US, China escalate quantum race with rival investment drives

Shares of key Chinese quantum computing companies have surged about 20% over two trading days after Washington announced a US$2 billion funding package for nine US firms, as investors bet that Beijing would respond with its own push to keep pace in the global race for quantum supremacy.

Quantum CTEK surged 19% to 641.08 yuan (US$88.70) in just two trading days on May 22 and 25. GuoChuang Software gained nearly 18% to 40.24 yuan, while Koal Software rose 9.5% to 20.97 yuan. The rally mirrored a sharp move in US quantum stocks as Infleqtion soared more than 30%, Rigetti Computing jumped over 63%, D-Wave surged roughly 53% and IBM gained around 13% in the two trading days after Washington announced the funding package.

China’s quantum sector had already been building momentum this month. Origin Quantum launched Origin Wukong-180, its fourth-generation superconducting quantum computer. The Chinese Academy of Sciences’ Cold Atom Technology (CASCA) unveiled what it described as the world’s first dual-core quantum computer. The University of Science and Technology of China (USTC) released Jiuzhang 4.0, a photonic quantum computer.
 
Analysts said the flurry of breakthroughs, combined with the US funding push, was likely to accelerate Beijing’s timetable for state-backed investment in the sector.

On May 21, the US Department of Commerce announced the letters of intent to frame the initiative as a matter of national security as much as economic competitiveness. The funds, totaling US$2.013 billion, were distributed under the CHIPS and Science Act to support both domestic quantum foundries and computing companies, with the government taking a minority equity stake in each recipient.

The two foundry recipients are GlobalFoundries, which will receive US$375 million to establish a domestic quantum foundry spanning multiple hardware approaches, and IBM, which will receive US$1 billion to build a new subsidiary for quantum-grade superconducting wafers.

The remaining US$538 million is split across seven companies, with Atom Computing, D-Wave, Infleqtion, PsiQuantum, Quantinuum, and Rigetti each receiving up to US$100 million to address specific unresolved engineering problems across different quantum modalities. Silicon spin specialist Diraq will receive up to US$38 million.

“With today’s CHIPS Research and Development investments in quantum computing, the Trump administration is leading the world into a new era of American innovation,” said US Secretary of Commerce Howard Lutnick. “These strategic quantum technology investments will build on our domestic industry, creating thousands of high-paying American jobs while advancing American quantum capabilities.”

As a condition of the awards, the Department will receive a minority, non-controlling equity stake in each recipient company, a structure designed to enhance returns for US taxpayers. The CHIPS Research and Development Office said it continues to solicit proposals from eligible applicants for research, prototyping and commercial solutions that advance microelectronics technology in the US.

The May 21 announcement marks the first time Washington has taken direct equity stakes in quantum computing firms, a significant shift from its traditional approach of providing research grants. 

“The Trump administration’s decision to pump more than US$2 billion into nine US quantum computing firms has set off a frenzy in capital markets,” says a columnist at the National Business Daily. “In fact, Beijing had already moved early, placing quantum technology at the top of its list of six priority future industries in the 15th Five-Year Plan (2026-2030) last year.”

He says the other five technology sectors are biomedical, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied artificial intelligence (AI) and 6G telecommunications.

He adds that quantum technology deserves to be a priority battleground for every major power, citing three reasons:

• National security: quantum computing and communications will have a profound impact on defense and information security.
• Underpinning other industries: quantum computing’s exceptional processing power could dramatically accelerate drug development and materials design.
• Technological dominance: whoever moves fastest will gain the power to set the rules of the game, injecting new energy into both defense and the economy.

“The US move represents the first time a national government has directly taken equity stakes in quantum technology companies, marking a formal escalation from a laboratory race to a state-level industrial war,” says an Anhui-based writer. “Nearly 70% of Washington’s strategic equity investment is concentrated in quantum wafer manufacturing, essentially replicating the playbook used to build up semiconductor fabs and staking out the manufacturing foundation for the next generation of computing power.”

The writer says China remains one of the few countries capable of keeping pace with the US in quantum technology, with a domestic industry chain taking shape. He outlines three of China’s core advantages:

• Quantum communications: China holds an absolute global lead, with Quantum CTEK’s quantum cryptography communications technology already commercially deployed nationwide.
• Superconducting quantum computing: Origin Quantum operates China’s only 6-inch quantum chip production line, with a daily capacity exceeding 100 wafers, a yield rate of 92% and its 180-qubit superconducting quantum computer already available as an online service.
• Policy support: Quantum technology tops Beijing’s 15th Five-Year Plan list of six future industries.

