US-GB-Australia pact headlines quantum computing and AI

The governments of Australia, the UK, and the US recently announced the new AUKUS security pact. It mainly made headlines for hurting the feelings of the French government by canceling an Australian order for submarines, but more importantly, this pact represents a landmark in the transition from conventional military approaches to those that rely on artificial intelligence (AI) and quantum computing.

Advanced technologies are coming into focus

As a pact for military and defense affairs, the agreement places AI and quantum squarely in focus. In a joint statement, President Biden, Prime Minister Johnson, and Prime Minister Morrison said “We will promote deeper information and technology sharing. We will foster deeper integration of security and defense-related science, technology, industrial bases, and supply chains.”1

The implications for technological advancement are clear and profound. Biden added, “AUKUS will bring together our sailors, our scientists and our industries to maintain and expand our edge in military capabilities, critical technologies such as cyber, artificial intelligence, quantum technologies and undersea domains.”2

The pact firmly establishes AI and quantum as central to international relations, and it’s not a moment too soon.

AI and quantum are leading military concerns

Early October saw Nicolas Chaillan, the Pentagon’s first chief software officer, resign in frustration at the glacial pace of America’s adoption of AI and quantum. Although the US spends up to three times as much as China on defense, too much goes on arms that are already outdated, rather than technologies that will determine the outcome of the next war. “These emerging technologies were far more critical to America’s future than hardware such as big-budget fifth-generation fighter jets such as the F-35,” he said.3

Chaillan isn’t the only high-ranking American to make this claim. Defense Secretary Lloyd Austin sounded the alarm in May, saying “The way that we fight the next major war is going to look very different from the way that we fought the last ones.”4

There are projects underway in the US, with the Pentagon alone running over 600 AI-related undertakings and another $1.5 billion earmarked for AI over the next few years5. But as Chaillan stated, and as recent events have made clear, the government needs to up the pace.

Cybersecurity needs quantum

A wave of cyber attacks showed just how damaging cyber warfare can be. Biden blamed Putin6 for hacking attacks like Solarwinds7, the attack on Colonial Pipeline8; and the Kaseya ransomware hack9, but the attacks should trigger stentorious alarm bells over US cybersecurity capabilities. If these attacks were directed at healthcare, agriculture, or crucial infrastructure, a war could be over before a shot has been fired.

Chaillan refers to some governmental cyber defenses as being at “kindergarten level,10” while thought leaders are warning that tomorrow’s quantum computers will be able to unravel the public-key cryptography which underpins today’s secure encryption, underlining the importance of quantum cybersecurity11.

In response, companies like IBM and Google, and newer quantum computing stocks like Arqit, are doubling down on development for quantum-powered cybersecurity,12 and the UK government is urging adoption of quantum-safe cryptography13.

Quantum and AI weaponry

AI- and quantum-powered weaponry is also going to play a key role. Hypersonic weapons and missiles, which require adjustments that are levels of magnitude faster than any human could achieve, can only be controlled by AI. China, India, Japan, North and South Korea, Australia, and Pakistan are among the countries accelerating their hypersonic missile programs.14

Much of the sudden “sprint” to invest in quantum computing and AI is to do with the threat of China, which is reportedly spending $9.6 million on a National Laboratory for Quantum Information Sciences15. Its advanced AI capabilities like facial recognition and surveillance are already in use against the Uighurs in the Xinjiang province16.

In July, Austin warned that China was on track to surpass the US as a superpower. “Beijing already talks about using AI for a range of missions, from surveillance to cyberattacks to autonomous weapons,” he said, adding “AI is central to our innovation agenda, helping us to compute faster, share better and leverage other platforms. … That’s fundamental to the fights of the future.”17

However, quantum computing impacts not just on military and defense matters, but on economic issues and broader international relations.

The struggle to get ahead in the global AI/quantum race

The global race to master AI and quantum technologies, for economic and social reasons as well as for military purposes, is in turn driving the combined market forwards. The IDC predicts that total global AI revenues will reach $554.3 billion at a CAGR of 17.5% by 202418, while the global market for quantum computing is expected to be worth $1.79 billion by 2028, growing at a CAGR of 30.32%19.

As part of its post-Brexit game plan, the UK is hoping to position itself as a global center for AI and quantum excellence with the UK National Quantum Technologies Program, a £2.4 billion strategy to ensure that UK businesses can benefit from quantum technologies20. £173 million is going into the creation of the Hartree National Centre for Digital Innovation (HNCDI) in partnership with IBM, to focus on quantum computing, cloud, and machine learning solutions to industry challenges2122

In the US, the National Science Foundation (NSF) earmarked $20 million over the next 5 years to each of five new institutes, each focusing on a different AI application for the economy and society.23 Biden’s $2 trillion infrastructure plan allocates $180 billion for “R&D and industries of the future”, including around $90 billion for technologies related to quantum computing24.

