Editor's word The current state of global quantum ecology

Quantum technology is now making headlines in the professional press, the mainstream media, and especially the extensive exposition of quantum computing developments that have been drawing attention (including scientific experts in the field), but this is a natural consequence of the burgeoning investor interest, and these enthusiasms are also expected to be used to predict the huge market size that the quantum field will reach in the coming years.

The ecosystem of companies and startups developing quantum technologies is thriving, but the gap between private and public funding could become an issue in the absence of commercial use.

Recently, the editors of Nature Physics wrote and published an article on the current state of the global quantum ecosystem.

According to the latest McKinsey Quantum Monitor report, the market for the field will reach $106 billion by 2040, with the highest potential commercial value in financial, pharmaceutical and automotive applications. Of the three main subfields quantum technology encompasses - quantum computing, quantum sensing and quantum communications - quantum computing is expected to take the largest share, with an estimated ceiling of about $90 billion.

This may sound surprising, as quantum sensing and quantum communications are arguably more mature technologies and already offer commercially available devices: nitrogen vacancy centers, magnetometers or quantum key distribution devices, for example. However, the predicted use cases of quantum computers in more lucrative areas such as financial services have already had a knock-on effect on quantum computing assessments. Nevertheless, the surge of interest in this area is often accompanied by "promises" that can only be considered "speculative": for example, the hope that quantum computers will become a "panacea" for climate change.

In addition to tech giants like Alphabet, AWS, and IBM setting up quantum research departments, we have witnessed a large number of quantum computing startups and university spin-offs over the past decade or so; unlike large companies that can divert some of their revenues to longer-term prospects, startups rely entirely on outside investment to fund their ventures.

-- and in this regard, they have been doing very well.

Last year (2022), investment in quantum startups reached a record level: $2.35 billion. This figure represents a small (1%) increase for 2021, but it's still more than four times the amount of money raised in 2020. Of this $2.35 billion, the majority went to quantum computing companies, confirming the market's growing interest in the field. The flow of investments eventually led to the public listing of some quantum companies (such as Rigetti, IonQ and D-wave) on major stock exchanges. But so far, their performance does not look promising.

As of April 2023, Rigetti's share price was $0.48 per share - a drop of more than 95% from its initial value; earlier this year (2023), they also announced an overall 28% layoff to trim costs and preserve capital. d-wave and IonQ have also experienced severe share price declines , and of course, while one can expect volatility in the frontier technology market, the difficulty of generating revenue has made investors somewhat hesitant. For quantum startups, it is difficult to make money when the immediate benefits of the product you are selling are not clear.

The lack of commercial practical use is the main issue that most quantum computing companies will have to deal with in the near future. Most companies currently operate in a pure R&D mode, and while there are some fascinating recent applications in areas such as materials science and quantum chemistry, the devices currently available are still prototypes. Regardless of the specific approach used (superconducting quantum bits, trapped ions, photonic chips), millions of quantum bits are still some distance away from being required to solve meaningful problems.

Building fault-tolerant quantum computers of this scale could take years at most, more likely decades. Will venture capitalists, banks and angel investors want to stay in the game for the long haul? One might think that governments and public funding agencies would more naturally gravitate toward such long-term investments.

And indeed, they do. The UK recently announced a recent national investment plan that will commit £2.5 billion to the quantum technology industry over the next decade. A number of EU countries and the US have already committed to similar spending, and China has already made a leap in this race, committing $15 billion in public funding. These are solid numbers for the prospect of developing potentially disruptive technologies, but the vast majority of inflows continue to come from the private sector - they account for around 80 percent of total investment.

The job market has boomed in recent years, and careers outside of academia are now readily available for physics graduates specializing in quantum computing and information. From a researcher's perspective, there are obvious benefits to working in the private sector: higher salaries and permanent contracts, for example. But if private investors become impatient and start to redirect their money to the next emerging technology, it is unclear whether public funding will be sufficient to sustain a "bloated" number of quantum companies and startups.

Concerns about the sustainability of the business model of quantum technology startups may be unfounded, and the current downturn experienced by the major players may be just a blip on the radar. But it's not just about money. Attracting funding may encourage a tendency to exaggerate results and ideas, as well as to portray potential long-term applications closer than they actually are. If things don't turn out as expected, the reputation and credibility of physicists as a whole may suffer.