IBM Takes a Billion-Dollar Step Toward Becoming Quantum’s Foundry King

Last century’s three-letter-acronym tech titan wants to be a little more like this century’s four-letter-acronym tech titan. It’ll take a quantum leap, and billions of dollars.

The federal government officially handed over the first billion-dollar check to IBM subsidiary Anderon last week to help the legacy tech player build the first pure-play quantum wafer foundry in the US. IBM has pledged an additional $1 billion to get the upstate New York facility up and running, in the hopes it can become a TSMC-style leading foundry for the quantum age, restoring Big Blue to the top of tech’s pecking order.

Bit by Qubit

Led by IBM’s semiconductor chief Mukesh Khare, Anderon’s foundry will produce superconducting qubit arrays, quantum input/output signaling, and readout signal chain components. We don’t quite know what that means either (extremely capable quantum computers are built on a system that practically bends the laws of physics to its will, after all), but here’s the important part: IBM said last week it has already achieved significant operational milestones at the facility during a demonstration phase, giving it confidence it can soon transition into commercial production.

That’s good news, considering the foundry isn’t intended for just IBM. À la TSMC, the company plans to be a critical supplier for an entire budding quantum industry, which also just received a boost from the government:

• Earlier this month, pure-play quantum developers Rigetti Computing, D-Wave Quantum and Quantinuum each received up to $100 million from the US Commerce Department, in exchange for a small equity stake. Citi analyst Fatima Boolani told Barron’s that the funding wave lends credibility to the emerging market, adding “there’s a real opportunity to commercialize this technology.”
• Not everyone is signing up, however. Earlier this summer, one Google Quantum AI executive said that the unit had declined federal funding, saying that it came with “various conditions” that could slow research.

Q the Music: IBM could use a jump into the future. In July, its stock suffered its worst day ever in records going back to the 1960s, dropping 25% after the company released disappointing preliminary second-quarter results. The problem? Big Blue has completely whiffed on the AI wave. Worse, its legacy hardware sales are hurting as businesses shift their spending to AI. As the old saying goes: If you can’t beat them, and you can’t join them, skip right on over to the next big tech advancement.