A report by the Australian Strategic Policy Institute observes that “The Covid-19 crisis has also seen quantum emerge as an investment vector for post-pandemic recovery: large capital investments have been made over the past year by such nations as China, Japan, Germany, France, South Korea and India.25

“We are seeing these initiatives not just in UK and US, but in Russia, Japan, China, Canada, Australia,” agrees Chirag Dekate, vice president of artificial intelligence, machine learning and supercomputing at Gartner. “All of these governments are investing fairly heavily in quantum computing.”26

In early 2020, for example, India committed US$1.12 billion for quantum computing research over five years27. The ASPI expressed concern that quantum-based enhanced imaging could enable India to locate Pakistan’s underground nuclear installations, exacerbating regional instability. It further warned that quantum computers could be used to attack the digital signatures that secure cryptocurrency transactions, knocking out the crypto economy and stealing millions of dollars.28

Investment in quantum computing is gaining momentum

The AUKUS pact is just one of many signs that governments around the world both recognize the potential of quantum computing and are working to actualize it. Investors are quick to follow their lead to invest in quantum computing, searching for the best quantum computing stocks so as to take part in these disruptive technologies.

For people who want to spread their exposure to risk and expand their portfolio across a number of companies, the QTUM ETF from Defiance is an appealing option. As an ETF, QTUM follows the BlueStar Quantum Computing and Machine Learning Index (BQTUM), which tracks approximately 71 global companies involved in research and development of AI and/or quantum computing.

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1 “UK, US AND Australia launch new security partnership” September 15, 2021

2 “Biden touts ‘strength’ of alliances with UK and Australia as nations announce new pact” September 16, 2021

3 “US has already lost AI fight to China, says ex-Pentagon software chief” October 10, 2021

4 “Pentagon chief calls for ‘new vision’ for American defense” May 1, 2021

5 “Austin: AI Is Crucial for Military, but Commanders Will Pull the Plug on Misbehaving Systems” July 14, 2021

6 “Biden vows US action over Russian cyber-attacks” July 10, 2021

7 “SolarWinds hack: Russian denial ‘unconvincing'” May 18 ,2021

8 “PERSPECTIVE: Russia, Colonial Pipeline, and Whether the Attack Is an Alarming Omen” June 21, 2021

9 “Ransomware attack on software manager hits 200 companies” July 3, 2021

10 “US has already lost AI fight to China, says ex-Pentagon software chief” October 10, 2021

11 “How Quantum Computing Will Transform Cybersecurity” January 4, 2021 also “Preparing for Quantum-Safe Cryptography” November 11, 2021 also “An Australian strategy for the quantum revolution” May 13, 2021

12 “With cyberattacks on the rise, organizations are already bracing for devastating quantum hacks” June 7, 2021

13 “Preparing for Quantum-Safe Cryptography” November 11, 2021

14 “Hypersonic and directed-energy weapons: Who has them, and who’s winning the race in the Asia-Pacific?” March 15, 2021

15  “An Australian strategy for the quantum revolution” May 13, 2021

16 “China uses facial recognition to monitor ethnic minorities” January 8 ,2018

17 “Pentagon Racing to Stay Ahead of China in Artificial Intelligence” July 17, 2021

18 “IDC Forecasts Improved Growth for Global AI Market in 2021” February 23, 2021

19 “Quantum Computing Market Size And Forecast” August 20, 2021

20 “Can the UK become a quantum computing world leader?”

21 “New £210 million centre to create jobs of the future with AI and quantum computing” June 4, 2021

22 “UK STFC Hartree Centre and IBM Begin Five-Year, £210 Million Partnership to Accelerate Discovery and Innovation with AI and Quantum Computing” June 3, 2021,-210-Million-Partnership-to-Accelerate-Discovery-and-Innovation-with-AI-and-Quantum-Computing

23 “The race to the top among the world’s leaders in artificial intelligence” December 9, 2020

24 “Biden’s $180 Billion R&D Plan Prioritizes Key Areas Such As Chips, Quantum Computing” April 1, 2021

25 “An Australian strategy for the quantum revolution” May 13, 2021

26 “Can the UK become a quantum computing world leader?”

27 “India bets big on quantum technology” February 3, 2020

28 “An Australian strategy for the quantum revolution” May 13, 2021