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IDC significantly lowers quantum computing forecast as AI advances rapidly

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The analyst firm IDC has said that it is significantly lowering its quantum computer spending forecast due to slower-than-expected hardware advancements. It also said that new technologies such as generative AI which offer greater near-term value are eating into the money that would have been spent on quantum computers.

In its latest forecast, it believes that quantum computer spending will grow from $1.1 billion in 2022 to $7.6 billion in 2027. That’s a five-year compound annual growth rate (CAGR) of 48.1%.

Back in 2021, IDC stated that by 2027, quantum computing spending would reach $8.6 billion, that’s a billion dollars more than is now expected.

Aside from slower quantum hardware advancements and new technologies like generative AI, macroeconomic factors like higher interest rates and inflation are having an impact. Despite the pandemic, 2021 was a much more optimistic time economically, the stock market had bounced back from the 2020 flash crash and inflation was only just starting to hit.

‘There has been much hype around quantum computing and when quantum computing will be able to deliver a quantum advantage, for which use cases, and when,’ said Heather West, Ph.D., research manager, research manager within IDC’s Enterprise Infrastructure Practice.

‘Today’s quantum computing systems may only be suitable for small-scale experimentation, but advances continue to be made like a drumbeat over time. Organizations should not be deterred from investing in quantum initiatives now to be quantum ready in the future.’

Moving away from spending on quantum computers, IDC said that investments in the quantum computing market will grow at a CAGR of 11.5% over the 2023-2027 period and will reach $16.4 billion by the end of 2027.

It said investments will come from public and privately funded institutions, internal allocation from technology and services vendors, and external funding from venture capitalists and private equity firms. It noted that 13 countries plus the EU have quantum initiatives which should drive investments too.

Source: IDC

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