Quantum Computing Investment

Quantum Computing Investment: Understanding “Fully Fault-Tolerant Logical Quantum Bit”

Currently, Quantum Computing is still in the “Noisy Intermediate-Scale Quantum (NISQ) stage,” where it can manipulate dozens to hundreds of physical Quantum Bits, but has not yet achieved full fault tolerance. The goal of universal quantum computing is to utilize logical Quantum Bits to execute arbitrarily complex algorithms, while companies are currently only attempting to encode a small number of error-correctable logical Bits using dozens to hundreds of physical Bits, which can operate stably within a limited time. Overall, quantum computing is transitioning from “demonstrable” to “fault-tolerant,” but it still requires years, if not over a decade, of engineering breakthroughs to achieve scalable universal quantum computers.

01 | What does it mean if a fully fault-tolerant logical Quantum Bit is capable of running algorithms of arbitrary depth?

This is equivalent to achieving a “breakthrough at zero point” in Quantum Computing. Its significance is extremely profound, comparable to: “from sprinting robots to machines capable of running marathons.”

Having such a logical bit means:

1. The basic unit that truly realizes Fault-tolerant Quantum Computing (FTQC).

A. It can withstand noise, decoherence, and the accumulation of operational errors.

B. Theoretically, the lifespan of quantum information can be extended indefinitely.

2. Can execute arbitrary-depth Quantum Computing circuits.

A. Current Quantum Computing can only perform dozens or hundreds of layers of quantum gate operations (after which error accumulation leads to failure).

B. Fault-tolerant logical bits can execute thousands of layers of gate operations, which enables the execution of practical algorithms (such as Shor's algorithm, quantum chemistry simulations, etc.).

3. It is a necessary threshold for “Practical Quantum Computing.”

A completely fault-tolerant logical bit is akin to the invention of the “stable transistor.”

B. From that moment on, Quantum Computing was no longer just a laboratory demonstration, but a technology that could be industrially scaled.

02 | Does such a “fully fault-tolerant logical bit” already exist?

The answer is: Not yet.

Although many companies (such as Quantinuum, Google, IonQ, IBM, PsiQuantum) claim to have achieved “logical bits” or “error-correcting logical bits”, these are all finite-lived logical bits, rather than being in the sense of “fully fault-tolerant”.

The current situation is as follows:

03 | How to Rationally View “Fully Fault-Tolerant Logical Bits”?

1. Currently, all logical bits are “partially fault-tolerant”: they can extend their lifespan through error correction, but they still cannot execute algorithms indefinitely.

2. A truly “fully fault-tolerant” logical bit requires:

1. Door Fidelity < 10^-4

2. Error correction overhead < 100 physical bits / logical bits

3. Stable real-time quantum feedback control

3. Currently, no company has reached this point yet, but Quantinuum, Google, and IBM are gradually approaching it.

Quantum Computing Investment: How to Rationally View Quantinuum's 48 Logical Quantum Bits

The Helios system recently released by Quantinuum Quantum Computing claims that its product Helios can achieve 48 logical quantum bits with error correction capability using 98 physical Quantum Bits. Compared to other mainstream architectures that require dozens or even hundreds of physical quantum bits to realize a single logical quantum bit, Helios has nearly achieved a 2:1 efficient conversion. This technological breakthrough relies on the high coordination of hardware and software as well as complex error correction algorithms, posing a significant challenge in the field of quantum engineering.

This news has sparked heated discussions in both academia and industry - it could either represent a substantial breakthrough in Quantum Error Correction engineering or highlight the difference between demonstration and promotion. Quantinuum is a global leading Quantum Computing company formed by the merger of Honeywell Quantum Solutions and Cambridge Quantum in 2021, focusing on full-stack quantum technology development from hardware to software. Honeywell currently owns approximately 50%~55% of Quantinuum shares.

01 | Why is this a result worth paying attention to?

