Listen to Satya Nadella, Microsoft’s CEO and he will tell you that quantum computing is “one of the technologies that will radically reshape the world.” A McKinsey report published in June lent support to this claim, suggesting that quantum technology funding and investment activity surpassed $1.4bn in 2021, more than double that of 2020. The organisation estimates that the industry could be worth $700bn by 2035. Separating quantum hype from reality is, however, a major challenge. To this end, we spoke recently to a senior member leading the quantum efforts of a major US tech business.
Our conversation began with his observation that there was “lots of quantum-washing” currently underway – companies often labelling inaccurately their progress/ prowess regarding quantum. As it was put to us, quantum computing is “a completely different computer science” and so needs to be built bottom-up. At present, much of the technology remains immature, or “too small, too slow and too error-prone.” We were told that the logical approach was for businesses to consider constructing clear roadmaps for development which embraced both hardware and software tools.
When asked how businesses might use quantum computers, we were reminded that “quantum will not solve all problems.” However, the three most likely current broad use cases could comprise simulating nature, analysing data patterns and optimised search/ sampling. The former embraces enhanced materials analysis which could be applied to devising more efficient ways for energy extraction or the prevention of materials corrosion. Better data analysis and optimisation could help solve problems as diverse as drug discovery, more efficient logistics routing or better trading algorithms. Businesses such as Boeing and JP Morgan are already apparently working with certain quantum processes.
How might the industry evolve? Our quantum contact highlighted that the biggest current barriers to adoption related not only to effectively scaling the technology (so that it could solve increasingly complex problems) but in identifying specifically which problems quantum computers might be best at solving (rather than a one-size-fits-all approach). Have no doubt, the potential is significant, in our view, but we are still in a very early quantum innings.
21 June 2022
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
Alex Gunz, Fund Manager
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