The Quantum

Technology Monitor
FACTS & FIGURES
DECEMBER 2020

CONFIDENTIAL AND PROPRIETARY

Any use of this material without specific permission of McKinsey & Company
is strictly prohibited
 Dynamic overview of industries‘ maturity
toward quantum computing, based on the
current application of the technology

What is the Quantum Continuously evolving overview of the

Computing Monitor? global quantum computing player &
investment space, updated 6-monthly

… and what it is not:

Definitive & exhaustive list of the start-
up and funding activities in the quantum
computing realm as it evolves too rapidly

McKinsey & Company 2

Key Facts

60% of start-ups and incumbent Investments in the past 5 years show

a compound annual growth rate of
~60% of quantum computing
companies in the G7 are located in players are active in the systems
North America
80% with 0.5 billion USD and algorithm layers
in 2020 alone representing about Quantum computing hardware
G7 members account for more than one third of all investments so far
manufacturers are 35-40
70% of quantum computing About 90% of investment is globally
startups worldwide1
focused on hardware manufacturers

1. Excluding China, due to a lack of data

McKinsey & Company 3

 NOT EXHAUSTIVE

Quantum technologies are accelerating

Not Exhaustive Quantum computing Quantum communications Quantum sensing Quantum overall

2000 2015 Today

1999 2001 2007 2011 2016 2017 2019 2020

EU invests First announcement of First commercial offer First sale of a special- Large technology company offers First industry announcement for QC Launch of first online QC platform World’s most powerful quantum
€50-75 million in commercial R&D of quantum key purpose quantum open and premium access to their partnership, in the automotive industry via the cloud by large technology computer (volume 128) is
quantum technologies project on QComms distribution services is computer is announced quantum computer company announced
via Future and launched at the price of $10m Several dozens of startup are founded
Emerging
Technologies (FET) 2003 2016 2018 2019
program over next 7
DARPA launches the First testing of quantum key First commercial Quantum 2.0 sensor, a Launch of first quantum cloud
years (EU Flagship service offering access to
program) first quantum network; it 2007 2012
distribution on commercial fiber gravity sensor, is launched
becomes fully lines hardware of multiple providers
operational in October The local government through one platform
First QC software
2003 of Geneva protects company is founded 2018
1999 voting systems with
First industry announcement for QC
quantum key
2016 2019
First commercial distribution for a partnership in the chemicals industry.
special-purpose QC federal election 2014 Canadian government commits $ 76 Large technology companies start to
US company makes the first claims
company is founded millions to the University of to “quantum supremacy”1
Total yearly investments incubate and consolidate the start-up
in QTs exceed $100 m Waterloo for quantum hardware and ecosystems
software
for the first time; more
than 10 QT companies
are founded
2018
EU commission announces a €1 billion
project for support of quantum
researchers over the next ten years (EU
Flagship program)

1. Quantum supremacy: an event defined by the resolution of a quantum computation that cannot be done by the most powerful classical computers in a practical amount of time

Source: McKinsey analysis, expert interviews, press search McKinsey & Company 4
 2.5 bn USD
p.a. 0.8 bn USD

Public funding 2.7 bn USD 0.8 bn USD

for quantum
computing
NOT EXHAUSTIVE
2.2 bn USD 0.5 bn USD

1.2 bn USD 0.1 bn USD

1.2 bn USD
Less than

0.9 bn USD 0.1 bn USD

Source: CSIRO, McKinsey analysis McKinsey & Company 5

Several industries are already working in “stealth mode” on
competitive applications of quantum computing
Adoption of quantum computing technology, by industry vertical

Bystanders Beginners Amateurs Professionals Legends

No explorative activities Industry players formed Several pre-competitive Industry players start to Innovation related to the
in the realm of quantum first partnerships and/or activities have moved to realize business impact applications of quantum
computing have publicly consortia to explore first a competitive stage and via proprietary quantum computing in an industry
been announced by the quantum computing use industry players start to computing applications plateaued but use cases
industry’s players so far cases (pre-competitive) hire quantum scientists and adhere to a strategy continue to create value

Adoption of
technology

Healthcare Systems & Consumer Automotive & Assembly Telecom, Media &
Services Technology1
Public and Social Sector, Insurance Chemicals
Professional Services
Travel Transport & Pharmaceuticals &
Logistics Medical Products
Aerospace &
Advanced Industries Defense

