IonQ CEO Niccolo de Masi speaks Quantum with AnewZ

Pleasure to be here, Guy. Good to see you again.

Yeah, so look, I've been on the board of IonQ for about five years. I was actually the original sponsor of its IPO in 2020, and I've been working closely with the entire C-suite. I actually interviewed a lot of them and Peter Chapman, who's now our Executive Chairman and until last week was the CEO, and we worked together on pretty much all the major strategic decisions the last five years. So it's been a very seamless transition for me. When you stand back and look at IonQ's market, we're actually in two business lines. So we're in, of course, quantum computing, which is the core of the employee base and where 500 of our 933 patents remain, and we keep building that out. But 400 of our patents and a good chunk of the revenue is actually coming now from quantum networking as well. And the two are related; they are a similar technology core, but we think of ourselves as addressing two TAMs, if you will. UBS McKenzie just put a report out last week, maybe two weeks ago, that identified each business as being about a 10 to 15 billion, you know, annual revenue opportunity in the coming, you know, they said in the coming, you know, five to 10 years. We obviously have been at this longer than almost everybody else in the space, and so I remember studying IonQ's founders and foundational research as far back as the mid to late 90s. So it's closer to 30 years in gestation to get to where we are than what you'd expect from most startups. Quantum computing, of course, was theoretically postulated by Richard Feynman, you know, in the 1970s. It took until the 1990s for one of IonQ's research founders, Chris Monroe, to demonstrate this could be done theoretically and physically in the lab. And then since the mid-90s to today, you know, the company has, of course, invested prodigiously in R&D, and we are proud to be the first public company in the quantum computing space. That was a 2020-2021 IPO, and since then we've, of course, continued to build the commercialization vector as well as the R&D vector of the company.

I think about quantum computing as the third leg of the stool to the overall computing market. So we used to have just CPUs, and Intel was the king of the roost. And I can remember Intel saying that, you know, this newfangled GPU thing that Nvidia was doing or Broadcom was doing was never going to matter, and it was small and irrelevant, you know, 10, 15 years ago. And of course, that has not transpired to be the case because GPUs, though they were built for, obviously, originally game consoles, you know, they're very good at calculations that work for what we call classical AI. Now, it turns out that we've known for 50 years, since, you know, since Dr. Feynman was, you know, first thought about this in the 70s, that there's a whole class of problems that are not going to be solvable by CPUs or GPUs. That's point one. Second point is there's a whole set of problems that quantum processing units, but what we call our machines, QPUs, are going to be much more energy efficient and space efficient for solving. And then there's going to be problems just like today with computers that require a CPU and a GPU. There will be problems that will use classical AI and quantum AI or quantum machine learning, you know, to address efficiently and quickly. Humanity has this voracious appetite for computing power, and the amazing thing about, you know, we as a civilization is that we figure out every year or two how to take advantage of more hardware power using, you know, software to, you know, frankly, improve everyone's life, right? And so quantum computing is focused on solving the most impactful, hardest problems that the world has ever dreamt of that are largely outstanding. It's everything from how do I make better, you know, renewable energy solar cells through to how do I ultimately solve some of the logistics, you know, complexities that delivery companies have. How do I solve, you know, yes, the battlefield of the future is part of it for sure. Code making and code breaking are both things that IonQ does. So quantum computing can do code breaking as we build bigger machines, and quantum networking will build the internet of the future to ensure that we always have safe and reliable communications for e-commerce, the battlefield, governments, and companies to protect their information. When you look more broadly, though, drug discovery, creating new materials—you know, we're a unique business because we IPO'd first, and we've raised the most money in the independent quantum computing space. As a result, we have more commercial partnerships than anybody else in the ecosystem. So whether it's AstraZeneca on drug design, Ansys on computational engineering, General Dynamics on fraud and anomaly detection, and we've, of course, got partnerships with three-letter agencies around the world and companies like Airbus. They just want our help on how to stack cargo efficiently, you know, inside their machines. What quantum computers do that's so unique is they solve a number of permutations and look at all of the combinations of a problem in parallel, as opposed to in series. There's this phenomenon called quantum entanglement that allows our computation unit, is called a qubit, and the qubit can look at a bunch of computational permutations with all other qubits at the same time. And so you hear in our industry people talk about how many qubits the system has. We have more logical or algorithmic qubits, qubits that can do computational work, in the marketplace, we believe, anybody else in the world. We are the only computing system in the quantum world that you can access on the Google, Amazon, or Microsoft cloud. That was the case at the IPO, and four years later, we're still the only player that's on all three of them. So we're very transparent, and we're trying to democratize quantum computing for all, depending on what your budget is and what you're willing, of course, to allocate to having the latest technology versus the last system or the year before system. So our biggest customers are buying systems from us outright, and that's sort of an eight-figure expenditure. Then you have smaller companies and even governments that are spending seven figures with us a year on buying access to a machine. And then lastly, we have our older systems available through, you know, the public clouds on Google, Amazon, and Microsoft. So we very much believe that we are the ecosystem leader. We have more people using our machines than anyone else. We have more people commercializing with us to solve useful problems, and we have more GAAP revenue than anybody else in the ecosystem.

