Europe’s position in the advanced connectivity value chain FIGURE 8 Equipment/ components Hardware Systems software Applications software Services Providers of hardware components e.g. electrical components, dilution refrigerators and semiconductors Most mature segment – in value chain with Europe as leader (e.g. detector tech and control components) Tech improvement needed to enable scaling of fault-tolerant QCManufacture of full-scale quantum computers and simulators Mature value chain segment (e.g. superconducting circuits) dominated by tech giants, but Europe competes well and has presence Software development that interacts with the quantum processing unit (e.g. low-level programming) Low presence of European players, still in prototype phase for system software players (e.g. logical programming languages and error-correction software for quantum technology) Development of algorithms that run on quantum equipment, interacting with the systems layer Europe excels in algorithms for applications, but is outpaced by US/China with large and at-scale hardware and software players with leading full-stack solutions Consulting and education services around strategic and technological aspects of quantum technologies Growth expected, but still in early-stage development (e.g. cloud services) where Europe lags. Mix of upward integrating hardware and dedicated cloud players offering access to third-party hardware Europe leads in quantum key distribution (QKD), and has presence of both general and specialized quantum tech component manufacturing Most mature segment in the sensing value chain Fragmented landscape in Europe, which has some commercial products but limited standardization Europe is strong in QKD systems. Global giants have entered hardware, but start-ups are more technologically advanced Europe competes moderately in QS hardware manufacturing, and we see European incumbents partnering with smaller players to commercialize European research is competitive as software development follows progress in hardware Europe is well-positioned in an immature value chain segment; telecom companies have started to invest to ﬁll the role as quantum network operator Europe is strong in research and number of start-ups in this less mature domain with few players As the hardware segment matures, Europe is likely to be threatened by global hardware/software giants Application themes are focused on different use cases (e.g. bio imaging, navigation and infrastructure monitoring) Europe is strong in the innovation and research of this emerging domain, though it still has low maturity with few players on the market Low maturity with few consulting services players in the market – existing players focus on security or general quantum technology Key value chain steps Description Europe’s competitiveness 1) Quantum computing (QC) 2) Communications 3) Quantum sensing (QS) Leading Europe’s starting point Lagging Strategic focus area Source: The Future of European Competitiveness,70 DigitalEurope: The EU’s critical tech gap,71 McKinsey Technology Trends Outlook 2024,72 expert interviews –Systems and application software. Since off-the-shelf products do not yet exist, most business models are still based on exploratory research projects. Efforts to develop capabilities as the technology matures can include investments in quantum neural networks for AI and machine learning applications as well as in superconductors for high-quality cubits with long coherence times, crucial for reducing application error rates. To scale industry solutions, such as quantum communication applications for defence and financial transactions, Europe could focus on forming cross-sector coalitions for companies that share a common technical backbone, which could increase their chances of getting funding for pilot programmes with industry participants, such as automotive players. Europe in the Intelligent Age: From Ideas to Action 24

Europe in the Intelligent Age 2025