Finance
Global Energy &
Materials

1. Technology companies are quantum computing hardware manufacturers and software developers

Source: McKinsey analysis McKinsey & Company 6

Experts expect the impact of quantum computing in the mid-term
to be greatest in AI, GEM, Finance and TTL
Horizons: Primary value pools (until ~2025) Secondary value pools (beyond ~2025) Economic value: + Low ++ Medium +++ High Value share: Low Medium High

Economic value Economic impact share

~2025 ~2035 Quantum simulation Optimization Quantum AI/ML Prime factorization

Advanced Industries + ++

Consumer + +

Global Energy & Materials ++ +++

Telecom, Media & Technology + ++

Finance ++ ++

Insurance + ++

Healthcare Systems & Services + +

Pharmaceuticals & Medical Products ++ +++

Travel Transport & Logistics + ++

Public and Social Sector, + ++
Professional Services

Source: McKinsey analysis McKinsey & Company 7

 NOT EXHAUSTIVE

Most players are active in the systems, software & algorithms layer
Number of quantum computing players, by value chain segment

Hardware for comm. Systems, software

Components purposes & algorithms2 Total number

85-
105 135-
>1001 160
suppliers, that are largely not specific
to quantum computer hardware (e.g.,
50-55
Heidelberg Instruments); there are a
few (8) quantum computing- focused
component suppliers (e.g., kiurta) that
enter in the overall count companies

1. Only 8 of these companies counted in the overall number of quantum computing players
2. Does not include end-users with their own quantum computing teams, e.g. the Volkswagen Data:Lab or Airbus

Source: McKinsey analysis, web research McKinsey & Company 8

 NOT EXHAUSTIVE

The US and Canada are most active around quantum computing

Number of quantum computing players (excl. China), by country and origin
Geographic details on next slide

Number of QC Incumbent Public- /gov.- Academic

players, by country Start-ups companies organizations groups

Top 7 36 13 14 38

20 0 1 9

13 0 1 7

7 0 2 4

7 1 0 5

7 1 3 1

6 0 2 1

… and elsewhere1 31 32 19 24

Σ 127 18 43 89

1. Excluding China, due to a lack of data

2. Includes Chninese companies Baidu and Alibaba

Source: McKinsey analysis, web research McKinsey & Company 9

 NOT EXHAUSTIVE

We have seen a stark rise in quantum computing start-ups globally

Number of quantum computing start-ups (excl. China), by region (today, and 2015 in brackets)
2020 2015

20 (6)
51 (9) High-quality data on the Chinese
36 (12) quantum computing landscape is
not available; As far as we know,
Chinese players are government-
funded / -owned research groups

11 (2)1

4 (1)
+ 4 (1)
1. Excluding China, due to a lack of data elsewhere1
Source: McKinsey analysis, Pitchbook, Crunchbase McKinsey & Company 10
 NOT EXHAUSTIVE

Founding & investment activity has grown rapidly in the last 5 years
Number new foundings / investment volume, by year

Volume of PE/VC Number1 of QC

investment, Mn $ start-ups founded

50

<10%
650
600 45

550 40
500
35
450
400 of total investment allocated 30
outside of hardware players
350 25
300
20
250
200 15
150 10
100
5
50

2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 2020
1. Number only quoted until 2018, since start-ups with a later founding date may still be in "stealth" mode, i.e. they have not disclosed their activity publicly

Source: McKinsey analysis, Pitchbook, Crunchbase McKinsey & Company 11

 NOT EXHAUSTIVE

Most newly founded start-ups are software & algorithm developers

Founding activity1 in quantum computing (excl. China), by new founding volume per year
Software Hardware Components

35

30

25

20 14 26

15

10
6 13
2
5
6
4 4 3
1 1 1
0 1 1 1 1 1 1 1 1 1 1 1
1999 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 2018
1. Number only quoted until 2018, since start-ups with a later founding date may still be in "stealth" mode, i.e. they have not discolsed their activity publicly

Source: McKinsey analysis, Pitchbook, Crunchbase McKinsey & Company 12

Development of QC in China is driven by start-
ups and researchers linked to the government

