Cover U.S. semiconductors equipment and networking stocks here at Citi. It is my pleasure to welcome Matt Kinsella, CEO of Infleqtion, his inaugural fireside chat at a Citi conference. We also have Ilan Hart, Chief Financial Officer, as well as Marcus Kupferschmidt, IR and Strategic Finance in the audience. Welcome, Matt.
Thanks for having me, Ata. It is great to be here.
All right. I will kick it off with my questions first, and then we will open it up to the audience questions towards the end. If you have a question, please raise your hand and the mic will come to you, and you can ask your question. Matt, super exciting times in the quantum-
Yes
world. Quantum computing is garnering more attention as more companies go public and with some high-profile government initiatives.
Yep.
For investors in the audience who may be less familiar with quantum and Infleqtion, can you level set us on what neutral atom quantum is?
Sure. Just some casual quantum mechanics as you all digest your lunch. First of all, at the highest level, or maybe a show of hands, and we did this at the panel this morning too, for those who came. But when I say quantum, how many people have a general idea what that means? Or how many people have spent time on quantum? Okay, like half the audience. A little bit? Okay. Well, at the highest level, when we say quantum, we're talking about the world of the very small. So it's the atomic and the subatomic levels, and there's a whole different set of physics that rule the day down there, and it's called quantum mechanics. It's very bizarre. There's some phenomena that take place down at the world of the very small that we don't experience in our day-to-day basis.
The reason why all that matters is because what we, with our neutral atom technology and other quantum companies are doing, is harnessing those bizarre quantum mechanical principles and then turning them into useful technologies. The reason why all this matters is that this is a kind of a new vector of technology acceleration that we've tapped into that allows us to bring new products to market that can do things that classical technologies have not been able to do. That can range from building very precise sensing equipment, all the way to building quantum computers that will do types of computation that classical computers can't do and really never will be able to do based upon the digital nature of the architecture.
Our modality, neutral atoms, is, and the word modality basically means how are you taking advantage of those quantum mechanical principles and turning them into useful products. Our modality, neutral atoms, is a highly flexible modality. It can address both the quantum sensing and the quantum computing opportunity. At the end of the day, I actually have it in my pocket, what are we doing? We are using these quantum chips that we build. We're trapping atoms inside these quantum chips. We're interacting with them with lasers, and then we're turning those atoms and their quantum mechanical properties into these useful suite of products that I'd mentioned. We can excite individual atoms and use their electron energy transition from excited to ground state as the ticking of a clock. That clock is about 1,000 times more precise than any other clocks out there.
And we can do all sorts of other sensing applications with those same atoms. Then ultimately, we can address each individual atom and turn each atom into a qubit, which is a quantum bit, the quantum analog of a bit, and entangle those atoms with other colors of light in the form of lasers. Then those entangled atoms become the basis for the quantum calculations that we're doing on our computers. So what is the neutral atom modality? It's a way of taking advantage of those quantum mechanical properties I talked about and turning them into useful products.
Awesome. Matt, I've been attending quite a few investor events on other quantum modalities, and
Yeah
would love to get your thoughts on why neutral atoms and kind of the pros and cons versus other competing modalities, whether it's annealing or photonics
Yeah
if you have any thoughts. And is there going to be one winner that takes all in quantum or are we going to have multiple modalities kind of coexist?
Well, before I came to Infleqtion to be here full time, I was actually the first investor in the company, and was actually a technology analyst for many years at a firm called Maverick Technology Partners. I've come to this conference for- It's not my inaugural conference. I've been coming here since 2006. But yes, my inaugural fireside chat as a company. I did a pretty wide overview of the quantum market at that point in time, and this is late 2017, early 2018. The conclusion that I walked away with was really twofold. Number one, the risk-reward at that point in time was actually just as good to start something from scratch as it was to bet on an existing company. I partnered with a professor at the University of Colorado, and that was effectively the beginning of Infleqtion.
But probably more importantly was that this neutral atom modality was very intriguing to me. It was largely at first because of the flexibility. As opposed to being a binary bet on whether you could turn this technology into a useful quantum computer at some point in time, we could really kind of follow NVIDIA's monetization strategy and take this powerful neutral atom technology and point it at some of these more near-term applications in the sensing market and build a good business off of that. At the same time, start to explore the R&D to see if this would be a useful candidate for quantum computing. Fast-forward from 2018 till today, I've been surprised by both sides of the equation, but I kind of knew we could build a good business in sensing.
