Quantum Computing is Becoming the New Software for WarfareJan9

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Quantum Computing is Becoming the New Software for Warfare

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THEME ALERT

Quantum Computing is Becoming the New Software for Warfare → 

Quantum computing has long been at the forefront of many tech companies’ agendas. However, it is now gaining prominence among aerospace and defense giants who understand that quantum computing and similar technologies will completely change how the militaries of tomorrow operate their tech. At the forefront of this new arms race are the US and China, two superpowers already dumping billions of dollars of investment into new quantum pursuits.

MRP has previously highlighted quantum computing and the future of military technology, including hypersonic weapons and satellites, separately. However, there is already a growing crossover of these two disruptions taking shape in the defense industry.

For decades, the US has relied on its stealth technology, leveraging design and materials, to make aircraft immune to detection from radar. But as enemies and allies alike continue to develop more advanced detection systems, physical attributes alone will no longer make the cut. 

In November 2018, China Electronics Technology Group Corporation (CETC), China’s biggest defense electronics company, unveiled a prototype radar that it claims can detect stealth aircraft in flight. The radar uses some of the exotic phenomena of quantum physics to help reveal planes’ locations.

Quantum computing works by taking advantage of the unique properties of subatomic particles. In the simplest terms, while conventional computers use bits that reflect one or zero (known as binary), quantum computers would use qubits that can represent an almost infinite number of values between zero and one.

According to MIT, CETC’s quantum-inspired radar operates by taking one photon from every pair generated and firing it out in a microwave beam. The other photon from each pair is held back inside the radar system. Only a few of the photons sent out will be reflected back if they hit a stealth aircraft. A conventional radar wouldn’t be able to distinguish these returning photons from the mass of other incoming ones created by natural phenomena—or by radar-jamming devices. But a quantum radar can check for evidence that incoming photons are entangled with the ones held back. Any that are must have originated at the radar station. This enables it to detect even the faintest of return signals in a mass of background noise. Along with unstealthing aircraft, quantum defense tech could bolster the security of battlefield communications and affect the ability of submarines to navigate the oceans undetected.

Back in the summer, top Pentagon official Michael Griffin has listed quantum computers and related applications among the Pentagon’s must-do R&D investments. Following this, several key agencies in the U.S. intelligence community were asked in December what they saw as long-term threats faced by the country in the next decade and beyond, and the future of “dual-use technologies” took center stage. Agnostic technologies like encryption, autonomous and unmanned systems, AI and quantum computing rank at the top of the agencies’ “worry list” for fears that they could be used to cause harm, rather than advance society. The government says that, “adversaries could gain increased access to AI through affordable designs used in the commercial industry, and could apply AI to areas such as weapons and technology,” and that “quantum communications could enable adversaries to develop secure communications that U.S. personnel would not be able to intercept or decrypt.”

However, where risk lies, opportunity also awaits. Governments of developed nations have begun taking the quantum shift very seriously as of late, due to massive advances being made in the private sector by tech powerhouses like Alphabet, Intel, and IBM. Although a review of SEC filings from five of America’s top cybersecurity contractors — Lockheed Martin, Booz Allen Hamilton, Raytheon, Northrop Grumman and Leidos — found that only Booz Allen Hamilton included quantum computing in their 2018 prospectus, that landscape appears set to change. 

Lockheed Martin, for instance, has said that it believes American sailors could utilize a new quantum compass based on microscopic synthetic diamonds with atomic flaws known as nitrogen-vacancy centers, or NV centers. These quantum defects in the diamond lattice can be harnessed to form an extremely accurate magnetometer. Shining a laser on diamonds with NV centers makes them emit light at an intensity that varies according to the surrounding magnetic field. While this kind of technology is still likely in the very early stages of development at Lockheed, the company has begun making forays into tech that could make it possible, investing in D-Wave, a Canadian company focused in quantum computing.

At the end of last month, President Trump signed The National Quantum Initiative Act (H.R. 6227), authorizing $1.2 billion over five years for federal activities aimed at boosting investment in quantum information science, or QIS, and supporting a quantum-smart workforce. Although the bill is not explicitly aimed toward the defense sector, it will bolster overall advances in quantum tech, making it more accessible and attractive as time goes on. The US government likely also hopes to begin closing the shoring up their position in the new arms race, as experts are split on whether China is catching up, or even pulling ahead of the US in quantum computing.

According to one recently retired national security official, interviewed by Yahoo, China is on track to be 20 years ahead of the United States in the not-too-distant future. Another national security official said the United States is currently scrambling to defend itself, hoping to find foolproof ways to protect its everyday communications in the worst case.

