International Business Machines ( IBM 1.22%) has been engaged in quantum computing research for many years. According to the company's roadmap, IBM aims to demonstrate quantum advantage—where quantum computers surpass classical ones—by 2026 by integrating both technologies. The first quantum computer capable of fault tolerance is anticipated by 2029, after which IBM plans to expand its efforts.
Although practical, large-scale quantum computers are still years away, IBM and HSBC revealed a notable advancement in quantum computing on Thursday. As outlined in a newly submitted scientific paper and a press release on HSBC's website, the bank utilized IBM's quantum systems alongside conventional methods to enhance a specific aspect of algorithmic bond trading. While this was only a pilot project, it highlights the real-world potential of IBM's quantum computing solutions.
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A quantum computing first
In the corporate bond sector, customer requests are evaluated through a competitive bidding process that relies on computer modeling and traditional algorithms. This procedure is complex, requiring the integration of live market data, risk assessments, and additional variables.
Working with IBM, HSBC applied a quantum algorithm on IBM's Heron quantum processor to address the challenge of predicting the likelihood that a trade will be executed at a quoted price in the European over-the-counter bond market. By combining quantum computing with established machine learning methods, HSBC achieved up to a 34% improvement over results from using only classical approaches.
"This is a pioneering global milestone in bond trading. It provides a concrete example of how current quantum computers can address significant business challenges at scale and deliver a competitive advantage—an advantage that will only increase as quantum technology progresses," stated Philip Intallura, HSBC's head of quantum, in the press release.
This breakthrough comes after IBM announced in August a partnership with AMD to create next-generation computing systems that merge quantum and high-performance classical computing. IBM's approach, known as quantum-centric supercomputing, blends quantum processors with CPUs, GPUs, and other conventional chips to tackle practical challenges.
The news from HSBC strongly indicates that this hybrid strategy holds promise and could soon result in quantum-centric computers that accelerate business and scientific tasks in the real world.
A major opportunity for IBM
IBM's quantum division has already secured nearly $1 billion in contracts. These agreements, such as the collaboration with HSBC, involve pilots, experiments, and exploratory projects. IBM partners with a diverse group of organizations, including government labs, academic institutions, and companies like HSBC, Boeing, Wells Fargo, and Bosch.
The results from HSBC imply that IBM's quantum business could begin generating income from actual deployments of quantum computers and algorithms working alongside classical systems in the near future. Although there are still significant technical hurdles before large-scale, fault-tolerant quantum computers become a reality, the technology could find practical uses sooner than IBM's long-term plans suggest.
McKinsey projects that the quantum computing sector could be worth $97 billion by 2035 and reach $198 billion by 2040. While such forecasts should be viewed with caution, they illustrate the vast potential for IBM to turn its long-standing quantum research into a multibillion-dollar enterprise.
Significant revenue from quantum computing is not expected for IBM in the immediate future, but HSBC's findings indicate that the company is making meaningful progress toward building a viable quantum business that addresses real-world needs.