I've been very surprised at how rapidly neutral atoms have gone from a dark horse, kind of unexplored quantum modality back at that time- To really leading in most of the metrics that matter today. At the highest level, what do you need to build a useful quantum computer? You need a lot of very high-quality qubits. Neutral atoms have always been known to be able to scale. You can probably fit a million physical qubits in this device. We have the record of 1,600 physical qubits at our machine in Boulder. But the knock against neutral atoms had always been the quality of these qubits. They were quite low. But the big surprise to me has been what we've been able to accomplish from a quality perspective, and the quality metric we use in the industry is called gate fidelities.
Our gate fidelities were somewhere in the 50% range, so a coin toss as to whether or not we could accomplish what we wanted to accomplish with the circuit back in 2018, and they've rocketed to 99.73% now, really on par with some of the other modalities like superconducting and continuing. The slope of our improvement is very, very steep. There's a lot to like about the neutral atom modality. The flexibility is the first thing that attracted me to it. The scalability of the qubit count is also very attractive. Then finally, the quality of these qubits continue to get better, and the bill of materials is considerably lower, which is why our capital consumption is so much less than many of the other quantum players.
That's because really our underlying bill of materials is rubidium or cesium atoms in their gas form, which is effectively free. We don't need to manufacture any qubits ourselves. We need to procure the laser systems and then build these chips to house the atoms in. So we get the qubits basically for free from nature in a perfect form. They're all exactly the same. Then finally, it all takes place at room temperature, so we don't need to procure any large freezers or the likes. That keeps the cost down and the power consumption down considerably. To your last question, sorry, I've been going on for a while, I'll pause here. Will there be one modality to rule them all? I don't think that will be the case.
I believe this might play out sort of like the memory world has played out, where you'll have different quantum modalities that excel at different parts of the stack, similar to the world that we have in memory. But what I do think will happen on our way to that end state is one of these modalities, and some of the companies will get to useful quantum computing before the others. They will then attract the vast majority of the mind share of the customer base. They'll attract most of the talent and most of the capital, so they will get some escape velocity and probably run away and pull ahead of the pack. The others will catch up and then will probably settle into some sort of steady state of a multimodality world. Long-winded answer, but hopefully it got to all your points.
Makes sense, Matt. I also want to kind of decouple AI and quantum computing because
Yeah
to an average investor, I think that they believe quantum computing will accelerate or help AI.
Yeah.
Are there demand or applications that are already requiring quantum computing? What will be the end demand applications that will drive the quantum computing demand?
Well, I mentioned that there are certain types of problems that classical computers, even the most sophisticated GPU cluster running the latest Astra model or whatever it is, that just will never be able to solve these types of problems. That is because at the end of the day, even that cluster I just mentioned, it's all boiling things down to zeros and ones, right? That's actually not the way nature works. It's not the way the universe works, that the universe and nature run on quantum mechanics. So the types of problems that can't be distilled down to a zero-and-one modality is what we can solve with quantum computers because these computers think the way nature does. So give you a couple of examples.
If you're trying to model two atoms coming together or two molecules coming together, the electrons interact in a quantum mechanical way, which means it's effectively uncertain by nature. In order to model out all those different potential ways that these electrons come together, you'd need the number of transistors that would take up as many atoms in the universe, right? So there's a very specific type of problem that we just would never even be able to point classical computing at. So those are the types of problems, and I gave you that example of smooshing atoms or molecules together. So you could imagine drug discovery, you could imagine discovering new materials. Like you want to build a better battery, we're going to try to iterate on putting some new molecules together to build that battery.
Those are the types of problems we'll start to see quantum advantage at first, I believe, and it will be very much done in tandem with AI. A good example maybe to bring this to life is something we did with NVIDIA about a year ago, where we worked on something called the Anderson impurity model together, and that is a very basic photovoltaic equation. Most of the pre-processing and a lot of the work was done on the GPUs, but they kicked off some of that electron modeling over to our logical qubits on our quantum computer and then brought them back together for a recombined answer. I think that's the way you're going to see the world increasingly play out.
The types of problems that we can point quantum computing at will continue to get more and more sophisticated, such that we'll now start in the next couple of years doing things that you couldn't do alone with a classical computer. They're very complementary, AI and quantum, and I think it's just going to expand the types of problems we can throw compute at.
Matt, you mentioned your partnership with NVIDIA, and your peers are also kind of talking about it.
Yeah.
Just trying to understand, is that a requirement for being a quantum company right now to be working with NVIDIA or with NVQLink, like the software stack, or how does NVIDIA fit in in proliferating quantum?
