The federal government is moving forward with plans to spin off the National Research Council’s Canadian Photonics Fabrication Centre in Ottawa into a commercially operated entity.

Industry Minister Mélanie Joly said the initiative is aimed at strengthening Canada’s position in advanced manufacturing and next-generation technologies, particularly as demand grows for AI and data-centre capacity. Photonics is expected to play a critical role in addressing performance, energy and heat challenges tied to AI infrastructure.

“Spinning off the Canadian Photonics Fabrication Centre will strengthen Canada’s leadership in photonics innovation,” said Joly. “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.”

Phototonics is the science and engineering technology behind the creation, control and detection of light particles (photoncreating, controlling and detecting light particles, including visible and infrared varieties.

The planned spin-off follows signals in Budget 2025 that Ottawa explore seek private capital to scale the facility, positioning it as a platform for innovation and expanded photonics applications. The centre, currently North America’s only end-to-end pure-play compound semiconductor facility, provides design, fabrication and testing services to companies developing photonic technologies.

The government said the new commercial structure will remain anchored in Canada while attracting private investment to expand operations, strengthen domestic supply chains and improve service delivery to small and medium-sized firms working in AI and quantum technologies. The move is also intended to bolster economic resilience, technological sovereignty and national security.

“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,” said Mark Davies, the NRC’s president. 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.”

The centre has been working with clients globally to convert compound-semiconductor applications into photonic devices that underpin technologies used daily. The global AI market is valued at approximately $338 billion and expected to grow up to 35% by 2033, according to a federal government news release.

Pictured: Volkswagen EV-batter manufacturing plant project in St. Mary’s, Ont., affected by tariffs.

Rendering: Volkswagen Canada