1. From the perspective of engineering difficulty, it is very hard to achieve.

Quantum error correction requires encoding a “fragile quantum state” into many physical bits and suppressing noise through frequent measurement/feedback. The traditional view is that creating a reliable logical bit may require dozens to hundreds of physical bits. In this context, claiming a 2:1 encoding ratio is clearly a very unusual efficiency.

2. Evidence of Hardware and Software Collaboration

Quantinuum's physical gate fidelity (single- and two-qubit fidelity) is at a leading level in the industry, and they have published a detailed system white paper/preprint, indicating that this is the result of a system-level (hardware + control + software stack) optimization rather than an improvement of a single parameter.

3. Existing research teams have regarded Helios as a “usable platform” for research.

Not only internal demonstrations within the company, but independent academic work has been running non-trivial physical simulations on Helios, indicating that this machine has provided research-level computing power externally.

In summary: This is a “highly noteworthy” engineering progress, rather than an empty gimmick.

02 | Horizontal comparison relative to the current industry level

Mainstream approaches (especially many superconducting and early ion demonstrations) typically require far more than 2 physical bits to achieve a stable logical bit, with many systems needing a larger encoding overhead before reaching “break-even” (where the encoded performance exceeds that of bare physical bits). Therefore, Helios's 2:1 claim is considered a “significantly advanced” demonstration in the industry context.

The following are the known situations regarding physical Quantum Bits (physical qubits) and logical Quantum Bits (logical qubits) from several mainstream Quantum Computing companies. It should be noted that the metrics for logical Quantum Bits are still limited and sometimes vague (for example, “error-corrected” vs “error-detected” or “reliable logical bits”), so the data below can only serve as a reference and is not comprehensive or fully comparable.

03 | How to Rationally View This Achievement

1. Trustworthy aspects

● The official and technical white papers exist: Quantinuum has released a press release and a system-level preprint (arXiv), which provides physical gate fidelity, component-level error rates, and system benchmarks. The published white paper reduces skepticism about “pure claims.”

● Third-party research use case: Independent papers running complex simulations on Helios and publishing data demonstrate that the platform is now available for real scientific experiments, not just limited to in-house demonstrations.

2. Aspects that require caution (should not be regarded as “completely fault-tolerant” immediately)

● Ambiguity in the Definition of “Logical Bit”: The term “logical qubit” can refer to a “bit that can detect/correct errors through some encoding,” but different teams have different definitions regarding “fully error-corrected” vs “error-detected.” Quantinuum itself distinguishes between various LQs in its materials (for example, the different counts of error-detected versus error-corrected), indicating that one must consider the specific encoding scheme and the corresponding logical gate error rate. Simply interpreting “48 LQ” as “fully fault-tolerant bits capable of running arbitrarily deep algorithms” is not rigorous.

● Demonstration ≠ Scalable Commercial Use: A one-time system-level demonstration (especially under strictly controlled test tasks or specific circuits) can yield good results, but scaling the same efficiency and performance to thousands or tens of thousands of logical bits while maintaining long-term stability involves numerous engineering challenges such as heat dissipation, control complexity, and hardware yield. Media and companies often emphasize “demonstration success” and “scalable roadmap” simultaneously—these two should be evaluated separately.

3. The key indicator for judging “whether it has landed”

● Logical Gate error rates: It is important to not only consider the “physical gate fidelity” but also to observe whether the error rates of the “logical gates” in medium/deep circuits consistently remain lower than those of the physical bits.

● break-even / Sustainability Testing: Is there clear experimental evidence showing that “encoded bits outperform unencoded physical bits in long-term, deep circuits for practical tasks”? Quantinuum mentions expressions like “better than break-even” in the materials, but we need to look at the specific data and statistical significance.

● Independent Reproduction / Peer Review: arXiv is an important disclosure, but peer-reviewed papers and third-party reproductions greatly enhance credibility. Pay attention to subsequent reports from top conferences/journals (e.g., Nature, PRX, Science) or independent institutions.

