BCG The Next Decade in Quantum Computing Nov 2018 21 R tcm55 207859

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1.The Next Decade in Quantum Computing— and How to Play
2.Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries. For more information, please visit bcg.com.
3.THE NEXT DECADE IN QUANTUM COMPUTING— AND HOW TO PLAY PHILIPP GERBERT FRANK RUESS November 2018 Boston Consulting Group
4.CONTENTS 3 4 6 INTRODUCTION HOW QUANTUM COMPUTERS ARE DIFFERENT, AND WHY IT MATTERS THE EMERGING QUANTUM COMPUTING ECOSYSTEM Tech Companies Applications and Users 10 INVESTMENTS, PUBLICATIONS, AND INTELLECTUAL PROPERTY 13 A BRIEF TOUR OF QUANTUM COMPUTING TECHNOLOGIES Criteria for Assessment Current Technologies Other Promising Technologies Odd Man Out 18 SIMPLIFYING THE QUANTUM ALGORITHM ZOO 21 HOW TO PLAY THE NEXT FIVE YEARS AND BEYOND Determining Timing and Engagement The Current State of Play 24 A POTENTIAL QUANTUM WINTER, AND THE OPPORTUNITY THEREIN 25 FOR FURTHER READING 26 NOTE TO THE READER 2 The Next Decade in Quantum Computing—and How to Play
5.INTRODUCTION T he experts are convinced that in time they can build a high-performance quantum computer. Given the technical hurdles that quantum computing faces—manipulations at nanoscale, for instance, or operating either in a vacuum environment or at cryogenic temperatures—the progress in recent years is hard to overstate. In the long term, such machines will very likely shape new computing and business paradigms by solving computational problems that are currently out of reach. They could change the game in such fields as cryptography and chemistry (and thus material science, agriculture, and pharmaceuticals) not to mention artificial intelligence (AI) and machine learning (ML). We can expect additional applications in logistics, manufacturing, finance, and energy. Quantum computing has the potential to revolutionize information processing the way quantum science revolutionized physics a century ago. The full impact of quantum computing is probably more than a decade away. But there is a much closer upheaval gathering force, one that has significance now for people in business and that promises big changes in the next five to ten years. Research underway at multiple major technology companies and startups, among them IBM, Google, Rigetti Computing, Alibaba, Microsoft, Intel, and Honeywell, has led to a series of technological breakthroughs in building quantum computer systems. These efforts, complemented by government-funded R&D, make it all but certain that the near to medium term will see the development of medium-sized, if still error-prone, quantum computers that can be used in business and have the power and capability to produce the first experimental discoveries. Already quite a few companies are moving to secure intellectual property (IP) rights and position themselves to be first to market with their particular parts of the quantum computing puzzle. Every company needs to understand how coming discoveries will affect business. Leaders will start to stake out their positions in this emerging technology in the next few years. This report explores essential questions for executives and people with a thirst to be up-to-speed on quantum computing. We will look at where the technology itself currently stands, who is who in the emerging ecosystem, and the potentially interesting applications. We will analyze the leading indicators of investments, patents, and publications; which countries and entities are most active; and the status and prospects for the principal quantum hardware technologies. We will also provide a simple framework for understanding algorithms and assessing their applicability and potential. Finally, our short tour will paint a picture of what can be expected in the next five to ten years, and what companies should be doing—or getting ready for—in response. Boston Consulting Group 3
6.HOW QUANTUM COMPUTERS ARE DIFFERENT, AND WHY IT MATTERS T he first classical computers were actually analog machines, but these proved to be too error-prone to compete with their digital cousins. Later generations used discrete digital bits, taking the values of zero and one, and some basic gates to perform logical operations. As Moore’s law describes, digital computers got faster, smaller, and more powerful at an accelerating pace. Today a typical computer chip holds about 20x109 bits (or transistors) while the latest smartphone chip holds about 6x109 bits. Digital computers are known to be universal in the sense that they can in principle solve any computational problem (although they possibly require an impractically long time). Digital computers are also truly reliable at the bit level, with fewer than one error in 1024 operations; the far more common sources of error are software and mechanical malfunction. Quantum computers, building on the pioneering ideas of physicists Richard Feynman and David Deutsch in the 1980s, leverage the unique properties of matter at nanoscale. They differ from classical computers in two fundamental ways. First, quantum computing is not built on bits that are either zero or one, but on qubits that can be overlays of zeros and ones (meaning part zero and part one at the same time). Second, qubits do not exist in isolation but instead become entangled and act as a group. These two properties enable qubits to achieve an exponentially higher information density than classical computers. 