The Rising Quantum Computing Industry: Current State and Future Prospects
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As investors, we are always on the lookout for the next big thing in technology. And with the growing buzz around generative AI, it is natural to wonder what the future holds. But as we have been meeting with quantum computing start-ups lately, we have become increasingly intrigued by the potential of quantum technologies.
According to Gartner’s hype cycle, quantum technologies are currently in the innovation trigger stage. This means that while they are not quite ready for prime time yet, they are showing promise and attracting attention from investors, researchers, and innovators (especially in France).
The aim of this post is to gain an understanding of the current state of the quantum computing field and the challenges that must be addressed to achieve maturity as an industry.
Part 1: Technologies driving the market and growth signals (from investments to partnerships)
Part 2: The software challenges to adopt the hardware
Part 3: The latest innovation made by Big Tech on the subject
Hope you will enjoy the reading!
What Is Quantum Computing? A Primer on How Quantum Computers Work
Quantum computing has been in existence since the late 20th century, but it’s only in recent years that research and development have picked up steam. Unlike traditional computers that operate on binary bits of either 1 or 0, quantum computing utilizes qubits that can represent both 1 and 0 simultaneously — a phenomenon called superposition.
This unique feature of quantum computing allows for multiple calculations and processes to be performed at once, making it ideal for handling complex simulations and calculations. For instance, quantum computing can accelerate drug discovery processes by analyzing numerous compounds at once to identify those with the highest efficacy. This could impact a huge number of sectors and unlock new use case for several industries.
The Growth of the Quantum Computing Industry
Quantum computing is a technology that has the potential to revolutionize many fields, but it requires technological breakthroughs in both hardware and software development. In the quantum computing field, the crucial technical challenge is the development of stable and reliable qubits, which are the fundamental building blocks of quantum computers.
Understanding the key players and their position in the technology stack is a challenge in emerging markets. One classic solution is to display logos, such as the map provided by The Quantum Insider (credit to Alex Challans for the effort):
By connecting this map with the recent report by “Le Lab Quantique,” we can identify key technologies that are driving the industry forward:
Superconducting circuits are currently the most prominent technology used to perform quantum computing. From Google, IBM, Intel, Rigetti, Alice&Bob to D-Wave, it has been the privileged qubit technology that most of the actors have chosen to bet on. This choice is not arbitrary at all, and one of the intuitive reasons for which superconducting circuits make the ideal qubit candidate is that superconductivity is essentially a Macroscopic Quantum Phenomenon (arises from the collective behavior of many particles at once).
Other technologies such as cold atoms, photonics, silicon, and carbon nanotubes are also being developed to yield qubits. These technologies are being explored to improve the quality and scalability of qubits.
- For example, cold atoms are being used to create qubits that are more stable and less susceptible to environmental noise (Start-up in the space = Pasqal).
- Photonics is another technology that is being explored for quantum computing, as it has the potential to create qubits that are more scalable and easier to control (Start-up in the space = Quandela).
- Silicon is also being explored as a potential qubit technology, as it is a well-established material in the semiconductor industry and could potentially be integrated with existing technology (Start-up in the space = Diraq).
- Carbon nanotubes are another promising technology for qubits, as they have unique electronic properties that could make them ideal for quantum computing (Start-up in the space = C12).
Despite slightly lower fundraising pace in 2022, with an estimated $2.2 billion invested in quantum(see below),
there has been a surge in corporate partnerships and collaborations aimed at bringing quantum computing out of research labs and into commercial applications:
- IBM and JPMorgan Chase: IBM has partnered with JPMorgan Chase to develop quantum algorithms for financial services, with a focus on portfolio optimization, fraud detection, and Monte Carlo simulations.
- Volkswagen and D-Wave: Volkswagen has collaborated with D-Wave to investigate how quantum computing can optimize traffic flow and reduce congestion in cities.
- Honeywell and Cambridge Quantum Computing: Honeywell has partnered with Cambridge Quantum Computing to develop quantum software tools for commercial use, including quantum machine learning and quantum chemistry.
- Microsoft and Airbus: Microsoft has teamed up with Airbus to explore the use of quantum computing in airplane optimization, with the goal of reducing fuel consumption and emissions.
- Google and Volkswagen: Google and Volkswagen are working together to develop quantum algorithms for electric vehicle batteries and to optimize traffic flow in cities.
In addition to hardware development, various error-correction methods have been investigated to protect quantum information from environmental noise and other sources of errors that cannot be wholly eliminated by hardware. The development of quantum software and algorithms enabling full advantage of the capabilities of different quantum architectures seems to represent a barrier to widespread technology adoption.
The Quantum Software and Tools Market Is Growing Rapidly
The development of quantum software and algorithms is a key aspect of quantum computing. Although hardware is crucial, it’s the software that unlocks the full potential of diverse quantum architectures.
This is why a number of startups are popping up all over the world that specialize in developing quantum software solutions for a variety of use cases. This market includes software and tools for quantum simulation, quantum optimization, quantum machine learning, and quantum cryptography.
- Simulations: Enabling Quantum computers to simulate extremely complex systems and behavior in order to understand them better or even predict the future outcomes of different scenarios.
- Optimization: Enabling the optimization of complex problems with many variables, such as logistics optimization or financial portfolio selection.
- Machine Learning: Allowing to quickly and accurately learn complex functions and make predictions that were impossible using classical computers.
- Encryption: Quantum-based encryption technology is already being implemented in some areas and is expected to become more widespread in the future, providing secure communication channels and data protection services.