The Center for a New American Security (CNAS) has reported findings which state that the Chinese People’s Liberation Army (PLA) is currently recruiting quantum specialists, and that big defense companies like China Shipbuilding Industry Corporation are setting up joint quantum labs at universities. These findings follow Chinese researchers’ success in having already built a satellite that can send quantum-encrypted messages between distant locations, as well as a terrestrial network that stretches between Beijing and Shanghai. 

MRP noted in 2018 that quantum encryption can be a vital asset since quantum keys cannot be copied and can also encrypt transmissions between otherwise classical computers. Encrypted data cannot be stolen or hacked as, once a subatomic particle used in transmission is observed, the key is altered. This unprecedented breakthrough is likely the first of many Chinese quantum developments, considering their top two quantum systems are already larger than the remaining global top 10 systems combined, and the country is soon set to construct an $11 billion quantum research facility. Both projects were developed by scientific researchers, but the know-how and infrastructure could easily be adapted for military use.

Some would disagree, however, and say the US is still ahead in quantum development. Christopher Monroe, professor of physics at the University of Maryland and the head of IonQ, a quantum computer manufacturer, has said that “There is not so much a gap between the U.S. and China as there is between academic eggheads [who] are used to quantum and industry who build things”. Much like its strategy with AI, China seems to be throwing as many darts at the board as possible, racking up patents at more than quadruple the rate of the US in 2018. However, this is not necessarily a reliable metric for measuring the application of a specific kind of technology.

Not only has the US Department of Defense has been investing in quantum research for a very long time, as have US spy agencies, but the American military can also tap into work being done by its allies.

The next steps in quantum computing at the military level are not yet known, most likely classified at this time, but given the vast body of research, early applications, and China’s buildup of their own quantum infrastructure, it’s likely that we are closer to the quantum age than we have ever been. US defense companies will likely begin accelerating projects and investments in quantum technology over the next decade to ensure their machines and software remain on the cutting edge and can eventually vie for federal contracts.

THEME ALERT

MRP added Defense to our list of themes on November 27, 2013, respectively. Since we launched the theme, The iShares US Aerospace & Defense ETF (ITA) has generated a return of 66% against the S&P’s 38% over the same period.

Investors can also gain exposure to quantum computing via the Technology ETF (XLK), as well as the China Tech ETF (CQQQ).

We’ve also summarized the following articles related to this topic in the Technology section of today’s report.

Quantum

• The US and China are in a quantum arms race that will transform warfare
• Satellite study proves global quantum communication will be possible
• U.S. intelligence sounds the alarm on the quantum gap with China
• Are defense contractors investing enough in quantum computing?

Aerospace & Defense (ITA) vs US Tech (XLK) vs China Tech (CQQQ) vs S&P 500 (SPY)

Finance

Payments

In China, cash is no longer king

As more shops and restaurants in China move toward only accepting smartphone payment services such as Alipay, the elderly, visitors from overseas and people from rural areas who are unfamiliar with or lack access to these systems are running into problems paying with cash or credit cards.

A cashless society has many advantages, including lower transaction costs. But it also creates a divide between those who can make cashless payments and those who cannot.

In China, making purchases through smartphones and QR codes is common. The two most popular payment services are Alipay and WeChat Pay, which is run by Tencent Holdings. According to one recent study, 98% of people with smartphones in urban areas use their devices for mobile payments. The growing frequency of these payments has led some shops to stop accepting cash altogether.

But the shift toward electronic-only payments has drawn criticism because some people still prefer cash or have no other means of buying. In 2017, China had an estimated 772 million internet users, or 56% of its total population. But in rural areas there are still many people without access to the internet, let alone smartphones. NikkeiAR

Robotics & Automation

Automation Will be the End of Banks as We Know Them

The next 20 years are going to be defined by the way automation transforms the average person’s life. An intelligent service will make, and then execute, most of an individual’s financial decisions in the not-so-distant future.

That service will collaborate with the person to understand their human objectives — when they want to retire or where they can afford to send their children to college — and use its super intelligence and its ability to execute things in microseconds over and over to put the entire financial system to work for the person.

The individual may not understand how or why the intelligent service is doing all of these things, but he or she knows the actions are completely in the service of improving his or her life.

