The development of hardware for use in quantum computing has progressed slower than anticipated, prompting the market intelligence company International Data Corp. (IDC) to revise its spending forecast downward to $7.6 billion by 2027, in contrast to its projections of $8.6 billion made in 2021.

IDC foresees growth in quantum computing expenditure, currently standing at $1.1 billion in 2022. This translates to a five-year compound annual growth rate (CAGR) of 48.1%. The forecast encompasses both fundamental quantum computing-as-a-service and the supporting and adjacent quantum computing services.

The majority of this growth will be driven by the maturation of quantum computing infrastructure and platforms, along with the expansion of performance-intensive computing workloads suitable for quantum technology.

IDC forecasts worldwide quantum computing market to grow to $8.6 billion in 2027
Deconstructing Quantum Computing

“While today’s quantum computing systems may only be suitable for small-scale experimentation, continuous advancements are being made at a consistent pace,” said Heather West, Ph.D., a research manager within IDC’s Enterprise Infrastructure Practice. “Organizations should not be dissuaded from investing in quantum initiatives now to ensure their readiness for the quantum future.”

Within this forecast, IDC distinguishes between fundamental quantum computing-as-a-service, as well as the spending by customers on enabling and related quantum computing services. The report also delivers an overview of the market, highlighting trends in quantum computing investments, as well as the drivers and challenges faced by quantum computing vendors and cloud service providers.

Quantum computing investments

In addition to the sluggish progress in quantum hardware development, IDC identified renewed interest in artificial intelligence, particularly generative AI, as one of the factors contributing to the delay in quantum computing advances. Other contributing factors include macroeconomic conditions, elevated interest and inflation rates, and possible economic recessions.

IDC asserts that a substantial development in quantum hardware is important for the industry’s acceleration.

Until that milestone is reached, much of the growth will be fueled by the maturation of quantum-computing-as-a-service infrastructure and platforms, as well as the expansion of performance-intensive computing workloads suited for quantum technology.

IDC also expects that investments in the quantum computing market will experience a CAGR of 11.5% over the 2023-2027 forecast period, culminating in nearly $16.4 billion by the end of 2027. This encompasses investments from publicly and privately funded institutions, internal allocations (R&D expenditures) from technology and services vendors, and external funding from venture capitalists and private equity firms.

The IDC said that the rising interest in quantum computing by global government agencies; as of now, 14 such agencies (13 countries and the European Union) have unveiled quantum initiatives spanning multiple years, set to generate billions of dollars for quantum computing research.