Quantum Computing makes $110 million move nobody saw coming

Quantum Computing (QUBT), or QCi, a provider of affordable computing machines and integrated photonic technology, is making a bold bet at a dynamic time for the quantum tech industry.  

The company has agreed to acquire recently bankrupt Luminar’s semiconductor business unit in an all-cash transaction, betting that Luminar’s photonics expertise originally built for LiDAR can help speed QCi’s push towards commercial quantum systems.

The acquisition of Luminar Semiconductor, Luminar’s photonics and chip division, is valued at $110 million, clearly representing QCi’s move to shift towards revenue-generating hardware by leveraging Luminar’s existing customer base.

On Monday, December 15, Luminar announced that it had initiated voluntary Chapter 11 proceedings in the US Bankruptcy Court, commencing a value-maximizing sale process for its LiDAR business and the equity of Luminar Semiconductors (LSI). Further emphasizing that LSI is not a debtor in this matter, and its operations remain unaffected.

The market reacted swiftly. QCi’s stock was down 9% on Wednesday, reflecting investor unease over the size of the acquisition, which also awaits clarity as Luminar goes through a court-supervised auction. And, as expected, Luminar’s stock plunged more than 30% on Wednesday, following the bankruptcy notice, and hit a new low; however, it was trading up 3% after hours, modest gains compared to the intraday loss.

Related: Self-driving car company files for Chapter 11 bankruptcy protection

Under the agreement, QCi will be the proposed stalking horse bidder for LSI, that is, a lead bidder who sets the base price of the auction, and will also be entitled to customary bid protections if a competing offer prevails. QCi said it expects to close the deal by the end of 2026, subject to court approval.

Why Quantum Computing wants Luminar’s chips?

At the core of this deal is photonics, the use of light instead of electricity to move and process information. 

Photonics has become an increasingly important building block in next-generation computing, encompassing AI accelerators and advanced sensing systems. By processing data using light rather than electricity, this technology can deliver higher speeds and lower energy consumption. 

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This can be advantageous, considering the growing data center workloads, which are increasingly energy-intensive.

According to QCi’s recent Q3 filings, they also have cash to fund this immediately.

Luminar Semiconductor designs optical components developed initially for LiDAR systems, which are increasingly valuable in advanced sensing, quantum computing, and specialized hardware applications.  And access to these resources can help accelerate Quantum Computing’s transition from lab-scale systems to commercial systems.

Hence, QCi’s move to buy Luminar’s chips and optics expertise. 

The two companies, together, underscore increased engineering strength and will also help QCi increase its revenue through future commercialization. QCi intends to offer competitive compensation to workers who remain post-acquisition, also noting that LSI stands to gain from this takeover as it signals increased product development, investment in LSI’s existing research and development, and improved manufacturing capabilities.

With the acquisition in the background and notwithstanding QCi’s current market valuation, Wedbush initiated coverage of Quantum Computing with a neutral rating and $12 price target. The investment firm sees its commercial adoption approach as a major catalyst in this nascent industry, as reported by TheFly.

It also views quantum as a long-term investment opportunity, considering the potential energy efficiency benefits, especially given QCI's demonstrated technical expertise in quantum networking and quantum sensing through its photonics-based product portfolio. The company, though, continues to face competition from other established players with similar photonics strategies, such as IonQ, D-Wave Quantum, and Rigetti.

Related: 35-year-old consumer company files Chapter 11 bankruptcy