The Scoop
A $2 billion merger between a quantum computing company and a chip manufacturer became the epicenter of an unusual family spat between the FTC and the Pentagon. The Pentagon lost.
The Federal Trade Commission last week allowed IonQ to acquire US chip-maker SkyWater over the objections of a senior Pentagon official who had privately pushed for tough restrictions on the deal, largely to protect the US government’s $2 billion of investments in quantum computing companies earlier this year, according to people familiar with the matter. The US doesn’t have a stake in IonQ or SkyWater.
The deal’s completion marks a notable defeat for the Pentagon at a moment when Washington is routinely inserting itself into the private sector and is particularly focused on critical technologies such as quantum computing and developing more US-based chip manufacturers.
Emil Michael, the Pentagon’s powerful undersecretary for research and engineering, urged FTC Chairman Andrew Ferguson to require IonQ to guarantee competitors that they would have continued access to SkyWater’s chips, the people said. SkyWater is one of the few US foundries capable of building the specialized chips quantum computing firms need, and Michael was concerned that IonQ would box out rival quantum companies — including some that the US government has taken direct stakes in.
Ferguson agreed, and FTC staff spent months negotiating a settlement with IonQ that would have required SkyWater’s foundries to remain open to competitors. It also would have required IonQ to secure and wall off competitors’ confidential technical information, and to install an outside monitor to ensure compliance.
But FTC Commissioner Mark Meador, a fellow Republican, refused to support the restrictions, arguing in a statement that the merger “would be procompetitive or competitively neutral.” The FTC has only two commissioners because President Donald Trump fired two Democratic commissioners last year, and a third Republican commissioner left. With the agency deadlocked, IonQ was able to close the takeover on Friday with no obligations to adhere to the conditions it agreed to with the FTC. The company said the deal would “accelerate all quantum platforms across the industry.”
A Pentagon spokesman did not respond to a request for comment. Representatives for IonQ and Skywater did not respond to requests for comment.
Know More
Michael has been a powerful force inside the administration when it comes to all things defense and technology. The former Uber executive has been at the center of decisions around the use of AI in the military and has paved the way for numerous tech companies to contract with the Pentagon.
The Trump administration has poured more than $625 million into quantum research institutes. In May the Commerce Department took stakes in quantum companies and granted $2 billion of incentives to IBM and GlobalFoundries to build domestic quantum-chip factories. Those projects could make companies less reliant on SkyWater’s chips, but it will take years to build new foundries and make them fully operational. Two more executive orders this summer declared quantum supremacy a national priority.