~1 3 517
Billion USD Funding for a Startups are active in commercial Patents related to quantum
governmental laboratory quantum computing computing filed in China in
National Quantum Information 2018 (twice as many as US)
Origin Quantum Computing
Sciences Laboratory Founded in 2017 by a research team of the quantum
First provincial and ministerial level key laboratory in information lab at the Chinese Academy of Sciences Related activities
the field of quantum information in China Offers QCPU, quantum controlling hardware, Large Chinese companies are
Focus on theoretical and experimental research on quantum software, quantum cloud. In Sep 2020, interested in quantum products:
quantum communication and quantum computing Origin began to operate China’s first superconducting
quantum computer outside the lab
The project is invested in total 7 billion RMB, and is One software provider is engaging
completed and delivered by September 30, 2020 in Quantum AI and the design of
Qasky
computing architecture
Founded in 2016 to commercialize quantum
In December 2020, researchers from cryptography research at the Academy of Sciences
A tech company is hosting a
the Hefei National Laboratory Plan to offer products and services for integrated
quantum computing cloud with an
claimed quantum supremacy with a solutions for quantum information security systems
11-qubit computing-device backend
photonic prototype QuantumCTek
First Chinese provider of multi-protocol network
security products and services based on quantum

Source: Press clippings, web research McKinsey & Company 13

 Ÿ The race for technological leadership will continue between photonic, trapped-ion, and
superconducting qubit devices
— IBM announced a ~103 qubit superconducting chip by 2023, more than an order of magnitude
larger than the current Hummingbird chip
Where is — Honeywell aims to gradually scale its ion trap technology and manufacture large-scale
quantum computers for commercial applications by 2030
quantum — PsiQuantum announced that it will manufacture a commercially-viable quantum computer with
headed? ~106 qubits by 2025

Ÿ More players across industries will move from pre-competitive explorations of quantum computing
into competitive research (partly in “stealth-mode”)

Ÿ Several large investment rounds have already been announced for 2021 (e.g. Xanadu, ~100 mn
USD), suggesting that the investment activity around quantum computing will continue to rise
despite the COVID-19 pandemic

Ÿ Chinese researchers have made a claim to quantum supremacy (for a boson-sampling problem)
in December 2020, and local research is expected to yield more breakthrough results backed by
the ~10 bn USD government fund for quantum computing

McKinsey & Company 14

The team behind the Monitor

Niko Mohr
Partner
Dusseldorf
Mathis Friesdorf Philipp Hühne
Associate Partner Digital Communication
Berlin Specialist
Anika Pflanzer Dusseldorf
Partner
Munich
Matteo Biondi Lorenzo
Specialist Pautasso
Zurich Fellow Associate
Henning Soller Munich
Partner
Frankfurt

McKinsey & Company 15

Appendix

McKinsey & Company 16

Classical computing Quantum computing

Exponential
Alan Turing Richard Feynman complexity to
“Father” of “Father” of leverage
classical computing quantum computing as computational
power
1 classical bit One quantum bit Superposition state of two quantum
states 0 and 1
1
Bit can store 2 (complex) coefficients are required
or
zero or a one to describe the superposition
0 0
2 classical bits 2 quantum bits Superposition state of 4 quantum
1 1 1 states 00, 01, 10, 11
or or 4 (complex) coefficients are required
0 0 0 to describe the superposition

N classical bits N quantum bits Superposition state of N quantum

1 1 1 1 states 0000…, 1000…, 01000…, etc.
… … 2N (complex) coefficients are required
or or Simplicity
0 0 0 0 to describe the superposition of read-out

Source: McKinsey analysis, expert interviews, press search McKinsey & Company 17
Methodology

Quantum computing temperature and industry positioning (pp 6-7)

• The quantum computing temperature (pp 6) is based on a survey across +300 industry leaders globally and their opinion on the
impact of quantum computing on their respective industry
• The impact estimation and impact share across quantum capabilities (pp 7) is based on a survey across +100 McKinsey
experts and industry leaders
Quantum computing player landscape and investment (pp 3, 4, 8-14)

• To obtain the Quantum Computing player landscape, we considered the following entities
• Startups: founded in the last 25 years with estimated revenues below 200 million USD
• Incumbent companies: companies with revenues above 200 million USD
• Hardware manufacturers are considered such, if they have already demonstrated the creation of a quantum computer or have announced
efforts in this direction
• Systems, software and algorithms include all companies and startups which develop dedicated software or applications for quantum
computing. Hardware manufacturers which also develop dedicated software solutions are also included in this group
• Investments in startups has been extracted from Pitchbook and Crunchbase and amended by McKinsey analyses
• We could not obtain high-quality data on the quantum computing landscape in China due to most quantum efforts being kept secret.

McKinsey & Company 18