Entangled Things
Entangled Things
Episode 149: Following the Money in Quantum Computing
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In Episode 149, Patrick and Ciprian take stock of where the money in quantum is flowing. The conversation covers IBM's plan to invest more than $10 billion over five years, the US Department of Commerce's nine letters of intent totaling over two billion dollars under the CHIPS Act, and QEra's $230 million raise with Nvidia involvement. The team dig into which modalities are getting the spotlight, why neutral atoms are drawing attention, and what Microsoft's Majorana 2 bet could mean if it holds water. The episode closes on the bigger picture — whether we're nearing a defining moment for quantum like ChatGPT was for AI, the geopolitical dimensions of the race, and the importance of getting to the quantum-born generation.
Hey Tiffri and how you doing? Hey Patrick, I'm doing well. Looking forward for another episode of Entangled Things.
SPEAKER_01Well, it's just us this time, so um I I I'm not disappointed at all, but we I do miss our guests. Um we're talking about the money in quantum. And and money, you know, it's for a lot of people, it's about the science, it's about the future, and that's what got us into this. Um but there's been some moves here, haven't there?
SPEAKER_02Oh yeah, oh yeah. Um and before we dive into the details, right, it it certainly feels to me, Patrick, that um quantum computing, quantum in general, right? Whether it's uh uh computing or communications or sensing, I think it's it's picking up speed. I think the momentum is building up. We've seen in our um uh episodes this year, just to uh think about the more recent ones, uh, many, many new things happening on the science side of things, right? On the uh error correction, modalities, uh various types of breakthroughs. So uh I think the money is following.
SPEAKER_01Yeah, well so full disclosure, I have a uh a West Point classmate of mine, uh, I'll leave his name out unless he wants me to out him later on, who follows the show because he's interested, but he's really an investor. And he says that you know he's done well with like understanding what companies are doing and things like that. And we're starting to see government money really flowing in, like big chunks, billion-dollar chunks of money flowing into companies like Regetti and IBM. Um, and you saw something about IBM recently about their their dedication to this topic.
SPEAKER_02Yeah, yeah. I I I mean, uh I would just mention briefly three announcements which are pretty interesting to me. The most recent one that was released um uh on uh early June uh was by IBM. Uh and we know IBM like is uh I would call them almost like a veteran player in the quantum field, right? But they announced a plan to invest more than $10 billion in quantum computing over um the next five years, right? Meaning RD, capital expenditure, manufacturing, ecosystem, uh merger and acquisitions. That in itself, I think it's a big announcement. And it's huge. Not the fact that IBM is investing, right? We know they are a player, but the magnitude, like the amount of money they play to uh uh they plan to put into this one. Uh the other one that was very interesting was a bit earlier, I think it was May this year, if my memory serves well, where basically um the uh US Department of Commerce they announced no less than nine letters of intent, totaling more than two billion uh dollars in proposed incentives uh under the Chips and Science Act. Yes. Um and in addition to some money for IBM, there is an interesting pledge for about almost 400 million uh to establish basically a uh uh US domestic uh quantum foundry supporting multiple uh modalities. And then also it contains um financing for the likes of Atom Computing and Dirac and D-Wave and PsyQuantum and Quantum, Ringetti, and so forth. This is major. This is massive.
SPEAKER_01Yeah, I it seems like it just keeps coming every day. There's more and more and more. Um we're seeing I what I haven't checked out is whether the profitability is rising. Um, D-Wave seemed to be the first company that actually had a recurring revenue from this.
SPEAKER_02I I would say from my point of view, I think it's a bit early to look at the profitability because I think we're not yet at the level of like full-blown commercial solutions and and offerings. I think we're still in the, let's say, all bets are open kind of stage from the point of view of the money. But having said that, the fact that we are not really talking about millions of dollars, we're not even talking about tens of millions of dollars. We are starting to talk in increments of hundreds of millions and billions.
SPEAKER_01Billions, yeah.
SPEAKER_02That in itself says something, says something about you know um the um.
