Quantum Tech Could Generate $2 Trillion by 2035 Despite Investment Dip, Says McKinsey Report

According to McKinsey’s third annual Quantum Technology Monitor, quantum technology could generate trillions of dollars in value within the next decade. Four sectors—chemicals, life sciences, finance, and mobility—are expected to benefit the most from quantum computing, potentially gaining up to $2 trillion by 2035.

However, private and corporate funding for quantum technology start-ups decreased by 27% from the previous year. In contrast, public investments increased by over 50%, led by Germany, the United Kingdom, and South Korea. Significant advancements in quantum error correction and mitigation were made, with companies like Microsoft and Quantinuum achieving record qubit fidelity.

Quantum Technology: A Year in Review

The Quantum Technology Monitor’s third annual report reveals a year of significant progress and shifting investment trends in the quantum technology (QT) sector. Despite a decrease in private funding, public investments have surged, reflecting a growing global recognition of QT’s potential. This article delves into the key findings of the report, including the sectors poised to benefit most from quantum computing, the changing landscape of QT funding, and the latest technological advancements in the field.

Quantum Computing’s Potential Impact and Investment Trends

Quantum technology, a field that leverages the principles of quantum mechanics, has the potential to revolutionize various sectors. An updated analysis from the Quantum Technology Monitor suggests that four sectors—chemicals, life sciences, finance, and mobility—could gain up to $2 trillion by 2035 due to the impact of quantum computing.

However, the past year saw a notable decrease in private and corporate funding for QT start-ups, with investments falling by 27 percent from the previous year. This decline was less severe than the 38 percent drop in all start-up investment worldwide. Interestingly, the majority of funding (62 percent) went to companies founded five or more years ago, indicating a shift in investments toward more established and promising start-ups.

Public Investment in Quantum Technology on the Rise

In contrast to the decline in private sector investment, public investments in quantum technology increased by more than 50 percent over 2022, accounting for nearly a third of all investments in the field. Countries such as Germany, the United Kingdom, and South Korea have announced significant new funding for QT development, bringing the global public funding total to about $42 billion.

This surge in public funding reflects a growing realization among governments worldwide of the importance of QT. Most of these national initiatives aim to establish technological leadership and sovereignty and spur private investments for quantum technology development.

Talent Development and Innovation Clusters in Quantum Technology

The year 2023 also saw a significant step forward in talent development in the QT field. There were 367,000 people who graduated with QT-relevant degrees, and the number of universities offering QT programs increased by 8.3 percent. However, generating value from this talent and investment remains a challenge due to limited access to state-of-the-art hardware and infrastructure, limited awareness and adoption of quantum technologies, and a lack of interdisciplinary coordination.

To address these challenges, “innovation clusters” are emerging worldwide. These clusters are coordinated networks of partnerships between researchers, industry leaders, and government entities that contribute to the technological advancement of quantum technologies and drive regional value creation.

Technological Breakthroughs in Quantum Technology

The past year marked continued advances for all quantum technologies, with a range of enhanced and new QT offerings coming to the market. One significant advance was the transition from the Noisy Intermediate-Scale Quantum (NISQ) era to the Fault-Tolerant Quantum Computing (FTQC) era.

In quantum computing, promising quantum error-correction proposals and demonstrations by large companies show steps toward large-scale, fault-tolerant quantum computing. In quantum sensing, researchers are developing improved techniques to control ensembles of solid-state spins for a range of sensing applications. In quantum communication, researchers are improving the performance of quantum key distribution, demonstrating longer transmission distances and increased data rates using innovative techniques.