Well, at the end of the day, what does NVIDIA want to do, right? They want to sell more GPUs. Why are they focused on quantum? It's because they ultimately believe it will help them sell more GPUs. They are an industry enabler, I would call it, where they are doing what they can to help get useful quantum computing up and running because it does open up that whole classification of problems that they can now sell GPUs into that they weren't able to before. NVIDIA is a very important player in the industry, and I think you could think of maybe two ways that they are important. Three ways, actually. Number one is they are honing their own chips to help accomplish some of the things we need to do to get to useful quantum computing faster.
They've enabled something called the Ising models, which are models that help with some of the steps that you need to take that are done in software to make quantum computers useful. They are helping accelerate the industry from that perspective. Number two, to your point, they've created something called NVQLink, and that's really, think of it, the connectivity tissue between quantum computers and classical computers so they can work together, like in that example I gave you all a couple of minutes ago of the Anderson impurity model. Then number three, their customers on the supercomputing side of things will be the same types of customers that are going to want to procure quantum computers. They own a very helpful chain in the distribution world as well. We have a wonderful partnership with them.
Their team is very sharp, and I know they work with other players as well, which they're an ecosystem provider, so I would do the same thing if I were them.
All right.
Yeah.
Let's focus on the Infleqtion story. One unique aspect of your company is that you're generating revenue. Revenue more than doubled in your most recent quarter, and Infleqtion's on track to achieve $45 million in annual sales this year. Can you talk about what exactly is Infleqtion selling to customers today, and importantly, comment on the $20 million award from NASA?
Sure. Our revenues are derived from really selling one of three things, and those are our quantum sensors, our quantum computers, or our quantum software. A lot of that revenue comes in the form of working with either the U.S. government or the U.K. government or increasingly commercial customers. It comes in the form of working on different types of problems that they have that quantum can help them solve. To give you a couple of examples, we have sold three quantum computers, one to the state of Illinois, one to the United Kingdom, and then one to the Institute for Molecular Science in Japan, and a number of other potential opportunities in the pipeline.
We work with bodies like NASA or the Department of War or the Ministry of Defence to deploy our quantum sensors to help them solve the problems they need to solve. In the case of NASA, which we were just awarded a, let's call it, an expansion of the contract that we are working on with them of $20 million, which brings it to over $40 million cumulatively over the years. What we are doing with them is we are putting what is called a quantum gravity gradiometer, that is a mouthful, into space. What is that? What is a quantum gravity gradiometer? It is the same idea as what I told you all before. We trap atoms inside an ultra-high vacuum cell. In this case, we turn them into something called a Bose-Einstein condensate, and that is a fifth form of matter.
When the atoms coalesce into that Bose-Einstein condensate, they become incredibly sensitive to the forces around them, and one of those forces is gravity. When we put this Bose-Einstein condensate into space in a satellite, actually two of them side by side, this is what we are doing with NASA, we can track changes in gravity on the Earth's surface. Gravity is fundamentally a mass measurement. If we can sense changes in gravity with extreme precision, we can tell what is happening both on and below the Earth's surface. Some of the things that NASA will be using the data that our sensors are going to kick off to do will be to measure changes in aquifers underneath the Earth's surface, so predicting drought in certain areas, measuring the changes in the polar ice caps. Polar ice caps are melting.
You can see the mass changing. What are the implications of that? There are all sorts of use cases that we do not know about, like potentially the discovery of things being built underneath the ground, because ultimately that is fundamentally changing the mass stamp. When you are up in space, it casts a very wide net. We are looking at a large land mass and seeing changes in gravity on that large land mass. As you bring those devices down closer to the Earth's surface, you can start to be more targeted, and you can say, "Oh, here is something with mass deep underneath the Earth's surface there. Maybe that is a critical mineral deposit.
Let's go explore it further." You can do a much more targeted exploration and extraction as opposed to blowing up the side of a mountain, which is in many ways how they get critical minerals out of the ground now. There's a solid example of how we're working with NASA.
All right. You mentioned the involvement of the U.S. government and other governments. Why is it important for the governments around the world to be involved in quantum computing and lead the way?
Well, I think most governments recognize that this is going to have very big national and economic security implications for their country, the U.S. government being one of those countries that has very much recognized that. I don't think any of these countries want to be left behind, honestly. The things I think they're worried about are, let's say, God forbid, there was some sort of conflict that broke out over the Strait of Taiwan. Most likely the first thing to go would be GPS, and you'd have no ability to utilize the satellite system, the satellite clusters for your position, navigation, and timing. Quantum sensors can effectively recreate the position, navigation, and timing services we've historically relied upon GPS for, and the side that could have that advantage would almost certainly be victorious in a conflict like that. So the stakes are very high.
