Quantum computing promises a significant leap in computing power for mathematical problems in the development of medicines, logistics, finance, cryptography and many other areas. If the development of a commercially viable quantum computer is successful, those companies and governments that had early access to hardware and software will have a significant business advantage and increase in technological sovereignty over those who entered the race late.

Currently, American companies such as IBM and Google are in the lead. China is ramping up its activities. The European Union, however, is once more in danger of suffering from the “European paradox”: having a strong research base but lagging behind in turning ideas into widely used innovation and thus in value creation. The EU, and with it, Germany, are thus in danger of becoming dependent on a third party in yet another basic digital technology, eroding an already compromised technological sovereignty in the digital sphere.

To prevent this from happening, in 2020 the German Government under Chancellor Angela Merkel, as part of the Corona stimulus bill, announced 2 billion EUR of additional investments into quantum technologies with a focus on the development of domestic quantum computing hardware. This sparked high levels of activity in academia and led to the formation of the QUTAC industry consortium. In the wake of the federal announcement, multiple German states launched their own additional quantum computing initiatives to strengthen their respective positions.

Going forward, the main challenge will be to coordinate, shape and cultivate these activities in a way that results in a pooling of forces rather than a fizzling out due to failing to reach critical mass in the one or two most promising endeavors.

Current State of Affairs: The Technical Challenges of Quantum Computing

Quantum computing is a curious test case for discussions about technological sovereignty compared to other technologies such as 5G. While undoubtedly many technological challenges have to be solved for next generation digital cellular broadband, the development roadmap is reasonably clear and can be anticipated. In contrast, business strategies and government policy for quantum computing have to deal with a much higher level of uncertainty: As late as 2017, experts in background discussions were divided as to whether quantum computing would prove to be physically possible at all. By 2019 things had changed. The debate had shifted from the question of “if” to “when.” In late 2019, Google engineers published the first paper claiming to have proven a “quantum advantage” of their system compared to a regular computer; in 2020 a Chinese group followed suit.

The proof that a new computational platform is indeed able to tackle certain mathematical problems much faster than classical computers was not just a scientific breakthrough. Solving these classes of computational problems is at the heart of the business models of major industries: simulating the properties of medical molecules and chemical catalysts, optimizing delivery routes in logistics and managing risk profiles in financial portfolios. Access to a powerful quantum computer thus would be a major business advantage for early adopters. Additionally, quantum computing necessitates the development and implementation of new cryptographic approaches, as some of the most widely used encryption methods by governments, organizations and private persons are vulnerable to it. For these reasons, even at an early stage and with no clear timeframe for the development of commercially viable quantum computers, this new technology had major business and policy implications.

While there is now broad scientific consensus that building such a quantum computer is indeed possible, the jury is still out regarding on what technological hardware platform it will be built. Some teams are trying to build qubits, the basic computing unit of a quantum computer, from superconducting circuity; others are using photons, ion traps etc. They all share the property of being highly demanding when it comes to financial investments and required knowledge, forcing developers to focus on one platform, two at most. Simultaneously developing all platforms to cover all bases is unfeasible. And there is no approach that lacks highly outspoken advocates and detractors. In the end, only actual success will prove the winner.

Current State of Affairs: USA in the Lead, Germany Late to the Race

In 2020, these dynamics on the technological side had two major implications for the German government when it resolved to amend its quantum technology policy.

First, Germany was already late to the race. American companies such as Google and IBM had started to invest heavily in developing quantum computing at a time when it was still unclear whether it was even physically possible. European companies, on their part, expressed interest in using it within their businesses, but made no attempts to develop the necessary hardware on their own. Start-up activity within Europe was also very low, too.

Thus, the American players were able to build up an advantage when it came to facilities, experience, IP and building up an ecosystem, e.g. by offering access to their experimental devices. Not least, they managed to secure for themselves a large number of the brightest minds in the field, with a substantial number of them trained at European universities.

Moreover, the head start of the first movers was already so large that a German attempt at catching up would have to start immediately. There was no way to wait until the best technological platform had won out in order to then focus all spending on it. Additionally, the costs of developing all platforms simultaneously to make sure the winning one would be among them would be prohibitive. Policy action would thus need to devise a mechanism to maximize the chances for supporting the right platform up until the end while dropping dead ends quickly enough to minimize spending on them.

