Quantum computing age - Multi-sector disruption

By Davey Jose and Henry Ward, Thematic Analysts, Disruptive Technologies, HSBC

10 November 2022

Video

Quantum computing could be as transformational for the global economy as the internet, TV or telephone. The power to solve hugely complex problems could disrupt every industry, creating new opportunities – and risks. But perfecting the tech still presents major hurdles.

The most common question we get asked is – what is a quantum computer? At its simplest, it is a new class of machine with the potential for vastly more power and speed than the so-called “classical” computers we use today.

The second question is – how does it work? Classical computers (such as the one you are using to read this) are built on binary digits that store information as a series of zeroes and ones – otherwise also called a bit. Quantum computers, by contrast, are built of quantum bits, or “qubits”. These can be simultaneously zero and one, enabling them to carry out more calculations. Stringing qubits together creates a machine than can run through possibilities much more quickly than existing computers, and solve problems far more effectively. This is, of course, a simplification of a very complex topic: for more on the theory that underpins the tech, check out the brief guide in our summary*.

The quantum age is already beginning. Although the technology is its infancy, a number of teams have built systems that demonstrate just what it could achieve. And companies are already using it to solve complex problems. These range from manufacturers optimising the route of robots across a factory floor, to grocery stores restocking more efficiently.

Investor and government interest is rising fast. Venture capital investment in quantum computing exceeded USD1 billion for the first time in 2021. A number of existing tech companies are pioneering quantum technologies and applications. Governments have also been pouring billions into research and development in recent years, as policymakers start to appreciate the disruptive potential of quantum computers. China, the US and EU have already made commitments to spend more than USD24 billion.

>USD1bn

Venture capital investment in quantum computing in 2021

>USD24bn

Commitments to quantum initiaives announced by China, the US and the EU

The next generation of quantum computers could offer solutions to a whole new set of problems. They have the potential to do things even existing supercomputers cannot in two particular areas:

Optimisation – quantum computers can analyse problems with many variables and recommend the best solution among a huge range of options; this includes finding better ways to manage networks such as traffic flows through a city, delivery routes, and energy flows across a national or regional grid.
Simulation – quantum computers could have the capacity to simulate complex molecules at an atomic level, opening up the potential to facilitate new drug discoveries, battery technologies, chemicals, and even new materials.

We think quantum tech could affect almost every sector of the global economy. It could reshape the way future cities and transport are designed, suggest new ways of cutting carbon dioxide from manufacturing processes, and give banks a new tool for protecting customers from fraud. Please see our infographic (below) for more detail on possible applications. As such, quantum computing could have repercussions for most of the nine key long-term trends* that we focus on in HSBC Global Research.

But there are still huge engineering challenges ahead if quantum is to achieve its full potential. The most advanced machines today have around 100 qubits. To become more powerful, flexible and reliable, the next generation of machines will need at least 100,000 qubits. For now, this is exceptionally difficult to achieve – not least as some existing systems require specialised conditions, such as consistently very low temperatures, and malfunction if they get slightly too hot.

It is not yet clear which type of quantum computer will become the most prevalent. There are three main types being explored today – superconducting, trapped-ion and photonic. Superconducting systems require incredibly low temperatures, but can perform operations especially quickly. Trapped-ion qubits are more stable, but a little slower. Early results suggest that scaling up photonic systems – which use particles of light to carry information – could be a particular challenge. The next few years will further test the potential strengths, limitations and scalability of each design.

Quantum brings new risks as well as opportunities. For example, quantum systems have the potential to crack most forms of encryption used today to protect websites, personal data and financial information. This could present a threat to future cybersecurity and digital infrastructure – indeed, some hackers are collecting data that they can’t decrypt now and are waiting for the day quantum computers become available to do so. We think it is important for businesses and regulators to take these challenges seriously. Now’s the time to prepare for the quantum age.

First published 5th October 2022.

Would you like to find out more? Click here* to read the full report (you must be a subscriber to HSBC Global Research).

To find out more about HSBC Global Research or to become a subscriber get in touch at askresearch@hsbc.com.

* Please note that by clicking on this link you are leaving the HSBC Global Banking and Markets website, therefore please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.

Disclosure appendix

The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Davey Jose and Henry Ward

This document has been issued by the Research Department of HSBC.

HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis or act as a market maker or liquidity provider in the securities/instruments mentioned in this report.

Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenues.

Whether, or in what time frame, an update of this analysis will be published is not determined in advance. For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research.

Additional disclosures

This report is dated as at 05 October 2022.
All market data included in this report are dated as at close 30 September 2022, unless a different date and/or a specific time of day is indicated in the report.
HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.
You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument or of an investment fund.

Disclaimer

This document has been issued by HSBC Bank plc, which has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. Neither HSBC Bank plc nor any member of its group companies (“HSBC”) make any guarantee, representation or warranty nor accept any responsibility or liability as to the accuracy or completeness of this document and is not responsible for errors of transmission of factual or analytical data, nor is HSBC liable for damages arising out of any person’s reliance on this information. The information and opinions contained within the report are based upon publicly available information at the time of publication, represent the present judgment of HSBC and are subject to change without notice.

This document is not and should not be construed as an offer to sell or solicitation of an offer to purchase or subscribe for any investment or other investment products mentioned in it and/or to participate in any trading strategy. It does not constitute a prospectus or other offering document. Information in this document is general and should not be construed as personal advice, given it has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on it, consider the appropriateness of the information, having regard to their objectives, financial situation and needs. If necessary, seek professional investment and tax advice.

The decision and responsibility on whether or not to purchase, subscribe or sell (as applicable) must be taken by the investor. In no event will any member of the HSBC group be liable to the recipient for any direct or indirect or any other damages of any kind arising from or in connection with reliance on any information and materials herein.

Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed. Some of the statements contained in this document may be considered forward looking statements which provide current expectations or forecasts of future events. Such forward looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors.

This document is for information purposes only and may not be redistributed or passed on, directly or indirectly, to any other person, in whole or in part, for any purpose. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. By accepting this report, you agree to be bound by the foregoing instructions. If this report is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document.

Certain investment products mentioned in this document may not be eligible for sale in some states or countries, and they may not be suitable for all types of investors. Investors should consult with their HSBC representative regarding the suitability of the investment products mentioned in this document.

HSBC and/or its officers, directors and employees may have positions in any securities in companies mentioned in this document. HSBC may act as market maker or may have assumed an underwriting commitment in the securities of companies discussed in this document (or in related investments), may sell or buy securities and may also perform or seek to perform investment banking or underwriting services for or relating to those companies and may also be represented on the supervisory board or any other committee of those companies. From time to time research analysts conduct site visits of covered issuers. HSBC policies prohibit research analysts from accepting payment or reimbursement for travel expenses from the issuer for such visits. HSBC Bank plc is registered in England No 14259, is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the London Stock Exchange.

(070905) © Copyright 2022, HSBC Bank plc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of insert issuing entity name. MCI (P) 037/01/2022, MCI (P) 027/10/2022

Global Research
- Disruptive technology

Quantum computing age - Multi-sector disruption

Quantum computing could be as transformational for the global economy as the internet, TV or telephone. The power to solve hugely complex problems could disrupt every industry, creating new opportunities – and risks. But perfecting the tech still presents major hurdles.

Disclosure appendix

Disclaimer

Global Research

Find out more