IonQ Is Acquiring Two Quantum Computing Start-Ups. What’s Next in Its Buying Spree.

IonQ completed its acquisitions of Oxford Ionics and Vector Atomic in separate deals valued at a total $1.3 billion. (COURTESY IONQ)

Key Points

About This Summary

• IonQ finalized its acquisition of Oxford Ionics and will acquire Vector Atomic in deals valued at $1.3 billion.
• The Oxford Ionics deal brings IonQ a team of scientists, engineers, patents, and a U.K. base of operations.
• Vector Atomic acquisition accelerates IonQ’s entry into quantum sensing and strengthens its quantum platform.

IonQ said Wednesday that it had completed its acquisition of Oxford Ionics and entered into an agreement to acquire a second start-up in transactions valued at a collective $1.3 billion.

The company teased the upcoming acquisition of Oxford Ionics in a separate announcement last week. The $1.075 billion transaction includes $1.065 billion in IonQ shares plus $10 million in cash.

Shares spiked on Sept. 12 after the company said the acquisition had earned clearance from the UK Investment Security Unit, an arm of the Cabinet Office tasked with identifying national security risks.

Under the terms of the deal, IonQ will take on Oxford Ionics’ team of scientists and engineers as well as its patents for trapped-ion quantum systems. IonQ plans to integrate the startup’s ion trap technology, which is made using standard semiconductor chips, with its own quantum systems.

The company noted in a press release that the acquisition also provides it with a “U.K. base of operations” for future collaborations with research and commercial clients.

The Oxford Ionics deal wasn’t the only one on the table. IonQ announced that it had also entered into a definitive agreement to acquire Vector Atomic, the maker of quantum sensing technology and atomic clocks with national security applications, in a $250 million, all-stock transaction.

The deal “is anticipated to be accretive to earnings, while accelerating IonQ’s entry into the quantum sensing market and strengthening its full-stack quantum platform,” IonQ said in a press release.

The acquisition of the Pleasanton, Calif.-based company represents an effort to break into a new part of the market where companies like Infleqtion have already established a foothold.

It also signals IonQ’s aspirations in the federal realm. The announcement comes just days after the launch of IonQ Federal, a business division focused on leveraging IonQ’s technology to serve the U.S. government and its allies.

IonQ has been on an acquisition spree this year. In May, the company bought ID Quantique, a Swiss firm specializing in quantum networking. The following month, it completed its purchase of Capella Space, a satellite company. Then, in July, it completed the acquisition of Lightsync, a Boston-based start-up building technology to link quantum computers.

IonQ’s latest acquisitions signal an increased interest in networking, or the transfer of information between physically separate quantum processors. This focus is intentional, IonQ CEO Niccolo de Masi told Barron’s.

“The very fabric that is modern-day civilization relies on safe and secure communications,” the CEO said. “It’s your bank account details, its e-commerce, it’s the battlefield. If you take that away, you set the world back decades.”

While quantum technology is nascent, it is developing quickly, and most cybersecurity experts agree the machines will be powerful enough to crack current encryption standards.

“As we advance the quantum computing business, we get closer to breaking RSA encryption,” de Masi explained. “Our national security relies on this, and ultimately we know we need to win not only the quantum computing race, but also the quantum security race.”

IonQ stock rose 3.1% to $64.20 on Wednesday. Peers D-Wave Quantum and Rigetti Computing were up 8.6% and 3.7%, respectively, while the benchmark was down slightly.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com