“Intel will be among the first names people think of in quantum computing,” says Classiq CEO
Intel has agreed to acquire the Israeli quantum-software startup for $2.3 billion, betting that its technology can help turn decades of quantum research into a commercial business. CEO Nir Minerbi believes the combination of Intel’s hardware capabilities and Classiq’s software could put the chipmaker at the forefront of the emerging industry.
“We founded Classiq to solve an almost embarrassing problem: no one knew how to communicate with a quantum computer. It was a gamble, because quantum computers barely existed at the time. In the two or three years after the company was founded, the technology evolved significantly. Today, contrary to popular perception, there are quite a few applications for quantum computers, even though a major commercial breakthrough has yet to materialize. You might be surprised to learn that organizations such as Ichilov Hospital, the Bank of Israel and Israel Natural Gas Lines (INGL) are already using our platform,” says Nir Minerbi, co-founder and CEO of Israeli quantum-software startup Classiq.
On Monday, Intel announced that it would acquire Classiq for $2.3 billion in cash and stock, following a prolonged period of internal turmoil that had effectively brought its acquisition activity to a halt. The deal is set to be the largest in the quantum-computing sector to date, further cementing Israel’s position in a field that is still emerging but attracting growing commercial interest. Israel is already among the world’s top five countries by the number of quantum companies and the volume of private investment in the sector.
Minerbi, 35, founded Classiq in 2020 alongside Amir Naveh, a friend from their shared service in the IDF’s Talpiot program, and Naveh’s father, Yehuda, who previously led IBM’s quantum-computing program in Israel.
“Amir and I have been friends for 20 years. Ever since we were discharged from the IDF, we knew we wanted to build something, but we also knew it wouldn’t be in cybersecurity. At the time, Yehuda was leading IBM’s quantum-computing efforts in Israel, and that’s how we began exploring the field. This was around 2019, when Google announced ‘quantum supremacy.’
“We put together a presentation for Entrée Capital, which we considered by far the strongest deep-tech investor in the world. Just 35 minutes into the meeting, they told us they were on board. But the road since then hasn’t been easy.
“I actually hate the term ‘deep tech’ because it is often used as a kind of mitigating circumstance, as if to say, ‘We have no revenue and don’t need customers.’ You can only play that game up to a certain point, so we decided to take the opposite approach. Building a customer base was crucial to us, and ultimately, that was exactly what Intel liked: the fact that we also know how to do business,” Minerbi says.
The sale to Intel also brings Classiq’s story full circle. In its early days, the company participated in Intel Ignite, the chipmaker’s startup accelerator program.
“We’ve worked with Intel over the years, and a natural synergy emerged for two reasons. First, I’m from Haifa. It’s in my soul, and Intel holds a special place in the hearts of Israelis. Second, when you’re building a new computing paradigm, Intel is an obvious name to consider. The company has a range of hardware capabilities that could serve the quantum industry. What was missing was the software layer that would allow users to interact with these systems.”
Intel’s CTO Pushkar Ranade, a key adviser to CEO Lip-Bu Tan, presented the deal to investors and analysts on Tuesday. He described Classiq as playing a role in quantum computing similar to that of foundational software platforms in conventional computing, comparing it to CUDA, Nvidia’s software platform, and DOS, Microsoft’s early operating system.
Quantum computing has been on the horizon for decades. What has changed?
“Quantum computing represents an entirely new world of computing, a revolution that has been discussed since the 1980s. All the computers we know today share the same ‘DNA,’ whereas quantum computing is fundamentally different.
“What has changed in recent years is the conversation. We no longer ask whether it will happen, but when. The challenge has shifted from a scientific one to an engineering one, and engineering problems can be solved. When it happens, it will represent a once-in-a-century business opportunity. A company like Intel is less sensitive to the exact timing, whether the breakthrough comes in a year or two.”
You also seriously considered an IPO. Why did you ultimately decide to sell?
“We explored several alternatives recently, including the public markets through both a SPAC and a traditional IPO. We came quite close to pursuing that route, and other companies also expressed strategic interest.
“In quantum computing, the public market presents an unusual situation, somewhat like the pharmaceutical industry. The promise is so great that companies with little or no revenue can trade publicly. But that also brings volatility that isn’t for the faint of heart.”
Minerbi says that, given the recent decline in quantum-related stocks, he is not sure an IPO would have been the right move at this point. A further private funding round might have been the alternative. The sector’s leading publicly traded companies have seen their valuations fall from double-digit billions of dollars to around $10 billion or less.
Intel has a mixed track record with acquisitions. What will make this deal succeed?
“Intel is in an incredible position to serve the entire industry. It is also developing its own quantum computer, and it is a powerhouse. When you combine that with software, the opportunity becomes immense.
“Let’s check back in a year or two. There’s a strong chance that Intel will be among the first names that come to mind when people think about quantum computing.
“I don’t dwell much on Intel’s past. Instead, I look at the key people involved today. They emphasize how important it is for us to continue operating like a startup within Intel, and we have full confidence in this partnership. Both sides have something to prove, although the burden of proof lies more heavily on us.”
How large is Intel’s quantum operation, and what role will Classiq play?
“We will spearhead Intel’s strategic direction in quantum computing, and that effort will be driven from Israel. It’s too early to define everyone’s specific role, but Intel has made it clear that it needs every single one of our employees.
“Intel has about 70 employees working on quantum technologies, so adding Classiq’s 140 employees is a significant expansion. Until now, Intel’s involvement in quantum computing has focused on research and development rather than building a commercial business. By making the technology accessible to end users, a capability it gains through the acquisition of Classiq, Intel has an opportunity to make the leap from zero to one.
“We will report to the CTO organization, but Intel has consistently emphasized that it wants to preserve our startup culture and our Israeli identity.”
Has the National Quantum Initiative helped Classiq, and what should the next government do?
“In financial terms, the funding we received from the government was relatively small, but strategically it was significant. Before founding Classiq, I saw the Israel Innovation Authority as a kind of ‘social security’ for failing companies. I’ve since learned that this is far from the case.
“The authority helped facilitate both our major fundraising rounds and our broader growth. For every shekel invested by the Innovation Authority, we raised 100 shekels from private investors.”
