Unleashing Quantum’s Potential

Commentary by Julia DicksonandEmily Harding

Published October 25, 2024

Quantum technologies will revolutionize computing power, encryption and decryption, and sensing, potentially creating a crucial advantage or a critical failure in strategic competition. Experts assess that the United States leads China overall in quantum technologies, but that lead is in peril. The U.S. government must work closely with industry and its allies to stay ahead. To discuss opportunities for the U.S. government to collaborate with industry and its partners and allies on the development of quantum technologies, CSIS convened experts from the U.S. and Five Eyes (FVEY) governments, industry, and the think tank community.

The conversation identified four key challenges to collaboration and potential ways to mitigate them: acquiring sufficient capital, supporting the supply chain, addressing human capital scarcity, navigating export controls, and strengthening partnerships.

Challenge 1: Acquiring Sufficient Capital

The emerging quantum computing industry faces a particular challenge of securing sufficient, patient, trusted capital for two related reasons. First, specific use cases for quantum computing are real but unproven; communicating them is a challenge. Participants discussed extensively the challenge of expressing that quantum does not have a specific special use case but that powerful computing can solve problems in many industries, ranging from aerospace to pharma to finance, and generate billions of dollars in net income for end users. Still, clearly defining use cases will better draw in equity, funding investments from the fundamental science to devices, prototypes, and supporting technologies.

Second, at this early phase in quantum development, "costs still outweigh revenues by a significant ratio, and margins are extremely tight," so the return on investment does not appear guaranteed. Private investors are opting to fund other seemingly more secure fields with better-understood applications. In January 2024, for instance, the Register reported that quantum companies received 50 percent less venture capital funding in 2023 compared to the year before-decreasing from $2.2 billion to $1.2 billion-in part because of heavy investment in generative artificial intelligence (AI). Further, ensuring that investors are trusted or from partner nations is an enduring challenge.

• The quantum industry should explain concrete applications, highlighting how a quantum computer can solve the United States and its allies' top strategic and economic challenges. However, they must be explicit about what capabilities are proven and what are theoretical. Participants, therefore, recommended researchers publish quantum computing applications in peer-reviewed academic publications, subjecting them to a thorough review process. They praised the efforts of the Defense Advanced Research Projects Agency (DARPA) to track proven progress in quantum computing.
• Some participants pointed out that most potential customers for quantum computing are not quantum experts and are hardware agnostic; they just want to be able to use quantum algorithms to solve their specific use case. Describing the outcomes, rather than the hardware, will likely be more compelling for most funders. Quantum experts, who recognize that early applications will require specific use-case-based hardware, will need to work to bridge the understanding gap, communicating effectively how those end-use cases translate to hardware needs.
  

The high-performance computing (HPC) industry went through similar growing pains and provides a useful comparison. Early on, the defense sector made investments in the development of supercomputers, driven by military needs during World War II and the Cold War, such as cracking Nazi codes, designing nuclear weapons, and intelligence processing. By the 1980s, venture capital firms began to invest in the PHC industry, fueled by developments in the field, including advancements in distributed memory and massively parallel computers. The most significant investments in HPC research and development, however, came when researchers were able to clarify broader HPC use cases, including seismic data processing and reservoir simulation. The oil and gas sector then made large investments into developing HPC capabilities to enable the processing of large seismic datasets in real time, resulting in less exploration risk, more precise drilling, and improved operational efficiency.

Quantum today is where HPC was in the 1980s-with a clear military use case and some investment from venture capitalists but still lacking larger buy-in because the industry has yet to prove, as one expert put it, "What are quantum computers actually good for?" Another participant similarly noted, "We've all been on the other side of the table working in government where a commercial entity comes in and says, look at this tech, it's great. And you think, okay, but how does this solve my problem?" The quantum computing industry, therefore, needs to continue probing and highlighting applications to draw in the right equity at the scale needed for further research and development.

Challenge 2: Supporting the Supply Chain

The quantum industry is not yet large enough to support the commercial-scale production of highly specialized critical components. In a self-reinforcing cycle, the small number of components required currently does not provide a financial incentive for the production of these expensive parts, leading to a shortage and corresponding limits to research. A participant noted that the challenge is to get companies to scale up production of components to "sell to whom exactly?"

The U.S. Office of Strategic Capital (OSC) is working to address this problem by offering loan guarantees to attract private investment in critical technologies that have national security applications, including quantum. According to Undersecretary of Defense for Research and Engineering Heidi Shyu, "OSC-backed financing can help ensure the resilience and security of critical supply chains by supporting businesses that produce key components and materials."

• It should continue to prioritize supporting component-level supply chain technologies for quantum, and U.S. allies should similarly support the production of these components, perhaps by offering subsidies or loan guarantees to companies manufacturing key components.
  

Challenge 3: Human Capital Scarcity

The quantum industry, like other highly technical fields, faces a worrying talent shortage. In the United States, demand for quantum talent vastly outstrips supply, leaving only one qualified candidate available for every three quantum job openings. In fact, research indicates that only 50 percent of quantum computing jobs will be filled by 2025. Even amongst students working towards a degree in science, technology, engineering, and mathematics (STEM), knowledge about quantum technologies and careers in the industry is low, and experts from several U.S. government agencies further highlighted that there is a disconnect between what degree programs teach and the skills the industry needs.