At first glance, Germany seemed well equipped to develop the next generation of quantum technologies. Fundamental and experimental research into them is well established at German universities. In the latest round of the Excellence Strategy of the Federal Government and the Federal States, seven proposals for Clusters of Excellence dedicated to quantum physics at universities managed to secure funding. At the same time, many leading producers of lasers and other basic technologies used in next generation quantum technologies are German companies.

However, an analysis by the German National Academy of Science and Engineering at the beginning of 2020 showed that while Germany is indeed well positioned to take a leading position in quantum sensing, imaging and metrology and is competitive in the area of quantum communication, key elements of an ecosystem are missing when it comes to quantum computing (see Figure 1).

Making quantum computing work requires close cooperation between physicists and engineers as well as between academia and business. Most German quantum physicists lack experience with both, as the transfer of the first generation of quantum technologies such as lasers, MRTs or atom clocks already took place before the current generation of physicists took over. Physicist’s fears of a funding shifting away from fundamental research towards more applied research in the wake of an interest in tangible technological results were not assuaged by the quite assertive entrance of some engineers into this new field of technology.

Fostering cooperation and building of trust between physicists, engineers and business as well as proving that the plans for German quantum computing hardware will not result in funding cuts in other areas of quantum research therefore were essential requirements for policy action.

Besides these general efforts to link the so far rather isolated pockets of quantum competence within Germany, a second deficit has to be addressed: The lack of a system integrator capable of bringing together and coordinating all the needed competences and components that will make up a commercially viable quantum computer. Policy action thus needs to either aim at building up an existing player to fill this role or to create a new entity capable of this feat.

Without policy action tailored to address these weaknesses of the German ecosystem and the European ecosystem as a whole, the specter of the “European paradox” is looming to strike once more, namely, a failure to quickly turn strengths in research into large-scale innovation, resulting in value creation and sovereign control over key technological fields on the international level.

Analysis and Assessment of the Implications of the Current Situation: The Three-Pronged German Strategy

In summer 2020, the German government under Angela Merkel announced its Corona stimulus bill. It included a total of 2 billion Euro earmarked to strengthen quantum technologies, adding to the 650 million Euro already committed via an earlier framework program. The goal was and is to strengthen the technological sovereignty of Germany and Europe in a new digital core technology. Quantum computing hardware would be the focus of these investments, with the government somewhat putting the horse in front of the cart by announcing its intent to “immediately task qualified consortia with the construction of at least two quantum computers.”

This sparked a flurry of activity within German academia and business that, due to timing issues, soon became difficult for the Federal Government to channel. The initial announcement that orders for at least two quantum computers would be placed immediately turned out to be unfeasible due to the state of the technology, as described above. The failure to follow through on an announcement by the Federal Minister of Research and Education a few months later that the selection of the successful consortia was to be imminent caused additional confusion in the communities still waiting for the funding calls in order to apply.

This uncertainty caused unrest within the communities and may have contributed to a few German states forging ahead with their own quantum initiatives, e. g. Bavaria and Lower Saxony. While this additional activity most likely will contribute to the growth, strength and diversity of the German quantum ecosystem, some experts express concern that it could result in a fragmentation of resources instead of focusing them to reach critical mass. The same applies to links to international activities like the European Quantum Flagship or the cooperation between IBM and Fraunhofer-Gesellschaft to install the first IBM quantum computer on German soil.

The German Federal Government finally announced its specific measures and calls in Spring 2021. The Federal Ministry of Research and Education will hand out 1.1 billion EUR, and the Federal Ministry for Economic Affairs and Energy will allocate 878 million EUR. Further, the Federal Ministry of Finance will distribute 50 million EUR on projects it administers.

The Ministry of Research focuses on three areas: tech demos, a user network, and university funding. The first refers to funding for the development of technological demonstrations for the various technological platforms on which a quantum computer can be based. In November 2021, the first recipient of such funding was announced: 40m million EUR were awarded to the Finnish-German startup IQM. The demonstrators in turn are intended to serve as nuclei for the creation of platform-specific hubs in later funding phases. The second area refers to a user-network for quantum computing, intended to help potential users to identify use cases for this new technology in their businesses or areas of work. Last but not least, in the third area, universities will receive funding to expand their offers in the relevant fields.