● Scalability Roadmap: How vendors can scale the demonstration from 98→48 to hundreds/thousands of logical bits (for example, control channels, error correction overhead, cooling and chip yield) — Is the technology roadmap realistic, is the timeline reasonable, and are there milestones? Quantinuum has published roadmap-related materials, worthy of parallel tracking.

04 | Conclusion

The 2:1 statement from Helios is a real and significant engineering demonstration, but it is not the end of the “declaration that universal fault-tolerant computing is complete”; rather, it is “a step closer to general and scalable fault tolerance, but still requires more independent verification and scalable engineering work.”

Tech news often writes “the success of the demonstration” as “the revolution has arrived.” The results of Helios from 98 to 48 are indeed one of the most remarkable demonstrations in quantum error correction engineering in recent years: it significantly reduced the overhead from physical to logical and has already been used in actual scientific simulations. However, a rational scientific attitude requires us to validate it step by step in the chain of “demonstration → peer review → third-party replication → scalable engineering.” Considering Helios as a “milestone” rather than an “endgame” is a view that is neither overly optimistic nor overly skeptical — this is the most prudent perspective.

“Digging for Gold in the 15th Five-Year Plan”: A Comprehensive Overview of China's Quantum Technology Industry Investments, Core Players, and Golden Tracks

The future is here, and quantum technology is no longer an unattainable laboratory concept, but rather an industrial revolution related to national fortunes and containing huge investment opportunities. With the “14th Five-Year Plan” listing quantum technology as a core track for future industries, this once “unexplored area of scientific research” is rapidly transforming into a “new highland for industries.” For investors, understanding the context of China's quantum industry, identifying the core players and golden tracks within it, has become a necessary course for grasping the technological investment trends of the next decade.

This article will take you on a deep dive into China's Quantum Computing technology industry, from technical directions and core companies to investment logic, creating a clear investment navigation map for you.

01 | Top-Level Design: National Strategy-Driven Golden Track

1. The 14th Five-Year Plan for the Development of Quantum Technology in China:

1. Strategic Positioning: Quantum technology is positioned alongside artificial intelligence, life sciences, deep sea and deep space as a new track for future industries. The goal is to achieve global leadership in quantum communication, practical breakthroughs in quantum computing, and large-scale applications of quantum measurement before 2030, laying a strategic foundation for building a strong technological nation by 2035.

2. Technical Direction:

Quantum Communication: Improve the national wide-area Quantum Bit secure communication backbone network, achieve integrated coverage of space and ground, and promote the large-scale encryption applications in industries such as finance, government affairs, and electricity.

Quantum Computing: Breakthroughs in key technologies such as quantum chips, quantum error correction, and quantum operating systems, advancing the “Zu Chongzhi” “Nine Chapters” series of prototypes towards practical quantum computers, and building a national-level quantum computing power scheduling platform.

Quantum Measurement: Improve the accuracy and stability of Quantum Gyroscopes, Cold Atom Gravimeters, and Quantum Clocks, expanding applications in civil fields such as navigation, geological exploration, and medical imaging.

The above three directions constitute the core pillars of industrial development and also serve as the coordinate axis for our investment layout.

2. The Hefei National Laboratory plays a core role in China's Quantum Technology.

Behind this national strategy is the Hefei National Laboratory, the “strongest brain” coordinating the overall situation. It serves as the “command center” of China's quantum technology, nurturing world-class achievements such as the “Jiuzhang” photonic quantum computer and the “Zuchongzhi” superconducting quantum computer, and has become the technological source of the entire industry.

1. Background and Positioning

Hefei National Laboratory is a national-level comprehensive research institution, led by Academician Pan Jianwei, and is the highest-level research institution in the field of quantum technology in China. It is primarily built on the foundation of the University of Science and Technology of China, benchmarking against the world's top research institutions, and aims to address major national strategic needs by conducting fundamental and cutting-edge scientific research.

