The first major exit in Israel’s quantum industry: Classiq, a developer of operating systems for quantum computers, is set to be acquired by Intel in a deal combining cash and stock, valued at $2.3 billion. This transaction marks the most expensive acquisition of a quantum company to date—by a significant margin. The previous record was set last year when IonQ acquired Oxford Ionics for $1 billion.

This transaction represents a significant acquisition for Intel. Six years ago, Intel spent approximately $1 billion to acquire the Israeli mobility company Moovit, and a year later, it purchased Habana Labs for $2 billion. Since then, Intel has made other acquisitions—including the Israeli firm Granulate—but those deals were valued only in the hundreds of millions of dollars. Intel has not acquired any other Israeli companies since the purchase of Granulate in 2022.

A milestone acquisition

For Israelis accustomed to multi-billion-dollar deals in the cybersecurity sector, $2.3 billion might not seem like an extraordinary sum. In the realm of quantum computing, however, this transaction marks a significant milestone. Despite the intense attention surrounding the field, quantum computers have yet to see widespread commercial adoption; there are currently only 117 such machines globally, and their prohibitive costs remain a major barrier to broader accessibility.

While quantum computing has shown immense potential for decades- with several major breakthroughs occurring over the past two years- it has yet to experience its own "ChatGPT moment"- a transformative leap that would propel the technology into mainstream use.

Despite its small geographical footprint, Israel ranks among the world's top five nations in quantum computing, standing out both in terms of the number of active companies and the volume of private investment. Intel's acquisition of Classiq for over $2 billion is likely to draw greater investor interest toward Israel, serving as a new catalyst for the growth of the country's quantum industry.

This deal is reminiscent of Intel's acquisition of the autonomous driving firm Mobileye- founded by Amnon Shashua- a decade ago. That transaction ignited a wave of investment in Israeli autonomous driving ventures. There is now hope that the exit of Classiq will trigger a similar effect, potentially yielding even greater long-term benefits for the entire sector.

For Classiq's founders, employees, and investors, this acquisition represents a remarkably successful exit for a company that has been in existence for only six years. Classiq currently has approximately 150 employees, who collectively hold a 10% stake in the firm- a portion valued at $230 million based on the acquisition price- though the final payout for each individual employee will vary. Furthermore, Intel has set aside more than $100 million in retention bonuses to encourage employees to remain with the company.

About Classiq

Classiq was co-founded by Nir Minerbi, Amir Naveh, and the latter's father, Professor Yehuda Naveh. Minerbi serves as CEO, Amir Naveh as Chief Product Officer, and Yehuda Naveh as Chief Technology Officer. Both Minerbi and Amir Naveh are graduates of the Israel Defense Forces' Talpiot program- a background shared by many of the company's employees- while Yehuda Naveh previously held a senior position at IBM's R&D center in Israel. Each of the three founders is expected to receive between $80 million and $100 million from this transaction.

Although Classiq generates revenue, its annual figures are in the tens of millions of dollars- well below a $100 million annual run rate. Consequently, for such a relatively young company, the acquisition price represents a very high valuation multiple.

Classiq occupies a unique position in the quantum computing industry. It develops software that functions as an operating system for quantum computers, bridging the gap between complex hardware and the individuals or organizations seeking to utilize it. The company's ambition is to become the "Windows" of the quantum computing world.

IBM, a pioneer in quantum computing, is also one of Classiq's primary competitors. While estimates suggest that Classiq has surpassed IBM in market share, the rankings can vary depending on the specific metrics used. Classiq's software is hardware-agnostic, meaning it can operate across various quantum computing platforms rather than being locked into a single manufacturer's ecosystem.

The company's client base spans several sectors, including banking, automotive, and pharmaceuticals. Notable clients include BMW, Rolls-Royce, HSBC, Deloitte, Toshiba, and Citigroup.

Having raised approximately $200 million to date, this acquisition also represents a highly profitable outcome for Classiq's investors. The company's most recent funding round, completed in 2025, raised $110 million at a valuation of roughly $600 million to $700 million- a figure significantly lower than the current acquisition price.

Entrée Capital, which led Classiq's seed round, stands as the company's largest shareholder and is expected to be the primary beneficiary. Having invested only a few million dollars, the fund is projected to see a return exceeding $300 million. Team8 Capital, the company's second-largest shareholder, holds a 9% stake.

The deal is also expected to generate returns for Israeli savers through The Phoenix, which holds a 7.5% stake in Classiq. Unlike many recent exits by Israeli tech companies- most of which have been in the cybersecurity sector- Classiq is an Israeli-incorporated entity. Consequently, the Israeli government is expected to collect additional tax revenue, on top of the taxes already paid by the founders and employees who sold their shares.

