Global investment in quantum technology reaches historic high

25 September 2023 4 min. read
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The quantum technology industry is growing at a remarkable rate and investments in the potentially ground-breaking technology are at an all-time high. While excitement is growing, quantum technology still has a long way to go and there is some concern that the industry may be over-hyped.

The quantum technology industry consists of companies and organizations that are working to develop cutting edge quantum hardware, software, applications, and related services. Research institutions, universities, and government agencies also work to advance the quantum field.

Total annual investment in quantum start-ups hit a new high of $2.35 billion in 2022, though the actual growth of the industry was only 1% year-on-year. That is according to a report from global consulting firm McKinsey & Company, which examines the blossoming industry and shows how growing interest has led to a huge increase in funding.

Global investment in quantum technology reaches historic high

Investors have been pouring money into quantum computing startups in recent years, with a staggering 68% of all investments made since 2001 happening in just the last two years.

Las year saw some particularly notable deals, with four of the ten largest investments made in quantum startups since 2001. These included software startup SandboxAQ, which raised an impressive $500 million, as well as hardware and software companies Rigetti, D-Wave, and Origin Quantum, all of which closed major deals worth hundreds of millions of dollars.

These investments are a sign of the growing interest and excitement surrounding quantum computing, and suggest that the industry may be poised for significant growth and development in the years to come.

Global investment in quantum technology reaches historic high

The McKinsey analysis shows that the four industries likely to see the earliest economic impact from quantum computing starting in 2023 – automotive, chemicals, financial services, and life sciences – stand to potentially gain up to $1.3 trillion in value by 2035.

Public investments in quantum computing have also been growing, with several major countries committing significant funds to support research and development in this field. The US, for example, invested an additional $1.8 billion to quantum research, the EU has committed $1.2 billion, and Canada has pledged $0.1 billion.

IBM recently unveiled the Osprey quantum processor, which features 433 ‘qubits’, or quantum bits, the basic unit of information in quantum computing. That is more than three times the processing power of its predecessor, released only two years ago. IBM also recently updated its road map to develop a remarkable 4,000+ qubit processor by 2025.

Global investment in quantum technology reaches historic high

Rather than using bits that are either set to 1 or 0 in order to store information, qubits can be set to a third, sort of ‘in between’ state that is a combination of 1 and 0. This unlocks great new potential for incredibly complex processing. Quantum processors offer an array of fascinating (but perhaps niche) applications for which classical computers largely fall short, such as complex algorithms, machine learning, and advanced encryption.

The road ahead

Quantum computing is in an early phase of development, with components and hardware being still relatively delicate and finicky. There are many practical and theoretical challenges that must be overcome before quantum computers can be widely used in practical applications.

Global investment in quantum technology reaches historic high

As with any advanced and rapidly developing technology, quantum technology has the potential for misuse and there are risks involved with rapid adoption of things like AI and incredibly powerful decryption. Some physicists have also claimed that much of the startup scene is based on unrealistic hype and have warned that current valuations are a bubble.

“A lot of physicists, me included, have warned that quantum computing is being oversold. It’s not going to change the world, it’ll have some niche applications at best, and it’s going to take much longer than many start-ups want you to believe,” said theoretical physicist Sabine Hossenfelder, Research Fellow at the Frankfurt Institute for Advanced Studies.