2. Main Responsibilities

Breakthrough key core technologies: Focusing on national long-term development and security needs, committed to solving the “bottleneck” problem and achieving self-control in key areas.

Conduct cutting-edge fundamental research: Focus on the forefront of world technology, foster significant original innovations, and promote deep interdisciplinary integration.

Leading the Development of Emerging Industries: Providing fundamental support for cultivating strategic emerging industries through disruptive technological innovation.

3. Main Research Direction

The core research direction of the laboratory is highly focused on quantum technology and its related interdisciplinary fields, specifically including:

Quantum Information: including Quantum Computing, Quantum Communication, Quantum Precision Measurement, etc.

Nuclear Fusion Energy: Conducting fusion science and technology research around the “Artificial Sun” (Fully Superconducting Tokamak Nuclear Fusion Experimental Device EAST).

High-end Measurement Instruments: Independently developed cutting-edge scientific instruments and equipment for frontier scientific research.

Future Technologies: Exploring new fields at the intersection of Artificial Intelligence, chips, new materials, life health, and Quantum Technology.

4. Representative Achievements

“Nine Chapters” Optical Quantum Computing Prototype: A significant milestone in achieving “quantum computing superiority” by repeatedly refreshing the technology level of optical quantum computing.

“Zhu Chongzhi Number” Superconducting Quantum Computing Prototype: Achieved “Quantum Computing Superiority” in the superconducting quantum computing system.

“Mozi” Quantum Science Experimental Satellite: Led the completion of the world's first quantum science experimental satellite scientific experiment mission, achieving multiple breakthroughs including intercontinental quantum secure communication.

EAST All-Superconducting Tokamak: Multiple world records for plasma operation time have been set, laying a solid scientific foundation for future fusion reactor construction.

5. Relationship with the Institute of Quantum Information and Quantum Technology Innovation, Chinese Academy of Sciences

The Hefei National Laboratory has a very close relationship with the Chinese Academy of Sciences Quantum Information and Quantum Technology Innovation Research Institute (referred to as “CAS Quantum Institute”), which can be understood as “one team, two signs” or a highly coordinated integrated operating system. The CAS Quantum Institute is a core component and main carrying entity of the Hefei National Laboratory in the field of Quantum Information. In other words, the CAS Quantum Institute serves as the executor and operational platform for the Hefei National Laboratory in specific scientific research activities. Academician Pan Jianwei concurrently serves as the “Chief Engineer” of both institutions.

02 | Industry Ecosystem: A Clearly Defined “Quantum Map”

China's quantum industry has formed a collaborative ecosystem of “national team leading fundamental research and development, hard technology companies commercializing, and internet giants empowering.” To understand investment opportunities, one must first clarify the positioning and relationships of the major core players.

1. The R&D of quantum computing chips in China is characterized by a “core in research institutes, diffusion in the industry.”

Almost all major, milestone quantum computing chip prototypes were born at the Hefei National Laboratory:

1. “Zu Chongzhi Number” series superconducting Quantum Computing chips:

The team led by Academician Pan Jianwei, Professor Zhu Xiaobo, and others has successfully developed it. This marks China's achievement of international leadership in the field of superconducting Quantum Computing.

Original Quantum: Originating from the Key Laboratory of Quantum Information at the Chinese Academy of Sciences (led by Academician Guo Guangcan). They are one of the earliest companies in China dedicated to the full-stack industrialization of Quantum Computing, having developed and delivered multiple superconducting Quantum Bit computers, with their chip technology inheriting and industrializing the laboratory's achievements.

2. “Jiuzhang” Series Optical Quantum Computing Prototypes:

The team led by Academician Pan Jianwei, Professor Lu Chaoyang, and others has successfully developed it. This marks China's attainment of international leading level in the field of optical quantum computing.