Well, look, we're extremely well capitalized, and we have a lot of momentum with, you know, friendly governments and customers, you know, in the private and public space around the world. We, of course, have expanded the company dramatically, both organically with our quantum networking investments and inorganically. We've made two acquisitions in the quantum networking space. One was a company called Qubitekk in San Diego, California. The other one is a business we're in the middle of buying from SK Telecom in Korea. We're buying actually majority control of a business that's in Switzerland that is majority owned by SK Telecom. And those two businesses have been around for 10 years in San Diego and almost 20 years in Geneva, Switzerland. And so we'll, of course, be integrating those acquisitions. We'll be looking to turbocharge those acquisitions using a common sales team, of course, on a global basis to sell both our computing and networking equipment, you know, the safe-making and safe-breaking technologies, as I put it. At the same time, you know, I think building our ecosystem is what I'm most focused on. I mean, quantum computing is still in its early days relative to CPUs and GPUs. I mean, our market cap is about the same as, you know, Nvidia's was 10 years ago. And when we IPO'd five years ago, our market cap was similar to where Nvidia was when they IPO'd, you know, 20 years ago, and so on. And so we think we have exponential progress in front of us. Unlike traditional computing in Moore's law, where you double the number of transistors on a chip every two years, every 18 months, we actually double the compute power every time we add one qubit. One algorithmic qubit will double the power. And so going from our algorithmic qubit 36 system, which we call Forte Enterprise, and we were selling as of last year, our next system we're trying to finish by the end of this year, will be Aria 64. That difference in 36 to 64 qubits is 2 to the power of 28 more powerful. So it is 270 million times more powerful, if you can believe that, you know, in just one generation. And we continue, and we're aiming to make similar progress in future years. And so our customers are buying from us because they know that if we can help them improve a problem they're tackling with a current system by, you know, maybe a modest single-digit percent improvement in some cases, getting better answers or faster answers, imagine how much better it will be next year when we have a new system, and the generation, you know, beyond that. It's really, it's expanding, as I like to call it, doubly exponential. And so a lot of our challenge is explaining this to the marketplace and customers because they're not used to this paradigm. They're used to, you know, you buy last generation Pentium chip, new generation Pentium chip, you know, maybe it doubles in power, but ours is just extraordinarily more powerful each time. The other thing going on in our ecosystem, of course, is it takes time to hire and train application developers, the software layers, making sure we can translate real-world problems into something that can run on our quantum computers, and then feeding those results back to our customers. So we're investing a lot in customer success and sales engineers and that kind of thing. And so, you know, look, there's a dissemination of every new technology, whether it's mobile phones, GPUs, QPUs, to go from early adopters to secondary adopters to mass market to, you know, the laggards, if you will. We're still in the early adopter phase. You know, all of our growth is ahead of us, is yet to come. But, you know, whether it's our partnership with Nvidia around things like drug discovery, through to the fact that our quantum networking equipment is, you know, already embedded with customers like J.P. Morgan, Singtel, SK Telecom. It's in the new Samsung Galaxy Quantum 5. Our quantum random number generator is in that chip. So people are sitting up and looking at security seriously, and they're thinking about how much shorter these cycles are becoming now with generations of technology. You know, it used to take decades and decades for traditional CPUs to go from Shockley's transistor discovery in the 1940s to the Pentium chip in the 90s. But look how fast GPUs did it, a fraction of the time. And I think quantum computing will be the same thing. You know, the joke always is it's 10 years to be an overnight success. You know, we've been at this for actually decades. And so this is our decade. I think the coming 10 years is the decade of quantum computing. As a result, it will be the decade of quantum networking as well. And we're positioned as actually the only public company in the world that does networking and computing that has as many patents as we have. And we're the only company listed in the Western world that does quantum networking as a pure play as well. So really interesting story for curious investors to get involved with our ecosystem.