Intel pays $2.3B for Classiq, Israel’s quantum software leader

Intel has agreed to acquire Classiq, an Israeli startup that builds operating-system software for quantum computers, for $2.3 billion in cash and stock. The transaction, reported Monday, appears to be the largest acquisition yet in the quantum computing sector and one of the most significant exits for Israel’s tech industry in recent years.

The company employs roughly 150 people and has raised about $200 million to date, most recently at a valuation of $600–700 million in 2025. The acquisition price therefore represents a significant multiple on that valuation, despite the company’s annual revenue reportedly remaining below $100 million. Employees collectively own 10% of Classiq, translating to approximately $230 million at the deal price, and Intel has allocated over $100 million in retention grants to encourage the team to stay.

The deal reflects Intel’s push into quantum computing, a field that has attracted substantial investment but remains largely pre-commercial. While quantum computers remain rare and expensive, companies like Classiq are betting that software will help bridge the gap between niche hardware and practical applications. Classiq’s platform is designed to be hardware-agnostic, meaning it can run on quantum processors from multiple manufacturers, unlike competitors such as IBM, which are tied to their own systems. The startup counts BMW, Rolls-Royce, HSBC, and Citi among its customers.

For Israel, the acquisition could mark a turning point. It represents one of the first major exits in the country’s quantum computing sector and may draw more investor attention to the space. Israel is already considered a leading hub for quantum computing, both in the number of companies and the volume of private investment. However, the deal also highlights the gap between expectations and reality: quantum computing has yet to achieve widespread commercial adoption, and its “ChatGPT moment” remains elusive.

Intel’s move follows a pattern of large acquisitions in Israel, though this deal stands out for its size. The semiconductor giant has not made a comparable purchase in the country since its acquisitions of Moovit and Habana Labs several years ago. Intel CEO Lip-Bu Tan is reportedly a personal investor in Classiq, though sources indicated he did not participate in the acquisition negotiations due to his financial interest.

The deal also carries implications for Classiq’s backers. Entrée Capital, the company’s largest shareholder, is expected to see a substantial return on its early investment. Team8 Capital and Israeli insurer Phoenix also hold significant stakes. Because Classiq is incorporated in Israel, the transaction is expected to generate tax revenue for the state beyond individual capital gains taxes.

This acquisition arrives amid a wave of activity in quantum computing. Earlier this month, IonQ acquired cybersecurity firm Elisity in a deal valued at up to $1.3 billion, which had been the largest quantum-related transaction to date. Yet Intel’s purchase of Classiq surpasses those deals, suggesting growing investor interest in quantum software as a potential near-term opportunity, even as hardware continues to face challenges.

What remains uncertain is whether Intel’s bet will pay off. Quantum computing’s commercial viability is still years away, and the sector’s trajectory depends on breakthroughs that have yet to materialize. For now, the Classiq deal serves as a milestone for quantum software—and a reminder that the race to make the technology usable may be heating up long before it becomes mainstream.

Sources: calcalistech.com · ynetnews.com