However, since a significant portion of the consideration is being paid in Intel stock, not all proceeds will be realized immediately in cash.

One of Classiq's private investors is Lip-Bu Tan, who has been instrumental in Intel's turnaround efforts over the past 18 months. Tan invested in Classiq personally before becoming the CEO of the company that is now acquiring it. According to sources familiar with the matter, he recused himself from discussions regarding the acquisition.

Other notable investors include NightDragon, a fund led by Dave DeWalt, the former head of the cybersecurity firm McAfee.

Until recently, Classiq had been exploring the possibility of a public listing on Wall Street. Over the past year, several quantum computing companies have gone public- mostly through mergers with special purpose acquisition companies (SPACs)- though their share prices have performed poorly in recent months.

Quantinuum is the only company to have gone public via a traditional IPO; it reached a peak valuation of $15 billion at the time of its debut. Since then, its market capitalization has shrunk by 35%, leaving it with a current valuation of approximately $9.5 billion. IonQ, which went public via a SPAC merger in 2021, currently holds the highest market capitalization among publicly traded quantum computing companies, at roughly $13 billion.

If Intel acquires Classiq for $2.3 billion, the Israeli firm would rank among the five most highly valued companies in the global quantum computing sector. This valuation also underscores Intel's willingness to pay a premium for a company operating in a field that has yet to see widespread commercial adoption. Like many founders, Minerbi and Naveh had once spoken of global expansion and building an independent company. However, Intel's $2.3 billion acquisition of the firm- which had raised approximately $200 million in its most recent funding round and was valued at between $600 million and $700 million- proved highly significant for its shareholders and marked a major milestone in the development of Israel's quantum industry.

Intel May Be Approaching a Turning Point in Its Fate

Intel boasts a storied history, yet it has also become notorious for its poor acquisition strategy. The company has consistently missed out on major technological revolutions, often accelerating the decline of the very firms it acquired. This legacy chipmaker sat out the mobile revolution, struggled to gain traction in autonomous vehicles, and- unsurprisingly- fell behind during the artificial intelligence boom. These missteps have ultimately pushed the company to the brink of collapse.

Intel's history is deeply intertwined with Israel, where it has poured billions of dollars into acquisitions- with mixed results. Its most significant deal was the $15 billion purchase of Mobileye in 2017, though Intel later took the autonomous driving company public again in 2022. During this period, Mobileye acquired Moovit in 2020 for approximately $1 billion. More recently, Mobileye- in which Intel still holds an 80% stake- acquired Mentee Robotics, a robotics startup founded by Amnon Shashua, for roughly $1 billion. Despite these investments, Mobileye's market capitalization has shrunk to approximately $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 leverage that technology, Habana might today be competing with giants like Nvidia- or at the very least, holding its own against smaller AI chipmakers. Instead, Habana Labs failed to evolve into a formidable competitor; for all practical purposes, its operations have ceased. A similar fate befell Granulate, a promising Israeli startup with great potential that Intel acquired for about $650 million in 2022.

However, since Pat Gelsinger took the helm at Intel, the company has begun to shift in a different- and perhaps highly positive- direction. Its market capitalization has more than doubled, now approaching $500 billion; this surge may well signal a broader, more significant transformation of the business. Chen Lipu himself previously invested in Classiq, demonstrating a willingness to pursue bold strategic moves that diverge significantly from Intel's traditional operating model.

To date, Intel has maintained a relatively low profile in the quantum computing space. An acquisition of Classiq could lay the groundwork for a new business line for Intel in this sector- much like Intel's earlier, ultimately unsuccessful, attempt to acquire Tower Semiconductor for $5.5 billion, a move intended to bolster its position in specialized chip manufacturing. That deal fell through after failing to secure the necessary regulatory approvals, including from Chinese authorities. Tower Semiconductor has since continued to operate independently, expanding into the field of photonics and reaching a market capitalization of approximately $20 billion.

Unsurprisingly, Intel's entry into the quantum space has come later than anticipated. However, acquiring Classiq could allow the company to leapfrog several steps ahead in a relatively short timeframe. The Israeli firm occupies a unique position in the global market: its software is designed to operate across various quantum architectures- such as trapped-ion and neutral-atom systems- at a time when the race to determine which technology will ultimately prevail remains undecided.

As quantum computing matures, customers will require software to program and operate their machines. Classiq could provide this software layer, competing with offerings from companies like IBM, which focus more heavily on quantum hardware. Should Classiq remain independent, it would require significant additional capital to stay competitive against much larger rivals.

If Intel's strategy proves sound- and if quantum computing finally delivers on the long-promised potential that the industry has been anticipating for so long- then acquiring Classiq could yield immense value for Intel, much like Google's $50 million acquisition of Android in 2005 did for its smartphone business.

Source: Compiled from CTech

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