Canada Semiconductor: US has plans to invest billions in its neighbouring country

International Business Machine (IBM) announced its intention to grow in Canada, prompting the United States and Canada to announce on Friday that they would cooperate to establish a bilateral semiconductor manufacturing corridor.

The announcement was made as Canadian Prime Minister Justin Trudeau and visiting US President Joe Biden pledged to work together to oppose authoritarian regimes, including by reducing their reliance on foreign suppliers of semiconductors and critical minerals.

The prime minister’s office announced in a statement that the Canadian government will invest C$250 million ($181.94 million) in its domestic semiconductor industry to support manufacturing and R&D.

In a joint statement, the two leaders said IBM would provide “a significant investment to develop new and expanded packaging and testing capabilities at its Bromont facility (in Quebec) as part of a Memorandum of Understanding.”

IBM continues to operate semiconductor manufacturing and research facilities in upstate New York.

The company announced last year that it would spend $20 billion over the next ten years developing and manufacturing semiconductors, mainframe technology, artificial intelligence, and quantum computing in the formerly industrialised Hudson Valley region of New York.

In other news, companies receiving a portion of the US$52 billion in federal subsidies under the US Chips and Science Act would be prohibited from using the money for projects in “foreign countries of concern,” specifically mainland China, Russia, Iran, and North Korea, under the proposed “national security guardrails” that the US Commerce Department unveiled on Tuesday.

The new guidelines, which designate a list of semiconductors as essential to national security, forbid funding recipients from introducing new production lines or increasing the production capacity of an existing legacy facility by more than 10%.

Additionally, for ten years following receipt of funding, they are prohibited from engaging in significant transactions involving the material expansion of facilities for advanced chips in those nations.

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