Israel Innovation Authority Says the Country’s Quantum Edge Is Software and Control, on the Day Intel Announced a Deal to Buy Classiq
26 October 2026 – The Israel Innovation Authority and C4IR Israel, a World Economic Forum-affiliated centre that operates within the authority, published Israel’s Quantum Ecosystem: A Case Study in Capital-Efficient Innovation. The 36-page report examines Israel’s quantum sector and the first phase of the Israel National Quantum Initiative, which ran from 2019 to 2025. It also presents the recommendations of the National Committee on the Second Quantum Program for a proposed second phase covering 2027–2031.
According to the report, the number of active Israeli quantum companies grew from about five in 2019 to more than 20 by 2025. Employment in those companies rose from about 50 to about 1,000 over the same period. Companies working on quantum computing grew from one to more than ten. Three companies have each raised more than $100 million. Cumulative private capital raised by the sector passed $1 billion by the end of 2025.
Israeli quantum companies raised nearly $500 million in 2025, which the report puts at about 9% of global private quantum investment, or about 15% when the United States is excluded. On that measure Israel ranked fourth, behind the US, the UK and Canada. CTech, the English-language site of the Israeli business daily Calcalist, reported that Israel ranked fifth on 2024 data.
First-phase budget
The first phase had a planned allocation of about $413 million. The report estimates execution at about $409 million, a figure that includes expected cost-sharing by industry and academia. The authors write that actual spending will probably prove higher once full 2025 data is counted.
The report gives these figures for the four public funding bodies:
- Planning and Budgeting Committee of the Council for Higher Education (VATAT): about $149 million against a plan of about $145 million, or about $168 million including cost-sharing.
- Israel Innovation Authority: about $87 million in grants, almost double its plan, or about $141 million including private co-funding. The authority funded three R&D consortia it had not originally planned, in quantum computing, photonic quantum technologies and quantum communication. It cancelled a planned second consortium in quantum sensing.
- MAFAT, the Directorate of Defense R&D: about $69 million against about $67 million planned, or about $93 million with matching funds.
- Ministry of Science: about $7 million of about $24 million allocated. The authors write that the drivers of this gap “require further review.”
The report separately estimates that academia and industry contributed about $67 million.
A chart in the report, based on The Quantum Insider data as of August 2026, shows each country’s private quantum funding divided by its government programme investment. Israel’s ratio is 2.71, based on about $1.08 billion in private funding and $400 million in government investment. It is the highest of the 20 countries shown. The United States and France follow, each at 1.08.
Software, control and orchestration
The authors identify the layer between quantum hardware and end-user applications as one of Israel’s clearest commercial strengths. They name Classiq for high-level algorithm design, Quantum Machines for control electronics and orchestration, Qedma for error mitigation and Tabor for signal-generation and measurement electronics. Because these products work across hardware types, the authors argue, Israeli companies can take part in global quantum value chains without leading in any single hardware modality.
The report lists Israeli hardware companies working with superconducting, trapped-ion, photonic, neutral-atom and diamond NV-centre qubits. It also lists LightSolver, whose optical computing it describes as “quantum-inspired.” The authors identify quantum materials and specialized production inputs as the principal domestic gap. They recommend “selective technological sovereignty” over full self-sufficiency. Zachi Schnarch, acting CEO of the Israel Innovation Authority, said in the authority’s announcement that the goal “is not to develop every component of the quantum value chain in Israel.”
The report describes the Israeli Quantum Computing Center (IQCC) at Tel Aviv University, which Quantum Machines operates, as providing access to superconducting, photonic and spin-qubit platforms. It lists planned upgrades, including a 49-qubit superconducting processor from Anyon Systems and expanded NVIDIA DGX Quantum capacity.
Gaps the authors identify
Citing the National Committee, the authors write that structured engagement with quantum technology among Israeli industries outside the quantum sector is at an early stage. Dedicated exploration teams, internal quantum-literacy programmes and proof-of-concept budgets are not yet common in potential user sectors. The committee’s review identified the absence of a dedicated national programme-governance body in the first phase as “a significant structural gap.” Its central recommendation is to establish one for the second phase. On cybersecurity, the report states that a national post-quantum migration framework for critical infrastructure is under development and has not been publicly released.
For 2027–2031, the National Committee recommends:
- expanding international collaboration;
- securing supply chains and infrastructure in photonics, cryogenics and fabrication;
- strengthening academic excellence and doctoral training;
- prioritizing quantum software and algorithms;
- encouraging non-quantum industries and government bodies to develop use cases;
- expanding workforce training and talent retention;
- establishing a dedicated national programme-management body.
