A quantum computer arms race is intensifying between the United States, China, and Europe. Here’s what they have to do to prevail:
Every nation is seeking to gain an advantage in the race toward the quantum future of the planet. The collaboration of the US, UK, and Australia to create military uses of digital technology, particularly quantum computing capabilities, began a year ago. That came after the United States passed the National Quantum Initiative Act in 2019. The nation’s plans to quickly develop quantum computing capabilities were laid out by Congress.
Prior to this, Europe’s member states began constructing a quantum communications infrastructure that will be operational by 2027 as part of the $1 billion Quantum Flagship research initiative, which was announced by the continent in 2016. Similar to this, China’s 14th Five Year Plan (2021–25) places a high priority on the advancement of quantum communications and computing by 2030. Between 2019 and 2021, China invested up to $11 billion, Europe $5 billion, the United States $3 billion, and the United Kingdom £1 billion. the equivalent of $1.8 billion in total to become the quantum superpowers of future.
For nations looking to obtain the next competitive edge in the Digital Age, developing quantum computers has become a priority as the scientific research of quantum technology picks up speed. They both have very different motivations for wanting this advantage. On the one hand, quantum technologies are predicted to revolutionise practically every sector, from the automobile and aerospace to the financial and pharmaceutical industries. According to current BCG projections, these systems might generate between $450 billion and $850 billion in new value over the next 15 to 30 years.
On the other hand, as we noted in a previous essay, quantum computing systems will represent a serious danger to cybersecurity globally.
They can be used by hackers to crack any traditionally encrypted system, device, or network’s security and read the public keys produced by the RSA cryptosystem. It will present a serious cyber danger, known as Y2Q (Years to Quantum), to individuals, institutions, businesses, and national governments. They are forced to confront the unprecedented challenge by creating defences like post-quantum cryptography, which in turn will call for the deployment of quantum systems.
Since the Industrial Revolution, nations have discovered the hard way how important general-purpose technology, like quantum computing, are for competitiveness. Take the manufacturing of semiconductors, which the United States, China, South Korea, and Taiwan have recently dominated. Over the last two years, a rapid drop in production brought about by the COVID-19 epidemic and other causes caused production to stop and prices to rise in more than 150 businesses, including those producing cars, computers, and telecommunications devices. Brazil, India, Turkey, the United States, and other nations who were severely impacted including members of the European Union are currently working to reconstruct their semiconductor supply networks. The United States produces only around 7% of the world’s electric batteries, with China producing the majority of them. Because of this, the United States has offered financial incentives to encourage industry to expand domestic production of electric batteries.
If nations and businesses don’t immediately work on enhancing their quantum sovereignty, much worse may be in store. Governments should evaluate their efforts on both fronts in relation to those of other nations because the development and deployment of such systems necessitates the work of the public and private sectors.
It is anticipated that the United States will lead the world in quantum computing, depending on its tech behemoths like IBM and Google to develop quantum systems as well as a large number of start-ups that are creating software applications. According to BCG estimates, the latter attract roughly 50% of venture capital and private equity funds’ investments in quantum computing. Despite having been allotted $1.1 billion, the U.S. government has put in place systems that efficiently coordinate the operations of all of its agencies, including NIST, DARPA, NASA, and NQI.
China, whose government has invested more than any other in creating quantum systems, is breathing down the U.S.’s neck. . According to our projections, those investments have bolstered academic research, with China expected to produce over 10% of the world’s research in 2021—second only to the United States. The cascading consequences are clear: Less than a year after Google’s quantum machine conquered a problem three times more difficult, the University of Science and Technology of China (USTC) had accomplished the same feat. China had not produced as many startups as the United States as of September 2021, but it was still relying on its digital behemoths like Alibaba, Baidu, and Tencent to create quantum applications.
The European Union’s efforts in quantum computing are supported by both the union and its member states, which place it third behind the United States and China. Across the continent, research initiatives are coordinated under the EU’s Quantum Flagship programme, but they are not yet completely in sync. Several significant initiatives, including those of France and Germany, run the risk of duplication or inadequately use synergies. Even while the EU has produced a number of startups working on various layers of the technology stack, including Finland’s IQM and France’s Pasqal, many of them are unlikely to grow due to a lack of late-stage funding. According to BCG estimates, startups in the EU have only attracted around one-seventh as much capital as their American counterparts.
The U.K. is the last. was one among the first nations to start a publicly sponsored quantum computing programme. It hopes to advance through its educational policies, universities, postgraduate scholarship programmes, and doctorate training facilities. The UK, like the EU It also given rise to intriguing start-ups like Orca, which last year declared to have the tiniest quantum computer in the world. British start-ups might not have access to enough funding to grow, and many of them will likely be bought by American digital goliaths.
Other nations, including Australia, Canada, Israel, Japan, and Russia, are also vying for positions in the quantum computing industry. While Japan is using public subsidies to construct an indigenous quantum computer by March 2023, Canada is home to numerous promising firms, including D-Wave, a pioneer in annealing computers. (Please refer to the most recent BCG report for an analysis of the relative positions and difficulties that nations face in quantum computing.)
The “quantum sovereignty” four-step process
The focus of the quantum computing business is currently shifting to the difficulties associated with creating applications and implementing the technology. This change gives nations, particularly the ones that follow, a chance to catch up to the leaders before it’s too late. To advance their quantum sovereignty, governments must coordinate the use of four levers:
* Build the framework.
Even as they form partnerships to bring the technology home in the short term, governments must invest more than they already do if they want to develop quantum systems over time. States must build shared infrastructure to scale the industry after securing the hardware. For instance, the Netherlands has established Quantum Inspire, a platform that offers customers the gear necessary to carry out quantum calculations.
* Organize the participants.
As the United States has done, governments should use finance and influence to coordinate the efforts of public and private players. For example, Quantum Coordination Office performs. In order to assist the advancement of the technology, policymakers must also link stakeholders. U.S. policy is like that. For instance, the Department of Energy teamed up with the University of Chicago to create an accelerator to link businesses with financiers and scientific specialists.
* Make the transition easier. The shift of business to the quantum economy must be supported by governments. To encourage incumbents to switch to quantum technologies fast, they should provide financial incentives such as tax credits, infrastructural support, no- or low-interest financing, and free land. For instance, the United Kingdom has added expenditures in quantum technologies to its R&D tax exemption programme.
* Enhance your business talent. Government policies will need to stimulate the development of a new breed of entrepreneurial and executive talent that can occupy crucial roles in quantum firms rather than just fostering the development of academics and scientists. Instead than solely providing doctoral degrees on the topic, Switzerland, for instance, has assisted in the creation of a master’s programme to hasten the process.
While general-purpose technologies do not all have the same impact on a nation’s security and sovereignty as quantum computing, they are all essential for competitiveness. Despite the fact that many nations talk about creating quantum capabilities, their efforts haven’t resulted in significant advancements like those made by the US and China. Every government needs to be reminded that, unlike with Schrödinger’s cat, there is no doubt that their level of global competitiveness will decline if they lose the race for quantum computing.
Read more François Candelon columns for Fortune.
In addition to serving as the worldwide head of the BCG Henderson Institute, François Candelon is a managing director and senior partner at BCG.
Project manager at BCG and ambassador for the BCG Henderson Institute, Maxime Courtaux.
Senior data scientist at BCG Gamma and ambassador for the BCG Henderson Institute, Gabriel Nahas.
At BCG, Jean-François Bobier serves as a partner and director.