In the echoey void of a gutted Campbell Soup factory in Toronto’s west end, Canada’s minister of artificial intelligence and digital innovation announced the federal government’s biggest bet to date on homegrown technology that could revolutionize artificial intelligence, medical science and a host of other key sectors of the economy.

Against the backdrop of the Canada-U.S. trade war, and U.S. President Donald Trump’s frequent threats to Canada’s sovereignty, Evan Solomon leaned heavily into patriotism as he announced $195 million in repayable federal funding for Toronto-based Xanadu Quantum Technologies.

“This is absolutely a great day for Canada, for Xanadu, and I think for science around the world,” he said on Friday. “It shows what Canadians do best: We build.”

Solomon said Canada is going to take “big swings” in that endeavour.

“We are going to not just make a bet on solving the biggest problems in the world, and being the best in the world…. We’re going to do it big, fearlessly.“

Founded in 2016, Xanadu builds software and quantum computers powered by light instead of electricity. Unlike traditional computers that generate heat as electricity moves through metal wires, Xanadu’s chips guide particles of light without electrical friction. 

While other quantum computers require aggressive, power-hungry cooling to work, Xanadu’s units largely operate at room temperature.

Last June, the company unveiled a breakthrough chip capable of generating error-resistant photonic qubits, the basic unit of information for quantum computers.

“The countries that will have built what’s called a fault-tolerant quantum computer would have the capacity to break cybersecurity,” Solomon said.

“This is why China, the United States, Europe, everyone’s racing. And the best companies are right here in Canada, and the IP is in Canada. So, from a sovereign national security point of view, this technology is absolutely critical.”

‘Like riding a rocket’

Xanadu held the announcement inside a former Campbell’s Soup factory in Toronto, where the company plans to set up advanced manufacturing for its fault-tolerant utility-scale photonic quantum computers. The 158,000-square-foot facility is expected to cost $893 million and employ 275 workers.

“If digital computing is like galloping on a horse, quantum computing is like riding a rocket,”  Solomon said. “It’s that much quicker.” 

In 2023, the federal government launched its $360-million National Quantum Strategy. Friday’s $195-million repayable financing pledge to Xanadu represents its largest single financial commitment to manufacturing quantum technology. 

Friday’s announcement ranks among the government’s top single-company investments in Canada’s tech sector. One of the largest was in 2024, when the government provided a $2.14-billion loan to Ottawa-based satellite operator Telesat.

In March, Xanadu announced negotiations with the federal government and the province of Ontario for as much as $390 million in combined financial support to establish advanced semiconductor and photonic manufacturing capabilities in Canada. 

Xanadu CEO Christian Weedbrook said on Friday that up to $195 million in funding is “still being discussed” with Ontario’s government, describing the talks as “final negotiations and discussions.”

The company said Friday’s announcement represents Ottawa’s full share. Unlike a traditional loan, there’s no fixed date for repayment. The money will come from Innovation, Science and Economic Development Canada’s Strategic Response Fund, which provided $40 million to Xanadu in 2023.

‘Obligations to keep the jobs here’

Weedbrook, who is originally from Australia, says the money will bolster his company’s presence in Canada.

“A building that once fed Canadians will now help the technology of the next generation,” he said. “Where we are today will allow us to do most of this work here in Canada, in Toronto.”

In May, the U.S. government agreed to invest about $2 billion US in nine quantum companies. 

Xanadu is growing its footprint south of the border. In 2025, it secured partnerships with the U.S. Department of War and the U.S. Air Force Research Laboratory. The company also works with big-name U.S. firms like Lockheed Martin and chipmaker AMD.

“I think there’s obligations to keep the jobs here for some time,” said Amy Karam, a business consultant and fellow at the Canadian Global Affairs Institute.

“By having the government have a seat at the table in terms of business decision-making, I think that is one way that we as a country can really be more involved, or more part of encouraging companies to stay. Just funding and doing research and creating talent, it’s not enough anymore.”

In March, Xanadu dual-listed its shares on the Toronto Stock Exchange and the tech-heavy Nasdaq. The latter raises the company’s profile among U.S. investors, as its stock trades next to household names like Apple, Microsoft and Nvidia.

“It’s a big challenge to get companies to stay here,” said Karam.

“If you look at the Global Innovation Index, we are slipping drastically,” she said.

“We need to do some serious catch-up. We need to take our global technology leadership back, and I have the confidence that this government knows this, sees this and is executing accordingly.”

Matthew da Mota is a senior policy researcher at the Canadian SHIELD Institute. The Toronto-based think-tank was launched by BlackBerry co-founder Jim Balsillie to modernize public policy on tech and national security and safeguard Canadian intellectual property.

From developing new pharmaceutical drugs to cybersecurity, da Mota said Xanadu’s work could actually be dangerous in the wrong hands.

“It allows for really, really fast processing, really, really fast computation and doing multiple things at once in a way that we weren’t able to do with traditional computing. It allows for the potential to break existing encryption,” he said.

“That’s very dangerous for Canada, and for allies, but it’s also something that can be an extremely powerful tool for cyber security long-term.”

WATCH | What a new generation of chip could do in quantum computing:

Why Google’s Willow chip could be a quantum computing game changer

Google said that it has overcome a key challenge in quantum computing with a new generation of Willow chip, solving a computing problem in five minutes that would take a classical computer more time than the history of the universe.

Speaking to reporters, Solomon downplayed the potential risk of the government making a concentrated bet on a single company pioneering an emerging technology.

“Unless we are at the frontier with Canadian companies on quantum computing, we will be vulnerable in the future,” he said. 

“It is vital for this country from a security point of view, from a science point of view, from an economic point of view, to make sure that the best companies in the world are here in Canada.”