Canada makes moves to seize our quantum advantage

On Friday, AI Minister Evan Solomon announced a $195 million federal commitment to Xanadu Quantum Technologies through the Strategic Response Fund. The money will help build Inception, a 158,000-square-foot advanced photonics facility on the site of a former Campbell’s soup plant in Toronto’s west end, employing 275 people.

Xanadu is among Canada’s most important quantum computing companies, and this is a significant investment in shoring up Canada’s quantum supply chain. This is exactly the kind of investment you’d want to see, to ensure that we don’t repeat the mistakes of the past where we’ve squandered technological advantages in research by not building up the broader ecosystem that can translate that to supply chain and commercial capacity.

A couple months ago, we wrote a case study on Canada’s quantum advantage. We argued that Canada’s real opportunity in quantum is not just the pure technology. We can also play a role in controlling a greater share of the supply chain that enables quantum computing.

Quantum hardware differs enough from conventional computing hardware to require significantly different supply chain elements, and photonics is among the most important. It’s also a technical field where Canada already has strength: the Canadian Photonics Fabrication Centre in Ottawa (recently slated to be spun off into a private enterprise), the world-leading quantum materials work at Waterloo, and Xanadu’s own $10 million chip packaging facility.

Xanadu’s initial $10 million packaging facility was a small investment in one narrow aspect of photonics, but it had an outsized effect. The facility allowed Xanadu to onshore an important part of their supply chain while creating a hub that other companies, including non-quantum ones, could use. 

The new facility announced this week with federal government funding does the same thing at almost twenty times the scale.

One encouraging dimension of this announcement is that Ottawa is moving to capture more of the supply chain early in the life of quantum computing as a commercial technology.

But more than that, Canada is building an ecosystem where research, manufacturing, national security applications and company growth reinforce each other, and where the resulting economic value stays in Canada.

That suggests we may finally be learning from past mistakes. Canada has a long history of being involved in critical technologies at the early R&D phase, but then squandering our position when it gets to commercialization. (We wrote about those here.) Canada funded the foundational research behind modern AI and now imports the technology it helped invent rather than hosting the leading companies. The problem was never a shortage of bright minds or research institutions, but rather that we never built the manufacturing and commercialization architecture to hold onto what we made and grow it.

At this critical juncture in quantum, we need to hold onto and grow our capacity to build and use a technology we currently lead in. This investment in Xanadu is not a case of “picking a winner” among companies. It is picking a winning sector to invest in and grow. This is exactly what we need to be doing to build a more sovereign and resilient innovation economy in a changing geopolitical landscape.

One aspect of this announcement that stands out, though, is the role of the federal government here. In scaling quantum technology to something like a trillion-dollar industry, Ottawa can tactically invest capital in key projects. But one of the advantages that American companies have is access to deep pools of capital investment.

Canada has some big investment funds, and Prime Minister Mark Carney is hosting an investment summit in just a few weeks to sell Canada to global investors. As a country, we should be doing more to ensure that our big pension funds and other private sources of capital are being deployed to help grow strategically important industries in Canada. We’ll have more to say on that very soon.