Theres a major controversy raging in the field of quantum computing. One side consists of experts and researchers who are skeptical of quantum computers ability to be beneficial in the foreseeable future, simply because the physical and technological challenges are too great. On the other side, if you ask the entrepreneurs and investors at firms banking on quantum computing, that hasnt been the issue for quite some time. From their standpoint, its only a matter of time and concerted effort until the major breakthrough and the real revolution in the field is achieved. And theyre prepared to gamble a lot of money on that.

For decades, most of the quantum research and development has been carried out by academic institutions and government research institutes, but in recent years, steps to make the transition from the academic lab to the industrial sector have increased. Researchers and scientists have been creating or joining companies developing quantum computing technology, and startups in the field have been cropping up at a dizzying pace. In 2021, $3.2 billion was invested in quantum firms around the world, according to The Quantum Insider compared to $900 million in 2020.

And in the first quarter of this year, about $700 million was invested a sum similar to the investments in the field between 2015 and 2019 combined. In addition to the surge in startup activity in the field, tech giants such as IBM, Amazon, Google and Microsoft have been investing major resources in the field and have been recruiting experts as well.

The quantum computing field was academic for a long time, and everything changed the moment that big money reached industry, said Ayal Itzkovitz, managing partner at the Pitango First fund, which has invested in several quantum companies in recent years. Everything is moving forward more quickly. If three years ago, we didnt know if it was altogether possible to build such a computer, now we already know that there will be quantum computers that will be able to do something different from classic computers.

Quantum computers, which are based on the principles of quantum theory, are aimed at providing vastly greater computing power than regular computers, with the capability to carry out a huge number of computations simultaneously. Theoretically it should take them seconds, minutes or hours to do what it would take todays regular supercomputers thousands of years to perform.

Quantum computers are based not on bits, but on qubits produced by a quantum processing unit, which is not limited to the binary of 0 or 1 but is a combination of the two. The idea is that a workable quantum computer, if and when there is such a thing, wont be suitable for use for any task but instead for a set of specific problems that require simultaneous computing, such as simulations, for example. It would be relevant for fields such as chemistry, pharmaceuticals, finance, energy and encoding among others.

It's still all theoretical, and there has yet to be a working quantum computer produced that is capable of performing a task more effectively than a regular computer but that doesnt bother those engaged in the arms race to develop a breakthrough quantum processor.

A million-qubit computer

IBM, which is one of the pioneers in the industry, recently unveiled a particularly large 127-qubit computer, and its promising to produce a 1,000-qubit one within the next few years. In 2019, Google claimed quantum supremacy with a computer that managed in 3.5 minutes to perform a task that would have taken a regular computer 10,000 years to carry out. And in May of last year, it unveiled a new quantum center in Santa Barbara, California and it intends to build a million-qubit computer by 2029 at an investment of billions of dollars.

Amazon has gotten into the field, recruiting researchers and recently launching a new quantum center at the California Institute of Technology, and Intel and Microsoft have also gotten into the game. In addition to their own internal development efforts, Amazon, Microsoft and Google have been offering researchers access to active quantum computers via their cloud computing services.

At the same time, there are several firms in the market that specialize in quantum computing that have already raised considerable sums or have even gone public. One of the most prominent of them is the American company IonQ (which in the past attracted investments from Google, Amazon and Samsung) and which last year went public via a SPAC merger. Another such company is the Silicon Valley firm Rigetti Computing, which also went public via a SPAC merger. Then theres Quantinuum, which was the product of a merger between Honeywell Quantum Solutions and Cambridge Quantum.

All thats in addition to a growing startup ecosystem of smaller companies such as Atom Computing and QuEra, which have raised initial funding to develop their own versions of a quantum processor.

In Israel in recent months, the countrys first two startups trying to create a quantum processor have been established. Theyre still in their stealth stage. One is Rehovot-based Quantum Source, which has raised $15 million to develop photonic quantum computing solutions. Its technology is based on research at the Weizmann Institute of Science, and its headed by leading people in the Israeli processor chip sector. The second is Quantum Art, whose executives came from the Israeli defense sector. Its technology is also based on work at the Weizmann Institute.

There are also other early-stage enterprises that are seeking to develop a quantum processor, including one created by former Intel employees and another by former defense company people. Then there is LightSolver, which is seeking to develop a laser technology computer, which is not quantum technology, but it seeks to provide similar performance.

Going for broke

But all of these are at their early stages from a technological standpoint, and the prominent companies overseas have or are building active but small quantum computers usually of dozens of qubits that are only for R&D use to demonstrate their capabilities but without actual practical application. Thats out of a sense that developing an effective quantum computer that has a real advantage requires millions of qubits. Thats a major disparity that will be difficult to bridge from a technological standpoint.