SPEAKER_01In any other time, this would be the headline news, but the AI data center build-outs are making the the B-word less less impactful.
SPEAKER_02Yeah.
SPEAKER_01Um, and so, but we should not we shouldn't take away from the fact that if this happened five years ago, it would it would be the dominant story. And it's still seeping in. It's just uh it's still gonna take a little bit of time. And AI might be part of the reason that this is getting a lift because we're seeing synergies between AI and quantum. Uh not to the level that people predicted, uh, which I think was overblown, but we are still seeing it.
SPEAKER_02Yeah, yeah. And then let's not forget about uh the other important piece of news um uh in in this area, which was uh QRA's announcement earlier um this year, uh where they uh announced a raise of 230 million um uh dollars, right? Uh NVIDIA being involved in that.
SPEAKER_01So that opens up the door to talk about something tangential to money, which is it seems like there's a huge renaissance around um moving away from superconducting qubits. I'm not saying that they're dead or anything like that. I'm not saying anything controversial, but uh it seems like you know, trapped ions, neutral atoms, that seems to be uh catching the awareness of the world.
SPEAKER_02I think the massive advancements, uh especially in the area of error correction, for the likes of mutual atoms um and the others, I think those are mainly the ones fueling the um, let's say the boost that that these modalities are are are getting. I think uh people are starting to notice um the potential, the like the commercial potential for these modalities. At the same time, though, uh at least for me, I would be also curious to to know what you are thinking, Patrick. To me, it seems that we are more and more clearly moving towards a multi-modality world. Yes. This is where I see a significant bifurcation from the history of classical computing, uh, where we from the get-go, almost from the get-go, we converged on transistors, right? And and that seemed to be a way. This seems to be one of the big differences, like in in terms of the historical dynamics. It looks to me that we are uh moving into at least for a couple of decades, into a world where there will be no dominant modality in terms of the Trevor Burrus, Jr.
SPEAKER_01So I I think that that is a very safe bet, and I'll and I'll tell you why. And and and this is a hedge maybe. Photonics has to be part of the networking communications stack. And that is a separate one than and I just don't see photonics, I just haven't seen anything that indicates photonics would be the dominant universal gate quantum computing platform. So just that is different enough that to give us two. But we also saw some really compelling uh guests talking about sensing. And so if you include quantum sensing in this, then then yeah, this this it's easy to see where you know nitrogen vac uh vacancies and diamond and artificial diamonds is done is gonna have a place at the table. But again, I don't see that as a universal gate quantum computing platform, and no one's ever proposed, no one's ever said those words in the same sentence in my presence. So I think that's a safe assumption. Um so you know, I I again so having superconducting qubits was a was a an easy way, and and easy is you know, of course, relative. Uh it was an easy way to get in the game early and to have a quantum computer that did something early. Um but it it also ran into what was well-established and well-predicted roadblocks, the noise level that we talk about all the time is very pronounced in in that modality. Um what do you think about the the claims of you know Microsoft and some of the others that are that are clearly not talking about the the tried and true ways? They're not even talking about the the the up and comer, which is um trapped ions. There's been a lot of excitement and a lot of trepidation or or um or haters, if you will, on what Microsoft is doing. Uh do you see any other dark horses?
SPEAKER_02Well, before I reply to that, let me just first say that I do agree with everything you're saying, right, uh with respect to superconducting, but uh we just talked about the news of IBM announcing, right, a doubling down in their in their investments. So I would say there's still something there.
SPEAKER_01Um yeah, I I don't want to count anything out, it's just that it's yeah, it's almost like where's the attention? The spotlight can only be on one or two things at a time. And it it moves around.
SPEAKER_02And the problem is at the point I would definitely say neutral atoms is the spotlight.
SPEAKER_01Exactly. And that was my point is like neutral atoms got a lot of got it gets a lot of cash, and it might switch back to superconducting. Um, we I mean, we don't know what the next breakthrough will be. We don't know where the market will push us, kind of thing.
