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Quantum computing heavyweight arrives as merger creates Quantinuum

Investors keen on quantum computing can expect the Honeywell-Cambridge Quantum merger to produce a new publicly traded company within a year.

Quantinuum ion trap quantum computer
Quantinuum's quantum computer processes data on a device called an ion trap within this vacuum chamber.
Quantinuum

Honeywell Quantum Solutions and Cambridge Quantum, two big companies in the nascent but potentially revolutionary quantum computing technology, completed merger plans to become a new company called Quantinuum on Tuesday. The new 400-employee company is a bigger competitor to tech giants like Google, IBM, Intel and Microsoft that also hope to cash in on quantum computing.

The two companies each contribute about half of the employees but have different specialties. Quantum computing hardware maker Honeywell Quantum Solutions is a subsidiary of Honeywell, an industrial giant that sold its mainframe business in 1986 but remains active in chemicals, aerospace and building management. Cambridge Quantum, based in the UK, focuses on the software needed to make quantum computers useful and accessible to customers.

"We will be a center of gravity for the entire industry," said Ilyas Khan, founder of Cambridge Quantum and now chief executive of Quantinuum. Honeywell Quantum leader Tony Uttley now is chief operating officer.

Quantinuum's customers likely won't include you, at least directly, since quantum computers won't fit in your watch or laptop. But humming away in data centers, they have the potential to reshape things you do care about, like the efficiency of solar panels, the financial performance of your retirement fund and the development of new medicines.

The merger is a taste of what's to come for the young quantum computing industry as today's jumble of players consolidate into a smaller number with richer offerings, Hyperion Research analyst Bob Sorensen predicts. It's part of a move toward a "full stack" of quantum computing technology that customers prefer over cobbling together technology elements from multiple suppliers.

"We are still in the early stages of a shakeout in the sector," Sorensen said. "Consolidation and collaboration to move to some form of a full stack offering is a big ticket to-do for many quantum computing players at this point."

The tie-up completes a process the companies announced in June. Under the deal, Honeywell is contributing its subsidiary and a $300 million convertible note. It'll have a 54% stake in Quantinuum, but that could change as the company tries to capitalize on quantum computing investor interest. Shares of rival IonQ have risen 162% since going public in October, despite a net loss of $14.8 million in its most recent quarter.

"We do believe within the next 12 months we will be a publicly listed entity," Uttley said.

Quantum flowers blooming

Conventional computers have settled down on one foundation -- silicon chips studded with billions of electronic on-off switches called transistors. But for quantum computers, tech giants and startups are pursuing a wide variety of designs. It's not yet clear which will prevail. It's possible multiple approaches will survive, each adapted for different tasks.

That's because quantum computers, at least for years to come, will function as accelerators for specific jobs out of classical computers' reach. The most famous possible quantum computing ability is cracking conventional encryption, though that ability will require a lot more improvement over today's comparatively primitive quantum computers, and the US government and industry allies are working on post-quantum cryptography techniques.

Nearer-term uses for quantum computers could include optimizing financial trading strategies, quantum chemistry to develop new materials, and applying artificial intelligence technology to natural language processing, Uttley said. In coming days, Quantinuum will announce a cybersecurity product, too.

Classical computers process data stored as bits that can be either a 1 or a 0, but all quantum computers instead use qubits that store a much more complicated state. Quantum physics, the weird rules of the ultrasmall, lets quantum computers link multiple qubits together and manipulate them to perform calculations.

Honeywell's approach uses a method called an ion trap the company expects will be good for quantum chemistry. But Cambridge Quantum will maintain its ability to work with different quantum computing hardware, too, including the superconducting circuits at the heart of the machines from IBM, Google and startup Rigetti Computing. That'll tap into the best tools for the job, Khan said, and keep Quantinuum in the good graces of customers who don't want to be reliant on a single company's machines.

"They are flexible about the hardware, which is good," said Constellation Research analyst Holger Mueller. "They would lose a lot if they did abandon that."