How Much Is The Quantum Computing Market Worth?

How Much is the Quantum Computing Market Worth?

In 2018 several reports were released analyzing and forecasting the potential size of the quantum computing market. A report by Tractica estimates that revenues will grow from $39.2 million in 2017 to $2.2 billion in 2025. A competing report by Market Research Futures expects the market to grow at a 24% CAGR to $2.464 billion by 2022.

While the reports (and there are plenty more beyond those mentioned if you care to spend several thousand dollars to purchase a copy) differ somewhat on how fast quantum computing will be adopted and integrated into the marketplace, they all point to a very bullish outlook. They all agree that the major applications will be in modeling out complex systems from biology to chemical interactions, cryptography to national defense.

Investing with the bullish thesis on quantum computing relies on understanding where the adoption will likely first take place, when it will take place, and what it will be worth.

Let's Put The Forecasts Into Perspective

For as bullish as the forecasts are on revenue growth, let's put the size they're forecasting into perspective. Right now, the Semiconductor market size is $463.41 billion. Growth has been around 12.4%. All things being equal, the expectation is that by 2022 we'll be somewhere around half a percent of total Semiconductor spend, which seems reasonable, even though the growth of quantum computers clearly outpaces that of Semiconductors' 2 to 1. However, trying to forecast beyond a handful of years becomes exceptionally difficult for the reasons we'll discuss later.

Pioneering Will First Be Seen Cryptography & Complex Systems

Let's quickly review why quantum computing is all the rage. Quantum computing utilizes properties from quantum physics that people claim "defy the laws of classical physics." This involves superposition, where a qubit can be a 1, 0 or both, as well as entanglement, where two qubits can interact simultaneously regardless of the distance. What this allows certain models to do is evaluate complex systems (kind of like if a butterfly flaps its wings in Florida, it causes a tornado in Kansas) at a much more rapid pace.

The topic everyone first throws out with quantum computing is Cryptography or code cracking. Current cryptographic systems work on a combination of one or more models that would take inordinate amounts of time to crack with existing systems. In theory, quantum computers can use unique algorithms (IE Shor's algorithm) that reduce the time to something manageable.

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Disclosure: I have no interest in any stocks mentioned, and no holdings in those companies. This article presents only my opinions. I am not receiving compensation for it. I am not in any way ...

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