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Or sign-in if you have an account.Toronto is failing to hold on to high-potential Canadian semiconductor startups, say industry insiders. Photo by ShutterstockSilicon 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.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorLast 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.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.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againYet 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.“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.”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.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.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.“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.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.“We founded Taalas to rethink AI inference from the ground up by building the hardware around the model,” Bajic said.The global AI buildout is driving demand for more advanced and more efficient chips to power AI, with a wave of new Silicon Valley startups developing chips for AI inference and aiming to take on established players like AMD and Nvidia. Lau and other Canadian investors predicted earlier this year that demand could similarly spark a “mini wave” of homegrown semiconductor startups that will launch in the next couple of years.Lau framed Taalas’ move to AMD as a positive one, noting that a successful exit begets more successful founders who build innovative companies and attract investors.“What stands out to me is that (Bajic) chose to build in Canada again,” she said. “I wouldn’t be surprised if this acquisition actually fuels the ambitions of many more Canadian founders.”Buhr agreed, adding that AMD’s acquisition validates the quality of what Canada’s tech ecosystem is building.The more difficult and more pressing question, he said, is whether Canada is willing to invest to help scale and keep innovative companies at home.Taalas has raised US$219 million in venture funding from the likes of California-based Quiet Capital Management LP and American semiconductor venture capitalist Pierre Lamond, announcing its latest US$169 million round in February. 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