The Geopolitical Rivalry behind US Chip Export Controls and Its Implications for Canada's Semiconductor Autonomy

Abstract

As a country with minimal domestic manufacturing capacity, Canada relies heavily on imported chips to power its economy. This dependence has heightened its vulnerability to global supply chain disruptions, a weakness made evident during the COVID-19 pandemic. Moreover, due to a lack of domestic investment sources and a less developed commercialization environment, Canadian semiconductor firms are increasingly gravitating to the United States in search of funding and technological support, aggravating the sector's loss of intellectual property (IP) and talent. This trend has also contributed to rising foreign ownership, making Canadian chip firms more likely to be caught by US export controls. This context highlights the urgency for Ottawa to strengthen its domestic semiconductor ecosystem and reduce exposure to geopolitically driven supply chain risks, particularly at a time when the Trump's administration is seeking to repatriate US overseas semiconductor manufacturing capacity.