BOSTON, July 18, 2024 -- Three years ago, Boston Consulting Group (BCG) published its forecast for the quantum computing market. Since then, both quantum technology and its classical computing counterpart have progressed in unexpected ways, altering the trajectory—though not the overall direction—of this evolving market.

In its updated analysis titled, The Long-Term Forecast for Quantum Computing Still Looks Bright, BCG reaffirms its projection that quantum computing will create $450 billion to $850 billion of economic value globally, sustaining a $90 billion to $170 billion market for hardware and software providers by 2040.

"Is quantum computing on the verge of realizing its transformative potential? The answer, at present, is mixed," said Jean-Francois Bobier, a partner and vice president at BCG and a coauthor of the report. "While there are clear scientific and commercial problems for which quantum solutions will one day far surpass the classical alternative, it has yet to demonstrate this advantage at scale. Nonetheless, the momentum is undeniable."

According to the report, despite a 50% drop in overall tech investments, quantum computing attracted $1.2 billion from venture capitalists in 2023, underscoring continued investor confidence in its future. Governments around the world are also making big investments in the technology, envisioning a future in which quantum computing plays a central role in national security and economic growth. Public sector support is expected to exceed $10 billion over the next three to five years, giving the technology enough runway to scale.

In its 2021 report, BCG expected the market to mature in three phases, and this is still the case. The phases are: noisy intermediate-scale quantum, or NISQ (until 2030), broad quantum advantage (2030-2040), and full-scale fault tolerance (after 2040). Despite maintaining confidence in the projected economic value of quantum computing, BCG's previous assumptions for near-term value creation in the NISQ era have proven to be overly optimistic, however, and have been revised.

The NISQ era has not lived up to BCG's expectations because of two factors: technical hurdles in hardware development are proving tough to overcome and competition from classical computing has been fiercer than expected. AI has exceeded expectations in scientific fields, offering viable alternatives for previously difficult to solve problems. However, by leveraging analog methodologies, quantum machines can still deliver tangible value, especially in materials and chemicals simulations, ranging from $100 million to $500 million a year, during the NISQ era.

Despite being a notable reduction from BCG's 2021 projection, this adjustment is not anticipated to significantly affect the market for hardware and software providers. BCG still predicts a provider market valued between $1 billion and $2 billion by 2030, spurred by three factors:

Public Sector Support: As it has done in the past with technologies such as semiconductors, the internet, and GPS, the public sector is providing substantial support through orders and grants. BCG estimates that public orders already support over half the market, and due to existing program announcements and the geopolitical importance of quantum technologies, this demand should be sustained for the next three to five years.

Corporate Investments: Leading corporations are investing in enterprise-grade quantum capabilities. BCG's 2023 publication on quantum adoption tracked more than 100 active proof of concept projects among Fortune 500 companies, amounting to $300 million.

Supply Chains: Providers can generate revenues by forming supply chains that involve such equipment as controls, dilution refrigerators, lasers, vacuums, and software. According to BCG's research, supply chain spending will make up 5% to 10% of quantum computing hardware and software revenues this year.

"Our initial optimism about revenue during the NISQ period was well founded," said Matt Langione, a managing director and partner at BCG and a coauthor of the report. "Revenues for tech providers are approaching $1 billion dollars annually. However, the creation of meaningful value for end users is taking longer. Despite important signs of progress and well-defined roadmaps, quantum computing has yet to experience its ChatGPT moment."