TORONTO — Canadian deep-tech firms are continuing to enlist with the U.S. Defense Advanced Research Projects Agency (DARPA) despite trade and political tensions between the two countries. 

Washington’s security R&D hub has recently picked four Canadian companies for major programs that give the agency an early look at the hardware they’re developing. Founders of those firms say working with DARPA can open up significant financial and sales opportunities, and doesn’t compromise their ability to stay Canadian. At the same time, they’re calling for Canadian governments to offer similar support to ensure the country keeps hold of strategic technologies. 

Ottawa-based Ranovus has joined Cerebras of Sunnyvale, Calif. to build a new high-performance computing system for DARPA. By combining their technology, the two firms are promising a package that’s faster and more energy-efficient than the servers currently on the market. “This is really disruptive,” said Ranovus CEO Hamid Arabzadeh. 

Cerebras makes hardware specialized for training and running AI models based on an unusual design—its chips each take up an entire 12-inch silicon wafer. Ranovus, meanwhile, sells optical connectors to move information between processors in data centres. The Canadian scale-up is bringing the next generation of its technology, which works at wafer scale, to the project. The two firms will split the US$45 million from the two-year contract, Arabzadeh said. 

The DARPA deal inserts Canada into a supply chain that will be strategically important for the U.S. government and key industries, according to the Ranovus founder. “They went and looked all around the U.S. to find folks that could do this,” Arabzadeh said. “And they came back to us.” Ranovus claims to be years ahead of its competition in optical interconnects, which will be required to link all the new hardware being developed to power the AI boom. The firm is inventing new packaging techniques for the project at its Ottawa headquarters, where it already manufactures its products. 

Three other Canadian firms are part of a DARPA program exploring the longer-term future of computing. In April, the agency announced 18 companies for the initial phase of its Quantum Benchmarking Initiative (QBI), including Sherbrooke, Que.-based Nord Quantique, Vancouver-based Photonic and Toronto-based Xanadu. Participants must prove that their technology can lead to a machine that can solve real-world industrial problems by 2033. “DARPA will soon be able to opine upon the true state of quantum, because they’ll have seen what’s behind all the curtains,” said Photonic founder Stephanie Simmons. 

The four Canadian firms made their deals with the agency after November’s presidential election, which upended Washington’s approach to critical technology. The Trump administration has signalled it wants the U.S. to dominate fields like AI and semiconductors, including by reshoring electronics manufacturing within its borders and cutting deals with countries to buy American equipment. 

DARPA hasn’t asked any of the four Canadian companies to move to the U.S., or to place staff or intellectual property there, founders say. “We don’t have any obligations as of now,” said Nord Quantique CEO Julien Camirand Lemyre, adding that companies get to keep control of anything they invent during the program. Simmons said there are also no exclusivity provisions, so firms can also sell what they build to other clients.

Enrolling in DARPA programs can help firms attract new customers and investors. All four deep-tech founders hope their involvement will lead to contracts with other government departments in Washington. The Department of Energy, for example, is looking for both high-performance computing systems and quantum computers.   

The private sector also pays attention to DARPA results. Since Ranovus’s project was announced in April, two major cloud firms have expressed interest in using its technology, Arabzadeh said. Meanwhile, investors and clients can use the due diligence DARPA is doing for QBI to decide which quantum computing startups deserve their money. “It provides an external validation in a market that is complex,” said Camirand Lemyre.

Each participating firm can also earn up to US$316 million directly from the program, an “excellent way” to get funding without giving up equity, Xanadu CEO Christian Weedbrook said. “You need a lot of money to build the hardware.” 

While DARPA helped pioneer technologies civilians use every day like the internet and GPS, its primary objective is to keep the U.S. military ahead of the country’s enemies. Quantum computers, for example, should be able to crack current encryption codes in minutes. Simmons, Photonic’s chief quantum officer, said the machines will be “phenomenally powerful tools” that will play a role in economic and geopolitical competition between nations. “That’s part of the battlefield.”

As ties between Washington and Ottawa have stretched to the breaking point, Canadian defence analysts have raised concerns that the U.S. has control of key equipment on U.S.-made fighter jets and ships. DARPA’s programs seek to prevent the opposite situation. For example, the agency’s contract terms give the U.S. government the right to keep buying the Cerebras-Ranovus computing system even in wartime, Arabzadeh said. “Canada could not block the usage of this technology.” 

While the Canadian deep-tech founders acknowledged cross-border tensions, none were worried about working with the U.S. government, pointing to a long history of business and technology cooperation across the border. Ranovus will “make sure Canada gets the right side of the bargain,” Arabzadeh said, adding that the firm could stop working with the U.S. government at any time it wanted. And though DARPA will learn a lot about Canada’s top quantum computing startups via QBI, it won’t be able to copy the expertise of the people employed by companies in Canada. “There’s a lot of secret sauce,” said Weedbrook, whose firm has participated in three previous DARPA projects.

The deep-tech founders say Canadian policymakers could learn from DARPA’s approach. For example, Canadian tech startups have long complained that it’s easier to get R&D funding than contracts from the federal government, which cites free trade rules as a barrier to buying Canadian; Washington has never had a problem with favouring U.S. firms. 

The federal quantum advisory council has recommended to Ottawa that it set up its own version of QBI, said Simmons, who co-chairs the group. That would give startups in the DARPA program an alternative if the U.S. imposes unacceptable conditions for later phases of funding. The federal government, in turn, would get critical information about the state of quantum science and supply chains, which it’s already betting will develop into a major industry for Canada. “We need to have our eye on the future in terms of Canadian sovereignty,” said Weedbrook.