The Ministry of Economic Affairs plans to fund two consortia, one focusing on hardware, and the other on quantum computing software. Both are intended to work closely with large businesses and SMEs. The German Aerospace Center is tasked with coordinating this venture, in addition to its plans to create an industrial innovation center focusing on quantum computing. Finally, a competence center for quantum technologies in general will be created at the National Metrology Institute of Germany.

This announcement of major activities by two ministries of the Federal Government was complemented by the founding of QUTAC, a consortium representing key industries. Founding members are BASF (chemistry), BMW (automotive), Boehringer Ingelheim (pharmaceuticals), Bosch (industrial technology), Infineon (semiconductors), Merck (chemistry and pharmaceuticals), Munich RE (reinsurance), SAP (software), Siemens (industrial technology) and Volkswagen (automotive). Its goal is to accelerate the commercial and industrial use of quantum computing by identifying and evaluating use cases, highlighting funding needs and exchanging experiences. Strengthening the digital sovereignty of Germany is part of the consortium’s mission.

Outlook and Desirable Future Developments: Challenges Moving Forward

All the moving parts from the political sphere, academia and business are in place. The implementation of policy now must focus on speed and adaptability. International and technological developments within the area of quantum computing will make necessary adjustments on the fly, recruit new partners and devise quick, clean cuts where projects find themselves at dead-ends.

These are not qualities for which the German bureaucracy is currently known. The SARS-CoV-2 pandemic made these deficits widely visible to the German public and subsequently, the unwieldy topic of bureaucratic reform actually managed to become a talking point of major parties in their campaigns leading up to the fall election of the new Bundestag and the subsequent coalition talks between the Social Democrats, Green Party and Liberals. Ideally, innovation will be one of the first policy areas where the new government under Chancellor Olaf Scholz will experiment with more agile governance structures.

Looking further ahead, securing funding for the support of quantum computing in the long term will be the second great political challenge. The results of the continued funding efforts – such as the two desired quantum computers – will take longer to manifest than one or even two elective periods. The next few federal governments will have to resist funding cuts in favor of short-term projects even if they know that the economic and political pay-off might not materialize within the current elective period. The success of building up a German quantum computing ecosystem will depend on politicians giving it enough time to reach maturity and stand on its own feet.

The emergent quantum community in turn has to resist stoking too much hype about quantum computing and the timeline of its development. Careful expectation is needed as inflated expectations and subsequent disappointment could lead to a world-wide “quantum winter”: A radical reduction of funding even as actually progress is made, as has happened twice before in artificial intelligence.

A Relational Approach to Technological Sovereignty

Without an ecosystem where a quantum computer can be built, maintained and productively used, a quantum computer might as well be an exotic piece of art (in public relations communication it is often presented as such). The debate about technological or digital sovereignty for this reason should be about the relationship between the entity desiring sovereignty and the ecosystem that provides all the functions necessary to make use of and further develop the technology in question.

Sovereignty regarding a specific technology could then be evaluated based on how hard it would be to cut off an entity from access to the elements of an ecosystem essential for its respective use.  In the same way, one could ask how much influence different kinds of entities have regarding the future path a technology and how this influence is exerted. This requires a high-resolution analysis of the interplay between technological layers and competencies needed by governments, businesses, research institutions and individuals,  as well as of the shape and international entanglement of the respective value creation networks.

For analysis of sovereignty issues in the digital sphere, the German National Academy of Science and Engineering has proposed a layer model to better differentiate the technological dimensions (see Figure 2) that could be easily adapted to other technological fields. A comprehensive toolbox taking into account the dimensions of competence and value creation network is still lacking.

Of course, an analysis encompassing all three aspects would produce radically different results depending on whether it was performed at the level of a nation state, a company or a citizen. Making visible these crucial differences that are usually glossed over could serve as a starting point towards clarifying the concept of technological sovereignty to a degree that makes it useful for policy decisions and political debate instead of often just being a placeholder for the vague sense that the looming technological cold war between China and USA will be unpleasant for everyone caught in the middle.

This text is published as part of the German-Israeli Tech Policy Dialog Platform, a collaboration between the Israel Public Policy Institute (IPPI) and the Heinrich-Böll-Stiftung. 

The opinions expressed in this text are solely that of the author/s and do not necessarily reflect the views of the Israel Public Policy Institute (IPPI) and/or the Heinrich-Böll-Stiftung.