US to back Quantum firms with $2B in grants and equity stakes

The US Commerce Department plans to allocate $2 billion in grants to nine quantum computing companies. The authority is reportedly purchasing stock stakes in the list of companies. This comes in when Washington is pushing to maintain dominance against China in the field of technology.

The new government aid program focuses on hardware manufacturers that may take years before reaching profitability levels. However, this is one of the biggest direct interventions in the quantum tech industry by any US administration. It turns out to be different from the prior initiatives, as they were mostly funding universities, laboratories, and long-term research programs.

IBM set for $1B Quantum boost

According to reports, IBM is expected to receive $1 billion under the program. GlobalFoundries will collect around $375 million. This move will help the companies expand manufacturing capacity for advanced chips used in quantum systems.

The list holds the names of D-Wave Quantum, Rigetti Computing, Infleqtion, Atom Computing, PsiQuantum and Quantinuum. They are expected to receive about $100 million each. Meanwhile, an Australian startup, Diraq, will gain around $38 million.

The package would exceed the funding authorized under the US National Quantum Initiative Act. The Act, signed in 2018, had authorized about $1.275 billion over five years across multiple agencies. It is still unknown how much China has invested in its mission till now. Reports suggest that Beijing has spent more than $10 billion on quantum development over the last ten years.

IBM share price saw an uptick amid the announcement. It surged by more than 6% Thursday. IBM is trading at $239.3 at the press time. It has been running up by almost 10% over the last 5 trading days. However, it is still down by 6% over the past month.

GlobalFoundries posted similar but bigger gains. Its share price spiked by around 11% in the Thursday trading session. GFS is trading at $78.38 at the press time.

US may become both regulator and investor

The US is willing to invest in its own domestic companies as the govt will be both a regulator and a shareholder. Earlier, Cryptopolitan reported that the Trump administration has already taken stakes in Intel and MP Materials. This was done in order to secure domestic supply chains tied to semiconductors and critical minerals.

Quantum computing now appears to be moving into the same category of strategic technologies. Analysts hint that the equity component can change the way quantum startups fund themselves. Most of the quantum hardware startups continue to rely on government contracts. However, they also look for venture funds since no commercially viable quantum devices have emerged yet.

Unlike AI companies, which can benefit from their software products right away, quantum startups must develop hardware solutions that involve high costs and high error rates due to cryogenic devices.

Back in 2023, IBM Research had published a roadmap that targeted a system capable of running 100 million quantum operations by the end of the decade. However, Google in a 2023 research update highlighted that quantum error correction had crossed an important threshold.