A primer on quantum technologies

• While the current focus of technological investment is on artificial intelligence, many companies and countries are continuing to invest heavily in quantum technologies

• Quantum will increase computing power exponentially, but challenges remain to ensure it can be done at a large scale

• Many businesses have already experimented with quantum, in partnership with technology companies, in areas such as chemistry or logistics

• The geopolitical rivalry between the US and China will extend to quantum, as whoever gets there first will have an early-mover advantage

Quantum technologies, which include computing, communications, sensors and cryptography are not mass market yet, and as they are based on quantum physics, may never achieve their potential. But despite the overwhelming focus on artificial intelligence (AI) since OpenAI launched ChatGPT in November 2022, companies and countries alike have continued to invest heavily in quantum technologies as achieving that potential would have a major impact for all sectors and businesses. For example, US tech giant IBM has reported investing 7% of its research and development (R&D) budget in 2023 on quantum technologies, an increase of 29% from 2021. While EIU expects the technology to remain quite niche in the near future, we also want to highlight some of quantum’s key elements, such as business use cases and geopolitical implications, that would make it a major technology going forward.

What makes quantum different?

Classical computing uses transistors and bits, which can either be zero or one. Quantum computing uses electrons, which are turned into qubits, acting like artificial atoms. Qubits can be both zero and one at the same time, in what is known as superposition, and can lead to exponential power. Whereas having 20 transistors means a computer is 20 times more powerful, having 20 qubits means it is a million times more powerful, as each additional qubit doubles the computer’s power. 

Superposition (when a particle is in several states at the same time) and entanglement (when two particles remain connected even when separated) lead to quantum coherence, where both superposition and entanglement are maintained in a quantum state. Getting to that state is very difficult, because it requires very cold temperatures and a pristine environment, and this can lead to decoherence where quantum algorithms do not operate as they should. Ensuring coherence remains one of quantum’s most difficult challenges. 

Another challenge is security, with fears that quantum computers could break the  Rivest-Shamir-Adleman (RSA) algorithm, which is widely used for encryption all over our online world. However, the top quantum computers only operate with 1000 qubits so far, and it is estimated that as many as 20m would be required to break RSA. Even then countries are looking to mitigate the impact, with the National Institute of Standards and Technology in the US introducing new standards for post-quantum cryptography (PQC) and the 2022 Quantum Computing Cybersecurity Preparedness Act encouraging the federal government to adopt technology against quantum computing attacks.

How can businesses use it?

Quantum computing allies for much greater computing power, which in turn means much greater insights from data. IBM, which thinks that R&D spending in quantum computing will increase by a further 25% by 2025, sees three main usages: simulating nature; search and optimisation; and processing data from complex structures. Getting to “quantum advantage” means doing new things that current supercomputers cannot do, such as folding proteins to create new drugs or calculating the right chemical calculations to build a better battery. But quantum computing could also lead to doing the same things with far less resources, making computing far more sustainable going forward.

Many companies or institutions are already experimenting with quantum, in collaboration with technology companies. For example: 

• French bank Credit Agricole experimented with the use of quantum computers to value financial products and assess credit risks

• European aerospace company Airbus and German carmaker BMW partnered to use quantum to simulate systems to know the chemical reactions in fuel cells

• French energy company EDF used quantum to simulate hydroelectric dam deformation

• Korean carmaker Hyundai used quantum to better detect objects in 3D, as well as simulate chemical reactions in different metals

• The Port of Los Angeles has used quantum to optimise logistics and streamline its processes

These are very early examples of the use of quantum in the real world, but they still highlight the potential of the technology going forward. 

What are the geopolitical implications?

As with many technologies, quantum is also both political and geopolitical. Many countries have implemented strategies and plans to ensure they can take advantage of the technology.

• In the US, as well as standardisation through NIST, Congress passed the National Quantum Initiative Act in 2018, with a planned public investment of US$3.75bn. The 2022 Chips and Science Act also earmarked investment for quantum technologies. But much of US quantum investment comes from the private sector, especially leading companies such as IBM, Microsoft, or Google

• Countries in Europe have lined up multi-billion investments in France (€1.8bn, or US$2.2bn), Germany (€3bn, or US$3.3bn), and the UK (2.5bn, or US$2.9bn), with a focus on quantum start-ups. At the EU level, the Quantum Flagship initiative was launched in 2018 with over US$1bn in investments, and in December 2023 several member-states signed the European Declaration on Quantum Technologies, expanding to 21 countries in March 2024

• The level of investment in China is more opaque, with both Alibaba and Baidu having recently abandoned their efforts by shutting their labs. But quantum remains a clear strategic priority, with start-ups, academia and the public sector driving research and investment into the technology

The geopolitical rivalry between the US and China will extend to quantum technologies, and it is expected that any future US export controls to China will include it. While quantum may not happen at all, if it does happen, who gets there first will have an important early-mover advantage in an increasingly fractured digital world. 

The analysis and forecasts featured in this video can be found in EIU’s Country Analysis service. This integrated solution provides unmatched global insights covering the political and economic outlook for nearly 200 countries, enabling organisations to identify prospective opportunities and potential risks.