Canada to loan quantum startup Xanadu $140 million to build manufacturing plant

Friday's loan covers the federal portion of up to C$390 million in potential government funding Xanadu announced in March. The company said it expects to announce a deal for the remaining sum of up to C$195 million, from Ontario's provincial government, "in the near future."

Xanadu said it would use the federal loan to help build a manufacturing plant for photonics in Toronto, without sharing the terms.

"Essentially repayments in the future will be based as a percentage of revenue going forward, and it (the loan) is expected to create up to 275 jobs as well," CEO Christian Weedbrook told Reuters.

Founded in 2016 by Weedbrook, Xanadu is building a quantum computer that uses photonics — the light-based technology behind fiber-optic cables of the internet.

Its system, which is not yet commercially available, is designed to compute at room temperature, unlike other quantum computers that require extreme cold to lower potential errors.

Xanadu, whose customers include AMD AMD.O and Tower Semiconductor TSEM.TA, listed on the Nasdaq in March after a blank-check merger.

"Overall, we work with foundries in the U.S., Asia, Europe... we do all our chip designs ourselves in Canada, send them off to these different foundries," Weedbrook said.

The Canadian government will loan C$195 million ($140.78 million) to Xanadu Quantum XNDU.TO for setting up a plant that would make photonic components for quantum computers, in the country's largest ever support for the technology.

The move, unveiled on Friday, highlights growing global interest in quantum computers and comes months after the Trump administration decided to take $2 billion in equity stakes across nine quantum-computing firms to secure U.S. leadership.