Quantum Networking Market Size Share and Trends

Quantum Networking Market Size & Growth

[233 Pages Report] The global quantum networking market is projected to grow from USD 861.8 million in 2024 to USD 5,382.0 million by 2029, at a CAGR of 44.2% from 2024 to 2029. The quantum networking market is driven by the rising government investment in quantum technologies and the rapid advances in quantum cryptography and computing worldwide. The advancement in quantum computing has led to the increasing need for quantum-resistant networks to protect against data breaches, supporting market growth. Increasing concern over cyber-attacks and the escalating adoption of quantum technologies in secure communications in various industries, including banking & finance, government & defense, healthcare & life sciences, and IT & telecom, will further propel the market. Furthermore, the growing funding from public and private sectors to support quantum communication advancements will also support the growth in the quantum networking market. The quantum random number generator (QRNG) segment held the largest market share in 2023 due to the increasing demand for cryptographic security. QRNGs offer random numbers for encryption for quantum-resistant cryptography, driving their adoption in quantum networks.

Quantum Networking Market Forecast to 2029

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AI Impact on Quantum Networking Market The adoption of AI in the quantum networking ecosystem drives major advancements and optimization across various aspects of the market. One of the impacts is the quantum hardware control optimization. Here, machine learning algorithms are used to optimize the control parameters of the quantum processors, which are crucial for stable quantum network operations. Additionally, AI is crucial in developing threat detection and security protocols for quantum networks due to the growing security concern in quantum networks. AI-based tools and solutions also help speed up the development processes, further boosting the advancement in quantum networking technologies.

Quantum Networking Market Trends & Dynamics

Driver: Growing demand for quantum-secure communication solutions to mitigate cyber-attacks

The increasing rate of cyberattacks drives the quantum networking market. Traditional security methodologies struggle to keep up with complex cyber-attack threats. The May 2023 MOVEit hack, which was a cyberattack that targeted a flaw in the MOVEit managed files, for example, demonstrated how vulnerability in a file-sharing application could be exploited across multiple organizations. It also demonstrated how an attack on various organizations can facilitate data identification. Several emerging cyber threats are sophisticated, advanced attacks. They use zero-day vulnerabilities, ransomware, and the cyber operations of state-sponsored attacks, resulting in damage beyond the ability of traditional defenses and leading to a rise in costs. Additionally, old encryption schemes (e.g., RSA, ECC) assert less impact due to the rapid advances in quantum computing.

Traditional computing devices solve complex math, while quantum devices can conduct computation solving. Quantum computers have the potential to break widely used encryption algorithms by solving complex mathematical problems exponentially faster than classical computers. As such, the National Institute of Standards and Technology (NIST) has recognized this risk through its analysis and reports on the threat level and risk transitioning of quantum computers versus traditional cryptographic methods. It is working toward standardization of post-quantum cryptography.

Quantum Key Distribution (QKD) serves as a solution to potential risks associated with traditional encryption methodologies. This is aided by advancements in quantum networking that leverage the principles of quantum mechanics. QKD designs intelligent and more advanced encryption keys that are extremely challenging to intercept or decrypt without detection. Adopting post-quantum cryptography (PQC) solutions significantly enhances cybersecurity by addressing the limitations of current encryption methods. These advanced cryptographic techniques are designed to withstand attacks from both classical and quantum computers, effectively mitigating the risks posed by emerging quantum computing solutions such as universal quantum computers, quantum annealers, and photonic quantum computers, which are capable of running quantum algorithms, that could break widely-used public-key cryptography.

Restraint: High costs of quantum networking hardware

A major restraint in the quantum networking market is the high costs of quantum networking hardware and research & development. Single-photon detectors and sources required for quantum communication are expensive and resource-intensive. Therefore, the reduced budgets of organizations limit the adoption and integration capabilities of the quantum networking solution. These factors prove further advancements and cost reductions are required for broad market acceptance. In addition, government funding for quantum research is used to build up the required infrastructure, and research and technology development costs are high. The high cost of quantum networking limits large-scale adoption since it requires long-term financial commitment and huge resources following investments from the public and private sectors. This is expected to restrain the quantum networking market growth.

Opportunity: Increasing need for quantum networking technologies for secure financial transactions

The increasing deployment of quantum networking technologies in financial transactions creates lucrative opportunities for players in the global quantum networking market. Quantum Key Distribution (QKD) provides unparalleled security by exchanging encryption keys with absolute confidentiality, enabling secure communication and making it a crucial tool for safeguarding sensitive data in corporate, healthcare, and government environments. Security is critical for the banking industry due to the availability of sensitive client and proprietary information. Banks need to secure information while also ensuring the availability of data for transactions on a real-time basis. Quantum networks can provide near-impenetrable security in banking and other critical sectors, driving the market. These factors encourage companies to develop and implement advanced quantum networking technologies that address the specific needs of end-use industries.

Challenge: Vulnerabilities to interference, decoherence, and signal loss

In any quantum network, qubits the building blocks of quantum information-are easily corrupted by electromagnetic radiation and other forms of usual environmental noise, leading to errors in sending information and quantum state processing. Besides, decoherence explains a situation in which a quantum system loses its quantum effect due to interaction with the environment. This could potentially lead to qubits losing their quantum state and switching over to classical behavior, causing the failure of quantum information transmission and processing. As a signal travels within the communication channel, absorption can weaken or attenuate quantum information. At times, this can reduce or even destroy communication fidelity. This will further break the effective operation in practically problematic parts in connections that use optimal fiber states, where losses in the photon break the effective operation of the quantum network.

