US government distorts quantum market with premature equity stakes
While laudably supporting quantum-focused foundry capacity, the government is also trying to pick winners in the vendor community
Introduction
The US Commerce Department announced letters of intent [1] to invest $2.013 billion dollars into two quantum foundry companies and seven quantum computing (QC) companies. The investments are structured as equity positions in these companies. Encouraging quantum-focused foundry capacity is positive for the entire ecosystem. However, taking equity positions in a small number of vendors in return for their commitment to tackle key technical challenges is premature and, in my view, acts as a market distortion with the potential for sub-optimal results.
In contrast, the government could have structured this investment along the lines of programs announced in the UK and France. Rather than equity investments, those governments have established competitions to reward successful outcomes, without prejudging which vendors will succeed.
Why the foundry funding is good for the industry
The best part of the funding, which is provided by the US CHIPS and Science Act originally enacted in 2022 [2], is investment towards quantum-specific fab infrastructure. GlobalFoundries will receive $375 million to expand domestic foundry capabilities suitable for multiple QC modalities: superconducting, trapped ions, photonic, and spin. IBM will receive $1 billion to spin out a new fab subsidiary called Anderon to focus initially on foundry services for superconducting qubits then expanding to other modalities. [3]
Funding this foundry capability does three things:
First, it tries to avoid quantum fabrication going to Taiwan as the industry grows. Taiwan’s TSMC has carved out a central role in the classical semiconductor supply chain, but it is a strategic risk to the US, given China’s stated goal of annexing Taiwan.
Second, it provides two quantum-focused foundries that will hopefully be responsive to the specific development needs of QC firms in ways that traditional foundries haven’t been to date.
Third, it reduces or eliminates the need for QC vendors to develop their own internal fab capabilities or rely on academic foundry capacity. (Although, some vendors, such as IQM, have pointed to the quick turnaround in research development cycles enabled by their in-house fabs.)
Why the other part of the program is problematic
However, $638 million in funding (as equity stakes) is being made to QC vendors directly. Six of these companies (Atom Computing, D-Wave, Infleqtion, PsiQuantum, Quantinuum, and Rigetti) should receive $100 million each, if the process proceeds as intended. A seventh company, Diraq, will receive up to $38 million.
Each of these companies will receive the funds to tackle specific technical challenges. For example, D-Wave is receiving the planned funding “for critical advancements in annealing and gate-model superconducting quantum computing systems, including qubit counts, error rates, and coherence through advanced dielectric material optimization, interface control, and high-density advanced packaging.” [4]
One can certainly argue that any money helps, no matter how it is distributed. However, the opportunity cost of a poorly made investment is the loss of what might have been achieved under more optimal conditions. I see two key areas of concern. First, the government is trying to pick winners in advance of successful results. Maybe these seven companies have the best teams and systems in place to be successful at the tasks they’ve been given. But maybe other companies would have been better. The point is, we won’t know. Second, the government taking equity stakes, rather than providing non-dilutive funding, potentially distorts overall competition in the vendor landscape. Will the seven companies benefit from market perceptions that they have some inside track to future government contracts? [5]
Why the Brits and French have a better model
A better model would have been the ProQure program in the UK [6] or the PROQCIMA program in France [7]. Both programs are designed as competitions, with vendors moving through successive funding stages as they compete to show progress on meeting defined goals. These two programs are comparable in funding size with the $638 million CHIPS Act funding for individual QC vendors. ProQure is announced at “up to 2 billion GBP” but the program includes quantum sensing and quantum networking along with QC. PROQCIMA is focused on QC with funding of 500 million EUR.
The PROQCIMA announcement from the French Ministry of the Armed Forces and Veterans Affairs sums up my basic point well: “PROQCIMA’s partner companies each possess strengths to meet this challenge, but it is too early to know which ones will succeed in overcoming the various engineering, manufacturing, and industrialization hurdles. This is why the partnership takes the form of a three-stage competition: proof of concept, maturation, and then industrialization.” [8]
Notably, as a share of government budget, this means that both the UK and France are committing a far larger share to their respective quantum industries. This is not surprising as there is increasing wariness in Europe of over-reliance on US technology. French President Emmanuel Macron, in announcing a separate investment in the country’s quantum industry on May 5, 2026, was quoted by France24 as saying, “In all of these questions, there’s a battle over sovereignty that is being fought and must absolutely be won... technological dependencies will more and more become industrial and strategic dependencies.” [9]
Conclusion
Enhancing foundry capacity for the quantum industry is a straightforward positive development that will benefit all hardware vendors. The other $638 million in equity stakes may work out just fine in the end. I don’t mean to suggest that the $638 million is wasted. But there was clearly a better approach, with better odds of ensuring a positive outcome, which could have been followed. Hopefully, future ecosystem funding will look more along the lines of the UK and French programs.
Citations
[1] NIST, “Department of Commerce Announces Letters of Intent With 9 Companies for $2 Billion to Accelerate U.S. Leadership in Quantum Computing” (May 21, 2026). https://www.nist.gov/news-events/news/2026/05/department-commerce-announces-letters-intent-9-companies-2-billion
[2] US Congress, “H.R.4346 - CHIPS and Science Act” (accessed May 22, 2026). https://www.congress.gov/bill/117th-congress/house-bill/4346
[3] IBM, “IBM and U.S. Department of Commerce Announce America’s First Purpose-Built Quantum Foundry, Supported by Proposed $1 Billion CHIPS Award” (May 21, 2026). https://newsroom.ibm.com/ibm-and-u-s-department-of-commerce-announce-americas-first-purpose-built-quantum-foundry
[4] NIST, “Department of Commerce Announces Letters of Intent With 9 Companies for $2 Billion to Accelerate U.S. Leadership in Quantum Computing” (May 21, 2026). https://www.nist.gov/news-events/news/2026/05/department-commerce-announces-letters-intent-9-companies-2-billion
[5] Semafor Technology, “Big names missing from Trump’s quantum investment” (May 22, 2026). https://www.semafor.com/article/05/22/2026/big-names-missing-from-trumps-quantum-investment
[6] UK Department for Science, Innovation and Technology, “UK’s ‘Quantum leap’ to help beat disease, deliver high-paid jobs, and strengthen national security, as first country in the world to roll out Quantum computers at scale” (March 17, 2026). https://www.gov.uk/government/news/uks-quantum-leap-tohelp-beat-diseasedeliver-high-paid-jobs-and-strengthen-national-security-as-first-country-in-the-world-to-roll-out-quantum
[7] French Ministry of the Armed Forces and Veterans Affairs, “The DGA has awarded framework agreements to five companies for the development of universal quantum computers.” (March 7, 2024). https://www.defense.gouv.fr/dga/actualites/dga-notifie-accords-cadres-aupres-cinq-societes-developpement-dordinateurs-quantiques-universels
[8] French Ministry of the Armed Forces and Veterans Affairs, “The DGA has awarded framework agreements to five companies for the development of universal quantum computers.” (March 7, 2024). https://www.defense.gouv.fr/dga/actualites/dga-notifie-accords-cadres-aupres-cinq-societes-developpement-dordinateurs-quantiques-universels
[9] France24, “France announces billion-euro boost for quantum computing” (May 5, 2026). https://www.france24.com/en/live-news/20260522-france-announces-billion-euro-boost-for-quantum-computing