SPEAKER_02You mentioned you mentioned Microsoft, though. I think uh the claim that they made with Myrana 2 uh at their uh build conference uh this year, uh, I think that's a big deal. Um provided it uh is proven to hold water, right? Um button.
SPEAKER_01Well they had a let's say they had a false start back a few years ago.
SPEAKER_02The announcement itself, right, and and uh the fact that the mere fact that this proves they were able to produce at least one iteration over the architecture that it's based on on Majorana, that in itself is also a big uh uh a big thing if you if you ask me, right? Because again, um, and this is something a lot of people I talk to, they don't understand very well, right? Uh and I got questions like, yeah, but why did Microsoft such a big company choose this very treacherous, right, uh full of rabbit holes path of the the the Majorana uh the based approach? And the thing is, I do believe, I continue to believe this is a very well-calculated bet. Because if it works out, then it's probably gonna provide the quickest way to scalability.
SPEAKER_01I'm gonna say the geekiest quote ever. Why did Gandalf go through the minds of Moria? Right? It wasn't the obvious choice, it wasn't the easiest choice. But it but if it worked, the risk and reward profile was amazing. Exactly. That's Microsoft's um you know play here is if the if it works out, then the noise level, the the the the durability is is is enhanced, but they started from further back.
SPEAKER_02Literally, the the possibility of building uh tens of thousands and hundreds of thousands of stable qubits, right? Yeah, is is is there. So it's it's interesting to to to to follow, um, um at least. But uh like remember when we were first starting the podcast?
SPEAKER_01Yes.
SPEAKER_02Uh it feels like it's been in a different century. Uh so much has happened since uh it was in 1800s, wasn't it?
SPEAKER_01I think back then.
SPEAKER_02Right. The basically all the discussion was around trapped ions and superconducting, right? There was a little bit of photonics out there and and other things, right? All these new or well, new quote unquote, new modalities, right, that are now becoming um uh very interesting and and they seem to look feasible, are just further proof that our initial belief in the fact that quantum computing is a thing and is going to be a thing was right.
SPEAKER_01It's been reinforced so many times in my mind.
SPEAKER_02That's that's what what really um what I really love about the the field, uh the fact that um it it just not that it has slowed down, on the contrary, right? It's picking up steam. And and there are many factors for that. Financing is also very tied to the kind of global geopolitical uh situation, right? It's it's it's a it's a different play than the decades of um the um uh classical computing that were right after the second world war has finished.
SPEAKER_01Yeah.
SPEAKER_02I I would say the the the geopolitics of the time were were were quite different from what we're seeing right now. And I think this has a a significant, and as you like to say, if it weren't for Shore's algorithm, right, probably a large portion of the money and interest wouldn't be.
SPEAKER_01I I think it would have gone on, but I think there would have been winters, and I think there would have been there wouldn't have been the the intense competition that's driven a lot of this stuff. So I, you know, it it's it's bad, it's sad that it needed that it needs that fear factor to drive it, but it's good that we had it because that's how humans react. Right? A lot of a lot of US government attention on AI is fear that the Chinese are gonna get there first, right? And I'm sure that it the same is true in other governments, including in China and Russia. Um, so you can't discount that, but maybe we can ride it to a better future.
SPEAKER_02Um Yeah, and and I again I I have to say, I'm sorry, but I have to say it, right? Uh me being uh uh a European, um again, I I'm sad to to to say that we're again witnessing right a missed opportunity uh from the city.
SPEAKER_01I see some fighting back. I see some I see some you know companies that are trying to do things.
SPEAKER_02It's it's like I think it's it's um too little too late, right? When I'm looking at um like the US government literally pledging billions of dollars, I'm almost certain that the Chinese government, although not making public statements about it, it's it's it's pretty much that or or or or even or even uh uh uh more, right? And I see uh things like the EU quantum technologies flagship with a budget of one billion dollars for 10 years, um and uh the euro HPC, right, procuring and operating quantum computers um budget that is a hundred million, it's like I'm sorry to say, it's laughable, right? So this is why I'm saying I I have this distinct and unpleasant feeling that uh us Europeans are again losing sight, as you say, of the ball, right? Yeah, and we're doing too little too late.