“China’s core weaknesses lie in dedicated quantum wafer fabrication and high-end control and measurement equipment, precisely the areas Washington is targeting with its latest funding push,” he says. “Domestic quantum chips still partly rely on conventional foundries for production, while purpose-built quantum wafer facilities remain under construction.”

China and the US are competing across three main quantum computing approaches:

• Superconducting quantum computing, which uses supercooled electrical circuits as qubits: Origin Quantum and Quantum CTEK are China’s main players, competing with IBM, Google and Rigetti.
• Photonic quantum computing, which uses particles of light to perform calculations: USTC’s Jiuzhang series leads in China, rivaling US firm PsiQuantum.
• Trapped-ion quantum computing, which manipulates individual charged atoms as qubits: Beijing-based Qudoor is China’s main contender, going up against Quantinuum and IonQ.
• Neutral atom quantum computing, which uses individual atoms held in place by laser beams as qubits: CAS Cold Atom Technology is China’s leading player, competing with US firms Atom Computing and Infleqtion.

US export controls

During the Biden administration, the White House had already moved to choke off China’s access to quantum technology, introducing export controls on quantum computers, critical components and related software in September 2024, followed by a ban on most US investments in China’s quantum sector that took effect in January 2025.

In March 2025, the Trump administration added about 80 companies to its export blacklist, more than 50 of which were Chinese. Among the sanctioned, six subsidiaries of Inspur Group, China’s leading cloud computing and big data provider, were accused of acquiring US technologies to develop AI and quantum technologies and build exascale supercomputers for the Chinese military.

As of now, sanctioned Chinese quantum firms and institutions include Quantum CTEK, Origin Quantum, USTC, the Jinan Institute of Quantum Technology, the Hefei National Laboratory, the Center for Excellence in Quantum Information and Quantum Physics and the Institute of Physics.

Despite US export controls, Chinese firms have continued to make progress by sourcing equipment from non-American suppliers. In footage aired by state broadcaster CCTV in January 2023, Origin Quantum revealed it was using a mask aligner made by Germany’s SÜSS MicroTec to produce its superconducting quantum chips, showing that Washington’s controls had not fully closed off China’s access to key fabrication equipment.

The effort paid off when Origin Quantum launched Origin Wukong-72, its third-generation 72-qubit superconducting quantum computer, in January 2024. Named after the Monkey King of Chinese mythology, the Wukong series uses qubits, which, unlike the binary bits in conventional computers, can exist in multiple states simultaneously, allowing quantum computers to process vastly more complex calculations.

On May 9 this year, Origin Wukong-180, the fourth-generation model, went online and began accepting quantum computing tasks from users worldwide. It carries 180 computational qubits on a single chip and achieves an accuracy rate of around 99% across its core operations.
 
Chinese scientists are also working around US export controls by developing quantum technologies that do not rely on dilution refrigerators, a cooling device whose sensitive components are tightly controlled by the West. Photonic and neutral-atom quantum computing are two such approaches.

On May 7, CASCA unveiled what it described as the world’s first dual-core neutral-atom quantum computer, the Hanyuan-2.

Ge Guiguo, a senior solutions expert at CASCA, said the machine is built on domestically developed neutral-atom array technology and features a dual-core collaborative computing system with a total of 200 qubits. He said the machine marks the first time globally that a quantum processor has moved from a single-core to a dual-core architecture, representing a breakthrough in the core design of quantum computing.

USTC published results for Jiuzhang 4.0 in the journal Nature on May 13, showing that the photonic quantum computer solved a benchmark computational problem at a speed more than 10^54 times faster than the world’s most powerful supercomputer. The machine manipulated and detected quantum states of up to 3,050 photons, compared with 255 photons in its predecessor, Jiuzhang 3.0. 

Citing McKinsey data, a Liaoning-based columnist said that China invested US$15 billion in its quantum sector in 2024, more than double the US$7 billion committed by American firms and the government combined. He said it’s possible that Chinese firms will catch up with their US rivals one day.

However, some observers cautioned that China’s figures include substantial infrastructure costs, and that a significant portion of its research and development spending has gone toward quantum communication rather than quantum computing, where the US maintains a clear lead.

Read: New Trump sanctions on Chinese firms: leverage on Xi or overkill?

Follow Jeff Pao on X at @jeffpao3