Assessment of Canada’s Performance and Trajectory in Dual-Use Technologies (2025)

Executive Summary

This report provides a comprehensive assessment of Canada’s current performance and future trajectory (as of June 2025) in a suite of dual-use technologies, with a focus on the contributions of leading Canadian organisations. The analysis covers the following technology areas: 3d-printing-for-manufacturing, additive-manufacturing, advanced-manufacturing-techniques, artificial-intelligence, automated-design-software, biodegradable-plastics, biomimicry, machine-learning, predictive-maintenance, quantum-computing, quantum-key-distribution, sensor-networks, smart-sensors, and sustainable-materials.

Canada’s ecosystem, anchored by a blend of globally recognized research institutes (e.g., Institute for Quantum Computing, Vector Institute, Carleton University, University of Waterloo), innovative startups (e.g., Cohere, Aspect Biosystems, Nanoprecise, Quantum Bridge), and applied research centres (e.g., McMaster Manufacturing Research Institute (MMRI)), is making notable contributions to both civilian and defence-relevant applications. The nation’s strengths lie in foundational research, AI and quantum science, and the development of sustainable and advanced manufacturing solutions. However, challenges persist in scaling, commercialization, and integration with defence procurement cycles.

Strengths

World-Class Research and Talent

Canada continues to punch above its weight in fundamental and applied research, particularly in artificial-intelligence, quantum-computing, and advanced-manufacturing-techniques. Institutions such as the Vector Institute, Institute for Quantum Computing, Carleton University, and the University of Waterloo have established themselves as global leaders, attracting top-tier talent and international collaboration.

• Artificial Intelligence and Machine Learning: The Vector Institute and startups like Cohere and Augmenta.ai are at the forefront of artificial-intelligence and machine-learning, driving advances in natural language processing, generative AI, and AI-driven design.
• Quantum Technologies: The Institute for Quantum Computing and Quantum Bridge are developing quantum-computing and quantum-key-distribution technologies, with a focus on secure communications and next-generation computational capabilities.
• Advanced Manufacturing: The McMaster Manufacturing Research Institute (MMRI) and companies like Metafold are pioneering additive-manufacturing and 3d-printing-for-manufacturing, enabling rapid prototyping and complex component fabrication.
• Sustainable Materials and Biotech: Organisations such as ALT TEX, Cellulotech Inc., and FemTherapeutics are innovating in biodegradable-plastics, biomimicry, and sustainable-materials, aligning with global sustainability goals and offering dual-use potential for military logistics and medical applications.

Robust Startup Ecosystem and Industry-Academia Collaboration

A vibrant startup ecosystem is supported by strong linkages between academia, industry, and government. This is exemplified by:

• Cohere’s rapid commercialization of AI models.
• Aspect Biosystems’s breakthroughs in tissue engineering and biomimicry.
• SensorUp and Nanoprecise’s deployment of sensor-networks and smart-sensors for predictive-maintenance and industrial monitoring.

Government Support and Strategic Investments

Federal and provincial governments have maintained significant funding for research and innovation, particularly through programs such as the Strategic Innovation Fund, NSERC, and targeted defence innovation challenges.

Weaknesses

Commercialization and Scaling Gaps

Despite world-class research, Canada faces persistent challenges in scaling technologies from lab to market, particularly in defence and dual-use sectors:

• Procurement Bottlenecks: Defence procurement cycles remain slow and risk-averse, hindering the rapid adoption of emerging technologies.
• Venture Capital Limitations: While the startup scene is vibrant, Canadian firms often lack access to late-stage capital, resulting in talent and IP migration to the US and Europe.
• Manufacturing Scale: Advanced-manufacturing and additive-manufacturing capabilities, though innovative, are not yet at the scale of major international competitors (e.g., US, Germany, China).

Fragmentation and Coordination

The innovation landscape is fragmented, with limited coordination between disparate research centres, startups, and defence end-users. This impedes the integration of technologies such as quantum-key-distribution or AI-driven predictive-maintenance into operational defence systems.

Talent Retention

While Canada attracts and trains top talent, retention is a challenge, especially in high-demand areas like artificial-intelligence and quantum-computing, where global competition for expertise is fierce.

Notable Programmes & Investments

Government Initiatives

• Innovation for Defence Excellence and Security (IDEaS): Supports dual-use technology development, with recent calls focusing on quantum, AI, and advanced-manufacturing.
• Strategic Innovation Fund: Provides large-scale funding for scale-up in critical technology sectors, including sustainable-materials and sensor-networks.

Academic and Research Programmes

• Institute for Quantum Computing: National Quantum Strategy projects, focusing on quantum-computing and quantum-key-distribution for secure communications.
• Vector Institute: Pan-Canadian AI Strategy, with emphasis on responsible AI and dual-use applications.
• McMaster Manufacturing Research Institute (MMRI): Applied research in additive-manufacturing and advanced-manufacturing-techniques for aerospace and defence.

