QUANTUM COMPUTING MARKET REPORT SCOPE & OVERVIEW:

The Quantum Computing Market Size was valued at USD 1.03 Billion in 2023 and is expected to reach USD 10.31 Billion by 2032 and grow at a CAGR of 29.1% over the forecast period 2024-2032.

Quantum Computing Market, an emerging example of computation leveraging quantum mechanics, is revolutionizing industries by solving complex problems beyond the reach of classical computers. The quantum computing market has witnessed significant growth in recent years, driven by advancements in hardware, and software, and a growing demand for computational power to tackle real-world challenges in industries such as healthcare, finance, aerospace, and energy. This market is poised to experience exponential growth, with increased investment from governments, tech giants, and startups shaping the future of technology.

In the United States, the federal government has notably increased its funding for quantum research and development, reflecting a strategic focus on maintaining leadership in quantum technologies. In fiscal year 2023, the U.S. government allocated approximately $932 million to quantum computing initiatives. This surge in funding is part of a broader commitment to quantum information science (QIS), as outlined in the National Quantum Initiative Act. The act mandates a coordinated federal program to accelerate quantum research and development, aiming to enhance the nation's economic and national security.

MARKET DYNAMICS

KEY DRIVERS:

• Increasing Demand for Advanced Computational Power Drives Growth in Quantum Computing Market

As industries face growing data complexities and computational challenges, the need for advanced computational power has driven the quantum computing market. Traditional computing systems are limited in their ability to solve intricate problems related to artificial intelligence (AI), machine learning, drug discovery, and climate modeling. Quantum computing offers unprecedented capabilities for addressing such complex issues by utilizing quantum bits (qubits) that can represent and process information in multiple states simultaneously. This enables quantum systems to solve optimization problems, simulate molecular structures, and enhance decision-making processes at speeds that classical computers cannot match. Several sectors, including healthcare, energy, aerospace, and finance, are particularly interested in these capabilities to improve efficiency and innovation.

In healthcare, quantum computing can accelerate drug discovery and personalized medicine, while in finance, it can help optimize portfolio management and risk assessment. As more industries realize the potential of quantum computing to revolutionize their processes and tackle problems that were once deemed insurmountable, the demand for quantum systems and expertise continues to rise. The ongoing developments in quantum hardware and software only add to the growing momentum in this market.

• Significant Investments and Collaborations Fuel Expansion of Quantum Computing Capabilities

Substantial investments from both the private sector and governments have played a crucial role in the rapid development of quantum computing technology. Global players such as IBM, Google, Microsoft, and Amazon have allocated billions of dollars towards research and development (R&D) to push the boundaries of quantum computing. These investments are not limited to hardware; significant resources are also dedicated to software platforms, algorithms, and applications that can leverage the power of quantum systems.

Additionally, governments worldwide are increasing their support for quantum research through initiatives like the U.S. National Quantum Initiative, which was launched to advance quantum technologies with funding in the hundreds of millions of dollars. Public-private collaborations further bolster these efforts, with organizations partnering to accelerate the commercialization of quantum computing and bring the technology to a broader audience. This influx of capital and cooperation is helping to overcome existing barriers related to hardware development, error correction, and scalability. With continued investment, quantum computing is expected to reach greater levels of sophistication and accessibility.

RESTRAIN:

• High Costs and Lack of Scalability Pose Challenges to Widespread Adoption of Quantum Computing

Despite the promising advancements in quantum computing, the high costs of quantum hardware and the current limitations in scalability present significant challenges to the widespread adoption of the technology. Quantum computers require extremely sophisticated hardware, including qubits that need to be isolated from external interference, necessitating complex and expensive cryogenic systems and infrastructure. These requirements make quantum computing systems difficult to build and maintain at scale, limiting access to only the largest organizations with substantial budgets for R&D and infrastructure. Additionally, the technology’s current lack of scalability means that even though quantum computers can perform specific tasks more efficiently than classical computers, their real-world application is still limited. Until there are significant breakthroughs in qubit coherence, error correction, and the overall size of quantum systems, the technology will remain largely experimental. This means that for many companies, particularly small and medium-sized enterprises, the cost of adoption is prohibitive, and the immediate return on investment remains uncertain. While solutions to these challenges are being actively explored, it will take time for quantum computing to reach a level where it can be widely and cost-effectively deployed across various industries.

KEY MARKET SEGMENTS

BY COMPONENT

In 2023, the System segment of the quantum computing market accounted for the largest share, with an estimated revenue of 64%. This dominance can be attributed to the continuous development of quantum hardware, particularly quantum processors and quantum computers that form the backbone of quantum systems. Companies like IBM, Google, and D-Wave have made significant strides in this segment. For instance, IBM’s Quantum System One has set a high standard for integrated quantum systems, combining hardware, software, and a quantum cloud service.

The Services segment in the quantum computing market is expected to grow at the largest CAGR of 30.29% during the forecasted period 2024-2032, driven by increasing demand for Quantum-as-a-Service (QaaS) and cloud-based quantum computing platforms. Quantum computing services offer companies access to quantum resources without requiring significant upfront investment in hardware. Leading firms like IBM, Microsoft, and Amazon Web Services (AWS) are expanding their service offerings.

