Got this research note on my desk this morning...
Blog: Quantum Leap Is Within Reach
(read time ~4 minutes)
October 22, 2017
Quantum Computing represents a fundamental shift in the way computing and problem
solving as a whole function, and offers capabilities that make our modern
supercomputers pale by comparison. Applications include next generation machine
learning, solving previously impossible problems such as routing city traffic, vastly
accelerating biomedical research to help cure disease, and even simulating natural
processes of the universe itself. In 2015, Google used a D-Wave Systems quantum
computer to perform calculations hundreds of millions of times faster than a laptop.
Since then Google, D-Wave, IBM and others have made significant progress making
these machines, and related cloud computing services, more commercially viable.
We believe we are on the verge of a fundamental shift in technological history, with
demand coming from categories such as next generation machine learning that require
quantum computing power. While exact timing is unknown, its need should push the
sector to become vastly more important within the next five years. In this blog, we
summarize the promise of quantum computing, market opportunities, who the key
players are, and some of the remaining challenges.
This response was stimulated by a recent front page Wall Street Journal article, "How
Google's Quantum Computer Could Change The World" (October 16th). Complex physics
aside, the key point from the article was that Google, and the industry as a whole, are
on track towards achieving this breakthrough. Google says it is close to a functioning
universal quantum computer that would demonstrate the elusive promise of 'quantum
supremacy,' which outpaces all of our current computing technology. Google now has
a prototype chip on which it plans to run a full test early next year. Once unlocked,
the technology even has an ominous side: the wielder could break all known
cryptographic security. This has prompted the NSA to begin its own $80 million project
to get a jump start.
To start, what is quantum computing? It might be easier for us to talk about how a quantum computer is built. Conventional computers store information as a series of 0’s or 1’s, also known as bits. Several years ago physicists envisioned a computer that would be built using a particle that could be in many states at once. The information thus stored is called a ‘qubit,’ and can remain in an intermediate state. This requires the chip be suspended in temperatures near absolute zero, colder than even interstellar space.
To grasp the concept, think about trying to open a combination lock. A classical computer has to go through each combination one by one, potentially taking a lot of time. With qubits and quantum computing, all of the combinations can be tried simultaneously. This approach fundamentally changes the way computing works. Practically it means quantum computers can perform calculations thousands of times faster than today’s supercomputers.
The Opportunity Is More Than Classical Computing
While the technology is complex, if commercially available the opportunity is obvious and substantial. Over 50 years Intel changed the world, bringing rich rewards to its investors. Today quantum computing is poised to bring the next major phase in computing.
Intel pioneered modern computing. It invented the first microchip computer in 1971 and has since continuously pushed the envelope, ushering in the age of modern computing. Since 1971, Intel’s market value has grown to $200 billion today up from the initial investment of $2.5 million in 1968. Some readers might also know Intel only raised $8 million at its Initial Public Offering. Since 1982, an investor who purchased a share of Intel would have made ~2,700 times the initial investment by 2017 (on a stock split-adjusted basis). Intel was of course just one part of the computing revolution that followed, creating vast wealth across the economy.
On our fastest supercomputers, processing grew to many trillions of operations per second today compared to a few operations per second in 1971. For context, quantum computer processing power could be thousands of times faster than classical computers. Its goal is to supplant classical computing proving the power to solve problems in AI, machine learning, simulation and data processing.
The pace at which computing doubles has slowed lately and we believe that quantum computers may continue where classical computers have begun to trail off.
High performance computing is in demand. Auto companies have historically been important purchasers of dedicated supercomputers, which are used to simulate new vehicle designs. Pharmaceutical research is another area with high investment, with US$130 billion being spent annually on drug R&D. Exscientia, a drug discovery company in the UK that bases its approach on AI techniques, signed a $43MM deal with GlaxoSmithKline in 2017.
Overall, the potential for quantum computing is vast. One market estimate places the quantum computing market at an 82% CAGR over the next few years with the total quantum market at ~$10.0 billion US by 2024. On top of system sales, D-Wave has forecast that quantum cloud services offering access to quantum computing as a service could be an additional $20 billion annually.
The Quantum Computing Players
A few key players in this market are leading the charge. Google, mentioned above, has a 22-qubit quantum computer in development. Google has hired John Martinis at the University of California—Santa Barbara, who has worked in quantum research for 11 years; the company has assembled a team of scientists at UCSB. IBM has invested heavily, led by the intelligent and charismatic Jerry Chow in New York. In May of this year IBM’s quantum group unveiled a 17-qubit quantum processor that is being used in open-source collaboration on IBM cloud. Microsoft is also working on a different type of quantum computer (based on a “topological qubit”), but has yet to demonstrate tangible results.
In 2011, D-Wave systems, a Canadian company based in Burnaby, British Columbia, produced the first commercially available quantum computer — a “quantum annealer” capable of solving complex optimization algorithms. The company has released new versions that double initial qubit capacity to about 2,000 qubits. Systems have been purchased by Lockheed Martin as well as jointly by Google and NASA for research and experimentation purposes. D-Wave’s roster of investors is also impressive: it includes Jeff Bezos, Goldman Sachs and the CIA’s venture capital arm In–Q-Tel.
D-Wave has continued to show promising results in a 2017 Google performance study. Also in 2017, Volkswagen AG became the first automaker to work with quantum computers by using D-Wave’s computer to route traffic in Beijing. Researchers worked with data from 10,000 taxis to optimize traffic flow, which would have taken orders of magnitude longer with a conventional computer. VW is interested in quantum computing in areas such as autonomous driving, robotics and smart factories.
Some challenges still exist before quantum computing becomes ready for prime time. The first challenge to overcome is related to reliability. Qubits have proven to be quite sensitive to any environmental disturbances and can lose their information easily. One way to overcome this is to use error correction involving other qubits. Such error correction is challenging versus classical computers, but Google and IBM appear to have made progress on this front. Related to this challenge, IBM has suggested to use “quantum volume” to map out both the number of qubits and the error rate when thinking about quantum capability.
The second major challenge is to reliably demonstrate ‘quantum supremacy’ —the point at which quantum machines are undeniably orders of magnitude faster than conventional computers (including supercomputers). While some support has been demonstrated, there is some way to go before it is conclusive. With progress underway, these hurdles are likely to be solved in the next few years.
Once quantum computers are built, software will be needed to enable functionality, along with a services ecosystem. To that end, D-Wave has partnered with 1Qbit Information Technologies in Vancouver. IBM has released a software development kit in an open-source collaboration, and other players are likely to emerge. Due to the technical requirements of having quantum machines super-cooled, this revolution could take shape as cloud-based software over purchasing these multi-million dollar high-end machines. Software is likely to be developed alongside the chipset at a much faster pace than in 1971; we are likely to see a fully developed ecosystem in five years or thereabouts.
The Wall Street Journal article shows heightened interest in this area and breakthroughs appear eminent. Our guidance to readers is to track companies as they sort out which path and approach to the technology hurdles are resolved, as the rewards can be material.
