The Bottom Line

The Quantum Race for Secure Communications

Quantum communications, a niche application of quantum computing, involves using entangled light particles, photons, to securely transfer information. Today, Chinese citizens are the first in line to benefit from space-enabled quantum communication services. In response, Europe and North America have taken steps to ensure their citizens too may benefit from this advanced level of security. China may be ahead, but key drivers including access to capital, space technology expertise and political support around the world are seeing to it that this lead not remain uncontested.

NSR’s Quantum Communications via Satellite report forecasts over 30 quantum communication satellite launches and an overall market to reach $2.6B for cumulative orders, launch and service revenues by the end of the decade.  Players in this market look to bring quantum-secure communication services online and connect terrestrial quantum networks around the globe. The quantum satellite is critical to enabling links between continents. With several related technologies still to be tested in space, many of the launches are expected to fly primarily on cubesat platforms in LEO orbits.

China and The World

Quantum Communication and related application quantum key distribution (QKD) promises unlimited security. The technology is said to be secure because any interference is detectable. Using photons, two parties can send secret messages by sharing an encryption key encoded in the properties of entangled photons, and the security rests on the nature of physics itself.

Chinese quantum satellite, Micius ( also known as Mozi), a first of its kind, launched in 2016 and has been actively contributing by continuing to set new records in the field. China’s 4600km operational quantum communication network is evidence of the technological feasibility of distributing quantum keys via space to customers including government and financial institutions  China has also delivered the first mobile quantum satellite station expecting banks to use these in the near future.

Advancements in China have not gone unnoticed, as the world has committed over $20B in funding towards quantum research. A small portion of those funds are expected to enable the development of quantum communications by supporting the launch of key technology demonstration missions. The opportunity for satellite-based quantum communication service revenues is forecasted to reach $1.8B by 2030. Terrestrial QKD players will look to partner with space players to enhance their own services and more. To capture this business opportunity, actors will de-risk technologies and provide services enabled by satellite-hosted quantum communication payloads to meet customer’s expectations. Most recently, India tested QKD in space, Canada, Germany, France-Austria, and the USA all have upcoming quantum communication launches planned. Of note, the German Space Agency, DLR, is to receive $700m from a $2B quantum national fund to support quantum research projects, with an eye to leveraging the industry’s strong expertise in optical equipment.

Interest in the market is at an all-time high. SES, one of the largest satellite communication operators, has signalled strong interest in the technology leading a consortium for the SES QUARTZ mission and recently announced LUX QCI activities. In the UK, Arqit, a cybersecurity firm, completed a SPAC raising 400M with plans to launch two quantum communication satellites in the coming years to provide secure encryption service product ‘Quantum Cloud’.  Funding has also reached quantum networks startups, like Aliro and QuSecure. In the bigger picture, billion dollar valuations are quickly becoming the norm in the quantum computing field, as seen with IonQ. USA’s software champions also look to expand their quantum service offerings, with Microsoft, Google, IBM, and Amazon all having quantum computing activities on-going. Expect technological advancements in both quantum computing and communications to spill-over into each other and accelerate growth.

Bottom Line

In a day where Harvest now, decrypt later strategies are employed. Cybersecurity concerns continue to demand ever more attention. Being left behind in the domain of quantum security and communications may leave a nation unable to secure its most prized secrets.

As evidenced with recent activities in the market, the quantum communications race is a truly global competition, with China’s position seemingly cemented in first place. The West will look to close the gap through aggressive funding, technological roadmaps, and ever-increasing political willpower.

The quantum race is far from over, and advancements like those witnessed in the quantum communications domain may be mere primers for what’s to come. One thing is for certain: should quantum communication technologies succeed, expect it to open the floodgates for other quantum enabled technologies and services.

NSR supports equipment vendors, service providers, satellite operators, end-users, public agencies and financial institutions in their technology and business strategy assessment and planning. Please contact for more information