Turing Quantum: Originating from Shanghai Jiao Tong University (Professor Kim Hyun-min's team), focusing on the research and development of optical quantum chips and their industrialization, dedicated to bringing laboratory optical quantum technology into practical use.

2. China's quantum communication is a model of collaborative innovation between industry, academia, and research.

1. Guoshield Quantum:

Background: Originating from the University of Science and Technology of China, founded by the team of Academician Pan Jianwei. It is a leading enterprise in the field of Quantum Computing secure communication worldwide.

Main business: Quantum secret communication as the core, and expanded to Quantum Computing.

Quantum Communication: Providing Quantum Key Distribution (QKD) devices, core components, and overall solutions (such as the “Beijing-Shanghai trunk line”).

Quantum Computing: Provides core hardware components such as superconducting quantum computing control systems, amplifiers, and low-temperature cables. They are the “component suppliers” for superconducting quantum computers.

Positioning: A core hardware and solution provider in the field of quantum information, an absolute leader in quantum communication, playing a key upstream supplier role in the quantum computing industry chain.

2. Collaborative Industry-Academia-Research:

Guards Quantum and Hefei National Laboratory coexist symbiotically, undertaking the commercial transformation of laboratory research results. University of Science and Technology of China / Hefei National Laboratory ⇌ Benyuan Quantum / Guards Quantum: This is the most typical “technology spillover” model. The laboratory produces cutting-edge results, while the company is responsible for engineering, productization, and market promotion.

Guards Quantum (component supplier) ⇌ Origin Quantum and others (system integrators): Guards Quantum provides precision measurement and control systems, low-temperature devices, and other core hardware to other quantum computing R&D units, including Origin Quantum. This is a supplier-customer relationship within the same system.

3. The synergy between industry, academia, and research in China's quantum measurement:

1. National Instrument Quantum

Background: Originating from the team of Academician Du Jiangfeng at the University of Science and Technology of China. The team of Academician Du Jiangfeng is one of the leading teams globally in the field of quantum precision measurement based on nitrogen-vacancy color centers in diamonds.

Core Technologies and Advantages:

Quantum sensing technology based on NV centers: this is its core advantage. They have successfully commercialized the NV center technology from the laboratory and developed a series of globally leading instruments.

Quantum Diamond Atomic Force Microscopy: Capable of imaging physical quantities such as magnetism and electricity with nanometer-level resolution, it has revolutionary applications in materials science, semiconductor testing, and life sciences.

Diamond Quantum Computing Teaching Machine: It is the world's first teaching instrument that can present abstract concepts of Quantum Computing in a visual and operable manner, occupying a huge educational market.

Other Quantum Measurement Techniques:

Atomic magnetometer: Used for extremely high sensitivity magnetic field measurements, with applications in non-invasive biomedical detection such as cardiomagnetism and neuromagnetism, as well as in fundamental physics research.

Quantum Spin Magnetometer, etc.

Comprehensive advantages: top-notch technology sources, strong productization capabilities, and a rich product line. It is not just selling instruments, but is also building a “Quantum Measurement and Computing” instrument platform that covers multiple fields such as scientific research, industry, education, and healthcare.

2. Collaborative Innovation between Industry, Academia, and Research:

Guoyi Quantum is derived from the research team of the University of Science and Technology of China, and its core technology is closely related to the quantum precision measurement direction focused on by the Hefei National Laboratory. The relationship between the two is a typical connection between “basic research” and “technological application”: Hefei National Laboratory, as a national strategic scientific and technological strength, is responsible for frontier exploration and original innovation; Guoyi Quantum, as a market-oriented enterprise, is committed to engineering and productizing the cutting-edge research results of the laboratory (such as quantum diamond single-spin spectrometer and other advanced measurement technologies) and bringing them to the market.

