00:00This is a story about the government as venture capitalists.
00:03The Trump administration has announced it will invest $2 billion in nine quantum computing firms.
00:10The Trump administration taking stake in select quantum computing firms.
00:15That entire ecosystem of quantum computing stocks like Regetti and D-Wave all moving higher on the back of that
00:21news.
00:22Really strong optimism on this quantum computing sector.
00:26These investments will not be grants or contracts to buy from these firms.
00:31They will be equity stakes in the frontier technology of harnessing quantum physics to build an entire new form of
00:38computing.
00:38Something talked about and researched for years, but that has remained stubbornly on the horizon.
00:45IBM by itself will receive half of the government investment.
00:49Sam Palmisano spent 40 years at IBM, rising to be its chairman and CEO.
00:54He was there when the company began its quantum quest.
00:58I think the societal implications are greater than the financial investment.
01:03I mean, to put it in perspective, three decades ago I invested in quantum and IBM research.
01:08So when I left the board, which was 20 years ago, I said it will be there in 10 to
01:1215 years.
01:12I'm wrong again.
01:13I'm wrong again.
01:14It's very difficult scientific problems, disease, energy, financial markets, logistics, national security, cyber.
01:23It has the technology to do things that would have taken days on a supercomputer that IBM built could maybe
01:29take an hour or two, literally.
01:32I mean, there's things that are intractable that we deal with as a society, climate change, those kinds of things.
01:39Things that are heavily scientific and I'll say physics in this field can all be addressed, assuming, you know, where
01:46they are actually does happen in the next two or three years.
01:50The potential may be enormous, but what exactly is quantum and why has it taken so long to realize the
01:58potential we've been promised?
02:00Last year, we talked with Jamie Garcia, Director of Strategic Growth and Quantum Partnerships at IBM, a PhD chemist.
02:07She's working at the Cleveland Clinic where IBM has installed one of its quantum computers with the goal of transforming
02:13health care.
02:14Quantum computers are just a totally different paradigm to calculate solutions to problems.
02:20And so what most, you know, experts have done today that are studying quantum computing for different application spaces is
02:29to really sit down with the math and figure out, like, are the algorithms here that I can use and
02:34that I can exploit using a quantum computer going to bring me any sort of advantage over what can be
02:41done today in classical sort of state of the art?
02:44Techniques at the core of classical computing are bits, single pieces of information that can have the value of zero
02:52or one, but quantum technology relies on qubits, a unit that can have multiple values simultaneously.
03:00It's like holding a coin in your hand that is heads, tails and everything in between until you open your
03:07hand to check.
03:08Physicist Jerry Chow is IBM's CTO of quantum-centric supercomputing, working at the Thomas J. Watson Research Center just north
03:17of New York City.
03:17Really fundamentally, there's a different math, right?
03:21It's the mathematics of quantum mechanics that is governing how you actually manipulate these quantum bits, which then gives rise
03:31to a whole host of different opportunities for algorithms and types of problems that you can actually solve using quantum
03:38computers.
03:39A turning point in IBM's efforts to make quantum computing a reality came when it made it available to the
03:46world on the cloud.
03:482016, the IBM quantum experience was really a pivotal moment for us in terms of getting quantum computers for the
03:57first time out onto the cloud and into the hands of anybody, really people, right?
04:03What's interesting is that before that period, I'd say it was really much more in the realm of physics, right?
04:10That we were doing experiments on small devices, qubit devices that we were looking at, understanding how they worked, trying
04:17to make them better.
04:19But we didn't have any kind of real thought about how is this going to be used for computation?
04:25In the nine years since you put quantum experience up there, what have you learned at IBM?
04:31There was a whole lot of people out there who wanted to touch and learn about quantum.
04:37I think we were sitting there that first night after we launched it, watching these circuits coming in and people
04:42were actually running things.
04:43And we were like, oh, wow, this is picking up some steam here.
04:47And then, you know, to this point, we've had tremendous uptake in terms of using the platform to actually generate
04:52new papers and research.
04:55Thousands of papers have been generated, which would have been impossible for us to do just as individual scientists or
05:00researchers studying these devices in our own lab and working with other scientists in collaborations.
05:06And in success, that community could go places that classical computing, even using the large language models of AI, could
05:14never take us.
05:15So it's not just speed, it's actual accuracy.
05:18When we're using classical, no matter how infinite we get, it's an approximation.
05:24Right, absolutely.
05:25It's absolutely not just, not a question about speed.
05:28The whole point of the quantum computer and what it can do is that it can give us the ability
05:32to actually get potentially more accurate results,
05:34also get results that otherwise are unattainable using a classical computer alone.
05:41Companies like Google, Microsoft, and Intel are all exploring the potential of quantum computing.
05:47But there's also a new group of contenders, startups, that are betting it all on the hope that quantum tech
05:53will one day become profitable.
05:55One of those firms is Maryland-based IonQ.
05:58Its CEO is Nicolo DiMasi, who believes he has the best horse in the race.
06:04We supply quantum computers to our both federal, state, and commercial customer partners.
