AMD’s acquisition of Toronto chip startup Taalas shows Canada needs to do more to keep companies at home

Toronto is failing to hold on to high-potential Canadian semiconductor startups, say industry insiders. Photo by Shutterstock

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Silicon Valley chip giant Advanced Micro Devices Inc. announced on Thursday that it will buy Toronto-founded Taalas Inc. for an undisclosed price, making Taalas the latest high-potential Canadian semiconductor startup to be acquired by an American company or leave for the United States.

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Last June, AMD bought Toronto-founded Untether AI Corp. while Nvidia Corp. purchased CentML Inc., also founded in Toronto, in the same month. Tenstorrent Inc. relocated from Toronto to the U.S. in 2023 citing investor requirements.

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These acquisitions and U.S. investor interest in Canadian companies shows that Canada continues to churn out high-quality and globally competitive semiconductor and hardware companies, said Eva Lau, general partner at early stage investor Two Small Fish Ventures Inc.

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Yet it also highlights that homegrown chip startups continue to struggle to access capital and the steps needed to move from research to commercialization: namely, late-stage venture capital, strategic partnerships and customer access, said Michael Buhr, executive director of C100, an organization connecting Canadian founders with Silicon Valley networks and funding.

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“That still lives almost entirely in the U.S. and specifically in Silicon Valley,” he said. “So when AMD buys Taalas, it isn’t just buying the intellectual property. It’s buying the team and the trajectory that Canada’s ecosystem couldn’t fully carry at scale.”

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Later-stage venture deals in Canada typically involve heavy participation from foreign investors, primarily American ones, with a recent Business Development Bank of Canada report noting that foreign investors contribute 80 to 90 per cent of capital in deals valued at $50 million and above.

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As chip companies continue to jockey for market share in the multi-billion-dollar artificial intelligence build-out, AMD said that it acquired the Toronto company to enhance its current and future hardware by integrating Taalas’ technology into its own. Inference is the process whereby a trained AI model generates output from data, such as a prediction or an image.

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Founded in 2023 by former engineers from AMD and Tenstorrent, Taalas makes customized chips that involve printing parts of an AI model onto silicon, which allows AI applications to run faster and cheaper than traditional approaches.

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“Taalas’ technology and world-class engineering team strengthen our AI portfolio by delivering differentiated inference performance and efficiency,” Vamsi Boppana, senior vice president of the AI Group at AMD, said in a Thursday statement.

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For Taalas, joining AMD will mean more engineering resources, global reach and scale to help it accelerate its innovation, said Ljubisa Bajic, Taalas cofounder and chief executive in the same statement.

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“We founded Taalas to rethink AI inference from the ground up by building the hardware around the model,” Bajic said.