Intel's Acquisition of Classiq May Signal a Shift from Past Mistakes

Intel, a company with a storied past, has also developed a reputation for poor acquisitions that have missed technological revolutions and led to the decline of acquired firms. The chip manufacturer notably missed the mobile, autonomous vehicle, and AI revolutions, a failure that nearly led to its downfall. Historically, Intel has invested billions in Israel on acquisitions that yielded little benefit. A major example was Mobileye, purchased for $15 billion a decade ago, only to be re-issued three years later. During that period, Intel acquired Moovit for Mobileye at $1 billion, and Mobileye, in which Intel still holds an 80% stake, later bought robotics startup Menti for $1 billion last year. Mobileye is now valued at a low of $5.5 billion. Another significant acquisition was Habana Labs from Avigdor Vilnatz in 2019 for $2 billion. Had Intel effectively utilized Habana Labs, it could have competed with Nvidia or smaller AI chip manufacturers, but its operations were effectively halted. The promising startup Granulate, acquired in 2022 for $500 million, met a similar fate.

However, under the leadership of CEO Lip-Bu Tan, Intel appears to be undergoing a positive transformation. The company's valuation has more than doubled to nearly $500 billion, with this growth seemingly supported by signs of business change. Tan, who was personally invested in Classiq, has demonstrated an ability to make significant moves outside Intel's usual pattern. Intel has not historically focused heavily on quantum computing, but Classiq is intended to form the basis of a new division in this field, similar to Intel's planned approach with Tower Semiconductor for specialized chip manufacturing, a $5.5 billion deal that ultimately failed due to Chinese regulatory blockage. Tower Semiconductor has since entered the photonics field and is now valued around $20 billion.

Despite Intel's late entry into quantum computing, the $2.3 billion acquisition of Classiq could rapidly advance its position. The Israeli company holds a unique global standing, capable of working with all quantum architecture types, including trapped ions and atom cooling, in a race that remains undecided. Any purchaser of a quantum computer today requires an operating system that can be sourced from either Classiq or IBM. If Classiq had remained independent, it would have needed substantial financial resources to maintain its competitive edge against IBM, which is more focused on the quantum computer itself. If Intel manages this acquisition effectively and the quantum field matures as anticipated, Classiq could replicate the success of Google's $50 million Android acquisition in 2005, which propelled its smartphone business.