British innovation will be key to success of merger dubbed the 'Apple of quantum computing'

Quantum computing is one of those technologies that, like artificial intelligence, has been attracting the interest of investors for some time – even though few can actually explain what it involves.

The technology, put very simply, involves harnessing quantum physics – the branch of the science that seeks to describe and explain how and why objects behave and move in the way that they do – to store data or perform computations to a vastly more efficient degree than traditional computers.

Quantum computers are said to be able to operate millions of times faster than existing ones.

A number of governments around the world are pumping capital into the sector in the hope of establishing a lead in the field. They include Germany which, in June last year, announced a €2bn (£1.7bn) investment into two new quantum computers.

China, meanwhile, is setting up a national laboratory for quantum information sciences.

But the technology has also been the topic of much debate in investment circles.

Supporters believe it has the potential to transform many industries and sectors, including genetic medicine, pharmacology, financial services and materials development.

Sceptics argue that its vast potential may take many years, if ever, to be realised.

Wednesday, however, brought news of a deal that suggests quantum computing may indeed be on the verge of a breakthrough that could see it being applied more widely across business and industry.

Cambridge Quantum Computing, a British business founded in 2014, announced it is to combine with the quantum solutions arm of the US industrial giant Honeywell.

The pair said the combined business would be “extremely well-positioned to lead the quantum computing industry by offering advanced, fully integrated hardware and software solutions at an unprecedented pace, scale and level of performance to large high-growth markets worldwide”.

Honeywell will be the majority shareholder of the new company, with CQ’s shareholders, including Ilyas Khan, its founder and chief executive, owning just over 45% of the business.

Mr Khan said that he believed a breakthrough in the quantum computing had already arrived.

He told Sky News: “I think the tipping point was probably in the last 18 months. China, the United States, the United Kingdom, of course, have major programmes and lots of countries and companies have said that they face an existential risk if they don’t get quantum computing right.

“In terms of applications, things that we will use on a day to day basis, I think a good analogy is mobile phones – at the end of the 1980s, before they arrived, nobody really knew that they’re going to use them and of course, when they did arrive, the markets and their usage exploded.

“I would imagine that later on this year things like cyber security, for example, will be offering unhackable keys using the quantum computer, and it will begin to be more and more useful. Maybe the more esoteric uses are probably a couple of years away, machine learning, for example, [or] material discovery.”

He said the combined business would be a “global powerhouse” capable of creating and commercialising quantum solutions that address “some of humanity’s greatest challenges”.

British tech start-ups are often accused of selling out too early but Mr Khan, who will lead the combined business, could not be described as such.

He added: “The UK is the leader in quantum and this is the first time since the Second World War that a major technology initiative is not being driven by Silicon Valley. We are a software and an algorithm provider and the merger creates an integrated business.

“[It will be] what I would describe as an Anglo American, actually a global business. The characterisation of a sell-out, I think, is probably not one I would agree with.”

Honeywell will be investing between $270m (£190m) and $300m (£211m) in the new venture and Mr Khan said this money would be invested, predominantly, in people.

At the start of its life, the enlarged business will be employing around 350 people, of whom 200 are scientists – more than half of them boasting doctorates in disciplines such as chemistry, physics and maths.

Mr Khan went on: “This is a business where we are in scaling and growth mode – so it’s primarily people. We will probably grow quite rapidly as far as the numbers are concerned, both in the United Kingdom, and in the United States, and then a reasonable amount of that capital will be in continuing to increase the capacity of the quantum computers. We have the world’s best performing computer right now – and we will be deploying that for customer usage over the course of the next few years.”

Hinting at a forthcoming stock market flotation of the business, Mr Khan said there would also be a fund-raising at some point in the near future, in which outside investors would be able to buy a stake in the business.

He declined to say what valuation had been put on Cambridge Quantum under the transaction but said some numbers would be released “over the course of the next week or two”.

Mr Khan went on: “This is something which is obviously something that I’m very proud of. It’s a British winner. The United Kingdom is the leader in this. We are the world’s leader and, of course, consequently very valuable.”

That reluctance to talk specific numbers is, perhaps, understandable.

Barron’s, the influential US financial publication, has already suggested that the enlarged business could be the ‘Apple of quantum computing’ because the deal brings together Honeywell’s expertise in quantum hardware with Cambridge Quantum’s expertise in software and algorithms – emulating the way Apple straddles hardware, operating systems, and software applications. Honeywell itself has said that quantum computing will one day be a trillion dollar-a-year industry.

The deal marks another twist in what has been an inspiring story.

Born in Haslingden, in Lancashire, Mr Khan’s father was a bus driver and he was brought up in what he told the Lancashire Telegraph in 2009 was a “two up, two down terrace”. Educated at Haslingden Grammar School and University of London School of Oriental and African Studies, he want into banking on graduating, spending 20 years of his career in Hong Kong.

He first came to public attention when, in 2009, he rescued Accrington Stanley FC and later served as its chairman for three years. He has reportedly sunk more than £2m of his own money into the club over a 20-year period.

On returning to the UK he joined the University of Cambridge’s Judge Business School and chairman of the Stephen Hawking Foundation and it was a comment from the late Professor Hawking, a friend, who prompted him to start Cambridge Quantum.

He told The Quantum Daily last year: “The prompt really came from a comment that Stephen made to me in a meeting that we were attending and Stephen said ‘this is for real’. This really opened my eyes.”

It is just possible that those investors still sceptical about quantum computing may well have had their eyes opened, too, following this deal.

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