D-Wave strikes $550-million USD deal to acquire Quantum Circuits

Canadian-founded D-Wave Quantum announced yesterday that it has reached an agreement to buy fellow American quantum computing firm Quantum Circuits for $550 million USD.

That $550-million price tag consists of $300 million in D-Wave common stock and $250 million in cash. The acquisition, which is expected to close later this month, is set to combine Quantum Circuits’ gate model-based quantum computing tech with D-Wave’s expertise in quantum annealing.

“Together with Quantum Circuits, we expect that D-Wave will leapfrog the industry.”
Alan Baratz, D-Wave

D-Wave has long specialized in quantum annealing computers, which rely on principles of quantum physics to solve optimization problems more efficiently than classical computers. This is a distinct approach from gate model-based quantum computing, which many of D-Wave’s competitors—from tech giants like Microsoft and IBM to Canadian startups like Xanadu and Photonic—are building. Gate model quantum computing, which has broader applications, stores data in qubits, instead of traditional computer bits, to perform powerful computations.

D-Wave claims that its purchase of Quantum Circuits will “dramatically accelerate the projected time to a scaled, error-corrected gate-model quantum computer alongside and complementary to its [existing] commercial annealing quantum systems,” and help make it the first company to deliver “fully error-corrected, scaled gate-model quantum computing.”

D-Wave CEO Alan Baratz said in a statement that the deal is “a pivotal milestone” that will help secure the company’s “long-term value proposition.”

As part of this merger, D-Wave intends to establish a new research and development centre in New Haven, Conn., where Quantum is headquartered.

Founded in 1999, D-Wave is a University of British Columbia spinout that moved its headquarters from Burnaby, BC to Palo Alto, Calif. in 2023, but retains a presence in both cities. The company trades on the New York Stock Exchange.

Quantum Circuits, which is privately held, was spun out of Yale University in 2015 by a group that includes superconducting pioneer and professor Ron Schoelkopf.

D-Wave telegraphed that a deal like this could be on the way last summer when it sold $400 million USD in common shares to finance potential acquisitions and operating expenses. That November, during the company’s Q3 earnings call, Baratz indicated that gate-model development was a priority for D-Wave going forward.

Interest in quantum computing—which has potentially significant defence applications—across North America has been heating up lately, thanks in part to an increased focus on sovereignty amid military and economic threats from the US.

Earlier this week, Coquitlam, BC-based Photonic announced a $180-million CAD fundraise. In an interview with BetaKit at the time, Photonic CEO Paul Terry forecast consolidation in the quantum computing market following a number of industry breakthroughs in 2025. D-Wave’s deal could be a sign of more to come on this front.

Photonic’s financing comes on the heels of the Government of Canada’s December launch of a new quantum research program to rival a competing US DARPA initiative, and Xanadu sharing plans to go public in a $3.6-billion SPAC deal last November.

Photonic, Toronto-based Xanadu, and Sherbrooke’s Nord Quantique are all participating in both the Canadian and US quantum research programs, while Montréal’s Anyon Systems is taking part in the Canadian initiative only, and D-Wave and Quantum Circuits are participating in neither.

Feature image courtesy D-Wave.