On the computing side, I'd mentioned some of the maybe more positive, for lack of a better term, use cases that we can point quantum at, but one of the things that people are quite concerned, and rightfully so, about quantum is that modern-day encryption is all based upon one of these inabilities that I'd mentioned of classical computers to perform, right? There is just no world in which a classical computer can perform the type of calculation that modern-day encryption is based upon. What that is basically if I gave you a really long string of numbers, can you derive the two prime numbers that when you multiply them together give you that long string of numbers? That's a computation that a classical computer just can't do, nor really will ever be able to do.
But that's the type of problem that a quantum computer can do relatively easily, and that date, Q-Day is what they call it, the day where quantum computers will be able to decrypt all information keeps getting pulled closer and closer and closer. I thought it was really interesting that when President Trump signed the executive order for the acceleration of quantum investment in America, he also signed another executive order, which was to accelerate getting the U.S. into post-quantum cryptography. Basically, encryption methodologies that don't rely upon the traditional RSA methodologies that are all based on that inability of classical computers to perform that certain type of calculation.
Matt, can you remind us your milestones specifically around the logical qubits, because that's kind of considered the yardstick for most companies in terms of delivering to a certain target. Where are you guys at, and where are you working towards?
Sure. You'll hear a lot of terms thrown around in quantum computing. You'll hear qubits as one of the main ones, and you have to ask, what kind of qubits are we talking about? Are we talking about physical qubits or are we talking about logical qubits? Because logical qubits are really the only qubits that matter. What is a logical qubit? So I'd mentioned each of the atoms inside our cell becomes a qubit itself. Those are physical qubits. But the problem with those are that they are inherently noisy. They are prone to errors. Logical qubits are clusters of physical qubits that have effectively been error-corrected and redundancy has been introduced into them such that they don't fail, and they can actually perform the calculation that you want them to perform. It's very similar to how error correction codes run on classical hardware today.
We just don't think about it anymore because it's so ubiquitous. Logical qubits, in my mind, are really the keys to the kingdom in quantum computing, and it's at the 100 or so logical qubit range where we believe we'll start to do things that are advantaged with quantum computing. So up until that point, quantum computers can do cool things, but it's nothing you couldn't do with a classical computer yet. It all has to do with just the exponentials on how many classical bits you would need to perform a calculation. Once you get to around 100, that's where you start to crack into the levels where it would start approaching a number of classical bits that would just not be tenable to build.
At around 100 logical qubits is where we think we can start to do some interesting modeling of material science, and then it grows from there. Our roadmap took us from zero logical qubits in 2024 to 12 logical qubits at the end of last year to 30 at the end of this year and then 100 by the end of 2028. Again, it's at that 100 level where we start to think we'll start to see useful applications for quantum computers relative to classical computers.
Awesome. I'm going to stop here and see if there are any questions in the audience. If you have a question, please raise your hand.
Can we talk a bit about-
One second. Let the mic come.
Can you talk a bit more about the supply chain for quantum? If we get to a world where there is a quantum advantage, 100 plus logical qubits, do you think the market is ready to meet the level of demand that there would be for building lots of quantum computers in that world?
Yeah. It's a very good question because the industry is moving from one of scientific breakthroughs to having to just engineer and build these systems. The answer differs based upon the underlying quantum modality. For superconductors, you require big freezers. For trapped ions, you require different types of supply chain components. For us, really, our components are these ultra-high vacuum cells that we manufacture ourselves, so we control our destiny on that front. We do procure lasers and photonic systems from the open market. Those are normally not made by your traditional photonic vendors like Lumentum or someone like that because they're focused on the wavelengths that you need for the data center or for telecom, and rubidium and cesium atoms utilize different wavelengths.
In many cases, we're working with smaller vendors that are making these kind of bespoke lab-grade photonics, and more and more, we're bringing those capabilities in-house in the form of integrated photonics, so taking these from laser systems and taking them down to chip scale. The supply chain is something I think a lot about. There were supply chain elements to the executive orders as well, and the U.K. and other nations are very focused on making sure the supply chain is where it needs to be. It's functioning quite well at this point in time, and it's something that we need to stay ahead of as we scale. The good news is, for us is, again, we control a lot of our own destiny. Also our quantum sensing business, we build things in volume there already.
