The last two nails
were hammered into the semiconductor business in Canada recently with the
acquisition of GENNUM by Semtech and
ZARLINK by Microsemi (both out of California). This follows the recent
acqusition of SiGe Semiconductor by Skyworks and earlier TUNDRA by IDT. For all
practical purposes we are left with no significant size Canada-based and
Canadian controlled semiconductor company in the country - back to chopping
woods, digging minerals and pumping oil (not that there is anything wrong with
that... :-)
Oh, sure, there are
still some left-overs and a few pocket-size and interesting niche-y
microelectronics firms but nothing of the scale that would make a difference at
the national level. Does it matter? History will tell but it sure is a bit sad
for those of us who were part of the ride and, well, after all, who really
wants his future to be just about running a branch-plant?
Thus, appropriately
here is a nostalgic look back and a brief crash
course in the history of the semiconductor industry in Canada.
The beginnings of it
go back to the early '70s and the story of MicroSystems International Limited
(MIL), initially a government inspired venture with Northern Telecom (Nortel).
When MIL was winding up in 1974 it spun out two important seeds: Semiconductor
Components Group (SCG) as part of Nortel/BNR and a pair of two budding
entrepreneurs Terry Mathews and Mike Cowpland. They started MITEL whose
semiconductor division (Mitel Semiconductor) later on became ZARLINK. At about
the same time Wally Pieczonka and Doug Barber started Linear Technology Inc
(LTI) in Burlington, Ontario which was renamed GENNUM later on. These three
companies became pillars of the foundation on which pretty much all the rest
(with an exception of PMC-Sierra) of Canadian semiconductor industry was built.
The golden age
lasted about two decades (1980-2000) with the '80s being particularly heady
days as the industry was young and rapidly growing. When I joined Nortel's SCG
in the early '80s as a member of its R&D team, Nortel had a vertically
integrated semiconductor operation. It involved not just the chip design but
also manufacturing of silicon, process and device technology, packaging,
testing and design automation. The synergies in such an environment were just
immense. We were doing world-class engineering and, most of the time, money was
no object. As a young manager I was nevertheless able not just to collaborate
but also sponsor leading-edge research at Stanford University, Carnegie Mellon
and a number of Canadian schools.
In this fertile
environment a number of world-class inventions and products were developed such
as the CCD imagers technology by Jim White and Joe Ellul, some of the
industry-first CAD tools such as AUTOLAY and SYNFUL by Stan Jedrysiak, as well
as a number of first complex telecom chips that powered the digital world. Some
memorable management figures from that time were Lloyd Taylor, Graham Sadler,
Geoff Shrank, Dave Lawrence, Adam Chowaniec and later on Ken Bradley and
Claudine Simson. Similarly Mitel Semiconductor (ZARLINK) built its own
semiconductor fab in Bromont, Que and moved into the merchant semiconductor
business led by Doug Smeaton, David Brown and later on Kirk Mandy. At the same
time Linear Technology (GENNUM) led by Wally Pieczonka achieved a dominant
world market share of 65% as a supplier of hearing aids chips.
The spillover effect
of this critical mass on the broader Canadian scene was quite substantial as it
fed a large thriving supply chain, stimulated world-class research at the
universities including funding university Chairs (Carleton U) and spun off a number
of startups. Some of the better known included Siltronics (Gyles Panther),
Mosaid Technologies founded by Dick Foss and Bob Harland, DALSA founded by
Savas Chamberlain, CALMOS (later on transformed into Newbridge Microsystems and
finally TUNDRA, acquired by IDT) founded by John Roberts, Genesis Microchip
founded by Paul Russo, and many others. Among them was ATMOS Corp which I
founded in mid-nineties. There is a famous chart, created and supplied by
Doyletech, showing the family tree of locally-generated technology companies
and pretty much 90% of them can be traced back to NORTEL.
In the '90s there
was an important joint industry-government initiative at the time called
Strategic Microelectronics Consortium (SMC) run by John Roberts. It really
provided a strong boost to the growth of the fledgling microelectronics
industry in Canada. In addition, the Canadian Microelectronics Corporation (CMC
- currently run by Ian McWalter), mostly government funded, was created to stimulate and support
electronics research in Canadian universities.
