Canada’s New Playbook: Build First, Ask Allies Later
DIS signals real shift toward sovereign capability and domestic champions
🎯 Three-Shot Burst
The Government of Canada will prioritize building sovereign capabilities and buying Canadian (sidebar: what is a Canadian company, really?), focusing on the country’s existing strengths, and picking domestic champions in its long-awaited Defence Industrial Strategy (DIS).
The “build-partner-buy” framework indicates that Canada will focus first on domestic production and procurement. When that is not feasible, the feds intend to explore co-development partnerships with trusted allies.
Reality check: The emphasis on ‘build’ as the first priority before ‘partner’ and ‘buy’ is a huge shift and shows the government is listening to Canadian defence companies about building sovereign capability.
The DIS’ focus on growing Canadian SMBs into anchor companies is a welcome shift and important recognition that so many Canadian SMBs are already selling to our NATO allies first while searching for a domestic customer.
However, the document is light on enforceable mechanics that would actually make it fast and SMB-friendly: no procurement authority pushed down to the CAF; no fast lanes or separate rules for small / attritable systems; no authority to waive TB-style process for certain categories, or hard caps on decision timelines.
Bottom Line: On the assumption that simple rules for small dollars, explicit waiver authority, and alternative procurement authorities including agile and OTA, are now being crafted by the DIA, we give this strategy a solid B+.
Congratulations to Wendy and the DIS team.
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Every other major NATO ally has built and backed a national systems integrator — a company capable of assembling sovereign capability at scale. Canada stands alone without one
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🤝 Deal Corner
The factory is becoming the product
Pitchbook’s Ali Javaheri writes that for years, Defence VC funded prototypes. Now, it’s funding production. The numbers tell the story of a massive structural shift:
2022–2023: ~$0.5B annually in manufacturing-focused defence deals.
2024: $2.6B.
2025: $4.7B across 39 deals.
Bottom Line: Defence tech VC is in “industrialization mode,” not a Pentagon-prototype cycle: 2025 closed at $49.9B across 966 deals, with Q4 at $11.9B on 225 deals, signaling durable demand for scaled execution even as deal volume softened into year-end. Capital is clustering around readiness bottlenecks (autonomy + sensing + compute/infrastructure)
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Our armed forces are hollow, and our enemies know it
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Canada’s Defence Ambitions Must Include The Semiconductor Industry
Special guest POV by Gordon Harling, President and CEO, CMC Microsystems
The rapid uptick in defence investment under the Carney government is an opportunity to strategically bolster Canada’s semiconductor ecosystem as part of a broader re-industrialization effort.
Semiconductor-based technologies used for defence are often proven first in commercial industries where equipment must operate securely and reliably in harsh conditions.
Semiconductors are critical infrastructure at the heart of industry, and military-grade technologies have a long history of being repurposed for broader societal and economic benefit.
Canadian companies in mining, agriculture, automotive, marine and oceans, healthcare and biotechnology are all able to compete globally by integrating the intelligence made possible by semiconductor technologies into specialized equipment and software.
The dual use nature of defence technologies hammer home the need for a cohesive, national strategy to accelerate the expansion of Canada’s semiconductor sector industry so it can continue to contribute to the nation’s sovereignty, security and productivity.
Canada is focused on where it excels
Our heritage in telecommunications – think Nortel and Blackberry – have put Canada in a strong position to advance key semiconductor technologies and secure communications, which are integral to defence:
Compound semiconductors, which combine two or more different elements, sit at the core of modern radar, secure communications, power conversion and space systems. The federal government is already funding further development through the Strategic Response Fund and the FABrIC program, managed by CMC Microsystems.
Photonics, which uses light to carry and process information through fibers or tiny chips and turns it into useful signals for the internet and sensors, are found throughout defence applications including communications and navigation. The federal government earmarked money in its 2025 budget to advance photonic networking, sensing and secure communications as part of a broader initiative to fund quantum technologies for defence.
Click here to read more.
To read this article in French, please click here.
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The Office of the Department of National Defence and Canadian Armed Forces Ombudsman has released a new systemic report, Marking Time: A Decade of Stalled Progress for the Primary Reserve.
⚔️ Combat Readiness
The Europeans have had enough
One year into the second Trump presidency, a major ECFR poll finds that most Europeans no longer see the US as an ally and believe that greater defence spending is needed. This may also be related to the fact that NATO has seen the future, and is unprepared:
A single team of some 10 Ukrainians, acting as the mock adversary, counterattacked the NATO forces. In about half a day they mock-destroyed 17 armored vehicles and conducted 30 “strikes” on other targets.
Despite US Secretary of State Rubio’s conciliatory remarks at the Munich Security Conference, European countries are taking action to decouple from US security guarantees they no longer trust.
Dutch Defence Secretary Tuinman: “If the US blocks F-35 software updates, we will crack the code and do our own updates to make the plane fully European. I’m not allowed to say more”:
For the first time since the end of the Cold War, European capitals are discussing how to develop their own nuclear deterrent:
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Is this really sovereign cloud?
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Canadian bacon: Photonic claims “world-first” quantum teleportation across TELUS fibre network… Canada’s space inflection point… NordSpace engine testing [COOL VIDEO ALERT]… Quantum and drone tech dominate first DISH Industry Day… If Poland is preparing for war, why aren’t we?… How Can Improved Civil-Military Cooperation in Disaster Response Strengthen Canada’s Readiness?… Inside the Edmonton facility building quantum’s hidden infrastructure… Contested, Congested, and Constrained: Control of the Mid-Band and Its Implications for Canadian National Security
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Drone wars: Daniel Ek and Peter Thiel-backed start-ups win German military drone contracts… Defending America against drones… Border Officials Are Said to Have Caused El Paso Closure by Firing Anti-Drone Laser… The US Army has been acquiring multiple versions of the LOCUST laser weapon system to bolster its ability to shoot down hostile drones… Germany awards Stark and Helsing contracts to deliver next-generation strike drones… Euro drone: France is apparently negotiating an exit… Russia is deploying FPV attack drones from long-range “mothership” UAVs, extending precision strike capability to ranges of up to 400 miles… For the first time, an AI autonomous drone has beaten the best human pilots in global drone racing:
Arctic corner: Canada, Denmark deepen defence ties after Greenland annexation threat… In exclusive analysis, former Canadian defence chief says we can no longer afford to just claim the Arctic… CSIS officials say China is more of a concern in Canada’s Arctic than Russia… Inuit leaders urge Ottawa to follow Greenland’s infrastructure lead… Arctic as global flashpoint… Russia’s Arctic shadow war: How Moscow’s most-probed front fuels its Ukraine invasion… Head of CAF’s space division warns Russia is considering putting nuclear weapons in orbit… Canada wants NATO’s new Arctic Sentry security mission to become permanent… “Shifting Ice” – New Strider Report Reveals Russia’s Increasing Reliance on the People’s Republic of China to Develop and Control the Future of the Arctic
From the front: Defence Tech Startup Occam Raises €3M Following Brave1 Integration Approval in Ukraine… Shahed drones operating as relays increase the range of the network to some 600 kilometers… How Russia is reshaping command and control for AI enabled warfare… Ukraine to open 10 weapons export centers in Europe in 2026 in major wartime policy shift… Overview from the UK Ministry of Defence on routes for selling into the Armed Forces of Ukraine… Why Modern Warfare Rewards Metabolism Over Architecture:
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If you’ve got battlefield intel, classified tips, or just want to call in an airstrike on our typos, hit “reply” and sound off. Whether it’s a new tech sighting, a rumour from the mess hall, or feedback on our comms, we want your SITREP.