Quantum Networking Ecosystem

Quantum Random Number Generator (QRNG) segment held largest market share in 2023

The QRNG segment accounted for the largest market share in 2023. QRNG devices, which are essential for generating random numbers for cryptographic applications, gain momentum due to rapid integration into consumer and enterprise devices. Companies are developing next-generation quantum random number generators inside mobile handsets, IoT, and edge devices. In April 2022, ID Quantique (Switzerland) launched the Quantis QRNG chip, the first Quantum Random Number Generator designed and manufactured for mobile handsets, loT, and edge devices. It generates provably unbiased and unpredictable randomness with high entropy from the first bit. Therefore, advanced quantum random number generators have been adopted at an accelerated rate by businesses and consumers who seek security in all their digital interactions. Corresponding quantum networking solutions will drive investment as part of the broader trend of securing the quantum communication infrastructure.

Government & defense segment captured largest share of quantum networking market in 2023

Government & defense is likely to dominate the quantum networking market during the forecast period. This end-use industry applies quantum networking to secure classified information and enhance cryptography against sophisticated cyber threats. With the increasing sophistication and frequency of cyber threats, the demand for advanced solutions to protect sensitive information and maintain secure communication is growing in the defense sector. The latest in quantum networking for defense is the Defense Advanced Research Projects Agency (DARPA) Quantum-Augmented Network program. Through QuANET, DARPA will explore how integrating quantum and classical approaches to networking could provide quantum physics-based security capabilities to critical network infrastructures. The program will be the first to genuinely realize the security and covert advantages that quantum networks bring while taking advantage of the pervasive reach of classical networks. Companies, such as QuANET, provide a bridge between the communities of optical communications and quantum networking. Such innovations will drive the transition to a new networking paradigm, offering increased security to key defense infrastructures that can be scaled up to metropolitan area networks.

North America to register highest CAGR in quantum networking market during forecast period

North America is projected to exhibit the highest CAGR during the forecast period due to significant government investments, a strong ecosystem of research institutions and technology companies, and a rapidly growing commercial interest in quantum technologies across various industries such as finance, healthcare, and defense sectors which are exploring quantum networking applications. Considering that most major tech companies and startups operating in the region require heavy investment in the region,  there is a significant flow of capital into quantum networking research & development. This investment is crucial for advancing the technology, building infrastructure, and bringing quantum networking solutions to the market. Companies, such as MagiQ Technologies, Qubitekk, Inc., Quantum Xchange, Qunnect Inc., Aliro Technologies, Inc., and QuSecure, Inc., are leading the charge with significant investments in quantum computing and networking in the region.

Quantum Networking Market by Region

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Top Companies Quantum Networking - Key Market Players

The quantum networking market is dominated by players, such as TOSHIBA CORPORATION (Japan), Quantumctek Co.,Ltd. (China), ID Quantique (Switzerland), HEQA Security (Israel), QuintessenceLabs (Australia), MagiQ Technologies (US), Terra Quantum (Switzerland), Crypta Labs Limited (UK), Quantum Xchange (US), and Qunnect Inc. (US). Apart from these, some of the emerging companies in the quantum networking market are Qubitekk, Inc. (US), Aliro Technologies, Inc. (US), QuNu Labs Private Limited. (India), Arqit Quantum Inc. (UK), Miraex (Switzerland), SpeQtral Pte Ltd (Singapore), KETS QUANTUM SECURITY LTD (UK), Aegiq Ltd. (Sheffield), QuBalt GmbH (Germany), SSH (Finland), QuSecure, Inc. (US), VeriQloud (France), Qrypt (New York), Quside Technologies. (Spain), and LuxQuanta Technologies S.L. (Spain).

Scope of the Quantum Networking Market Report

Quantum Networking Market Highlights

This research report categorizes the quantum networking market Offering, Vertical, Application, and Region

Recent Developments

• In May 2024, Cisco became a corporate partner in the Chicago Quantum Exchange to enhance quantum communications and quantum-safe networking. Cisco Quantum Lab will collaborate on tapping the Chicago Quantum Network—a 124-mile quantum network—to develop secure quantum internet technologies. At the same time, it would work toward better national security and financial systems through quantum-resistant protocols and techniques.
• In March 2024, ID Quantique (IDQ) introduced Clarion KX, a quantum-enhanced key exchange platform to future-proof the security of the network for enterprises and telecom operators. This platform combines Quantum Key Distribution with advanced algorithm-based encryption to provide an out-of-band, secure key distribution process. It integrates NIST-approved QRNG for extreme security, wherein vulnerability mitigation against emerging quantum threats and “Harvest Now, Decrypt Later” cyber-attacks are handled.
• In December 2023, Aliro Quantum launched the Aliro Simulator, a modular quantum network design and testing tool. It models everything from small optical components to large networks, allowing examination into configurations and use cases before their actual deployment in the real world.
• In November 2023, TOSHIBA CORPORATION and SpeQtral Pte Ltd expanded their collaboration on Singapore’s National Quantum-Safe Networks+ Project. This would include scaling up deployments with Toshiba’s battle-tested fiber-based QKD and the Quantum Key Management System product in quantum-safe testbeds globally.
• In April 2023, Qunnect launched GothamQ, a quantum network distributing entangled photons across NYC’s telecom fibers, marking a significant step toward practical quantum networking and the Quantum Internet.

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