Canada to spin off photonics centre to attract capital

Ottawa has begun work to spin off the National Research Council's Canadian Photonics Fabrication Centre into a commercial entity.

The Ottawa-based facility, known as CPFC, is described by the government as North America's only end-to-end pure-play compound semiconductor facility. The feds say the new structuring is intended to attract private capital and expand domestic manufacturing of photonic semiconductors.

Photonics is drawing greater attention as artificial intelligence systems place heavier demands on data centres and computing infrastructure. Devices built with photonic components are increasingly used to help manage processing loads, electricity use and heat.

This follows the federal government's December 2025 phase of the Canadian Quantum Champions Program, which states that a $92 million investment is part of a $334.3 million commitment to provide up to $23 million to four Canadian quantum tech companies. Anyon Systems, Nord Quantique, Photonic, and Xanadu Quantum Technologies were selected for the program.

Xanadu Quantum Technologies, a leader in Canadian photonics, launched on the Toronto Stock Exchange last March.

Mitch Davies, President of The National Research Council, said the centre's long operating history gives Canada a strong base for expansion.

"Photonics is a cornerstone of Canada's innovation future, driving advances in AI, quantum technologies, sensors, medical devices and advanced electronics-all vital to our national security and prosperity. With a strong industrial base of ambitious businesses and 20 years of CPFC leadership, Canada is ready to build on this foundation and position its photonics industry for global success," said Davies.

The spin-off is aimed at increasing Canada's manufacturing capacity and broadening the domestic photonics supply chain. The centre will remain based in Canada and continue to support employment.

For more than two decades, CPFC has worked with companies on the design, refinement, fabrication and testing of compound semiconductor wafers. The facility serves businesses developing products for telecommunications, sensing, quantum technology, defence systems and AI computing.

The spin-off follows a policy direction in Budget 2025, which said Ottawa would explore ways to attract private investment to scale the centre's operations. That process is now beginning.

The goal is to turn the facility into a larger industrial platform for Canadian companies developing photonic applications. Smaller businesses working in AI computing and quantum technology are among those expected to get faster access to fabrication services.

Ottawa also pointed to rapid expansion in the AI market, saying it was valued at more than CAD $338 billion in 2025 and could grow by as much as 35 per cent a year through 2033. That would increase demand for AI computing infrastructure and the photonic devices used in related systems.

"Spinning off the Canadian Photonics Fabrication Centre will strengthen Canada's leadership in photonics innovation. This will attract private-sector investment and create new opportunities for Canadian companies to expand the development of critical technologies that protect our sovereignty and drive productivity and economic growth," said Joly, Minister of Industry.