Quantum’s big leap puts data centers in the spotlight

Quantum computing, which has been largely confined to labs for decades, may be closer to its breakout moment than many on Wall Street expect.

The technology has long been touted as futuristic, using the principles of quantum mechanics to solve problems beyond the capabilities of the most powerful classical supercomputers. However, rapid advances are prompting increased investment in the field and sparking debate about how these powerful computers will integrate with industries such as the already booming data center sector.

“We are confident that by the end of the decade, machines of commercial value will be deployed in data centers,” said Zulfi Alam. microsoftQuantum’s corporate vice president told CNBC.

“Last year I couldn’t be more certain, but this year I can say with certainty that by 2029 we will have commercially viable machines, which means they will be able to do calculations that classical machines cannot do,” said Alam, who leads the company’s development of scalable quantum machines.

Classical computers use switches or bits to make or break current at any given moment to perform calculations. The more bits there are, the more computational power there is. Quantum computers, on the other hand, take advantage of the ability of some materials to exist in “on” and “off” states simultaneously at extremely low temperatures. This allows quantum bits (qubits) to perform the same calculations very quickly.

Microsoft, which announced a new quantum computing chip called Majorana last year, is one of several hyperscalers, or companies that offer computing power that can rapidly scale as demand increases. google and Amazon This is a company that has invested heavily in technology.

Patrick Moorhead, CEO and chief analyst at Moor Insights & Strategy, said the defense sector is making early investments in both quantum computing and networking, while hyperscalers and platform vendors are ramping up investment through cloud access, price management and developer platforms.

Governments are also stepping up investment, with China leading the way in public spending on quantum technology at just under $18 billion, followed closely by the European Union, according to the European Center for International Politics and Economics (ECIPE), a think tank.

Most industry roadmaps currently set the implementation of these systems between 2028 and 2032, according to Ellie Brown, quantum computing and cloud economics analyst at S&P Global Market Intelligence.

UBS analyst Madeline Jenkins said her company’s roadmap sees the benefits of quantum computing arriving by the early 2030s, but that she sees the benefits of quantum computing coming sooner than that. “Many companies are telling me that 2027 is going to be a big year for quantum, both in terms of roadmaps and in terms of what has been accomplished,” she said.

Taken together, these timelines show that the sector is well on its way to real-world deployment, while also raising important questions about how today’s data infrastructure needs to evolve to support it.

UBS analysts led by Jenkins said in a 103-page report released in January that the industry is close to creating a quantum computer capable of solving problems in 200 seconds that would take traditional supercomputers 10,000 years, although building a quantum computer could cost tens of millions of dollars.

Regarding the impact on the data center ecosystem, experts told CNBC that quantum technology could reduce the energy demands of power-hungry facilities while also reducing the workload required to train AI.

In terms of energy, Jenkins said quantum computing will require “a fraction of what a data center uses.”

“It’s all about time. If you replace the same problem that would take thousands and thousands of hours with a quantum computer that takes seconds or minutes, obviously it requires much less energy,” she said.

Microsoft’s Alam also noted the low power requirements of quantum computers, stressing that Majorana 1 “is putting out more power than the entire planet in the palm of your hand, and it’s not running super hot. It’s running cold.”

Although quantum technology is rapidly advancing, it is unlikely to replace the classical computing currently hosted in data centers in the short term.

“Ideally, the overall problem-solving workload would be less efficient, but not completely replaced,” S&P’s Brown said.

Microsoft’s Alam emphasized that quantum systems do not operate in isolation. “Quantum machines are not standalone entities; they are hybrid tools. They require high-performance computers in close proximity to the quantum accelerator,” he said.

Moor Insights & Strategy’s Moorhead also noted that once quantum scale becomes a reality, it will likely play a complementary role by adding a new class of “specialized infrastructure” within data centers and moving facility designs toward “quantum pods,” which have their own power and thermal needs.

“While it will not replace AI data center expansion as a major energy driver in the near term, it will add some specialized loads and operational complexity,” he told CNBC in emailed comments.

Ultimately, the AI ​​boom will continue to be the primary driver of demand for facilities, and while the shape of demand may change, the scale will remain the same.

Building this type of system within a real data center environment is not trivial and may require an entirely new dedicated facility.

Only a handful of specialized quantum computers are currently being deployed in data centers, and quantum vendors are currently brainstorming a set of industry standards to streamline widespread deployment, according to Brown and S&P analyst Kelly Morgan.

Brown said there is still a significant amount of bespoke work required to integrate quantum systems into data centers, adding: “We don’t have the quantum talent to leverage it and deploy it effectively.”

But in the long term, she foresees “a great interaction between quantum and other data center fields, including AI,” where the two could potentially work together to solve problems.

Tim Adams, president and CEO of the International Finance Association, said these hurdles reinforce the need for continued investment in data center infrastructure over the next decade.

“Data centers are necessary to advance technology transformation and should be considered as one of the high-potential investments toward the very transformative outcomes that are certainly possible over the next decade,” Adams told CNBC.

And this phase has already begun, with Brown pointing to a surge in M&A activity aimed at building the capabilities needed for the commercial phase of quantum.

“M&A has been massive in the last three months,” Brown said, referring to several acquisition announcements by quantum companies. ion Q. “There has been a lot of positioning in this space to not only help improve quantum talent and technology, but also to help take control of the supply chain a little bit.”

When it comes to risks, there is no doubt that data security is the biggest risk, along with the opportunities that quantum computing offers.

According to UBS, a sufficiently powerful quantum computer could break current encryption methods, meaning security systems could no longer be trusted. The Swiss bank’s report warns that companies need to implement new quantum-secure cryptographic technologies and start investing in them within the next few years.

Despite this surge in investment, Microsoft’s Alam warned that the road ahead will not be easy. He predicted that bringing quantum machines online will require a lot of “blood, sweat and tears,” from achieving performance benchmarks to solving complex technical problems, all of which will need to “converge at the right time” for the real magic to happen.