U.S. to invest in quantum computing firms, including IBM, in exchange for stakes

In this March 18, 2019, photo, the logo for IBM appears above a trading post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, File)

The Trump administration is awarding grants to a handful of companies, including IBM, that are focused on quantum computing in exchange for stakes in some of them.

The investments deepen the Trump administration’s push into taking equity stakes in companies considered critical to the domestic supply chain as well as to counter China’s dominance in certain sectors, including chipmaking.

The government has already taken big stakes in companies such as Intel and MP Materials, a rare earth mining company.

IBM will receive US$1 billion, while GlobalFoundries is set to receive US$375 million, the two companies said in separate statements on Thursday.

Others, including D-Wave Quantum, Rigetti Computing and Infleqtion, will receive about us$100 million each for a U.S. government stake in the companies.

Shares of companies that are part of the deal rose between seven per cent and 25 per cent in premarket trading.

The Trump administration is awarding a total of US$2 billion in grants to nine quantum-computing companies, the Wall Street Journal reported earlier in the day.

Quantum computers are designed to process information exponentially faster than traditional supercomputers, though the technology still faces major technical hurdles including high error rates that limit their practical performance.

GlobalFoundries launched a new business called Quantum Technology Solutions focused on scaling manufacturing for quantum computing hardware, while the U.S. government agreed to take an equity stake of about one per cent in the company.

IBM said it would launch a company called Anderon in New Albany, New York that would be America’s first dedicated quantum chip manufacturing facility.

Backed by US$1 billion in CHIPS Act incentives from the Commerce Department and a US$1 billion cash contribution from IBM, Anderon will operate as a 300-millimeter quantum wafer foundry.

IBM would also contribute intellectual property, assets and workforce to Anderon and will bring in additional investors as the new company scales.

“These strategic quantum technology investments will build on our domestic industry, creating thousands of high-paying American jobs while advancing American quantum capabilities,” Commerce Secretary Howard Lutnick said.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Vijay Kishore and Anil D’Silva)