Corporate and Startup Investments

• Cohere: Secured Series D funding to expand AI model commercialization, including dual-use applications in intelligence and logistics.
• Quantum Bridge: Partnered with Canadian defence agencies to pilot quantum-key-distribution networks.
• SensorUp and Nanoprecise: Deployed sensor-networks and smart-sensors for predictive-maintenance in critical infrastructure and defence platforms.
• ALT TEX, Cellulotech Inc., FemTherapeutics: Attracted investment for scale-up of biodegradable-plastics and sustainable-materials, with potential applications in field logistics and medical support.

Competitive Comparison

United States

The US remains the global leader across nearly all assessed technologies, benefiting from vastly greater scale, defence spending, and integrated innovation ecosystems. US firms and institutions are ahead in the deployment of quantum-computing, additive-manufacturing, and AI for defence, with rapid commercialization and adoption cycles.

Europe

European countries, particularly Germany, the UK, and France, are highly competitive in advanced-manufacturing-techniques, sustainable-materials, and quantum technologies. The EU’s regulatory and funding frameworks support large-scale, cross-border collaboration, which Canada lacks.

Asia

China is rapidly advancing in quantum-computing, sensor-networks, and additive-manufacturing, leveraging state-driven investment and scale. Japan and South Korea excel in smart-sensors and sustainable-materials.

Canada’s Position

Canada is globally recognized for foundational research, especially in artificial-intelligence and quantum-computing, and is an early mover in sustainable-materials and biomimicry. However, it lags in large-scale commercialization, defence adoption, and manufacturing scale relative to the US, China, and leading European nations.

Opportunities for Collaboration / Export

International Collaboration

• Five Eyes and NATO: Canada’s trusted status enables collaboration in secure quantum communications, AI-enabled intelligence, and advanced-manufacturing for allied defence supply chains.
• Academic Partnerships: Joint research with US, UK, and EU institutions in quantum-computing, AI, and sustainable-materials.
• Export of Dual-Use Technologies: Canadian startups (e.g., Cohere, Quantum Bridge, SensorUp) are well-positioned to export AI, quantum-key-distribution, and sensor-networks solutions to allied markets.

Industrial Partnerships

• Integration with Multinational Primes: Opportunities exist to supply advanced-manufacturing components, smart-sensors, and sustainable-materials to global aerospace and defence primes.
• Biotech and Medical Exports: Companies like Aspect Biosystems and FemTherapeutics can export biomimicry and biodegradable-plastics innovations for military medical and logistics applications.

Risks & Mitigation

Geopolitical and Supply Chain Risks

• IP Leakage: The migration of talent and IP to foreign jurisdictions poses risks to national security and economic returns. Mitigation: Strengthen IP protection, incentivize domestic retention, and foster sovereign scale-up pathways.
• Supply Chain Vulnerabilities: Dependence on foreign suppliers for critical materials and manufacturing inputs. Mitigation: Invest in domestic supply chains for advanced-manufacturing and sustainable-materials.

Technology Adoption Risks

• Slow Defence Uptake: The risk that defence procurement lags technological advances, leading to obsolescence or missed opportunities. Mitigation: Streamline procurement, expand pilot programmes, and increase defence-industry engagement.
• Dual-Use Export Controls: Navigating regulatory barriers for dual-use technologies, particularly in quantum and AI. Mitigation: Enhance compliance frameworks and work with allies to harmonize controls.

Cyber and Quantum Security

• Quantum Threats: The emergence of quantum-computing may render current cryptographic systems obsolete. Mitigation: Accelerate quantum-key-distribution deployment and quantum-resilient cybersecurity research.

Outlook (5-year)

Trajectory

Canada is well-positioned to maintain and expand its leadership in foundational research and early-stage innovation in artificial-intelligence, quantum-computing, and sustainable-materials. The next five years will likely see:

• Increased Commercialization: With sustained investment and targeted policy interventions, more Canadian innovations are expected to reach market, especially in AI, quantum-key-distribution, and advanced-manufacturing.
• Defence Adoption: Pilot programmes and increased collaboration with the Canadian Armed Forces will accelerate the integration of dual-use technologies, particularly in predictive-maintenance, sensor-networks, and quantum-secure communications.
• Sustainability Leadership: Canada will continue to be an early adopter and exporter of biodegradable-plastics and sustainable-materials, aligning military logistics with environmental goals.

Challenges

• Scaling and Retention: Addressing the persistent challenges of scaling up and retaining talent/IP will be critical to realizing the full potential of Canadian innovation.
• Global Competition: Intensifying competition from the US, China, and Europe will require Canada to focus on niche leadership and strategic partnerships.

Strategic Recommendations

• Enhance Scale-Up Support: Expand funding and incentives for late-stage commercialization, particularly for dual-use applications.
• Strengthen Defence-Industry Linkages: Create more agile pathways for defence adoption of emerging technologies.
• Promote International Collaboration: Leverage Canada’s trusted status to deepen partnerships within Five Eyes, NATO, and allied innovation networks.
• Invest in Talent Retention: Implement policies and incentives to retain top talent and IP within Canada.

Conclusion:
Canada’s dual-use technology ecosystem is robust, innovative, and globally respected, particularly in AI, quantum, and sustainable materials. To translate this strength into strategic advantage, Canada must address commercialization and scale-up challenges, foster deeper defence-industry integration, and leverage international partnerships. With focused action, Canada is poised to remain a leading innovator and trusted supplier of critical dual-use technologies over the next five years.