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US quantum computing company IonQ has agreed to buy a UK technology start-up spun out of Oxford university in a $1.1bn all-stock deal as breakthroughs in the sector spark early signs of dealmaking activity.
Maryland-based IonQ, which had a market value of nearly $10bn at Friday’s close, is among the companies at the forefront of the field, where technology groups such as IBM and Google parent Alphabet are racing to develop more powerful and easily operable quantum computers.
Unlike conventional computers, which solve problems using bits, quantum computers harness quantum bits, or qubits, that can process information at an exponentially faster rate, potentially yielding huge advances in areas such as drug discovery. But higher error rates have proved to be a stumbling block for the nascent sector.
IonQ said on Monday that it had struck a $1.07bn all-stock deal to buy Oxford Ionics, under the terms of which the UK start-up’s investors will receive between 7.3 per cent and 11.9 per cent of IonQ’s common stock depending on share price performance in the run-up to the deal closing. The deal is expected to close this year. Oxford Ionics’ investors will also receive $10mn in cash.
IonQ’s newly appointed chief executive Niccolo de Masi said the acquisition would help the company achieve its goal of becoming “the Nvidia of quantum”.
“This is a change-the-world advancement which is coming sooner and faster than people think,” de Masi told the Financial Times.
The acquisition of Oxford Ionics will enable IonQ to produce a so-called fault-tolerant quantum computer with processing power of 80,000 logical qubits and 2mn physical qubits by the end of the decade, the company said on Monday. IBM, which has developed one of the most powerful quantum machines to date with more than 1,000 qubits, is trying to develop a 100,000-qubits supercomputer by 2033.
Oxford Ionics, which was founded in 2019 by Oxford university physicists Chris Ballance and Tom Harty, is among the leaders in developing one of the most accurate quantum machines using ion-trapped technology manufactured on standard semiconductor chips, which suffer from a much lower number of random errors. Oxford Ionics’ 80-strong workforce, including its founders, will join IonQ after the deal is completed.
IonQ has signed up customers such as US government-backed Oak Ridge National Laboratory, UK drugmaker AstraZeneca and manufacturing group Airbus. The company is projected to generate between $75mn-95mn in revenues this year by putting its quantum computer processing power to work solving problems for its clients.
The takeover of Oxford Ionics will be IonQ’s sixth acquisition since the end of December 2022, as the group has tried to cement its status as the biggest pure-play quantum computing company globally.
Shares in New York-listed IonQ have almost quadrupled over the past year as excitement around quantum computing has grown following the boom in artificial intelligence stocks, giving it a share price of $39 apiece.