The problem is that sometimes investing in the here-and-now comes at the expense of investments in the future. The quantum companies are still relatively small and have limited staff. If they have an active computer, they also need to maintain it and support its users in the community and among researchers. That requires major efforts and a lot of money, which might be at the expense of next-generation research and it is already delaying the work of a large number of quantum computer manufacturers who are seeing how smaller startups focusing only on next-generation development are getting ahead of them.

As a result, there are also companies with an entirely different approach, which seeks to skip over the current generation of quantum computers and go for broke to build an effective computer with millions of qubits capable of error detection and correction even if it takes many years.

In 2016, it was on that basis that the Palo Alto, California firm PsiQuantum was founded. Last year the company raised $450 million (in part from Microsoft and BlackRock) based on a company valuation of $3 billion, becoming one of the hot and promising names in the field.

Itzkovitz, from the Pitango fund, was one of its early investors. They said they wouldnt make a small computer with a few qubits because it would delay them but would instead go straight for the real goal, he explained.

PsiQuantum is gambling on a fundamentally different paradigm: Most of the companies building an active computer, including the tech giants, have chosen technology based on specifical material matters (for example superconductors or trapped ions). In contrast, PsiQuantum is building a photonic quantum computer, based on light and optics an approach that until recently was considered physically impossible.

Itzkovitz said that he has encountered a large number of startups that are building quantum processors despite the technological risk and the huge difficulty involved. In the past two weeks, I have spoken with 12 or 13 companies making qubits from England, Holland, Finland, the United States and Canada as if this were the most popular thing there was now in the high-tech industry around the world, he said.

As a result, there are also venture capital funds in Israel and overseas that in the past had not entered the field but that are now looking for such companies to invest in over concern not to be left out of the race, as well as a desire to be exposed to the quantum field.

Its the Holy Grail

Similar to the regular computing industry, in quantum computing, its also not enough to build a processor. A quantum processor is a highly complex system that requires a collection of additional hardware components, as well as software and supporting algorithms, of course all of which are designed to permit its core to function efficiently and to take advantage of the ability and potential of qubits in the real world. Therefore, at the same time that quantum processor manufacturers have been at work, in recent years there has been a growing industry of startups seeking to provide them and clients with layers of hardware and software in the tower that stands on the shoulders of the quantum computers processor.

A good example of that is the Israeli firm Quantum Machines, which was established in 2018 and has so far raised $75 million. It has developed a monitoring and control system for quantum computers consisting of hardware and software. According to the company, the system constitutes the brain of the quantum processor and enables it to perform computing activity well and to fulfill its potential. There are also other companies in the market supplying such components and other components including even the refrigerators necessary to build the computers.

Some companies develop software and algorithms in the hope that they will be needed to effectively operate the computers. One of them is Qedma Quantum Computing from Israel, which has developed what it describes as an operating system for quantum computers that is designed to reduce errors and increase quantum computers reliability.

Our goal is to provide hardware manufacturers with the tools that will enable them to do something efficient with the quantum computers and to help create a world in which quantum algorithmic advantages can actually be realized, said Asif Sinay, the companys founder-partner and CEO. Its the Holy Grail of all of the quantum companies in the world.

The big challenge facing these companies is proving that their technology is genuine and that it provides real value to companies developing quantum processors. Thats of course in addition to providing a solution that is sufficiently unique that the tech giants wont be able to develop it on their own.

The big companies dont throw money around just like that, Sinay said. They want to create cooperation with companies that help them reach their goal and to improve the quality of the quantum computer. Unlike the cyber field, for example, you cant come and scare a customer into buying your product. Here youre sitting with people at your level, really smart [people] who understand that you need to give them value that assists in the companys performance and to take the computer to a higher level.

Two concurrent arms races

What the companies mentioned so far have in common is that they are building technology designed to create an efficient quantum computer, whether its a processor or the technology surrounding it. At the same time, another type of companies is gaining steam those that develop the tools to develop quantum software that in the future will make it possible for developers and firms to build applications for the quantum computer.

Classiq is an Israeli company that has developed tools that make it easier for programmers to write software for quantum computers. It raised $33 million at the beginning of the year and has raised $48 million all told. A competitor in Singapore, Horizon Quantum Computing, which just days ago announced that it raised $12 million, is offering a similar solution.

Another prominent player is the U.S. firm Zapata, in which Israels Pitago fund has also invested, and which is engaged in services involved in building quantum applications for corporations.

There are two concurrent arms races happening now, says Nir Minerbi, co founder and CEO of Classiq. One is to build the worlds first fully functional quantum computer. And many startups and tech giants are working on that and that market is now peaking. The second race is the one for creating applications and software that runs on quantum and can serve these firms. This is a field that is now only making its first steps - and its hard to know when it will reach its goal.

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The big money is here: The arms race to quantum computing - Haaretz