Intel Buys Israeli Quantum Computing Firm Classiq for $2.3 Billion

Chip giant Intel has announced its acquisition of Israeli technology company Classiq, which developed software for quantum computers, in a deal estimated at approximately $2.3 billion. This transaction marks the largest deal to date in the global quantum computing sector and one of Intel's most significant acquisitions in Israel. The final sum and the exact mix of cash and stock are still being finalized.

The acquisition signifies Intel's substantial entry into a highly promising technological field. Classiq is expected to become Intel's global development center for quantum technologies, expanding the company's operations beyond its traditional core of designing and manufacturing chips for computers and servers. This is Intel's first major acquisition in about four years and the first since Lip-Bu Tan became CEO approximately 18 months ago. It is also Intel's second-largest acquisition in Israel, following the $15.3 billion purchase of Mobileye in 2017, though Classiq focuses on quantum software rather than chips.

Classiq, founded in 2020 by CEO Nir Minervi, CTO Dr. Yehuda Naveh, and CPO Amir Naveh, developed a development environment that enables organizations and researchers to design, build, and run software and algorithms for various quantum computers. The system aims to simplify the development process, allowing non-experts in quantum physics to create applications without needing to adapt software for each specific hardware type. It acts as a software layer connecting developers to quantum hardware, similar to how operating systems allow software to run on different computers.

The company competes with IBM in this space and has already seen its technology adopted by commercial clients and academic institutions, including BMW, HSBC, Rolls-Royce, Deloitte, and Citibank, along with hundreds of academic and research bodies. Applications developed on Classiq's platform include automotive simulations and financial tools for fraud detection and option pricing.

Classiq had raised approximately $200 million from investors since its inception, with a significant round led by Entree Capital last year. The company was reportedly exploring a Wall Street IPO before negotiations with Intel began. The deal follows a more than five-fold increase in Classiq's revenue over the past year, despite its relatively small operational scale compared to its valuation.

Significant financial gains are expected for Classiq's founders and investors. Entree Capital, holding about 15% of Classiq, is projected to receive around $340 million. Team8, with approximately 9%, is expected to get about $200 million, and The Phoenix, holding 7%-7.5%, anticipates roughly $160 million. Founders Yehuda Naveh and Amir Naveh, each holding about 4.5%, are each expected to receive around $100 million, while Nir Minervi, with about 3.3%, is set to receive approximately $77 million. Additional employees and investors will also benefit, depending on the final deal structure.

The acquisition raises the question of Intel's ability to successfully integrate Classiq and leverage its technology for growth, recalling past integration challenges with Israeli companies like Habana Labs and Granulate. This acquisition presents Intel an opportunity to establish a strong position in a new field, with Classiq becoming part of a major global technology race.