The United States should look for opportunities to seed basic quantum studies concepts into high school STEM curricula, sponsor in-depth study at the college and graduate level, and establish professional development programs for new graduates. The industry should offer increased training opportunities such as internships to ensure students have firsthand learning opportunities and are adequately prepared for jobs in the industry upon graduation. Finally, the United States should work with its allies, many of which have more robust talent pipelines, to establish joint quantum workforce education efforts.

• Universities, secondary, and primary schools should accelerate efforts to design and implement quantum curricula. Notably, the Chips and Science Act of 2022 calls on the National Science Foundation to "increase the integration of quantum information and science and engineering into the STEM curriculum at all education levels" and create a pilot program called the "Next Generation Quantum Leaders Pilot Program" to educate "the next generation of students and teachers in the fundamental principles of quantum mechanics."
• The U.S. government should also expand professional development programs for quantum or quantum-adjacent professionals to build critical skill sets. The Department of Defense, Department of Energy, and intelligence community could sponsor quantum professionals to spend two years in a swap-government officials can go work with industry partners, and industry officials can work in government efforts. Quantum professionals would not only return to the government with new skills but also an awareness of the challenges the industry faces and vice versa.
• Industry also has a role to play in developing the quantum workforce by offering internships or other similar workforce training opportunities. A U.S. government (USG) expert noted that the industry has thus far failed to offer summer internships or other opportunities, so students are often not adequately prepared when they complete their degrees. This is especially relevant for students enrolled in technical degree programs, such as mathematics or physics, where they learn many relevant skills but are not quantum specialists upon graduation.
• Finally, the USG needs to partner with its allies to close the talent gap. Joint efforts focusing on quantum workforce education and development would be mutually beneficial for the United States and its allies, helping "ensure a vibrant and secure [quantum] ecosystem that is underpinned by shared values."
  

Challenge 4: Navigating Export Controls and Strengthening Partnerships

Allies and partners are concerned that export controls may impede collaboration, especially as the United States becomes more focused on developing and protecting sensitive technologies. Participants discussed striking the right balance between "promote" and "protect" in quantum technologies. The interim final rule (IFR), published in September 2024, may mitigate some of these challenges because it adds license exemptions to allow exports and reexports to countries with similar export controls in place. In theory, if U.S. allies implement similar export controls, the IFR should allow for smooth collaboration on quantum development. Roundtable participants were overall optimistic about the new U.S. policy, but it is new and untested.

During the roundtable, FVEY partners expressed that they want to work closely with the United States on the development of sensitive technologies, but they confront regulatory barriers that impede smooth cooperation. A participant voiced concern that, as the political climate in the United States becomes more focused on developing sensitive technology, Washington will become increasingly concerned with protecting that knowledge and minimizing the transfer of information and goods related to these technology areas, even to close allies.

Other participants, however, downplayed concerns about sharing, highlighting that U.S. policy is aimed at collaborating with partners in like-minded countries. For instance, the U.S. Department of Commerce's Bureau of Industry and Security says the new IFR "strengthens our international relationships with like-minded countries and ensures that U.S. export controls keep pace with rapidly advancing technologies" such as quantum computers and related equipment. The IFR "adds a new license exception to authorize exports and reexports to countries that have implemented equivalent technical controls," which is currently applicable to a small group of countries. If the FVEY countries and other U.S. allies adopt similar export controls, there should be few export control issues impeding further collaboration.

• One participant noted that while the FVEY is a long-standing, productive alliance, the U.S. should expand quantum partnerships beyond this group, nominating Germany as a strong partner.
• The U.S. government should watch closely the implementation of the new rules about exports to ensure that intent matches outcomes. The U.S. government should also lean heavily forward on information sharing with partners and allies, designating someone at Department of State and a partner at Department of Commerce to be the point person for finding temporary workarounds through the current maze and also finding and advocating for long-term fixes to facilitate collaboration.
  

Additional Challenges:

Participants touched on the following topics as well, which provide ripe areas for future discussion:

• Straddling government and national security use cases and private use cases. For example, decryption versus pharmaceutical research.
• Following through on DARPA's Quantum Benchmarking Initiative for lessons learned.

The participants also discussed the luxury of time to get quantum right. One said, "We have the time to kick the tires and very rigorously evaluate where things are. And I think what you'll find over the coming years is that that will be what most governments do because that's the most prudent way ahead." Participants acknowledged the tension between creating urgency to facilitate investment and compete with China's advances and getting computing right, citing various quantum technologies that have now been set aside in favor of more promising tracks. Further, several participants discussed the need to carefully consider the entire stack as an integrated whole-from hardware to software, all the way to creating safe and correct algorithms.

Conclusion:

The country that is first able to exploit quantum computing will have an asymmetric advantage in the information space. Quantum sensing and other technologies also provide huge advantages for early indications and warning and monitoring of a variety of critical functions. The leaders in this space will be able to shore up their own defenses-designing and enacting new encryption protocols-as well as decrypt adversary communications. Quantum technologies also have compelling civilian commercial applications and a significant impact on the global economy. China is notably investing massive amounts of money into the field. In fact, Beijing may already be ahead in quantum communication and on par in quantum sensing but behind in quantum computing. FVEY countries, other allies and partners, and the private sector must create urgency around this problem despite the long-time horizon; facilitate consistent investment in a promising, perhaps critical, technology; and capitalize on alliances to make progress.

Julia Dickson is a research associate with the International Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Emily Harding is director of the Intelligence, National Security, and Technology Program and vice president of the Defense and Security Department at CSIS.

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