SPEAKER_01Um I mean, there's a lot going on in Europe right now, so I'll give I'll give you guys some slack. But but here's the other thing is we've seen it.
SPEAKER_02In terms of the vision for this super strategic technology, uh I I think it's just not there in the European Union.
SPEAKER_01And I'm not sure. But we've also said that even with technologies this advanced, you can catch up quick. You know, transistors were invented in the United States, but they're built in Taiwan. AI, you know, large language models really emerged in the United States, but China's nipping at the heels. Uh Mistral's, you know, a player. I mean, we could be we might get quantum computers by 2030, and in 2029, Europe could wake up and say, we're gonna do this, and and it might not make that much of a difference.
SPEAKER_02Well I'm not saying it's not important, but I I I'm not seeing things uh the same way here, Patrick. Think of, yes, it's right, they're manufactured, I think the biggest chip manufacturer is TSMC, right? Yeah well, look at how difficult it is to not surpass, but only match what TSMC is doing.
SPEAKER_01Oh yeah, we're trying really hard.
SPEAKER_02And burning like loads of money, and the results are not there. So my fear is this, right? Uh, and we've seen that with several technology cycles. I believe the the mobile phone ones, the smartphones ones is the best example where it's gonna end up being, I don't know, a two-horse race, a three-horse race. I'm talking here from the geopolitical standard. Yeah, yeah, yeah. Right? Uh probably a two-horse race, as it looks like between the US and China. And my theory is that the same pattern will repeat in that no matter how much money you will throw at it, it will be next to impossible to catch that train once the train gets momentum and it starts, it starts moving, right? Remember the example I mentioned is the the smartphones where obviously we have uh um iOS and Android, uh, and then Microsoft burned what, maybe $10 billion, uh acquiring Nokia and then trying to get into that with everything they had, right? And ended up just writing off closely.
SPEAKER_01I think the key here though is is whether you have the educated population to dive in.
SPEAKER_02Yeah.
SPEAKER_01And I think that both China and the United States have a good top layer, really well educated, very scientific. We we get we we attract a lot of people, China has a lot of people, but the average American and the average Chinese citizen doesn't understand quantum, isn't going to dive into quantum computing, and I don't think we're there yet either in Europe.
unknownNo.
SPEAKER_01But the education level, Europe could build the basis for catching up in the last lap by by educating. And and and again, you know, it's it's this next generation. It's not our generation, especially not mine. I'm 60 years old now. It's the younger generations that are going to decide this race. And uh and so I you know, I don't count Europe out, and Europe benefits from relations with both sides. You know, they may be the only the only unit that can get you know quantum computer from China and from the US uh without you know without being blackballed by the other. Um so you know, investment markets, I keep getting asked by people, um, especially that listener I told you about, you know, what companies do we look at? And it it seems like you know, we're not giving investment advice, let's disclaim that right now. But it seems like this is like the early days before AI was, before LLM was a a no a common term. It feels like that time. And you are an AI guy, so you know better than anybody. You know, you knew names of companies that we now know as household names, but you heard of them before anybody was talking about them. You were country before country was cool. Does it feel the same, or do you think we're still a little early?
SPEAKER_02Um I think we're a little bit early, but not by too big of a margin, in a sense that I mean Quantinium IPO'd from what I understand, didn't they?
SPEAKER_01I mean, we're starting to See a little bit of a popcorn effect there.
SPEAKER_02Yeah, yeah. I think our our uh equivalent of the chat GPT moment is probably around the corner. Will that happen in a year's time or five years' time? I don't know, right? But I I think it's it's it's really, really closing, right? Because remember, um AI was a thing well, well before ChatGPT and GPC3 and everything. It just wasn't cool, right? And it wasn't on the agenda of everyone, and it wasn't uh uh something that everyone was just like crazy about. Um and it took like literally one defining moment um to things basically completely flip over. And uh the the only kind of thing with quantum computing, Patrick, is that it is uh an order of magnitude more difficult to prove that you are right. If you think about the ChatGPT moment, all OpenAI did was to just publish an internal web portal that they just built uh during a weekend to prove the capabilities of the model. Believe it or not, this is where ChatGPT uh uh originates, right? And you were able to log into that and literally looking at the responses that you were getting, say, wow. The proof was in the pudding, yes. Whereas you need an NP problem.