Automation is the ultimate reduction in friction because it allows optimizations to happen perpetually. Automation allows optimizations to happen at zero marginal cost. Automation allows optimizations to happen without human involvement, and when you’re able to do that, the customer is always matched with the ideal financial situation. This is a nightmare scenario for banks. TC

Labor, Education & Demographics

Wages

A little graph with a big message: Full employment raises wages

The below figure covers 2014-2018, a period when the unemployment rate fell from about 6.5 percent to less than 4 percent. The smooth line plots a nonlinear path through the dots to facilitate interpretation.

The figure shows that it takes very low unemployment to generate wage gains for middle-wage workers. (The same holds for low-wage workers, though for them, the minimum wage matters a lot, too.) Over these years, going from 7 to 6 to 5 percent didn’t do much at all for these workers. In fact, as the little dip in the smooth line shows, wage growth was actually a bit slower when unemployment was 5 to 6 percent than when it was 6 to 7.

But when unemployment starts to close in on 4 percent and lower, good things start to happen, and the smoother line must head north to cut through the dots.

The key factor in play here is something you don’t hear enough about in most economic discussions, even though it’s a key determinant of wage growth: worker bargaining power. Middle- and low-wage workers in this country suffer such acute bargaining power deficits that only at persistent, chock-full employment will employers be forced to bid up wage rates. WaPo

Services

Grocers

Kroger, Microsoft Create Futuristic Grocery Store. Amazon, Take Note

Kroger Co. and Microsoft Corp. are joining forces to bring the ease of online shopping to brick-and-mortar grocery stores.

Kroger, America’s biggest supermarket chain, has remodeled two stores to test out the new features, which include “digital shelves” that can show ads and change prices on the fly along with a network of sensors that keep track of products and help speed shoppers through the aisles. Kroger could eventually roll out the cloud-based system it developed with Microsoft in all of its 2,780 supermarkets.

The alliance is the latest example of how big U.S. retailers are deploying data-rich technology to improve the often-tedious ritual of food shopping and keep pace with Amazon.com Inc., which is bent on grabbing a bigger share of the $860 billion U.S. food retail market.

For Microsoft the deal helps grow its cloud business, which lags behind Amazon’s but has found willing customers like Kroger and Walmart Inc. that are loath to line the pockets of Jeff Bezos. Kroger also hopes to sell the technology to other retailers, potentially opening up a new revenue stream with fatter profit margins than selling groceries. B

Cannabis

Marijuana M&A is already hot in 2019, with a pot tech-vape tie-up worth $210 million

It’s 2019, and the marijuana M&A market is already heating up.

Cannabis technology company TILT Holdings on Thursday signed an agreement to acquire Jupiter Research, a vaporizer-maker, for $210 million in cash and stock. Jupiter booked over $100 million in orders last year, up from under $25 million in 2017, according to a December note from Canaccord Genuity.

TILT was created out of a four-way merger between marijuana software company B aker Technologies with Briteside Holdings, Sea Hunter Therapeutics, and Santé Veritas Holdings in May 2018. The combined entity went public via a reverse merger on the Canadian Securities Exchange (CSE) last December and began to roll-up other marijuana companies shortly after.

Whereas other US-based marijuana companies, known as multi-state operators, are focused on acquisitions that expand their geographical retail presence, TILT is focused on supplying software and services — and now hardware — to marijuana dispensaries. TILT acquired Blackbird, a marijuana distribution and software company in December.

“So rather than solely focused on opening retail stores, we’re really focused on providing solutions to the whole industry,” said Joel Milton, TILT’s senior vice president of software and services. BI

Technology

Quantum

The US and China are in a quantum arms race that will transform warfare

In November 2018, China Electronics Technology Group Corporation (CETC), China’s biggest defense electronics company, unveiled a prototype radar that it claims can detect stealth aircraft in flight. The radar uses some of the exotic phenomena of quantum physics to help reveal planes’ locations.

It’s just one of several quantum-inspired technologies that could change the face of warfare. As well as unstealthing aircraft, they could bolster the security of battlefield communications and affect the ability of submarines to navigate the oceans undetected. The pursuit of these technologies is triggering a new arms race between the US and China, which sees the emerging quantum era as a once-in-a-lifetime opportunity to gain the edge over its rival in military tech.

China has also managed to cultivate close working relationships between government research institutes, universities, and companies like CSIC and CETC. The US, by comparison, has only just passed legislation to create a national plan for coordinating public and private efforts.

Still, the US military does have some distinct advantages over the PLA. The Department of Defense has been investing in quantum research for a very long time, as have US spy agencies. The American military can also tap into work being done by its allies and by a vibrant academic research community at home.