Workforce targets for the end of the second phase are about 225 core faculty groups and 600 doctoral students. The report does not give a budget for the second phase.
Intel to acquire Classiq
Later on 26 October, Intel announced a definitive agreement to acquire Classiq. Intel said it would combine Classiq’s algorithm synthesis platform with its own quantum software, silicon spin-qubit technology and chip manufacturing. Intel did not disclose financial terms. CTech reported the price at $2.3 billion in cash and Intel stock. Globes, another Israeli business daily, reported an effective price of about $2.2 billion, after deducting an estimated $100 million in cash that Classiq still holds. Intel said it intends to continue supporting Classiq’s existing integrations with other hardware platforms. The companies expect the deal to close in the first half of 2027, subject to regulatory approvals, and will operate independently until then.
My Analysis
The authors make a convincing case that a small country can build a commercially significant quantum sector without leading the race to scale processors. The software, control and orchestration layer is the clearest example. Intel is reportedly paying more than three times Classiq’s last private valuation to buy one of the companies in it. The report’s own budget figures do not reconcile. The authors calculated the headline ratio from $1.08 billion and $400 million, while other sections of the report give $1.05 billion and $409 million. They also do not say who will run the second phase, although the report names the missing programme body as one of the two main gaps that remain. Other governments studying Israel should learn from the institutional model and wait for better data before quoting the 2.71.
Why the 2.71 private-to-public ratio needs qualifying
Israel’s 2.71 leads the 20 countries in the chart by a wide margin. Germany, Japan and China are each below 0.25. I think the direction is right. I would not lean on the size of the number, for three reasons.
The inputs differ across the report. The chart’s ratio comes from $1.08 billion in private funding and $400 million in government investment. The growth chart a page later gives about $1.05 billion in cumulative capital, and the budget section gives $409 million in programme execution including cost-sharing. The report does not say whether the chart’s denominator is an allocation, executed spending or public money alone. It also does not say whether the 20 countries’ figures cover the same years.
The budget does not add up. VATAT’s total including cost-sharing is $168 million, the Innovation Authority’s is $141 million and MAFAT’s is $93 million. With the Ministry of Science’s $7 million, they come to the $409 million headline. Those totals imply about $97 million in matching contributions. The same page puts the academic and industry contribution at $67 million, which would give a total of about $379 million. The four public bodies’ own spending comes to about $312 million. The chart’s $400 million is close to the figure that includes industry’s and academia’s share. On public spending alone, the ratio would be about 3.5. The authors should publish the reconciliation.
The ranking depends on the year. On the chart’s cumulative figures, Israel ranks fifth in private funding with $1.08 billion, behind the US, the UK, China and France. The fourth-place ranking in the text applies to 2025 fundraising alone. Both statements can be true. Readers should know which one they are looking at.
The funding is also concentrated. Quantum Machines had raised $280 million by its February 2025 Series C, of which Globes reported $20 million was a secondary sale by founders and employees. Classiq passed $200 million with its November 2025 strategic round from AMD, Qualcomm and IonQ. Quantum Art reached $124 million with its December 2025 Series A. These reported lifetime totals add up to more than $600 million, against the report’s roughly $1.05 billion. They include secondary sales and may count rounds differently from the report, so the comparison is indicative. It still suggests that more than half of the sector’s private capital went to three companies.
On any of the report’s totals, Israeli private quantum funding is more than twice the first-phase budget. The authors credit the commercialization system Israel already had, including technology-transfer offices, venture investors, accelerators and public R&D instruments. In my view, that system accounts for most of the ratio. Investors would have funded some of these companies without the quantum programme. Readers cannot tell from the 2.71 how much of the $1.08 billion the programme added.
How many quantum companies Israel has
The text says more than 20 active companies, and the growth chart says 23 or more. The report’s company maps include Rafael and IAI/ELTA in sensing, and its stack diagram adds Elbit. An endnote says the companies shown are selected examples, not a census. Readers therefore cannot tell whether established defense groups are part of the headline count.
The cleaner growth figure is the one for quantum computing: from one company to more than ten. The report notes that in 2019 Quantum Machines was the only company focused exclusively on quantum technology. The Innovation Authority’s own 2025 High-Tech Report, published in September 2025, counted “just 10+” quantum companies and more than $300 million raised in 2025. The new report counts rounds that closed after September, including Classiq’s in November and Quantum Art’s in December. Those rounds account for much of the fundraising difference. The company-count difference may come from scope, but neither document reconciles the two. The authors could settle it by publishing a company-level census that separates startups, established suppliers, defense groups and quantum-inspired companies.
