Quantum industry faces cross-border puzzle

The world’s quantum technology industry has a problem that even a quantum computer may struggle to solve: how to keep its technology out of foreign hands when almost everyone in the business depends on foreign suppliers.

A new international study has found that 90% of quantum companies rely on suppliers in other countries, while 74% sell their products abroad. And this at a time when governments pour billions into gaining a technological advantage over their rivals.

The Global Quantum Supply Chain report surveyed 160 companies headquartered in 15 countries. Between them, they identified suppliers in 36 countries and customers in 49 countries, with manufacturing operations spread across 25 countries.

The numbers reveal that the industry is thoroughly international, despite governments increasingly treating quantum technology as a national security priority.

Quantum technology exploits the unusual properties of matter at the smallest scales to develop new forms of computing and advanced communications systems. Quantum computers, in particular, hold the promise of tackling calculations that would overwhelm even the most powerful conventional supercomputers, in a fraction of the time.

Quantum computers depend on cooling systems that operate close to absolute zero, where temperatures are colder than those found in outer space. Some approaches use lasers to manipulate individual atoms. The components require extraordinary precision, and relatively few manufacturers can supply them. That means a country may have the scientific expertise to develop a quantum computer but still need to import the equipment that makes it possible.

“Quantum innovation does not stop at national borders, and neither do the supply chains that make it possible,” said Dr Celia Merzbacher, executive director of the US-based Quantum Economic Development Consortium (QED-C). “As the industry scales, the report gives leaders and policymakers a clearer view of how deeply connected our ecosystem already is.”

The research was conducted jointly by quantum industry associations representing the United States, Europe, Canada, the United Kingdom, Japan and South Korea, with participation from India’s quantum industry.

It shows that even the smallest businesses are caught up in the international trading network. Companies employing fewer than 10 people reported buying from suppliers and selling to customers in multiple countries. The average (or median, as the report put it) respondent dealt with suppliers in three countries and customers in three countries.

Component suppliers generally served more countries than developers of complete quantum systems, suggesting that much of the industry’s specialist manufacturing expertise is concentrated in businesses serving customers across national borders.

The United States, Germany, the United Kingdom, Canada and Japan were the five most frequently named locations for both suppliers and customers, with Europe a key player, said Cécile Perrault, executive director of the European Quantum Industry Consortium.

“Taken as a bloc, the European Union is the second most frequent location of both suppliers and customers in this survey, which shows how much the global quantum industry already works with European companies,” she said. “The survey also shows that the countries this industry buys from and the countries it sells to are not always the same, which is worth keeping in mind as Europe shapes its industrial and trade policy for quantum,.”

This complicates the growing enthusiasm for technological self-sufficiency. Governments may want their own quantum industries to be independent of foreign technology, but developing an entire supply chain domestically could be prohibitively expensive.

Export restrictions add another complication. A country that prevents certain quantum components from being sold abroad may protect its intellectual property, but it could also deprive local manufacturers of customers. Conversely, restrictions on imports could leave domestic developers scrambling to find alternative suppliers.

The implications extend beyond the established quantum powers. For emerging technology economies, the international nature of the industry creates opportunities to specialise in particular components or applications without having to develop an entire quantum computing industry from scratch.

South Africa has research capabilities in quantum science and photonics, the technology of generating and controlling light. Notably, at Wits University, Professor Andrew Forbes leads the Structured Light Laboratory, pioneering ways of manipulating light for ultra-secure communications and advanced imaging, while also directing the South African Quantum Technology Initiative.

These areas could provide opportunities for participation in international supply chains, although commercialising scientific expertise remains a hurdle.

The survey did not separately analyse South Africa or the wider African quantum economy. Its findings do suggest, however, that smaller countries could benefit from becoming specialist suppliers to the global industry. India is already pursuing that opportunity.

“This study shows that the strength of the quantum industry will depend not only on national capability, but on how effectively those capabilities connect across borders,” said Abhishek Purohit, India ecosystem liaison for the study and director of technology strategy at QURECA.

“For emerging quantum economies such as India, this creates an important opportunity to contribute specialised capabilities, integrate more deeply into global value chains, and become a trusted partner in the next phase of quantum commercialisation.”

One glaring omission from the study is China, which has invested heavily in quantum computing and communications. No companies headquartered in China were included among the respondents, although China appeared among the supplier and customer locations identified by participating businesses.

The research also excluded academic institutions, which continue to play a major role in developing quantum technology. Consequently, the findings describe commercial supply chains within the surveyed industry, without capturing the full extent of global quantum research and development.

The researchers hope the data will help governments devise industrial policies that protect sensitive technologies while allowing companies to continue trading with trusted international partners. That is easier to recommend than to accomplish, of course.

However, said Jonathan Legh-Smith, executive director of UKQuantum, cooperation would be essential as the industry develops.

“Quantum is inherently international across markets, standards, research, talent, capital and supply chains,” he said. “The report highlights this global interconnection and emphasises the need for practical cooperation between quantum nations.”

• Read the full Global Quantum Supply Chain report here.

* Arthur Goldstuck is CEO of World Wide Worx, editor-in-chief of Gadget.co.za, and author of The Hitchhiker’s Guide to AI – The African Edge.