All this has given the US has a head start in the quantum arms race. But China’s impressive effort to turbocharge quantum research means the gap between them is closing fast. MIT

Quantum

Satellite study proves global quantum communication will be possible

Researchers in Italy have demonstrated the feasibility of quantum communications between high-orbiting global navigation satellites and a ground station, with an exchange at the single photon level over a distance of 20,000km. The milestone experiment proves the feasibility of secure quantum communications on a global scale, using the Global Navigation Satellite System (GNSS).

Co-lead author Dr. Giuseppe Vallone is from the University of Padova, Italy. He said: “Satellite-based technologies enable a wide range of civil, scientific and military applications like communications, navigation and timing, remote sensing, meteorology, reconnaissance, search and rescue, space exploration and astronomy.

“The core of these systems is to safely transmit information and data from orbiting satellites to ground stations on Earth. Protection of these channels from a malicious adversary is therefore crucial for both military and civilian operations. “Space quantum communications (QC) represent a promising way to guarantee unconditional security for satellite-to-ground and inter-satellite optical links, by using quantum information protocols as quantum key distribution (QKD).”

The team’s results show the first exchange of a few photons per pulse between two different satellites in the Russian GLONASS constellation and the Space Geodesy Centre of the Italian Space Agency. Phys

Quantum

U.S. intelligence sounds the alarm on the quantum gap with China

As scientists and now policymakers point to the rapid progress that China is making in the field, it’s the intelligence community that appears to be the most alarmed.

One of the biggest and most widely circulated concerns over China’s quantum computing work is that it could enable powerful new machines to break through the layer of security protecting online transactions around the world, thereby exposing highly sensitive information.

According to one recently retired national security official focused on emerging threats presented by advanced technology, China is on track to be 20 years ahead of the United States in the not-too-distant future. Another national security official said the United States is currently scrambling to defend itself, hoping to find foolproof ways to protect its everyday communications in the worst case.

Congress appears to be taking note. “China is eating our lunch on quantum,” said one congressional staffer. Lawmakers tasked with intelligence and national security issues will be focusing on China in coming months, hoping to inspire quicker progress on the U.S. side. Yahoo

Quantum

Are defense contractors investing enough in quantum computing?

Quantum computing is expected to make existing forms of cybersecurity obsolete, but the coming revolution has not jolted researchers and defense firms to fully invest in the technology, according to the intelligence community, experts and industry officials.

Quantum computing needs strong collaboration between theory and practice, said Christopher Monroe, professor of physics at the University of Maryland and the head of IonQ, a quantum computer manufacturer. “There is not so much a gap between the U.S. and China as there is between academic eggheads [who] are used to quantum and industry who build things,” said Monroe. “The more interesting development so far has not been from defense contractors, but companies like Google, Intel, Microsoft and IBM — the big computing behemoths,” Monroe said.

A review of SEC filings from five of America’s top cybersecurity contractors — Lockheed Martin, Booz Allen Hamilton, Raytheon, Northrop Grumman and Leidos — found that only one, Booz Allen Hamilton, included quantum computing in its 2018 prospectus.

The intelligence community fears that the United States is falling behind China and other countries when it comes to quantum computing. In June, George Barnes, the deputy director of the NSA, said that quantum computing research in the United States was “sub-par.” “We have to be better at playing the long game,” Barnes said. FD

5G

Sprint will carry one of Samsung’s 5G phones

Sprint will carry one of Samsung’s upcoming 5G-enabled smartphones later this year, joining rivals AT&T and Verizon. The company says the smartphone will be available in summer 2019, and it will also be compatible with Sprint’s existing LTE network.

In December, both AT&T and Verizon announced that they would be carrying upcoming 5G smartphones. Verizon was first, and it announced that it would be selling one of the phones in the first half of 2019. AT&T responded by saying that not only would it have that same phone early in the year, but it would also offer a second 5G phone from Samsung in the second half of the year.

The South Korean firm is reportedly working on at least two variants of its upcoming Galaxy S10 smartphone: one with a Qualcomm modem and the other with a Samsung-made equivalent. One of these is also rumored to be a “Beyond X” version of the phone with a 6.7-inch screen. None of the three carriers have confirmed exactly which model of Samsung phone they’ll be carrying.

Sprint stopped short of confirming that Samsung’s device would be the first 5G phone on its network, saying only that it would be “one of” the first after. The US carrier previously announced that it would carry a 5G phone from LG earlier in the year, and it also said it was working with HTC to develop a 5G “smart hub.” Verge