQro Innovation Collaboration Center to expand the existing Quebec factory and build an R&D lab.

The announcement is “an important part of supporting our growth at this site,” Thomas said. The Canadian and Quebec governments will provide a total of approximately C$100 million for this first phase, according to a statement.

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“It's important that Canadians be at the center of developing these technologies, but it's also important for the world, especially for our allies,” Prime Minister Justin Trudeau said at a news conference.

Supply disruptions during the pandemic demonstrate the United States' heavy dependence on East Asia, which accounts for 75% of global semiconductor production.

Last year, when US President Joe Biden visited Prime Minister Trudeau in Ottawa, IBM and the Canadian government signed a high-level agreement on semiconductor cooperation.

There are no large subsidies

Canada is a so-called “fabless” G7 nation, meaning it has the technology but no large-scale chip factories. Chip manufacturing industry players are hoping for a broader government strategy backed by substantial support, similar to the billions of dollars promised to the electric vehicle battery industry in factory construction and operating subsidies. There is.

Industry Minister François-Philippe Champagne said in an interview Friday that the focus will be on government incentives for the chip industry. “Maybe it's not for us to recreate what already exists in the United States, but to consider what are complementary and strategic places where we can play a role.”

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Through the Chip Act of 2022, the United States secured $39 billion in direct subsidies, as well as $75 billion worth of loans and loan guarantees, to encourage domestic semiconductor production.

Canada's positioning is focused on improving the resiliency of the North American supply chain with advanced capabilities for chips dedicated to highly specialized sectors such as aerospace and healthcare, rather than supporting large-scale factories. I'm leaving it there.

For Benjamin Bergen, president of the Canadian Council of Innovators, the lack of major government investment is less of a concern. Spending hundreds of millions of dollars on a single foreign multinational simply means “the government is not thinking any more strategically about what kind of semiconductor strategy it wants to have,” he said. he said.

—With assistance from Brian Platt.

(Comments from the Minister of Industry and industry organizations added from the 12th paragraph onward)

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