4 The Next Decade in Quantum Computing—and How to Play There is a catch,however:qubits are highly susceptible to disturbances by their environment, which makes both qubits and qubit operations (the so-called quantum gates) extremely prone to error. Correcting these errors is possible but it can require a huge overhead of auxiliary calculations, causing quantum computers to be very difficult to scale. In addition, when providing an output, quantum states lose all their richness and can only produce a restricted set of probabilistic answers. Narrowing these probabilities to the “right” answer has its own challenges, and building algorithms in a way that renders these answers useful is an entire engineering field in itself. That said, scientists are now confident that quantum computers will not suffer the fate of analog computers—that is, being killed off by the challenges of error correction. But the requisite overhead, possibly on the order of 1,000 error-correcting qubits for each calculating qubit, does mean that the next five to ten years of development will probably take place without error correction (unless a major breakthrough on high-quality qubits surfaces). This era, when theory continues to advance and is joined by experiments based on these socalled NISQ (Noisy Intermediate-Scale Quantum) devices, is the focus of this report. (For more on the particular properties of quantum computers, see the sidebar, “The Critical Properties of Quantum Computers.” For a
7.longer-term view of the market potential for, and development of, quantum computers, see “The Coming Quantum Leap in Computing,” BCG article, May 2018. For additional context—and some fun—take the BCG Quantum Computing Test.) THE CRITICAL PROPERTIES OF QUANTUM COMPUTERS Here are six properties that distinguish quantum computers from their digital cousins. Classical versus quantum bits Superposition Conﬁguration space of qubits Qubit A Qubit B Qubit C Examples of single qubit superposition states Arrows ( ) are exemplary representations of a qubit state The basic constituents for quantum computing are not binary bits, with values 0 or 1, but qubits. Qubits take on arbitrary values between the state ‘0’ and state ‘1’ as described by their so-called probability amplitude; the latter also determines the probability of the states representing 0 or 1. An overlay of the states ‘0’ and ‘1’ is called superposition. The images show examples of superposition with diﬀerent probability amplitudes. Since amplitudes may generally be positive, negative, or even complex, qubit states are represented in a so-called ‘Bloch’ sphere. Entanglement Quantum gates Qubit A Qubit B Qubit C 1-qubit gate (Hadamard) 2-qubit gate (CNOT) Contrary to bits, whose value we try to keep well-separated and which store their information in isolation, a collection of qubits occupies intertwined states, acting as a group. This so-called entanglement increases the information density by an exponential factor—the basic promise of quantum computers. The most common so-called circuit-based quantum computers build their algorithms based on q-gates representing logical operations on the entangled quantum states. This is the most conventional feature. We can build any algorithm based on q-gates that act on only one or two qubits at a time. Interference Measurement Measurement collapses the probabilistic information from a quantum calculation to a discrete, classical result Most gate-based algorithms exploit the fact that the probability amplitudes of quantum states can interfere with each other. This means that potential solutions can be ampliﬁed or weakened. Quantum algorithms have to be written in a way to amplify the correct answer toward near certainty. A tricky aspect of quantum computing is that the rich information of a computational state cannot be directly read. When trying to extract an answer, the information collapses to a discrete state with some probability, ideally the critically ampliﬁed answer we are seeking. Boston Consulting Group 5
