The NRC’s Canadian Photonics Fabrication Centre is the only end-to-end, pure-play compound semiconductor facility in North America.

The federal government is working on spinning out the National Research Council of Canada’s (NRC) Canadian Photonics Fabrication Centre (CPFC) into a “commercial entity.” 

Industry Minister Mélanie Joly announced the intended spinoff at a reception for the CHIPS NORTH semiconductor conference in Ottawa on Monday evening, saying in a statement that the spinout “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,” Joly said. 

Established in Ottawa in 2005, the NRC says that the CPFC is the only end-to-end, pure-play compound semiconductor facility in North America. Compound semiconductors can transport data faster than traditional silicon chips, making them better suited for powering 5G and 6G telecommunications networks, autonomous vehicles, and quantum computing. 

It’s unclear when the spinout will take place, what the ownership structure will look like, or how the CPFC’s operations will differ once completed.

The private capital from the spinout will help scale the CPFC’s operations, expand Canada’s supply chain of photonic manufacturing capabilities, and provide more effective and timely services to Canada’s small and medium-sized AI and quantum businesses, according to an NRC news release.

The spinout plan builds on Budget 2025’s commitment to “explore options” that make the CPFC more attractive to private capital and turn it into an innovation platform.

Historically, the CPFC has worked with clients to design, test, and fabricate their chip designs, but some industry leaders have recommended spinning out the CPFC. Some have even compared doing so to Taiwan’s support of silicon semiconductor fabricator TSMC in the 1980s. TSMC is now the largest contract chipmaker in the world.

In a policy memo for Build Canada this past October, Cohere co-founder Ivan Zhang said that Canada’s “world-class” compound semiconductor fabrication facility could be “a key part of advanced technology supply chains,” but that it had been underinvested in for two decades.

“Think of it like having one of the world’s only airplane factories capable of achieving supersonic flight but only ever building prototypes, never selling jets,” Zhang wrote. 

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At the time, Zhang recommended commercializing the CPFC by transferring authority from the NRC to a new commercial entity with private shareholders, with the government retaining a stake to safeguard national interests. 

The NRC said that, with access to the CPFC, Canadian firms will be well placed to capture a large share of a growing AI market that’s driving rapid expansion in AI compute and photonics technologies.

“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,” NRC president Mitch Davies said in a statement. 

It’s unclear when the spinout will take place, what the ownership structure will look like, or how the CPFC’s operations will differ once completed. The government only said that the commercial entity will have “firmly Canadian foundations” with “Canadian industrial development at its core.” BetaKit has reached out to Innovation, Science, and Economic Development Canada for more details, but did not hear back by press time. 

Since 2021, the Government of Canada has invested over $115 million to expand and modernize the CPFC, including upgrading its equipment and building a new 8,000 square-foot building to increase its lab space. 

Feature image courtesy NRC.