Honeywell, Cambridge Quantum Computing form new company

Honeywell Quantum Solutions and Cambridge Quantum Computing have agreed to merge, with plans to tightly tie Honeywell's system hardware with Cambridge's quantum operating system and applications.

The combined companies will form a new company with the goal of advancing quantum computing. Parent company Honeywell International will maintain a 54% stake in the new company and plans to invest between $270 million and $300 million to help fund the operation. The new company has also signed a long-term agreement with Honeywell International to manufacture the ion traps needed run the quantum hardware.

Together, the two companies can more aggressively pursue opportunities in a number of markets, most notably cybersecurity, drug discovery, finance and material science, officials from both companies said. What will help that effort is the close partnership they've had the past three years working on a number of projects, becoming familiar with the other's core technologies.

"We've had a tremendous amount of experience working together," said Tony Uttley, the president of Honeywell Quantum Solutions (HQS). "We've been able to see each other's advancements in our respective technologies and over time have come to realize putting these two organizations together we have a chance to do something unique."

Honeywell's trapped ion-based system has a quantum volume of 512, the highest measured among any quantum systems available as of this writing. Last year, the company promised it would double that number every year for the next five years.

Cambridge Quantum Computing (CQC) possesses an operating system specifically designed for quantum systems that is largely open source, with some proprietary code. CQC also has two applications that exploit the capabilities of its operating system, with one aimed at the cybersecurity market due later this year.

 "We have [a cybersecurity application] that will be market-ready in the fourth quarter, but we have to make sure we are spot-on with the methodology where the keys are incorporated into the user system," said Ilyas Khan, CEO and founder of CQC. "Working with the team at Honeywell post-merger, we will be able to look at producing a variety of products that come out of this system."

The other offering is a quantum chemistry platform, called EUMEN, designed to aid in research for a cure for Alzheimer's disease. Over the next two years, the company will supplement these with two applications aimed at the financial and logistics markets, Kahn said.

As of this moment, the market is still waiting to see if quantum can become a business and not just a technology.

Despite the merger with Honeywell, Kahn said CQC's software will remain hardware-agnostic and will continue to be compatible with most hardware providers.

Opinions vary among analysts as to what the combined company's chances are for a fast start out of the blocks, at least over the short term.

"Together, CQC and Honeywell have a software/hardware stack with CQC having relationships with all the quantum hardware providers, which is good for extensibility," said Dan Newman, principal analyst of Futurum Research and CEO of Broadsuite Media Group. "But as of this moment, the market is still waiting to see if quantum computing can become a business and not just a technology."

The new company carries more credibility into the quantum computing market given the "generous" financial backing of Honeywell, said Paul Smith-Goodson, quantum computing analyst with Moor Insights & Strategy. There's also the prospect of delivering much-needed cybersecurity software along with one or two other quantum computing companies, such as IonQ, he added.

"They have good financial backing from Honeywell International -- it's not like they are a startup out there on their own," Smith-Goodson said. "They'll have the cybersecurity offering soon and IonQ will have a signature verification product ready within a year, so things are progressing in this market."

The deal is expected to be completed sometime in the third quarter of this year. Honeywell's chairman and CEO, Darius Adamczyk, will serve as chairman of the new company while Ilyas Khan will be CEO and Tony Uttley will be its president.