SPEAKER_01Nobody understands. You need a you basically need a math degree to be able to make sense of it.
SPEAKER_02Yeah, yeah. And also the problems are, let's say, uh quite specialized. If I'm reading some headline that a quantum computer solved the problem of, I don't know, the ground state energy of a certain molecule or something. Well, I probably have an idea about what that means. I don't really have the necessary kind of detailed knowledge to say, oh yes, they really cracked it and they solved the problem. So this is why I think it's gonna be maybe more like uh a longer moment, not just like one moment.
SPEAKER_01Well, it history doesn't repeat its rhymes, as as Mark Mark Twain famously said. Uh so it won't it won't go down the exact same way. But people wanna be in you know wanna be early. So I I guess what I would recommend, and then it's probably advice preaching to the choir with our audience, but you should start getting familiar with the players. What's Raghetti doing? What's you know, what's um, what's D-Wave up to? What's Quantinium doing? How does the how does the IPO work? When's the next IPO? Uh, and kind of figure out like, you know, where you want to be so you're not regretting. You know, I'm not saying you should go buy, you know, cryptocurrencies or anything like that, but uh, you know, I would hate to be this close to this market and then miss the the opportunity when it comes. Because I think there will be an opportunity. Maybe it'll be a bubble, maybe it'll be something that you know is dangerous down the line, but people make a lot of money before the bubble becomes, you know, uh before the bubble breaks.
SPEAKER_02Oh, yeah, yeah. I mean, the mere fact that there are some companies and their investors who are confident enough to start thinking we're actually acting upon listing uh on the stock exchange, right, is is also an important uh aspect because we weren't there five years ago.
SPEAKER_01Oh no. Five years ago, there was IBM and there was D-Wave, and they were doing business somewhat, and everybody else was figuring it out and thinking about it, and now it seems like the popcorn's popping. And you can't, I mean, you can't. I went to the the Q Tech conference um in June, and there were a lot of booths, a lot of exhibitioners, a lot of companies I I hadn't heard of. So I was sitting there in the lounge Googling, like, oh, this one and that one, and hopefully we'll get some of them as guests. I won't say who I didn't know before. I wouldn't want to admit that, but um, but it I think at one point a couple of years ago, you said there were 88 companies in the quantum space. That the numbers, it's it's gotta be double that, it's gotta be quadruple that now. And uh, and and some of them we won't even hear of because the space has gotten so big.
SPEAKER_02Yeah, yeah. And well, just to be clear, right? I am not really thinking here about like the big players who were already listed on the stock market and were um running quantum computing programs or research, the likes of, I don't know, um, IBM, Google, Microsoft, Amazon. That's not what I'm talking about. I'm talking about newcomers like which were startups at one point, and they ended up being listed um um in uh uh listed on the stock market. And that's an important sign, uh, right. Uh think of it like you've got now um um ion Q, you've got uh D-Wave, uh, you've got uh Regetti, uh, you've got Quantum Computing Inc., right? All these are companies that are not like well-established uh tech giants that were doing the quantum computing research. These are companies that were born in the space, yeah, and they're basically all listed. Um and I think the trend will I think the trend will continue. Uh truth to be told, as you said, again, even in this space, we are completely outshined by the borderline crazy stuff that goes on in the AI uh uh space, right? But nevertheless, I think the uh the the kind of the core idea um that I would like to convey to our audience is that it looks like the tech is is starting to align with the money, which is always an important sign uh for for any technology area. And I think quantum computing, right, is is at the beginning of such a period of time where uh it looks like there's going to be accelerated investment, both uh from governments but also from the private side. I think that's equally important, right? Because if only governments were driving the thing, that's essentially one aspect, right?
