Analysis
If Intel doesn’t mess up this time, Classiq could do for it what Android did for Google
Intel has repeatedly struggled to turn acquisitions into lasting competitive advantages. The Israeli quantum software company offers a chance to establish a position in a computing market whose winners have yet to emerge.
Alongside its illustrious history, Intel has also earned a well-deserved reputation as a poor acquirer, a company that never misses an opportunity to miss a technological revolution and often hastens the decline of the very firms it buys. The veteran chipmaker missed the mobile revolution, struggled to establish itself in autonomous vehicles, and, of course, fell behind in the AI boom. These missteps brought the company to the brink of collapse.
Intel’s history is closely intertwined with Israel, where it has invested billions of dollars in acquisitions that have yielded mixed results. Its largest deal was the $15 billion acquisition of Mobileye in 2017, only to take the autonomous driving company public again in 2022. Along the way, Mobileye acquired Moovit for approximately $1 billion in 2020. More recently, Mobileye, in which Intel still holds an approximately 80% stake, acquired Mentee Robotics, the robotics startup founded by Amnon Shashua, for approximately $1 billion. Despite these investments, Mobileye’s market capitalization has fallen to around $5.7 billion.
Another major acquisition was Intel’s $2 billion purchase of Habana Labs from Avigdor Willenz in 2019. Had Intel known how to capitalize on the technology, Habana could today be competing, if not with Nvidia, then at least with smaller AI chipmakers. Instead, the business has failed to emerge as a significant competitor, and Habana Labs’ operations have effectively been shut down. A similar fate befell Granulate, the promising Israeli startup Intel acquired in 2022 for approximately $650 million.
However, something different, and potentially very positive, has been happening at Intel since Lip-Bu Tan took the helm. The company’s market value has more than doubled and is now approaching $500 billion, with the surge appearing to reflect early signs of a broader business transformation. Tan, who was personally invested in Classiq, has demonstrated a willingness to make major strategic moves that depart from Intel’s traditional playbook.
Until now, Intel has maintained a relatively low profile in quantum computing. Classiq could provide the foundation for a new business in the field, much as Intel’s planned $5.5 billion acquisition of Tower Semiconductor was intended to expand its position in specialized chip manufacturing. That deal ultimately collapsed after the companies failed to secure regulatory approval, including from Chinese authorities. Tower continued operating independently and has since expanded into photonics, reaching a market valuation of approximately $20 billion.
True to form, Intel is entering the quantum sector later than it might have. But acquiring Classiq could allow it to move several steps ahead relatively quickly. The Israeli company occupies a distinctive position in the global market, with software designed to work across different quantum architectures, including trapped ions and neutral atoms, at a time when the race to establish a dominant technology remains unresolved.
As quantum computing develops, customers will need software to program and operate their machines. Classiq could provide that layer, competing with offerings from companies such as IBM, which has a stronger focus on quantum hardware. Had Classiq remained independent, it would have needed substantial additional capital to maintain its competitive position against much larger players.
If Intel gets the strategy right, and if quantum computing finally delivers on its long-promised potential (the wait has already been a long one), Classiq could do for Intel what Google’s $50 million acquisition of Android in 2005 did for its smartphone business.