8.THE EMERGING QUANTUM COMPUTING ECOSYSTEM computing technology is Quantum well-enough developed, and practical uses are in sufficiently close sight, for an ecosystem of hardware and software architects and developers, contributors, investors, potential users, and collateral players to take shape. Here’s a look at the principal participants. This layer includes a quantum-classical interface that compiles source code into executable programs. At the top of the stack are a wider variety of services dedicated to enabling companies to use quantum computing. In particular they help assess and translate real-life problems into a problem format that quantum computers can address. Tech Companies Universities and research institutions, often funded by governments, have been active in quantum computing for decades. More recently, as has occurred with other technologies (big data for example), an increasingly well-defined technology stack is emerging, throughout which a variety of private tech players have positioned themselves. At the base of the stack is quantum hardware, where the arrays of qubits that perform the calculations are built. The next layer is sophisticated control systems, whose core role is to regulate the status of the entire apparatus and to enable the calculations. Control systems are responsible in particular for gate operations, classical and quantum computing integration, and error correction. These two layers continue to be the most technologically challenging. (We provide an overview of the status and prospects of different technologies on page 13.) Next comes a software layer to implement algorithms (and in the future, error codes) and to execute applications. 6 The Next Decade in Quantum Computing—and How to Play The tech stack is increasingly well-defined, and players are positioning themselves in it. The actual players fall into four broad categories. (See Exhibit 1.) End-to-End Providers. These tend to be big tech companies and well-funded startups. Among the former, IBM has been the pioneer in quantum computing and continues at the forefront of the field. The company has now been joined by several other leading-edge organizations that play across the entire stack. Google and more recently Alibaba have drawn a lot of attention. Microsoft is active but has yet to unveil achievements toward actual hardware. Honeywell has just emerged as a new player, adding to the heft of the group. Rigetti is the most advanced among the startups. (See “Chad Rigetti on the Race
9.Exhibit 1 Companies Assume Four Roles Across Layers of the Stack in the Quantum Computing Ecosystem End-to-end providers IBM SERVICES Hardware & systems players Potential expansion Software & services players Specialists Zapata Computing Tellus Matrix Group Quantika Entanglement Partners h-bar Quantum Consultants Cambridge Quantum Computing Google APPLICATIONS LAYER QC Ware 1Qbit Rigetti Computing Riverlane SYSTEM SOFTWARE LAYER Microsoft2 QxBranch Quantum Benchmark Strangeworks Q-CTRL Qindom ProteinQure QbitLogic Alibaba Group SYSTEMS IonQ4,8 D-Wave Systems QuTech5 Intel QUANTUM COMPUTER HARDWARE SeeQC7Emerging:Quantum Circuits6 Silicon Quantum Computing8 Honeywell Xanadu Qilimanjaro BraneCell PsiQ8 TundraSystems Global Alpine Quantum Technologies9Sources:Quantum Computing Report (quantumcomputingreport.com); BCG analysis. 1 Based on player’s ambition with varying levels of maturity and service activities. 2 Multiple technologies in the labs with focus on topological qubits. 3 Qilimanjaro is a spinoff from the University of Barcelona. 4 AWS is invested in IonQ. 5 QuTech was founded by TU Delft and TNO, and has collaborations with Intel and Microsoft. 6 Quantum Circuits (qci) is a spinoff from Yale University. 7 SeeQC is a subsidiary of Hypres. 8 Vision to become end-to-end provider. 9 Alpine Quantum Technologies (AQT) is a spinoff from University of Innsbruck. for QuantumAdvantage:An Interview with the Founder and CEO of Rigetti Computing,” BCG interview, November 2018.) Each company offers its own cloud-based open-source software platform and varying levels of access to hardware, simulators, and partnerships. In 2016 IBM launched Q Experience, arguably still the most extensive platform to date, followed in 2018 by Rigetti’s Forest, Google’s Cirq, and Alibaba’s Aliyun, which has launched a quantum cloud computing service in cooperation with the Chinese Academy of Sciences. Microsoft provides access to a quantum simulator on Azure using its Quantum Development Kit. Finally, D-Wave Systems, the first company ever to sell quantum computers (albeit for a special purpose), launched Leap, its own real-time cloud access to its quantum annealer hardware, in October 2018. Hardware and Systems Players. Other entities are focused on developing hardware only, Boston Consulting Group 7