4. Overview of Major Quantum Technology Companies/Institutions in China:

Table Interpretation and Key Insights:

1. Clear division of labor in the industry:

A. The national team (Hefei Laboratory) is responsible for top-level design and cutting-edge breakthroughs.

B. Hard technology companies (Benyuan, Guodun, Turing, Guoyi) are responsible for engineering and productizing scientific research results, forming the backbone of the industry.

C. Internet giants (Alibaba, Tencent, Baidu, Huawei) mainly leverage their own advantages in software, algorithms, and cloud platforms to build ecosystems and explore applications.

2. Differentiated competition in technical routes:

In the field of Quantum Computing, Origin Quantum (superconducting) and Turing Quantum (photonic) are advancing side by side on two mainstream hardware paths, forming a “dual hegemony” pattern.

B. In the field of Quantum Communication, Guodun Quantum is the absolute leader, with a solid position.

C. In the field of quantum measurement, Guoyi Quantum is a leader representing industrialization.

D. Software and Empowerment: Keda Guochuang.

3. Complementary Role Positioning:

There is a close collaborative relationship between them. For example, the measurement and control system of GuoDun Quantum is an important component of BenYuan Quantum's Quantum Computing; Baidu's cloud platform can connect to BenYuan or other companies' quantum computers; the software from Keda Guochuang serves the quantum communication network built by GuoDun Quantum and also serves the measurement devices of GuoYi Quantum.

This table clearly presents a vivid picture of the close integration, clear division of labor, and the coexistence of competition and interdependence in China's quantum technology industry, characterized by “production, education, research, and application.”

03 | Investment Logic: Follow the Sequence of “Commercialization Implementation”

From an investment perspective, the quantum industry will follow the path of “communication → measurement → computing” to explode in succession. Investors should layout in different tracks based on their own risk preferences.

1. Current Choice: Quantum Communication (the most deterministic track)

●Investment Logic: High technology maturity, backed by national-level projects such as the “Beijing-Shanghai High-Speed Railway”, with clear and urgent orders in high-security demand fields such as finance, government affairs, and power.

●Core Asset: Guodun Quantum. As an absolute leader in the industry, its core equipment and solutions have been applied on a large scale, making it the most genuine quantum communication investment target in the current A-share market.

2. Recent Focus: Quantum Measurement (the rapidly rising “hidden champion”)

●Investment Logic: Technology is moving from the laboratory to industrial and defense applications, able to solve pain points in fields such as navigation, resource exploration, and medical diagnosis that traditional technologies cannot address, with clear commercialization scenarios.

●Core targets: Guoyi Quantum, Beihang Quantum, etc. The former is a platform company with products covering research and industry; the latter focuses on high-precision inertial navigation, primarily targeting the national defense strategic market. Currently, they are mostly non-public companies, which are the focus of the primary market and industrial funds.

3. Long-term Layout: Quantum Computing (the most imaginative track)

●Investment Logic: The technical challenges are the greatest, but once overcome, it will reshape the entire computing industry landscape. Current investments belong to a forward-looking layout, with risks and rewards coexisting.

●Core Targets: Origin Quantum, Turing Quantum. They are the full-stack leading enterprises in their respective technical routes, representing the highest level of China's quantum computing hardware field. In addition, Baidu, Alibaba, Tencent, etc. are entering through cloud platforms, which can serve as a window to observe industry progress.

04 | Conclusion: Insights into the Future, Seizing Opportunities

The blueprint for the “15th Five-Year Plan” has been drawn up, and China's quantum technology is advancing at full speed under the dual drive of national strategy and market forces. For investors, this requires both the vision to look up at the stars and the patience to stay grounded.

It is recommended to adopt a “pyramid” layout strategy: at the bottom, allocate to the most deterministic Quantum Bit communication industry chain; in the middle, focus on the Quantum Measurement field, which is on the eve of explosion; and at the top, make long-term strategic investments in the world-changing dreams of Quantum Computing.

The tide of the era rushes forward, and only those who can discern the essence and grasp the core context will be able to win the future in this investment feast of Quantum Technology.

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