Like chips at a party, Canadian chipmakers are quickly being swallowed up.
What happened: Last week, U.S. semiconductor giant AMD announced it was acquiring Toronto chip startup Taalas for an undisclosed sum. Taalas is an innovator because of how it handles inference, the mechanism by which AI models use their training to create outputs.
Most chipmakers take a one-size-fits-all approach, producing chips that can handle inference for any model — Taalas builds chips that are tailored for specific models.
Zoom in: AMD’s Taalas acquisition is the latest in a string of U.S. takeovers or redomicilings of Canadian chip companies. Last year, AMD also acqui-hired Untether AI’s team while Credo acquired Hyperlume. In 2023, Tenstorrent hightailed it out of Ontario for California.
Why it matters: Canada punches above its weight when it comes to creating innovative semiconductor startups but, in a tale as old as time, has had trouble keeping them around. Access to later-stage capital and growth infrastructure is simply more advanced down south.
The implications go beyond a missed economic windfall — a truly sovereign national AI stack cannot exist without chips that are largely made and designed domestically.
What they’re saying: “The goal is not to prevent acquisitions,” says Daniel Wigdor, a University of Toronto professor and CEO of AI venture firm AXL, “the right goal is narrower and more achievable… make sure that when the value gets created here, a real share of it stays here, and that the next company finds more reasons to scale in Canada than to leave.”
Zoom out: In Wigdor’s view, this requires the government “acting like a demanding first customer rather than a grant-issuer,” which would entail capital aimed at the steps between research and scaling and funding conditions that anchor IP, senior jobs, and ownership in Canada. “None of that is exotic, and none of it requires us to out-spend the [U.S.].”—QH
