The global quantum technology sector has entered a new phase of accelerated state-backed competition after the U.S. Commerce Department announced a $2.013 billion strategic funding package for nine domestic quantum computing firms on May 21, triggering sharp stock rallies in both U.S. and Chinese quantum companies and underscoring rising stakes in the race for global quantum supremacy.
Under the terms of the CHIPS and Science Act, the U.S. government will take minority non-controlling equity stakes in all funding recipients, marking a historic shift from traditional research grant models to direct government investment in private quantum firms. The bulk of the funding, $1.375 billion, is allocated to domestic quantum foundry development: GlobalFoundries receives $375 million to build a multi-modal quantum chip foundry, while IBM gets $1 billion to launch a new subsidiary focused on manufacturing quantum-grade superconducting wafers. The remaining $538 million is distributed across seven specialized quantum computing companies, with major recipients including D-Wave, Infleqtion, Rigetti, and PsiQuantum, each receiving up to $100 million to solve long-standing engineering challenges across different quantum technology modalities, and smaller player Diraq receiving up to $38 million for silicon spin qubit development.
“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,” U.S. Commerce Secretary Howard Lutnick said in the announcement. “These strategic quantum technology investments will build on our domestic industry, creating thousands of high-paying American jobs while advancing American quantum capabilities.” The equity stake structure is designed to generate potential returns for U.S. taxpayers, and the CHIPS Research and Development Office noted it will continue accepting new proposals for microelectronics and quantum advancement projects.
The funding announcement immediately sent shockwaves through global capital markets. Over the following two trading days, leading U.S. quantum stocks posted double-digit gains: Infleqtion surged more than 30%, Rigetti Computing jumped 63%, D-Wave rose 53%, and IBM gained around 13%. The rally spilled over to Chinese markets, where key domestic quantum companies recorded similar gains: Quantum CTEK climbed 19% to 641.08 yuan, GuoChuang Software gained nearly 18% to 40.24 yuan, and Koal Software rose 9.5% to 20.97 yuan. Investors are betting that the expanded U.S. government push will prompt China to accelerate its own state-backed investment in the sector to maintain its competitive position.
China has already laid significant groundwork in quantum technology, with a flurry of major breakthroughs announced just weeks before the U.S. funding reveal. On May 9, domestic firm Origin Quantum launched Origin Wukong-180, its fourth-generation 180-qubit superconducting quantum computer, which is now open to global users for cloud-based quantum computing tasks. Two days earlier on May 7, the Chinese Academy of Sciences’ Cold Atom Technology (CASCA) unveiled the Hanyuan-2, billed as the world’s first dual-core neutral-atom quantum computer with 200 total qubits, marking a global breakthrough in multi-core quantum processor architecture. On May 13, the University of Science and Technology of China (USTC) published results for its Jiuzhang 4.0 photonic quantum computer in *Nature*, showing the system solves a core benchmark problem 10^54 times faster than the world’s most powerful conventional supercomputer, while scaling up from 255 to 3,050 manipulated photons from its previous generation.
Industry analysts and commentators note that these recent developments, paired with the U.S. funding push, are expected to speed up Beijing’s timeline for expanded state investment in quantum technology. China already designated quantum technology as the top priority among six core future industries in its 15th Five-Year Plan (2026-2030), outlined in 2025. The other five prioritized sectors are biomedical technology, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied artificial intelligence, and 6G telecommunications.
Industry observers widely frame quantum technology as a defining strategic battleground for major global powers, for three core reasons. First, quantum computing and communications will reshape national defense and information security architectures. Second, the unprecedented processing power of quantum systems can dramatically accelerate breakthroughs in drug development and advanced materials design. Third, early technological leadership will grant countries major influence over global industry standards for the next generation of computing.
“The U.S. 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,” a technology analyst based in Anhui, China’s central quantum research hub, noted. He added that nearly 70% of U.S. strategic investment is concentrated in quantum wafer manufacturing, mirroring the policy blueprint used to build up the U.S. domestic semiconductor industry and laying the foundational manufacturing infrastructure for next-generation computing power.
China remains one of the only nations capable of competing head-to-head with the U.S. across quantum technology, with a maturing domestic industrial chain. It holds three distinct core competitive advantages: it maintains a global lead in quantum communications, with Quantum CTEK’s quantum cryptography technology already deployed for commercial use nationwide; Origin Quantum operates China’s only 6-inch quantum chip production line, with a daily capacity of over 100 wafers, a 92% yield rate, and its 180-qubit system already available as a cloud service; and quantum technology sits at the top of Beijing’s national priority list for the next five-year development cycle.
However, China also faces key gaps that the U.S. is explicitly targeting with its latest funding push. “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,” the Anhui-based analyst said. “Domestic quantum chips still partly rely on conventional foundries for production, while purpose-built quantum wafer facilities remain under construction.”
The two superpowers are competing across four major quantum computing architectures, with domestic leaders on each side: for superconducting quantum computing, China’s Origin Quantum and Quantum CTEK face off against IBM, Google and Rigetti; for photonic quantum computing, USTC’s Jiuzhang series rivals U.S. firm PsiQuantum; for trapped-ion quantum computing, China’s Qudoor competes with Quantinuum and IonQ; and for neutral atom quantum computing, China’s CASCA goes up against U.S. firms Atom Computing and Infleqtion.
This competition has unfolded against a backdrop of escalating U.S. export controls targeting China’s quantum sector. During the final months of the Biden administration, Washington introduced sweeping export restrictions on quantum computers, critical components and related software in September 2024, followed by a ban on most U.S. investments in Chinese quantum firms that took effect in January 2025. The Trump administration expanded these controls in March 2025, adding roughly 80 companies to its export blacklist, more than 50 of which are Chinese, including six subsidiaries of leading Chinese cloud and AI firm Inspur Group, which were accused of acquiring U.S. technology for military quantum and supercomputing development. Currently, most major Chinese quantum firms and research institutions, including Quantum CTEK, Origin Quantum, and USTC, are named on the U.S. export blacklist.
Despite these restrictions, Chinese firms have continued to advance their technology, bypassing controls by sourcing key equipment from non-U.S. suppliers and investing in homegrown alternatives that avoid Western-controlled components. For example, in 2023 Chinese state broadcaster CCTV showed Origin Quantum using a mask aligner manufactured by Germany’s SÜSS MicroTec for superconducting quantum chip production, proving U.S. controls have not fully cut off access to critical fabrication equipment. This progress allowed Origin Quantum to launch its third-generation 72-qubit Wukong system in 2024, followed by the 180-qubit fourth-generation model in May 2026.
Chinese researchers have also worked around controls by developing quantum architectures that do not rely on Western-controlled dilution refrigerators, a critical cooling component for superconducting systems. Photonic and neutral-atom quantum computing, the two areas that saw major Chinese breakthroughs in May 2026, fall into this category.
Data on overall investment in the sector paints a mixed picture of the current competitive balance. A columnist based in Liaoning cited McKinsey data showing China invested a total of $15 billion in its quantum sector in 2024, more than double the combined $7 billion invested by the U.S. government and private firms. However, independent observers caution that China’s overall investment figure includes large amounts of general infrastructure spending, and a significant share of Chinese R&D funding is allocated to quantum communications rather than quantum computing, where the U.S. still retains a clear technological lead.