06:13We also provide quantum key distribution, and we do that both on the ground and up in the heavens.
06:19Quantum key distribution is effectively quantum cyber security.
06:23And we're very focused on this not being just proof points in the lab, but doing useful quantum advantage examples
06:30for our customers
06:31and embedding ourselves into their workflows on an ongoing basis.
06:36The potential may be great, as are the investments being made, but when can we expect to see these potentially
06:43dramatic results?
06:44It turns out that that depends on whom you ask.
06:48IBM has made getting to quantum advantage in the real world a strategic priority.
06:53And has a timeline of getting there in a big way by 2029.
06:57Our roadmap really shows the detail in terms of how we want to get from today to 2029.
07:03In between, we have this real important milestone also that we believe that with the community, we'll be hitting quantum
07:09advantage, right?
07:10Where there'll be some problems and claims of advantage where we'll see quantum really surpassing any classical methods of solving
07:20certain types of problems.
07:21IBM says it's on track to have quantum computing payoff in a big way by 2029.
07:27But IonQ's Demasi says they're already there.
07:30So our machines we announced on September 12th at our Analyst Day are 36 quadrillion times more powerful than anyone
07:38else's machine.
07:39And that gap is increasing.
07:42Not only do we believe we are five years ahead of anybody else in the quantum computing business, whether it's
07:48government programs, adversaries or commercial companies, but we also have the lowest unit economics.
07:54So we're able to build a fully fault-tolerant 2 million qubit system and keep our cost of goods sold
08:01under $30 million.
08:03The quantum race is on and the promises are big.
08:06But the winner is in the eyes of the beholder.
08:09IBM says it's ahead because it has more total qubits in its machines.
08:15IonQ says it's not the number of qubits, but the number of algorithmic qubits, putting it in front.
08:21Previously, these were questions for investors to weigh.
08:24But now the government has entered the race and placed bets on nine quantum computing companies.
08:31Those left out include big players like Google and Microsoft and smaller contenders like IonQ.
08:37Google says that funding from the government would have come with conditions that would have slowed down its progress.
08:43Why do we need the government to participate?
08:45Why can't the private markets take care of it on their own?
08:48If you go back to the original investments in the Internet, it was ARPA, then it became ARPANET.
08:53It was basically a link to connect the scientific laboratories and the academic research universities to exchange information on what
09:03they were doing in research.
09:04That became the total communication backbone for the Internet.
09:09The government didn't create the digital economy.
09:12The government created the infrastructure.
09:14But built on the infrastructure were the companies, the ecosystem for innovation as well as investment.
09:20An example of where things haven't worked so well had to do with an energy company back in the 70s
09:25under Nixon.
09:26There was an energy crisis.
09:27That failed miserably, needless to say, because they tried to pick a company.
09:32So when the government's not just here, when the government's around the world, look at state-owned enterprises, if you
09:38want to go to China and places like that.
09:40When they try to pick companies, their history says they aren't as successful as when they create the environment for
09:47the private sector to be successful.
09:49This is an equity investment.
09:51Yes, correct.
09:52But there's a range of companies that they're investing in.
09:54But it's equity participation.
09:55Yes.
09:55Which is different from what happened with ARPA.
09:57That was a grant.
09:59Yes, correct.
09:59Yeah, it's absolutely right.
10:01And this is where I think the model is challenged.
10:03Because when you make an equity investment, maybe they're spreading their risk.
10:07I mean, like a pro-growth equity PE firm.
10:10But at the end of the day, you're picky.
10:12The risk associated with pickyness in the past is that government doesn't do a very good job of operating.
10:18And government doesn't have a long-term attention span.
10:22This technology is going to take 10, 15.
10:25I'm already in for 30 years, right?
10:26I mean, so, you know, you need stability in that regard.
10:30And that's where government struggles in operational detail.
10:33They do policy, right?
10:35They can make grants, do research, and they need to fund long-term stuff.
10:39But they're not strong at actually running companies.
10:42And that's where they fail.
10:43To most of us, $2 billion sounds like a lot of money.
10:46But when you compare that with some of the investments being made right now in AI, I mean, $850 billion.
10:52So is this priming the pump for investors?
10:55Is this a way the government's saying, we're willing to invest and that will encourage other investors to come in?
10:59I think the reason why $2 billion is nothing is what it's going to take.
11:05Just go through the development cycles.
11:08When they talk about a hybrid model for quantum, right, what they're talking about is marrying this quantum advantage, the
11:16technology, to the traditional approaches, which is cloud and AI.
11:20But it's not commercial computing, right?
11:23It doesn't have what you need to make this thing a robust commercial system.
11:28The data management, memory management, backup and recovery, all the things you expect, right, accuracy of your answers and things
11:35like that, that you expect if you're running a hospital or a bank or whatever it happens to be, I
11:42don't think is going to be there in two or three years.
11:44I mean, they're working on it like crazy.
11:45But I think this thing's got a way to go from a financial perspective.
11:49The $2 billion, I mean, it's a start, but it's certainly not going to be the finish.
Comments