Unfortunately most
of it started to slow down around the year 2000. After a good, long 40 year
run, the semiconductor industry was maturing (not unlike what happened to the
automotive industry). Some players, such as Mitel Semiconductor (ZARLINK),
caught the change and transformed themselves from captive suppliers into
merchant semiconductor players. Unfortunately, the largest of them, Nortel's
SCG, failed to achieve that, mostly due to lack of management leadership. As a
result, this primary engine of semiconductor growth and expertise in the
country was sold off to STMicroelectronics and following a classic pattern
drifted away never to be seen again :-(
There is no doubt in
my mind that the failure of the leadership of Nortel's SCG at that time to spin
off its microelectronics business as something like "Telecom Semiconductor
Inc", was a main trigger for the subsequent decline and slow disappearance
of the semiconductor industry in Canada. We have simply lost critical mass. A
number of talented highly specialized engineers and researchers moved away in
search of the jobs in California's Silicon Valley and other places around the
world. It's a pity but that is what lack of foresight, vision, circumspection
does to a country...
For a little while
though "Times they were a-changing" we got a bit of a second backwind
towards the end of the '90s with the days of mushrooming semi start-ups
nourished by the multi-million dollars investments from the burgeoning VC
firms. This was the era of a new type of semiconductor company, no longer large
capital intensive and vertically integrated, but so called fabless
semiconductor company. Among the better known started at that time were: SiGe
Semiconductor (founded originally by John Roberts), Skystone (Antoine Paquin
& Stefan Opalski), Solidum (Feliks Welfeld), Quake (Dan Trepanier), ATMOS
(Paul Slaby), Lumic/Atsana (Luc Lussier), Philsar, Extreme Packets and IceFyre.
All of these companies have been acquired since and are mostly gone from the
Ottawa scene.
So, what have we got left? What is the
landscape after the battle? What we have is a number of small and medium size
firms built up on the remnants of the previous firms. They are mostly
profitable and sometimes hugely so. They usually do not forge new product
frontiers or aggressive innovation. Instead they tend to provide services and
capitalize on the know-how and expertise developed by their predecessors.
The most successful
is definitely a cluster of what one could call "Semiconductor IP
protection and licensing". This includes:
MOSAID (founded by Dick Foss, later on run by George Cwynar and
currently by John Lundgren), Wi-LAN (Jim Skippen), UBM TechInsights (previously
Semiconductor Insights - a spin-off from MOSAID built-up by Terry Ludlow and
Doug Smeaton), Chipworks (Terry Ludlow), Global Intellectual Strategies (GIS -
Pierrette Breton). It is interesting to note that all of these companies can be
traced back to MOSAID - clearly Dick Foss must have done something right laying
down this foundation!
In addition, there
is a sprinkle of design services and IP product companies such as TSMC Design
Centre (as a result of EMT (Sreedhar Natarajan) acquisition with its origin in
ATMOS Corp), Kaben Wireless Silicon (which we have built-up significantly during
my recent 3 year CEO run), SiDense (founded by Wlodek Kurjanowicz and run by
Xerxes Wania), CogniVue (with its origin in Lumic/Atsana and currently run by
Simon Morris). Outside of Ottawa the significant players include PMC-Sierra in
Vancouver, DALSA, Fresco Microchip (Lance Greggain) and ViXS (Sally Daub) in
the Toronto area. The industry has its representation through the ITAC SMC
Council currently coordinated by Iain Scott.
So, now, what does the future hold for semiconductors
in Canada? The business has changed and the glory days appear to be over
and are not likely to come back. It is a different world now and no amount of
nostalgia is going to change that. In particular, the old business model of
fabless semiconductor companies is, for all practical purposes, dead, when it comes to start-ups and emerging
companies (you can find more about it in this presentation: http://www.design-reuse.com/exclusive/kaben/).
There is a need for new approaches that have a chance to bring significant ROI
justifying investments.
Just because the old
ways of doing business are no longer applicable, this does not mean there is
not a need or a demand for semiconductor start-ups and their innovation - quite
contrary! But the way we go about it has to be different. To avoid repeating
myself, I refer you to this article: http://www.eetimes.com/electronics-news/4074052/Letter-to-the-editor-IP-cars-share-common-ground
PS
Here is a bit of an
inside scoop on the Zarlink story:
And here is an info
on the GENNUM acquisition:
