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Quantum Computing
Overview
Quantum computing is the use of quantum mechanics to store and process information millions of times faster than a classical computer. This technology has the potential to revolutionize various industries in the form of collaborations and investments. Large enterprises and major governments have also shown interest in exploring use cases across industries and understanding national security implications.
Despite progress in increasing qubit counts, quantum computers still face challenges in scaling up while maintaining qubit fidelity and coherence. Researchers are exploring various approaches to overcome these obstacles, including topological qubits, advanced error correction codes, and more efficient cooling systems. The lack of supporting infrastructure and the need for extremely low operating temperatures also hinder the widespread adoption of quantum computing. Significant advancements in qubit design, error correction, and infrastructure are required before quantum computers can be implemented commercially on a large scale.
Industry Updates
Market Sizing
The global Quantum Computing addressable market could range between USD 29.8 billion and USD 186.0 billion
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Use cases
Though still in its nascent stages, quantum computing is being explored across a range of industries to help solve complex problems and tackle global challenges. This includes the optimization of various processes in sectors such as manufacturing, financial services, transportation, and logistics. While some use cases have shown proven results, most are in their early stages. Although they are likely to be significantly faster than traditional computing alternatives, they are yet to deliver quantifiable benefits.
Using quantum computers to run simulations to identify new materials and gain insights on how existing materials interact have been popular use cases. Meanwhile, major manufacturers of aircraft, steel, and automobiles are harnessing this technology for their R&D.
We have identified key quantum computing use cases below:
Market Mapping
Quantum computing companies can be categorized into six segments, with the highest number of startups located in the software applications category. While the most highly funded startups operate as end-to-end providers or specialize in developing quantum computing hardware, a growing number of smaller companies have entered the software space in recent years—inflating the size of this segment. Startups face competition from big tech incumbents, the majority of which operate as end-to-end providers that develop both quantum hardware and software. Overall, most startups in this industry are still at the seed stage with only a quarter having reached the early stage size.
End-to-End Providers
Hardware: Processors
Hardware: Components and Enablers
System Software
Software Applications
Cloud Computing Platforms
The Disruptors
Technological uncertainty levels the playing field
The development of viable quantum computers requires trial and error of different technologies. While large incumbents are less likely to experiment with multiple technologies, startups have an important role in accelerating innovation.
The uncertainty around quantum hardware technology levels the playing field for all existing and new players in the industry. This is evident in the case of PsiQuantum, a relatively unknown startup which attracted the three largest investments in the history of quantum computing during 2019–2021, to prove the viability of the ‘photonic approach’ in building quantum computers. In addition, companies with different approaches do not necessarily directly compete with each other.
Funding History
Competitive Analysis
Incumbents
Uncertainty Around Technology Puts Tech Giants’ Edge at Risk
Large tech companies became more actively involved in quantum computing after the launch of D-Wave’s quantum annealers in 2011. Almost all the incumbents operate across the stack (hardware and software), with the objective of building an in-house general purpose (universal) quantum computer. This could mean that the incumbents are all eyeing the long-term large-scale revenue opportunities that universal quantum computers offer. Industry experts also argue there is no theoretical proof that quantum annealers can offer a major advantage over classical computers.
While incumbents have a few obvious advantages (e.g. access to large investments and the availability of a supporting ecosystem and faster access to users) over startups, uncertainty around qubit design technology puts tech giants' edge at risk. It is possible that a startup with no such advantages could prove the viability of quantum computers with a newer technology. That said, many of the biggest advancements in today’s quantum technology have come from leading incumbents, in particular from Google and IBM.
The uncertainty around the technology has also elevated the need for partnerships across companies, mainly for software solutions. Microsoft and Amazon (AWS) have partnered up with companies that work on various quantum hardware technologies that allow users to run programs in any back-end technology.
Notable Investors