What Intel’s purchase of Classiq means for hardware-agnostic software
The authors’ strongest argument is that Israeli companies in this layer can earn revenue whichever qubit modality wins. Anyone building or using a quantum computer needs control electronics, orchestration and compilation. Users of today’s noisy machines also need error mitigation. Israeli companies sell all four. This is the logic of Quantum Open Architecture: specialist suppliers for each layer, assembled by someone else.
CTech reported that Classiq’s 2025 round valued it at an estimated $600–700 million. At $2.3 billion, Intel is paying more than three times that. As an independent company, Classiq integrated with hardware from many vendors and owned no processor it could favour. Once the deal closes, Classiq will belong to a company that builds its own silicon spin qubits. Intel has said it intends to keep the software hardware- and modality-agnostic. Classiq’s customers will decide for themselves whether to rely on that. Classiq’s investors include AMD, Qualcomm and IonQ. Through 2027, I would watch whether IonQ, IBM, Quantinuum and other hardware makers keep working with Classiq once a competitor owns it.
Quantum Machines faces a different version of the same question. Several of the largest hardware makers develop their own control electronics, so Quantum Machines competes with in-house engineering teams as well as with other suppliers.
For Israel, the deal is a successful exit. I also read it as strong evidence for the authors’ argument about this layer. Once the deal closes, one of the three Israeli quantum companies that have each raised more than $100 million will be owned by a US company. CTech reported that Intel set aside more than $100 million in retention grants for Classiq staff. I would judge the outcome for Israel by whether it keeps the research capability, the skilled jobs and a say in product direction after closing, more than by who owns the company.
Control, compilation and error mitigation after fault tolerance
The authors list the businesses in the enabling layer separately. They do not examine how the move to fault-tolerant machines will affect each one. I expect the effects to differ.
Hardware makers will need more control and orchestration as they move toward error correction. A fault-tolerant machine has to process syndrome measurements continuously and decode them fast enough to keep up with the stream. It also has to return results quickly enough for the logical operations that depend on them. The timing depends on the architecture. In Google’s below-threshold experiment, the surface code ran in cycles of about 1.1 microseconds, while the real-time decoder’s average latency at distance 5 was about 63 microseconds. Many corrections can be tracked in software rather than applied to the qubits immediately. In September I wrote about the vendors already supplying this classical loop. Quantum Machines builds the controllers on the quantum side of that loop. With NVIDIA, it developed DGX Quantum, which connects its controllers to GPU servers for real-time calibration and hybrid quantum-classical computing.
Developers will keep needing compilation. Compiling large algorithms into fault-tolerant circuits is harder than compiling small ones. Developers get their resource estimates from the same step and use them to decide whether to run an application at all.
I expect the market for error mitigation to change most. For broad classes of noisy circuits, the sampling cost of mitigation grows exponentially with circuit depth, so users cannot apply it to arbitrarily large computations. With error correction, users pay with more qubits instead of more samples, although researchers have also proposed combining mitigation with error correction in fault-tolerant architectures. How well Qedma and its competitors do will depend on how fast logical error rates fall and on the workloads customers run. I see no fixed end date for their business. In covering Sandia’s QUOPS benchmark last month, I wrote that roadmaps promising scientifically transformative machines in the early 2030s need the historical rate of capability growth to quadruple. I expect noisy processors, and the mitigation tools built for them, to stay in use for some years yet. The people designing the 2027–2031 programme should expect demand within the enabling layer to shift as logical qubits improve.
The report’s unpublished sources and missing second-phase budget
For the budget execution figures, the industry-readiness assessment, the materials gap, the governance findings and the academic workforce data, the authors cite a 2025 report of the National Committee. The endnotes describe it as internal, and I could not find a public version. The growth chart’s caption says its endpoint values are documented and its intermediate values are directional estimates. The same chart labels 2019 industry employment as 5, while the text says about 50.
The crosswalk against the World Economic Forum’s Quantum Economy Blueprint is easy to misread. Its activity column is labelled “current and planned.” The authors grade how closely Israel’s activity and plans match the Blueprint’s priorities. Governance gets “Strong” although the dedicated programme body does not yet exist, because the National Committee recommended creating one. That is a fair measure of direction. A policymaker scanning the table could still read “Strong” as a delivered result. The authors could remove the ambiguity by adding a separate column for what has been delivered.
The report sets out a five-year programme without saying what it should cost. According to the Council for Higher Education, the first programme had a budget of NIS 1.25 billion over six years. Globes reported in November 2025 that this budget would run out at the end of 2025. The second phase is proposed to start in 2027. The report does not say how the national programme is funded in 2026, although the Innovation Authority opened a quantum infrastructure call this year.