BY END-USER

In 2023, the BFSI (Banking, Financial Services, and Insurance) segment accounted for the largest market share of the quantum computing market, contributing approximately 25% of the total revenue. This is largely driven by the sector's need for enhanced computational power to optimize risk management, portfolio optimization, fraud detection, and cryptography. Quantum computing has the potential to revolutionize the BFSI industry by providing faster and more accurate solutions to complex financial modeling and data processing tasks. Companies like IBM and Microsoft have been at the forefront of introducing quantum technologies tailored for the BFSI sector.

The Healthcare segment is expected to witness the largest CAGR of 31.74% during the forecasted period 2024-2032, primarily driven by the growing interest in utilizing quantum computing for drug discovery, genomics, and personalized medicine. Quantum computing's ability to simulate molecular structures and solve complex biological problems more efficiently than classical computers presents significant opportunities for healthcare innovation. IBM has launched its Quantum for Life Sciences platform, which helps pharmaceutical companies accelerate drug discovery by simulating molecular interactions at an unprecedented scale.

REGIONAL ANALYSIS

In 2023, North America emerged as the dominant region in the quantum computing market, driven by significant investments in research and development, a strong presence of key players, and supportive government initiatives. The estimated market share for North America in the quantum computing market was around 36%. This dominance can be attributed to the United States’ leadership in both public and private quantum research. Government programs such as the U.S. National Quantum Initiative Act have provided substantial funding to accelerate the development and deployment of quantum technologies.

The Asia Pacific (APAC) region was the fastest-growing region in the quantum computing market in 2023, with an estimated CAGR of around 31.93%. Several factors contributed to this rapid growth, including increasing government support, technological advancements, and a growing focus on innovation. Countries like China and Japan have made significant strides in quantum research, with China leading the way in quantum communication and cryptography projects. Additionally, India has also ramped up efforts through its National Mission on Quantum Technologies and Applications (NM-QTA) to invest in quantum computing research and development. Key companies such as Fujitsu and Hitachi are at the forefront of quantum computing advancements in the region.

Key players

Some of the major players in the Quantum Computing Market are:

• IBM (IBM Quantum System One, Qiskit)

• D-Wave Quantum Inc. (Advantage Quantum Processor, Leap Quantum Cloud Service)

• Microsoft (Azure Quantum, Quantum Development Kit (Q#))

• Amazon Web Services (Amazon Braket, Quantum Solutions Lab)

• Rigetti Computing (Aspen Series Quantum Processors, Forest Development Kit)

• Fujitsu (Digital Annealer, Quantum-Inspired Optimization Services)

• Hitachi (Quantum Annealing System, CMOS-Based Quantum Computing)

• Toshiba (Quantum Key Distribution (QKD) System, Quantum Cryptography Solutions)

• Google (Sycamore Processor, Quantum AI Platform)

• Intel (Horse Ridge Cryogenic Controller, Quantum Dot Qubits)

• Quantinuum (H-Series Ion Trap Processors, Quantum Origin (QKD))

• Huawei (HiQ Cloud Quantum Computing Service, Quantum Computing Simulator)

• NEC (Quantum Annealing Cloud Service, Quantum Neural Network Solutions)

• Accenture (Quantum Computing Consulting Services, Quantum Impact Simulation Tool)

• Nippon Telegraph and Telephone (NTT QKD Platform, Quantum Node Integration)

• Bosch (Quantum Sensing Devices, Quantum-Inspired Optimization Tools)

• Quantum Computing Inc. (Qatalyst Software, Entropy Quantum Computing Platform)

• PsiQuantum (Photon-Based Quantum Processors, Quantum Foundry Services)

• Alpine Quantum Technologies GmbH (Ion Trap Qubit Solutions, Quantum Research Platform)

• Xanadu (Borealis Quantum Processor, PennyLane Software)

• Zapata Computing (Orquestra Platform, Quantum Workflow Automation Tools)

• Northrop Grumman (Quantum Sensor Technologies, Advanced Quantum Communication Systems)

RECENT TRENDS

• In February 2024, D-Wave introduced its 1,200+ qubit Advantage prototype through the Leap real-time quantum cloud service. Existing Leap subscribers can now access this new hardware immediately, while new users can sign up for Leap and receive up to one minute of free usage of the Advantage2 prototype. This offer is available alongside other quantum processing units (QPUs) and solvers provided on the platform.

• In November 2023, Rigetti Computing received Phase 2 funding from the Defense Advanced Research Projects Agency (DARPA). The potential grants, amounting to USD 1.5 million, aim to support Rigetti in creating benchmarks to evaluate the performance of large-scale quantum computers in real-world applications.

• In December 2023, IBM announced a partnership with Keio University, The University of Tokyo, Yonsei University, Seoul National University, and The University of Chicago to advance quantum education efforts in Japan, Korea, and the United States. This collaboration aims to deliver educational programs, incorporating contributions from each university, with the objective of training up to 40,000 students over the next decade.