Morgan Stanley tech analysts project the market for quantum computing, August 24th, 2017.
Morgan Stanley analysts Katy Huberty, Brian Nowak, and a whole bunch of their colleagues, today pen a 32-page think piece in which they advise that the age of quantum computing may be nearer than you think, positing an “inflection point” in the science of manipulating qubits, the fundamental unit of quantum computing.
The impetus for quantum getting serious are the roadblocks in traditional computing: Chip advances aren’t delivering like they used to. “Price reduction in classic computing has potentially run its course,” the authors write, “the quantum computer is not a ‘nice to have’ but a ‘must have’ for global productivity.”
And they are already think about who could be winners, writing “It is hard to discern among currently evolving hardware platforms, which will be resilient enough to beat classical supercomputers in the next few years, but in our view the listed companies with the most credible internal quantum computing roadmaps are IBM (IBM), [Alphabet’s (GOOGL)] Google, Microsoft (MSFT)] and Nokia (NOK) Bell Labs.”
The authors throw into the mix emerging companies such as D-Wave and Rigetti. And there’s even some old-economy names here: Airbus, Lockheed Martin, Raytheon, Amgen, and Biogen.
The immediate advantage is speed: “To sort a billion numbers, a quantum computer would require 3.5 million fewer com- puting steps than a traditional computer and would find the solution in only 31,623 steps.” Other problems, many having to do with computing physics, become possible on quantum machines, the authors write, whereas they might never be possible on traditional binary computing devices.
The authors believe quantum computing is in a “transition” period in which it is “moving from fundamental theoretical research to an engineering development phase, including commercial experiments,” and during that period, “classical computers will simulate quantum algorithms,” while quantum machines try to reach the complexity they need to actually take over real computing tasks.
Stuff is just now moving out of the labs, they observe, based on talking with the players:
Our discussions with industry specialists at or involved with IBM, D-Wave, Lockheed Martin, Microsoft, Rigetti, BluFors, Google, Atos, 1Qbit, Nokia Bell Labs and Morgan Stanley IT, show that quantum computing is moving from white papers and fundamental research to engineering developments, including roadmaps to full functioning quantum computers with hundreds or thousands of qubits. The range of effort varies by company – from several key scientists at the Bell Labs to hundreds of engineers at IBM. According to The Econo- mist, there is $1,500bn of public funding dedicated to quantum com- puting in the next several years.
In the meantime, companies such as Nvidia (NVDA) have lots of opportunity to bulk up those classical computers to simulate quantum machines, and then from 2025, things start to heat up:
We think the high-end compute platforms could see a transition post 2025, similar to how steam engines coexisted with combustion engines and electric motors for decades before being decommissioned. In the medium term, we see incremental demand for FPGAs and GPUs (pos- sibly benefiting Xilinx, nVidia, and maybe Intel) as more supercom- puters from Atos and Fujitsu are developed to simulate the behaviour of quantum computers. If quantum computers eventually do become ubiquitous, then the growth of high-end computing sys- tems that emulate them could be affected, hence limiting the valua- tions of those stocks, but this is more a post 2020 event, in our view.
Or rather cool down: Quantum requires extremely low temperatures, so it’s not going to be in your jeans pocket anytime soon:
The size of the market will also depend on the business model used (one-off hardware sales vs. cloud-based, the latter being the most likely, in our view, as the hardware needs to run at a very low temperature (below 1 degree Kelvin) in a very stable radio frequency environment, and as such is more likely used as a shared asset).
The impediment at the moment is that Quantum needs to reach a threshold of manipulating 50 or more qubits in a single operation.
Google, IBM, and others have achieved 16+ qubit systems, while others have simulated quantum computing with more than 40 qubits. That said, quantum computers are measured by not only the number of qubits but also by the amount of interconnection (the more interconnection, the more flexible) and the noise level (the lower the better). Google is tight-lipped about its efforts, but IBM has talked about having a 50-qubit system within the next few years. We believe that there will be a two- to three-year period during which simulations and real quantum hardware systems will coexist before quantum computers reach more than 50 qubits and simulators become less relevant. Beyond that, it is all about “scaling” the number of qubits at an acceptable level of noise, similar to what the computer/semiconductor industry experienced by doubling the number of transistor every 18 to 24 months for the same production cost (which is known as Moore’s Law).