10.since this is the core bottleneck today. Again, these include both technology giants, such as Intel, and startups, such as IonQ, Quantum Circuits, and QuTech. Quantum Circuits, a spinoff from Yale University, intends to build a robust quantum computer based on a unique, modular architecture, while QuTech—a joint effort between Delft University of Technology and TNO, the applied scientific research organization, in the Netherlands—offers a variety of partnering options for companies. An example of hardware and systems players extending into software and services, QuTech launched Quantum Inspire, the first European quantum computing platform, with supercomputing access to a quantum simulator. Quantum hardware access is planned to be available in the first half of 2019. The ecosystem is dynamic, and the lines between tech layers are easily blurred. Software and Services Players. Another group of companies is working on enabling applications and translating real-world problems into the quantum world. They include Zapata Computing, QC Ware, QxBranch, and Cambridge Quantum Computing, among others, which provide software and services to users. Such companies see themselves as an important interface between emerging users of quantum computing and the hardware stack. All are partners of one or more of the end-toend or hardware players within their miniecosystems. They have, however, widely varying commitments and approaches to advancing original quantum algorithms. Specialists. These are mainly startups, often spun off from research institutions, that provide focused solutions to other quantum computing players or to enterprise users. For example, Q-CTRL works on solutions to provide better system control and gate operations, and Quantum Benchmark assesses and predicts errors of hardware and specific algorithms. Both serve hardware companies and users. 8 The Next Decade in Quantum Computing—and How to Play The ecosystem is dynamic and the lines between layers easily blurred or crossed, in particular by maturing hardware players extending into the higher-level application, or even service layers. The end-to-end integrated companies continue to reside at the center of the technology ecosystem for now; vertical integration provides a performance advantage at the current maturity level of the industry. The biggest investments thus far have flowed into the stack’s lower layers, but we have not yet seen a convergence on a single winning architecture. Several architectures may coexist over a longer period and even work handin-hand in a hybrid fashion to leverage the advantages of each technology. Applications and Users For many years, the biggest potential end users for quantum computing capability were national governments. One of the earliest algorithms to demonstrate potential quantum advantage was developed in 1994 by mathematician Peter Shor, now at the Massachusetts Institute of Technology. Shor’s algorithm has famously demonstrated how a quantum computer could crack current cryptography. Such a breach could endanger communications security, possibly undermining the internet and national defense systems, among other things. Significant government funds flowed fast into quantum computing research thereafter. Widespread consensus eventually formed that algorithms such as Shor’s would remain beyond the realm of quantum computers for some years to come and even if current cryptographic methods are threatened, other solutions exist and are being assessed by standard-setting institutions. This has allowed the private sector to develop and pursue other applications of quantum computing. (The covert activity of governments continues in the field, but is outside the scope of this report.) Quite a few industries outside the tech sector have taken notice of the developments in, and the potential of, quantum computing, and companies are joining forces with tech players to explore potential uses. The most common categories of use are for simulation, optimization, machine learning, and AI. Not surprisingly, there are plenty of potential applications. (See Exhibit 2.)
11.Despite many announcements, though, we have yet to see an application where quantum advantage—that is, performance by a quantum computer that is superior in terms of time, cost, or quality—has been achieved.1 Note 1. This has occasionally been called “quantum supremacy,” but the community has moved away from this term because it can be misleading. Identifying a single problem for which a quantum computer performs better does not imply a general superiority, which the term “supremacy” suggests. However, such a demonstration is deemed imminent, and Rigetti recently offered a $1 million prize to the first group that proves quantum advantage. (We provide a framework for prioritizing applications, where a sufficiently powerful quantum computer, as it becomes available, holds the promise of superior performance on page 22 in Exhibit 9.) Exhibit 2 Multiple Potential Use Cases for Quantum Computing Exist Across Sectors INDUSTRIES High-tech Industrial goods Chemistry and Pharma Finance Energy SELECTION OF USE-CASES ENTERPRISES (EXAMPLES) • Machine learning and artiﬁcial intelligence, such as neural networks • Search • Bidding strategies for advertisements • Cybersecurity • Online and product marketing • Software veriﬁcation and validation IBM Telstra Alibaba Baidu Google Samsung •Logistics:scheduling, planning, product distribution, routing •Automotive:traﬃc simulation, e-charging