SPEAKER_01Yeah, the last five years, I you can't thank a government for that. I mean, uh even it doesn't matter how much China and the United States are putting into it, that's great. It it doesn't equal in a quarter what the um what the the the private sector is doing, and that's the revolution here. With with AI, we we didn't have that that ramp up. You had open AI and you know the people in the in those quarters. Um, but I don't think you got the same nurturing. And you had AI winters, you had times when people are like, yeah, this isn't gonna work, that you've told me about.
SPEAKER_02Uh we had two major ones.
SPEAKER_01Yeah. Right. I mean if you think about the great power players in AI, yeah, China and the United States are definitely the biggest players there. If you think of quantum, China and the United States are maybe as significant as an IBM, maybe as significant as a as a half a dozen or a dozen of the ones you just mentioned. And so it's multipolar. And the industries count for multiple great powers in this space. You know, we've got companies in Europe and and Australia and and the US and you know, I'm sure there's some in Russia that they're a little distracted. Um and so it it's and it again, it it does, it depends on such a uh such a difficult educational foundation to have. Mathematics and physics are the two places most people run screaming from. And so, you know, I it it it seems like like you and I, I've been learning a lot about quantum since we started talking about it. And and and it's been accelerated greatly by by being on the podcast. I'm sure by listening to the podcast, you can get the same thing. But it seems to keep getting more complicated. I thought there's things that I grappled with a two years ago that now it's like, oh yeah, I understand that, but there's still another thing. It's like an onion of complexity, of Rubik's Cubes, that you just keep going deeper in more and more dimensions. And that what's that makes it very interesting. But it also wakes me to the idea that there's just not that many people waiting in the wings with the academic rigor to really understand it. And so what I'm hoping is we get to that abstraction layer, and maybe that's the company that will break it, where it just becomes it's just a utility that we can use. But right now, I don't I don't see that. I don't see quantum yet just being something you can get involved with without actually understanding, other than on the investment side. Now, one last thing before we start to wrap up. When we first started the podcast, we did seven episodes without guests where we talked about things. We talked about encryption, we talked about Shore's algorithm, we talked about entanglement and superposition, and we talked about the players. And I don't think there were nearly as many companies back then when we were talking about it. This has been a bit of a rehash, but back then we weren't talking about money because they were all far away from you know a point where we thought there was going to be money on the table. We've we've bridged that gap quite a bit since then.
SPEAKER_02It's it's a very interesting parallel. Yeah, yeah. And uh I I remember, right, we were we were talking about the big players who were literally the already existing big tech giants uh starting to put money into this, and then a few relatively small at the time startups. And that was it. Yeah, right.
SPEAKER_01Yeah.
SPEAKER_02Um basically um um that was that was it. Um the one thing that I noticed, I'm noticing is um and certainly in the past maybe two or three years, is that the the uh that academia is starting to um to pick up, right? I'm simply looking over here in in Romania, my home country, right? We've got, I think in the past three years, we've got uh more than 10 universities out of the uh largest ones in the country that introduced either uh undergraduate uh quantum computing courses or postgraduate quantum computing courses, or even established uh specific curricula uh in master's degrees or PhDs for um uh uh or or geared towards quantum computing. So there's there's definitely an uh kind of a direction, and I I'm not even talking about the big ones like the MITs, the hardware, the standards of the world, who definitely have this. But I think I think it's picking up speed and steam both in academia, and there's more and more interest towards teaching this.
SPEAKER_01It all circles back to your staying of quantum born. We need to get to that point where it's taught it taught in the grammar schools instead of in the colleges. I think we're out of time for this. It was a great, great conversation. I hope everybody enjoyed it, but um, I'm sure I'm sure we'll we'll uh we'll redo this in another year or so because it's moving so fast.
SPEAKER_02Oh, definitely.
SPEAKER_01All right. See everybody later. Thanks again.
SPEAKER_02Thanks, everyone. Bye.
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