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The size and significance of the technology-based industries in Canada creates significant demand for ICs. The Canadian integrated circuit (IC) sector, which is a part of the electronic components industry, has been growing quickly along with the growth of IC end-user companies in the information technology industries. Since Canada does not have sufficient large-scale manufacturing facilities for semiconductors, it imports 93 percent of its IC requirements. A number of Canadian companies design ICs, which are manufactured at foreign plants. The domestic market in 1997 was approximately US$6.1 billion and is expected to have an annual growth rate in excess of 15 percent over the next few years. There is strong demand for ICs in the telecommunications, computer equipment, geomatics, automotive, defense electronics, aerospace, and contract equipment manufacturing industries in Canada. Approximately two-thirds of Canada's IC production remains in-house with 70 percent of the rest exported.
Imports make up 93 percent of the total domestic market for ICs. Both local production and exports increased significantly over the 1995 to 1997 period. However, the domestic market and the import levels remained approximately the same.
One reason Canada cannot meet its own IC demand, is that it does not have a large-scale DRAM manufacturing facility. Approximately half of Canada's IC imports are DRAMs and this market segment has been growing significantly worldwide and in Canada. Canada has been actively soliciting for a large-scale semiconductor fabrication plant that would provide it with the much-needed DRAM facility.
Also, with a few exceptions, Canadian IC producers tend to be small to medium sized businesses that are more focused on R&D and design than on manufacturing. Therefore, Canadian companies depend on the import of commodity ICs from other countries.
The Canadian IC sector is closely linked to the telecommunications equipment, software products, computer, and instrumentation industries. The growth of the IC industry is strongly correlated with the growth in demand for IC end-users' products.