2023 could be the breakthrough year for quantum computing

2022 was a dynamic year for quantum computing. With commercial breakthroughs such as the UK Ministry of Defense (MoD) investment in its first quantum computer, the launch of the world’s first quantum computer that can take advantage of the cloud and the Nobel Prize in Physics awarded for groundbreaking experiments with entangled photons, the industry is moving forward.

At the same time, 2022 saw the massive achievement of the exaflop barrier broken with the Frontier supercomputer. With a cost of about $600 million and more than 20 megawatts of power, we are approaching the limits of what classical computing approaches alone can do. Often, for practical business reasons, many companies are unable to fully utilize the increasing amount of data available to them. This hinders digital transformation in areas most dependent on high-performance computing (HPC): healthcare, defense, energy and finance.

To stay ahead, 91% of global business leaders invest or plan to invest in quantum computing. According to reports, 70% develop real-life use cases and 61% plan to spend $1 million or more in the next three years.

As the technology gets more exciting and the industry moves faster, the pressure is on quantum to deliver. But the voice of skeptics will also grow louder. In the face of those who say quantum computers will never be useful due to their complexity and limited results so far, the question on everyone’s mind is: will 2023 be a breakthrough year for quantum computing?

Technical innovations vs established market participants

In 2022, we saw the creation of many industry incumbents who used SPACs, IPOs, mergers or corporate sponsorships to build themselves substantial war chests to pursue serious tech activities. While these significant scale-up activities will continue, 2023 will also be the year of innovation and possible disruption.

Among the big players, new players will emerge with alternative approaches to quantum computing: perhaps replacing qubits and gate models qumodesusing model simulations and quantum glow models.

The goal of these new entrants is not just to achieve universal computing, but rather more specific and useful calculations that can be delivered in a shorter amount of time. The challenge will be whether these new machines can be applied to something useful and whether the industry will care in the short term. The quantum supply chain is also evolving with component-based suppliers – such as quantum processor vendors – set to detach the way full-stack systems are built and break the economics of current black box approaches.

Such work will force further discussions on the appropriate and best way to compare and benchmark technologies, performance and the industry.

Competition for financing

Despite the turmoil in international financial markets, quantum computing could continue to buck the trend with large funding rounds. An interesting comparison will also take place in 2023 between public and private quantum companies.

Listed companies will continue to put their capital to work, but at the expense of the short-term attention of investors and short sellers. While they and the rest of the industry push to achieve meaningful and substantial technical milestones, they will only partially manage to shake off the short-term pressure to validate the business. It is likely that there will be a race to capture the first market share that meets revenue forecasts.

In the private sphere, and with a global recession looming, large company valuations are likely to struggle to compete with previous expectations. This will be offset to some extent by the increasing interest in deep tech and new exciting developments. Within the recent plethora of new quantum companies, many will struggle, and both successful and less successful companies will be acquired as the major players consolidate. Overall, 2023 is likely to end with fewer quantum companies than 2022.

For both public and private quantum companies, it will help to take a few steps towards creating useful cases with quantum computers in the short term. In pursuit of pragmatic value creation, this will come in many forms – including quantum sensing and communication, quantum-inspired and hybrid quantum-classical approaches with small-scale systems.

A few successes here will be industry-changing, bringing a focus the industry has been waiting for. The consequences will seep through the entire market.

Making progress toward fault-tolerant machines

Despite progress in short-term applications, error correction will not disappear in 2023. Rather, the holy grail of quantum computing will continue to build a machine capable of fault tolerance. 2023 may bring software or hardware breakthroughs that show we’re closer than we think, but otherwise this will remain something that will be achieved well beyond 2023.

Despite being everything to some quantum companies and investors, the future business users of quantum computing will largely view it as too far out in the time horizon to care much about. The exception will be the government and anyone with a significant, long-standing interest in cryptography.

Despite that long time horizon, 2023 will define clearer blueprints and timelines for building fault-tolerant quantum computers for the future. Indeed, there is also an external opportunity that next year will be the year when quantum rules out the possibility of short-term applications for good, doubling down on the 7- to 10-year journey to large-scale fault-tolerant systems.

Governments, users and HPC

In 2022, the German government completed the tendering process for some very large quantum computer projects, with an example of a €67 million contract for two projects. In 2023, this trend will continue with even more government contracts for quantum computing.

Those tenders and the fact that they will be conducted through various HPC centers around the world will force the quantum computing industry to meet the rigor of the tender requirements and the delivery obligations that come with it. As long as those tenders are properly executed, these activities will drive the maturity of the technology and businesses in this space.

In addition, the sophistication of the user community will develop dramatically this year. Expect the launch of several “industrial challenges” delivered by teams of in-house quantum experts. Again, this increasing maturity will be a positive force within the industry and will help to make great strides in the search for concrete applications and roadmaps.

Geopolitics gets in the way

Geopolitics will continue to shape quantum, as will the rest of the economy; this shaping could become feverish with the growing separation between the US and China. If the breed is to the development of quantum computers to gain a strategic edge in cybersecurity, intelligence operations and the economic sector, expect increasing restrictions to limit technology exchange and increasing impact on supply chains. This will be partially offset by bilateral and multilateral agreements between nations, although the specter of nationalism will linger.

But how will European and British companies fare? Many are afraid of getting caught up in the competition between China and the US, so they are urgently designing quantum tools to protect their interests.

A breakthrough year for quantum

So looking ahead, it’s no longer a matter of if quantum computing will be available but when? 2023 may be the year some ask – and maybe even claim now. While others will continue to say: ‘of course not.”

With more and more companies using quantum to explore its potential, by 2023 we will certainly be more aware of its benefits and timeline. This can help companies better understand what their future could look like with quantum.

But as little as we know about what the future holds, one thing is certain: the world will be watching.

Richard Murray is co-founder and CEO of ORCA computers and chairman and director of UKQuantum.