Quantum industry explained: applications, innovations and challenges

Understanding the quantum industry

The quantum industry, while still in its nascent stages, holds the potential for significant impacts on technology and society. Quantum computing (QC), one of the most discussed applications, can revolutionize many fields such as machine learning (ML) and cryptography. These computers, which use the principles of quantum mechanics, promise to process complex calculations at speeds unattainable by classical computers. However, it is important to note that practical, widespread applications are still many years away, as the technology is in its early stages of development.

In 2023, the quantum technology market, including quantum computing, attracted just north of $1 billion in new private capital through nearly 80 disclosed funding rounds, indicating a growing interest in this sector. This investment distribution reveals an emphasis on different aspects of the quantum industry: 48% of the total investment went to quantum computer hardware components, 18% to quantum computers, and 22% to quantum sensing and imaging. Software development in quantum computers accounted for 6% of the investment. These figures underline the complexity and diversity of the quantum technology market.

Overall, while the quantum industry promises groundbreaking advances across multiple fields, it is crucial to recognize that these technologies are still in their infancy. Their full impact on technology and society will unfold over several years as research and development continue.

Quantum technology applications

Quantum technology offers significant potential for innovation in various sectors, including computing, communication and sensing. Quantum computers, using qubits, offer huge processing power, significantly surpassing traditional computers. This technological leap has drawn interest from major companies and governments, evidenced by Google’s Sycamore achieving “quantum dominance” in 2019 and other milestones since then.

However, challenges in hardware, error correction, and scalable systems persist. Despite this, quantum computing is poised to drive major industry transformations and demands attention from businesses and professionals to harness its future impact. The technology stack for quantum computing comprises several layers, including end users accessing quantum devices through interfaces, Quantum Processing Units (QPUs) using multiple qubit implementations, and the overlap of quantum compilers and application interfaces. Controlling hardware and software is crucial to the operation of quantum devices. The stack also includes classical processing units (CPUs) and graphics processing units (GPUs) in addition to quantum processors.

In quantum communication, concepts such as quantum internet emerge. This technology could potentially provide unprecedented levels of security by using quantum cryptography to create unbreakable encryption. However, as with computing, it is early days, and the practical realization of a quantum internet is a long-term goal.

Nevertheless, it also poses challenges for existing encryption methods. Quantum communication, which uses quantum key distribution (QKD), could potentially improve security. Meanwhile, quantum sensing could revolutionize fields such as medical imaging and navigation. These technologies, although promising, are not yet fully realized and face obstacles such as high costs and technical complexities.

Another area where quantum technology could have far-reaching effects is in quantum sensing applications, such as advanced medical imaging, which can greatly improve diagnostic techniques, providing higher accuracy and sensitivity. However, these technologies are under continuous development and are not yet ready for widespread clinical use.

Quantum’s impact on industries

Quantum technology, at the forefront of heavy engineering trends, promises industry transformation. It is in the early stages of development, but its potential ranges from revolutionizing material development and natural resource exploration to improving security.

Quantum computing is particularly notable for its advanced simulation capabilities and optimization calculations, which help sectors such as logistics, finance and transportation. It also has implications for cyber security, with the ability to break and strengthen encryption methods. As industries and governments invest and explore its applications, quantum technology’s role in future innovations becomes increasingly important.

Investment spans various hardware components, including dilution refrigerators, vacuum chambers and coaxial cables. There is significant investment in quantum software interfaces and Quantum Computing as a Service (QCaaS) offerings. Various qubit modalities have received investment, with silicon (38%), photonics (27%) and neutral atoms (20%) leading the way from 2023. The private investment in quantum processing units (QPUs) varied by modality, reflecting the sector’s evolving nature.

Challenges and limitations in the quantum industry

Quantum computing has made impressive progress, but faces significant challenges before it becomes widely practical. These include managing qubit decoherence, developing error correction techniques, scalability, hardware and software advances, interfacing with classical computers, establishing standards and protocols, increasing the trained workforce and managing high costs. Despite these obstacles, ongoing research and investments indicate a gradual overcoming of these obstacles through small advances and collaborative efforts across various sectors.

The investor landscape in the quantum industry is diverse, with a range of investors including venture capital, corporate VCs and government offices. Some sector specialists and consistent investors are emerging, with a notable focus on early-stage companies in deep physics and quantum technology. Investment is not limited to private capital, but also includes significant government funding and corporate investment.

What does the future hold for the quantum industry?

Most industry experts expect significant advances in quantum computing within the next decade, especially in achieving a quantum advantage over conventional computers for specific applications. However, there is no clear consensus on which qubit technology will dominate. Gate-based quantum computers are considered the most promising, but other types remain contenders. The rate of development is expected to reach operational levels by the 2030s, but widespread commercial availability remains uncertain. Factors such as resource availability and geopolitical climate are crucial in shaping the future of quantum computing, with potential impacts on development and international cooperation. The quantum computing landscape is still evolving, with uncertainties about technology maturity and geopolitical stability.

Despite a decline in private investment in 2023, returning to 2019/2020 levels, the sector remains strong. Government initiatives and funding are critical to the quantum technology sector, with more than 33 governments having ongoing quantum technology initiatives. The future outlook indicates a continued interest in quantum technologies, with expectations of more technical and engineering breakthroughs, increased government procurement and a possible evolution in venture capital focus towards deep technology.

Key players in the quantum industry

In the quantum computing sector, key players are the major corporations that include IBM, Google Quantum AI, Microsoft, AWS, Alibaba Group, Atos Quantum (EVIDEN), Baidu and Intel. Each entity brings unique contributions and advances to the field:

IBM offers cloud-based quantum computing services and is building a quantum data center in Germany. Google Quantum AI focuses on integrating quantum computing with machine learning, known for claiming quantum dominance in 2019. Microsoft is developing quantum software and hardware accessible via Azure, and is researching quantum programming languages ​​and qubit technology. AWS (Amazon Braket) provides a platform for accessing various quantum computers through the cloud, facilitating research and software development. Alibaba Group has established a quantum computing laboratory in Shanghai, which focuses on open source initiatives and quantum algorithm development. Atos Quantum (EVIDEN) offers the Quantum Learning Machine, a system for simulating quantum systems, and is involved in quantum hybridization projects. Baidu runs the Baidu Quantum Computing Institute, which develops quantum computing software and hardware solutions, including a quantum hardware-software integration solution called Liang Xi. Intel, known for semiconductor expertise, is working on ‘hot’ silicon spin qubits and other quantum technologies, working with academic and research institutions.

Every company is making progress in the field, but the future of quantum computing remains in development with various technical and geopolitical factors influencing progress.

In 2023, the quantum technology market received significant investment spread across various subsectors, with the majority going into full-stack quantum companies, drawing attention to the sector’s capital intensity. This investment trend reflects the complexity of the quantum computing technology stack, which includes several layers already mentioned. Funding, with its diverse investor landscape, also includes venture capital, corporate risks and government offices, lending credence to the sector’s evolving nature and the importance of government initiatives in funding.

Let’s hope 2024 can be even better for the industry!

Featured image: Intel

If you found this article informative, you can explore more current quantum news, exclusives, interviews and podcasts here.