But one of the most significant challenges in quantum software development is the need to create algorithms that can run on quantum hardware. This is because quantum computers operate differently from classical computers, and traditional algorithms are not suitable for quantum computing. Therefore, new algorithms and programming languages are being developed to enable the creation of quantum software.
Open Source Quantum Software Development and Incumbents tackling the opportunity
There is an extensive open source community dedicated to advancing the development of quantum software tools:
- Organizations like the Open Quantum Foundation are leading the way in open source development by creating a platform where developers can share ideas, collaborate on projects related to quantum computing, and even crowd-fund new initiatives out of their own pocket.
- Big Tech are also involved, with companies like IBM who developed the Qiskit software development kit, which is an open-source framework for quantum computing.
The aim is to encourage the advancement and evaluation of quantum computer algorithms in the short term. This provides a cost-effective opportunity for newcomers in the quantum industry to start without having to immediately invest in developing their own proprietary solutions.
Key Quantum Computing Companies and Their Progress
By now, you might be wondering what big companies are tackling quantum technology. Quite a few incumbents are making progress. Leaders like IBM, Microsoft, Google and others are striving in quantum hardware such as with quantum error mitigation and dynamic circuits. Governments worldwide are also strategically investing and encouraging quantum research hubs (interesting to see how France is well positioned in that regard).
We found it relevant to share with you the latest developments from the three main incumbents working on this topic:
Microsoft
Microsoft stands out as a leader in the field of quantum computing, with the goal of building large-scale systems that will empower industries to solve real-world problems using quantum computing. They made progress in 2022 with the development of topological qubits through their work on the topological phase of matter.
IBM
As discussed, IBM is another big player in the quantum computing space. It has made its quantum computer accessible via cloud-based architectures, adding a layer of sophistication to its technology stack. They made strides with Quantum Osprey processor (three times its Eagle version), a major breakthrough in the pursuit of quantum advantage. With 433 qubits, it has set a new benchmark as the most powerful general-purpose quantum computer based on superconducting technology.
Google has made its own push into quantum computing, with the goal of developing an advanced form of artificial intelligence (AI) based on the principles of quantum mechanics. Its innovation in this area includes Google’s Sycamore processor — the first chip built using scalable superconducting qubits with error correction capabilities — as well as its Quantum AI Lab (highlights of the advancements made in 2022), which brings together experts from diverse fields like physics, mathematics, engineering and computer science to work on areas like AI algorithms that could potentially be powered by advanced quantum computers. Latest technological advancement: https://www.nature.com/articles/s41586-022-05434-1
The Future of Quantum Computing and What’s Next
Looking to the future, it’s clear that quantum computing will become increasingly important, with governments and private organizations alike investing huge resources into R&D.
It is likely to enable a new wave of technology applications and use cases, such as:
- Improved searches through datasets exponentially faster
- Streamlined analysis of sample data and large datasets
- Faster optimization to identify the best solutions to complex problems
- Improved artificial intelligence training processes
- More efficient financial forecasting and risk management
The potential of quantum computing will also increase efficiency in sectors like biomedicine, energy optimization and climate change analysis. In many ways, it could be a decisive factor in helping us address some of the most pressing global problems of our time.
The key metrics further demonstrate the exponential potential of this technology:
- According to Gartner’s 2020 Hype Cycle Report, the “time to maturity” for quantum computing is expected to be 5–10 years.
- IBM forecasts that by 2028 there will be an estimated 1 million quantum computers connected in global networks.
- Statista forecasts an annual growth rate for the global quantum computing market size ranging from 32% in 2020 to 38% in 2024.
Still, there is a gap between achieving quantum supremacy in theory and utilizing quantum computers practically for optimal machine learning and optimization. Although research is underway, there are considerations to be addressed such as error correction, problem transfer efficiency, and programming complexity.
It appears that quantum computers won’t be a one-size-fits-all solution, and the average person may not experience a “wow” factor like what happened with AI. They won’t be able to replace digital computers for many tasks. Instead, it is more likely that they will complement classical computing by providing new capabilities and applications.
The hype surrounding quantum technology is not at its peak yet, but according to the Gartner curve, it is slowly getting there. Some vendors are already taking advantage of this hype-debut by prematurely promoting the technology for short-term gains, which could result in an early “quantum winter” in about 2 years from now. That’s why Specific hackathons focused on quantum computing are essential for companies to cultivate specialized talent for their specific use cases. This approach helps prevent any disappointment that may arise from the gap between promised results and actual outcomes.
We hold the belief that entrepreneurs are in the best position to identify opportunities for innovation and creation within a given industry. If you have any opinions regarding the future of quantum tech and the areas that will thrive, please do not hesitate to share them with us. Your feedback will always be highly appreciated.
Brief highlight of the cryptographic threats from the perspective of Gaspard Billaud (Cryptologist engineer at Thales), who assisted us in creating this article from the ground up.
If the arrival of the quantum computer promises many revolutions in different sectors, the technological breakthrough that it represents is perceived as a threat to cryptography. Indeed, a quantum computer that would be able to run the shor algorithm (1994) would be able to compromise the security of most information systems. The quantum computer is therefore seen as a “threat” in the world of cryptography.
In 2016, this threat prompted NIST, a U.S. organization in charge of standardizing cryptographic schemes, to launch an international competition for the standardization of post-quantum (quantum computer-resistant) cryptographic algorithms.
Four first algorithms have already been standardized, but the competition is still ongoing (next round on June 2023).
At OVNI, we invest in pre-seed stages and partner with founders who have global ambitions from day one. If you are a founder in this space or know someone who is, feel free to contact me at thomas@ovni.vc.