The only numerical targets I found for 2027–2031 concern the academic workforce. The goal of 600 doctoral students by the end of the second phase compares with 502 in 2025, a rise of about 20% over six years, after an 84% rise between 2017 and 2025. Without a budget, readers cannot rank the recommendations against each other or compare them with what other countries are spending.
Two government quantum-computing initiatives in one quarter
On 20 July the Innovation Authority announced a call offering up to NIS 100 million for national quantum computing R&D infrastructure that integrates at least three processor technologies. The grant covers 55% or 66% of the approved budget. Applications were due on 11 October. The call follows the IQCC, which CTech reported in August serves more than 30 customers, including all of Israel’s leading research universities. On 4 August the Prime Minister’s Office National AI Directorate and the Finance Ministry’s Accountant General issued a separate tender for what The Times of Israel described as a locally produced quantum computer, called Project Nexus, with the stated goal of “Israeli technological sovereignty.” The announcement gave no budget or timeline.
The two are different instruments. The Innovation Authority is running a grant competition for shared, multi-vendor infrastructure. The Prime Minister’s Office is procuring a domestic platform. Building domestic hardware is compatible with selective sovereignty. The two projects may well complement each other. The report does not mention Project Nexus, although it lists the Prime Minister’s AI Directorate among the government bodies working with Qubit IL, Israel’s quantum industry association. Someone has to decide how the two projects fit together. The National Committee proposed a dedicated programme body for this kind of coordination. Israelis voted in a Knesset election on 27 October. The next government will decide whether that body is created and funded.
Quantum computing adoption and the post-quantum migration
On the adoption of quantum technologies, I agree with the authors that dedicated quantum teams and proof-of-concept budgets are still rare among potential users. Some sectors have more reason to start than others. In my Quantum Utility Map I rate the competitive impact of quantum computing on finance by 2033 as minimal, while pharmaceuticals, chemicals and battery materials are among the early winners. I would start second-phase pilots with pharmaceutical, chemical and materials companies instead of spreading the money evenly across sectors.
The report covers post-quantum migration in the same chapter as adoption readiness. The authors separate migration to post-quantum cryptography from quantum key distribution. They note that the national framework for critical infrastructure is pending. They do not mention the obligation Israeli banks already have. On 7 January 2025, the Banking Supervision Department of the Bank of Israel sent banking corporations and licensed payment service providers a supervisory letter, which I covered at the time. It requires them to map their cryptographic exposure and to submit a quantum preparedness plan, discussed by the board and management, within a year. For each encrypted asset, banks have to record how long the data must stay confidential, with harvest now, decrypt later collection in mind. The plans were due in January 2026.
Israeli companies that sell abroad also face customer and procurement requirements tied to foreign timelines. Under the EU’s Coordinated Implementation Roadmap, member states should move high-risk systems, such as critical infrastructure, to post-quantum cryptography by the end of 2030, as I reported when it was published. US Executive Order 14412 directs federal agencies, through guidance from the Office of Management and Budget, to move high-value assets and high-impact systems to post-quantum key establishment by 31 December 2030 and to post-quantum signatures by 31 December 2031. It also directs the Federal Acquisition Regulatory Council to propose a rule that would require covered federal contractors to comply with NIST’s cryptographic standards, including the post-quantum ones, by 31 December 2030. Neither document binds Israeli companies directly. US agencies and European buyers can still pass these dates on to suppliers through procurement rules and contracts. As I have argued before, organizations plan to the deadlines regulators and customers set, not to a predicted date for a cryptographically relevant quantum computer.
I would give post-quantum migration its own owner and budget line in the second phase, next to the quantum computing pilots. Israeli cybersecurity companies can sell into that demand now.
What other governments can take from the Israeli programme
I agree with the five lessons in the report’s preface: reliance on existing institutions, open technology options, shared infrastructure, deliberate development of demand, and a single body responsible for the programme. Other governments will find the first lesson the hardest to copy. Israel’s private funding drew on a commercialization system built over decades and on defense customers who act as demanding early buyers. A country without those cannot buy them with a quantum programme. I made a related argument about hardware purchases in Quantum Sovereignty and the Utility Trap.
My recommendation to the next Israeli government is to set up the programme body before the next allocation. That body should then publish four things: a second-phase budget, the National Committee’s underlying data with a reconciled first-phase budget, a company-level census, and a plan that places Project Nexus and the Innovation Authority’s infrastructure call in one strategy. Israeli quantum companies have attracted more than $1 billion in private funding. One of them now has a reported $2.3 billion acquisition agreement. For 2027–2031, the question is whether Israel keeps the research, the jobs and a say in product direction as its leading suppliers grow and change hands.