We are ahead of the curve, call it, on supply chain planning and doing the types of relationship building that you need to have a good, healthy relationship with your supply chain. Folks who are just working on lab experiments and continuing to tweak things in their labs, that might be more of a wake-up call on when they need to actually start building these things at scale. Yeah, something I think about a fair amount. It's a good question.
Question?
Yes. What do you think the market is misunderstanding the most? Or better yet, how come the market is not as amazed by quantum sensing as some others?
About why isn't it as amazed by quantum sensors as quantum computers?
Yeah, pretty much. Because it kind of feels like the market is not appreciating the fact that you already have a stable revenue component around a pretty exciting field.
Yeah. I do think quantum computers can capture the hearts and minds of folks a little bit more, only because it's such a game-changing paradigm. Whereas I think about our quantum sensing business as more or less like an upgrade cycle, right? You've got classical versions of virtually every quantum sensor that we produce, clocks, RF antennas, sensors, and we just produce a version of it that's anywhere between 100 and 1,000 times better at higher price points, but coming down. I think honestly, probably one of the most misunderstood things right now in the market is the opportunity set within quantum sensing.
If you look and peel back the onion, the executive order that President Trump put out was pretty equally split between quantum sensing and quantum computing. It was very much get to useful quantum computing as fast as possible, but proliferate quantum sensors out, particularly into the battlefield, even faster. So it's a very big opportunity. Why that hasn't really captured the hearts and minds of the investment community yet, I think it's probably because it's just not as well understood. It's the only thing I can really speak to. It's interesting.
It's been our strategy from day one to build this stable base of quantum sensors and then address the quantum computing opportunity as it gets closer and closer, which I think has worked really well because we have developed that muscle memory you need to actually put your pencils down and ship product as opposed to just kind of always tweaking things in the R&D lab. You've seen other folks in the industry come at it in a different way. They've started entirely focused on quantum computing but have made acquisitions in the quantum sensing world to address that opportunity. So I think people will start to understand it more and more, is my guess, and it's up to us to prove it and put points on the board.
Just a question about how this sort of evolves. As we've seen the pushback to AI models and some of the fears that go around it
Yeah
the government saying, "Well, maybe we need to get a hold of these first before they go out to the public.
Yeah.
You alluded to the potential world dominance, if you will, whoever gets this first
Yeah
your technology.
Yeah.
Do you foresee that happening, where the government says, "We can't let you guys build this and give it to the world. We're going to hold this first." Is that, from an investment perspective, a potential hindrance for you because you can't really get it out as widely as you need to?
There are certain of our technologies that fall under export controls. Not many of them, but some of them. I wouldn't be shocked if there was more of that for the quantum industry over time. I think the government's been pretty practical on that respect, meaning we can't sell to adversaries, right? Even in the executive order it very clearly states stimulating growth for the U.S. and our allies. I think they're letting capitalism run its course, and I think they realize that's the fastest way to getting things to useful quantum computing and making these technologies get out into the field more and more. I think we're going to have restrictions.
We can't sell to Iran, we can't sell to China, we can't sell to other nations that the U.S. wouldn't allow us to, but there's been no real restrictions of substance for our products thus far to U.S. allies, and I don't really anticipate that there will be, except for the ones that are very much on the ITAR list because they could be construed as weapons in certain cases. It's not really something that keeps me up too much at night. I could be absolutely shocked and something happens that would be surprising, but I don't see that really in my base case of probabilities.
Matt, one last one.
Yeah.
We're almost running out of time, but where are you investing resources today between sensing and quantum computing? Do you own your own manufacturing, and how do you think about scaling the business?
We build all of our technologies internally today. We do utilize the supply chain to buy certain of our components like our photonics in certain instances. As we scale up, it's really going to become a question of, let's use clocks for example. They're our most, call it the furthest along the productization journey. We're in the middle of deciding whether it makes sense to continue to complete the final assembly of those or to start to utilize contract manufacturers or other types of suppliers, of other types of folks to help us actually put the finishing touches on things where we can focus on the things that add the most value, like the quantum cores. It's something that we're in active debate right now. But where are we investing?
A lot of our investment goes to R&D to get these quantum computers useful as fast as possible. I kind of think of our investments taking one of two forms. For quantum computers, it's a curve that's up and to the right, get more qubits, make them higher quality. For our quantum sensors, it's down and to the right, make more of them, but make them cheaper and make them smaller. That's where most of our R&D goes. We continue to evaluate all the options available to us to build out more at scale.
Super. This was very helpful, Matt. Thank you for coming to the conference.
Thanks, Aadith. Great questions. Thanks everybody in the audience.