station and parking search, autonomous driving •Semiconductors:manufacturing, such as chip layout optimization •Aerospace:R&D and manufacturing, such as fault-analysis, stronger polymers for airplanes • Materialscience:eﬀective catalytic converters for cars, battery cell research, more-eﬃcient materials for solar cells, and property engineering uses such as OLEDS Airbus BMW NASA Volkswagen Northrop Grumman Lockheed Martin Daimler Honeywell Raytheon Bosch Microsoft • Catalyst and enzyme design, such as nitrogenase • Pharmaceuticals R&D, such as faster drug discovery • Bioinformatics, such as genomics • Patient diagnostics for health care, such as improved diagnostic capability for MRI BASF JSR Biogen DuPont Dow Chemical Amgen • Trading strategies • Portfolio optimization • Asset pricing • Risk analysis • Fraud detection • Market simulation J.P. Morgan Barclays Commonwealth Bank Goldman Sachs • Network design • Energy distribution • Oil well optimization Dubai Electricity & Water Authority BPSource:BCG analysis. Boston Consulting Group 9
12.INVESTMENTS, PUBLICATIONS, AND INTELLECTUAL PROPERTY T he activity around quantum computing has sparked a high degree of interest.1 People have plenty of questions. How much money is behind quantum computing? Who is providing it? Where does the technology stand compared with AI or blockchain? What regions and entities are leading in publications and IP? A regional public funding race is emerging, with China leading the pack. With more than 60 separate investments totaling more than $700 million since 2012, quantum computing has come to the attention of venture investors, even if is still dwarfed by more mature and market-ready technologies such as blockchain (1,500 deals, $12 billion, not including cryptocurrencies) and AI (9,800 deals, $110 billion). The bulk of the private quantum computing deals over the last several years took place in the US, Canada, the UK, and Australia. Among startups, D-Wave ($205 million, started before 2012), Rigetti ($119 million), PsiQ ($65 million), Silicon Quantum Computing ($60 million), Cambridge Quantum Computing ($50 million), 1Qbit ($35 million), IonQ 10 The Next Decade in Quantum Computing—and How to Play ($22 million), and Quantum Circuits ($18 million) have led the way. (See Exhibit 3.) A regional race is also developing, involving large publicly funded programs that are devoted to quantum technologies more broadly, including quantum communication and sensing as well as computing. China leads the pack with a $10 billion quantum program spanning the next five years, of which $3 billion is reserved for quantum computing. Europe is in the game ($1.1 billion of funding from the European Commission and European member states), as are individual countries in the region, most prominently the UK ($381 million in the UK National Quantum Technologies Programme). The US House of Representatives passed the National Quantum Initiative Act ($1.275 billion, complementing ongoing Department of Energy, Army Research Office, and National Science Foundation initiatives). Many other countries, notably Australia, Canada, and Israel are also very active. The money has been accompanied by a flurry of patents and publishing. (See Exhibit 4.) North America and East Asia are clearly in the lead; these are also the regions with the most active commercial technology activity. Europe is a distant third, an alarming sign, especially in light of a number of leading European quantum experts joining US-based companies in recent years. Australia, a hotspot for quantum technologies for many years, is
13.Exhibit 3 Funding for Startups Has Increased in Recent Years Total Startup Most recent funding [US$ millions] D-Wave Systems 205 June 1, 2018 US$10 million of grant funding in a deal led by the Canadian Government Rigetti Computing 119 March 28, 2017 Announced further US$40 million in its series B round of funding PsiQ 65 Undisclosed Undisclosed Silicon Quantum Computing 60 August 2017 AU$83 million venture fundedby:New South Wales Government (AU$9 million), University of New South Wales (AU$25 million), Commonwealth Bank of Australia (AU$14 million), Telstra (AU$10 million over two years), and the Australian Government (AU$25 million over ﬁve years) Cambridge Quantum Computing 50 August 26, 2015 US$50 million of development capital 1QBit 35 November 28, 2017 CA$45 million of development capital in Series B funding IonQ 22 February 24, 2017 US$20 million of Series B venture funding Quantum Circuits 18 November 13, 2017 US$18 million of Series A venture funding Alpine Quantum Computing 12 February 8, 2018 €10 million of grant funding QC Ware 8 July 5, 2018 US$7 million of Series A venture funding Optalysys 8 September 21, 2017 £3 million of seed funding from undisclosed investors Nextremer 5 August 8, 2017 JP¥500 million of venture funding Oxford Quantum Circuits 3 September 8, 2017 £2 million of venture fundingSources:'>Sources: