2007 was a good year for CMC Microsystems. Our operations were reviewed both by an ad hoc committee of the Committee on Research Partnerships (CRP) and a site visit committee conducting our mid-term review. These reviews were positive for the corporation and also provided us with advice and recommendations for action that we will be pursuing for the remainder of our mandate, until April 2010. The fiscal year also saw the successful conclusion of our two CFI programs, the System-on-Chip Research Network (SOCRN) and the National Microelectronics and Photonics Testing Collaboratory (NMPTC).

The ad hoc committee was asked several key questions about the role of CMC, including our relationship to the micro-nano fabrication facilities (MNT fabs) in Canadian universities. Its conclusion was that we were contributing to the overall goals of the Research Partnership Program and that our primary focus should remain the implementation of our current mandate. The committee found that CMC’s role is complementary to the MNT fabs and supported a move to increase resources applied to the Microsystems Research and Technology Brokering theme, within the current funding envelope that had formed a part of the 2004 proposal.

The site visit committee, which constituted a part of the evaluation of our mid-term progress by the CRP, made several recommendations that we are following, including: continued support for microelectronics, diversification of our funding sources and pursuit of our industrial and commercialization efforts.

CMC is very encouraged by the feedback from both committees, which found that we continue to be highly relevant to the research directions of our clients, that our performance with respect to the training of highly qualified people (HQP) is ‘exemplary’ and that we deliver services that result in economic benefit to Canada ‘many times the value of the NSERC grant’.

Both of CMC’s major CFI programs—the SOCRN, valued at about $45 million and the NMPTC, valued at about $25 million drew to a successful conclusion at the end of the fiscal year. The verdict on both programs is one of significant achievement, with more than 700 prototyping stations delivered to 37 universities in the former case and the existence of four leading edge test laboratories (at Queen’s University, McGill University, the University of Toronto and the University of Manitoba) in the latter. This infrastructure will be much used for some time to come and constitutes a valuable national resource.

In 2007 we issued an update to CMC’s strategic plan within the context of the four top level goals identified in the 2004 plan. These goals were: enhance and support Canadian education, research and development in microsystems; build an integrated multi-sectoral community of microsystems innovators; stimulate increased Canadian microsystems prototype development for commercial and social benefits; enable synergy among Canada’s microsystems innovators, funding programs, innovation initiatives and the public. Our review of the plan showed that it continued to provide a valuable context for our current actions and that the top level goals remain the right ones. We updated our view of the microsystems market opportunities, our client demographics and the environmental trends and opportunities, particularly with respect to the investment in university micro-nano technologies fabrication facilities, the general micro-nano initiatives across Canada and the emergence of small microsystem-based companies. This led us to some modifications in our objectives for the remaining period of our mandate. In particular, we are aiming to deploy microsystems integration platforms, selectively add university MNT fabrication to our supplier network and increase the scope of our commercialization activities.

As a major part of our efforts to track the achievement of our goals and measure the outcomes associated with this, in 2007 we introduced the ‘CMC logic model’ which we use to help in our decision making and resource allocation processes. This model, published elsewhere in this annual report, gives us a framework for relating our activities past their immediate outputs to outcomes that are tracked over varying time periods—one, three and five years. As an example of this, we could track from a particular fabrication run to the microsystem that emerged and was tested, the papers that were published, the students that graduated, the existing companies that hired the students or the new companies that were started. For a client base of about three thousand researchers such detailed tracking of outcomes is a major task, but a very necessary one. We feel we are much better equipped now than ever before to provide this essential data to our stakeholders.

While it is good to reflect on our achievements for the year, to consolidate the gains we have made and the position we have achieved over our 25-year history, it is important to avoid any semblance of complacency. The hi-tech world continues to be a fast moving place and our area, in particular, has been identified by many countries and regions as one of major strategic importance. The update of our strategy from last year helps us focus and refine our targets, but the overall goals with respect to fostering advances in microsystems research and enabling these advances to be exploited for the benefit of all Canadians remain.

When we embarked on the change from microelectronics to microsystems, we said that this would be long-term commitment, with the first five-years setting the stage. It has become clear as we have developed our technology offerings and moved further down the integration path, that there are many applications for micro-nano technologies and for the integration of multiple technologies. Almost all of the key commercial areas that have been identified as priorities by various Canadian governments will benefit from the application of microsystems technologies, and in fact, we will be unable to remain competitive without them. CMC’s belief is that while we will never be able to directly supply all the necessary elements from within Canada, it is vital that we continue to be a major player in this field, that we are highly knowledgeable about the availability and possibilities of new technologies and that we continue to graduate sufficient highly skilled people to serve the needs of Canadian industry.

In order to achieve our mission, we have, over the last few years, both increased the size and the skill level of CMC Microsystems’ employee base. This has given us not just a broader skill set as we have moved into microfluidics, photonics, MEMS and embedded systems, but also a much deeper appreciation for the issues that our clients face. This will continue to stand CMC in good stead as we increase the range of our products and services and assist in the movement of the excellent research performed in our universities to the commercial world.

In closing, let us express our thanks to all of CMC’s stakeholders—our investors, in particular NSERC and CFI, our Board members and committee participants, who willingly volunteer their time and expertise in support of our mission, our employees and, most of all, our research clients. It is a great honour to work together with you in this exciting and vital field.

Dr. Ian McWalter President and Chief Executive Officer, CMC Microsystems	Mr. Chris Lumb President and Chief Executive Officer, Micralyne Inc.; Chair of the Board of Directors, CMC Microsystems