Intel has placed a bet on quantum computing, an emerging computing industry that has yet to make inroads into the market, by acquiring the Israeli startup Classiq for $2.2 billion. Behind the move is an intention to control the value chain of the quantum computing market-a futuristic computing method that is different from Intel’s traditional silicon-chip technology, and which may not fully mature for several years.
Investors, however, are left scratching their heads, trying to determine whether this move represents Intel securing its future and compensating in the quantum market for the loss of the mobile and AI markets, or whether it’s an overly risky gamble.
A calculated move?
This appears to be a calculated move. More and more major corporations are establishing quantum computing divisions to be ready for a technology capable of delivering levels of computational efficiency orders of magnitude beyond what even the most powerful supercomputer from Nvidia can achieve today.
Financial institutions such as HSBC, Wells Fargo, and even the Bank of Israel, along with automotive and engine manufacturers like BMW, Rolls-Royce, and Lufthansa, telecommunications firms including Comcast, AT&T, KDDI, and NTT, and, most notably, global defense equipment companies (including those in Israel), have already set up quantum computing units. They are preparing for what is known as the "quantum advantage" threshold: the moment when quantum computing matures to become more efficient and faster than the most powerful silicon-based supercomputer.
Within the industry, there is debate over whether this milestone will be reached by 2027 or perhaps not until 2030. Jensen Huang, CEO of Nvidia, notably remarked that full-scale commercialization of the field is still about 15 years away.
At present, Intel is the only Big Tech company to have made a major acquisition in the quantum sector. Other giants, such as Google and Microsoft, still view the field as something of a gamble; while they are experimenting with the in-house development of chips and scientific processes, they regard these efforts primarily as scientific exploration or commercial experimentation. Others, such as Amazon and Meta, are not really active players in this space. Nvidia, meanwhile, has opted against developing a quantum chip, choosing instead to facilitate quantum simulations using its standard graphics processing units (GPUs).
Investors on the sidelines
Intel had negative cash flow between 2022 and last year, and substantially increased its debt. However, since the arrival of CEO Lip-Bu Tan in March of last year, massive planned investments in facilities in Germany and Poland have been canceled, construction of the plant in Kiryat Gat has been frozen, and free cash flow has returned to positive territory. The company’s debt has also decreased, following a series of asset sales and the divestment of a chip company that Intel had previously acquired. Tan has chosen to shell out $2.2 billion for a software company, even as Intel is still licking its wounds following the layoff of tens of thousands of employees and various cost-cutting measures. Given Intel’s troubled history with acquisitions (one need only look at the disappointing outcomes of its purchases of Israeli firms Mobileye, Habana Labs, and Granulate) it is quite possible that investors view the acquisition of Classiq as a gamble.
Investors in publicly traded quantum computing companies, a sector that has been one of the hottest trends in the capital markets in recent years, might have been expected to take heart from a tech giant’s entry into the quantum arena. In the wake of the news of the acquisition, shares of IonQ dipped by 0.2% in after-hours trading, while shares of Quantinuum and Rigetti Computing also saw declines of less than 1%. The market is struggling to process this development-occurring within an emerging sector-especially since it came from a weak player in the market.
The defense connection
One factor that may help explain Intel’s gamble on quantum computing is its deepening relationship with the US government and the Pentagon. Since President Donald Trump spearheaded government investment in the company, and encouraged other American firms, such as Nvidia, to invest as well, Intel has increasingly come to be viewed as a US national asset: a chip manufacturing facility that serves the Pentagon and supports the growth of the nation’s public and private defense sectors.
About two years ago, the US government announced a $3 billion grant to Intel for the construction of a chip fabrication plant dedicated to the defense industry. Furthermore, Elon Musk’s initiative to build a new chip plant for Tesla and SpaceX-in collaboration with Intel, in the Terafab project-ensures that Intel will secure orders for chips used in spacecraft, satellites, autonomous vehicles, and robotic systems.
In this context, the US defense establishment is staying two steps ahead of the private sector in the adoption of quantum technologies. These technologies will enable the defense sector to withstand powerful cyberattacks, safeguard the encryption of its assets, and run complex simulations of weaponry, tasks that can only be performed on supercomputers.
One of the most pressing quantum applications in defense is not necessarily quantum computing, but rather quantum sensing. Such sensors could, for instance, facilitate navigation without relying on GPS or existing atomic clocks. In this sense, the development of quantum sensors that rely on the manipulation of photons, as pursued, for example, by Israeli company Quantum X Labs and US company Infleqtion, represents the most urgent need for quantum computing in defense.
A success story for investment institutions
The Classiq deal sheds light on a rarely discussed phenomenon: direct investment by investment institutions in technology companies. Phoenix Financial emerged as one of the biggest winners; having invested a total of $15 million in Classiq between 2022 and 2025, it is now set to pocket $150 million.
This is an impressive and far from accidental success story. Phoenix, alongside other institutions such as More, Harel, and Meitav, employs investment managers who are well-acquainted with the local venture capital landscape and Israeli growth-stage ecosystem. These managers actively seek out investment opportunities where risk is lower, specifically in growth-stage companies that are already generating millions of dollars in revenue.
According to an IVC report, in 2025 Phoenix Financial ranked as the second-largest institutional investor in the Israeli high-tech sector, accounting for 18% of total institutional investment in Israeli tech companies; Harel held the top spot with 33%. This year, Phoenix’s share of total institutional investment in high-tech has risen to 24%, while Harel’s share has declined to 30%.
These investments do not always yield positive returns. Phoenix Financial’s investment in Classiq, for instance, began during the 2022 high-tech bubble. Many institutions suffered losses from backing growth-stage companies at peak valuations during 2021 and 2022, which negatively impacted their returns following the industry-wide downturn that began in the second half of 2022.
Published by Globes, Israel business news - en.globes.co.il - on October 28, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.