Unpacking Australia’s $1 Billion Bet On a Future PsiQuantum Quantum Computer

Earlier this year, Australia agreed to invest nearly AUD $1 billion in U.S.-based quantum start-up PsiQuantum in an effort to become the first country to own a commercial-scale quantum computer.

The technology is expected to be operational by 2027.

“This investment marks the start of a manufacturing and production partnership that will create hundreds of local high-skilled jobs,” the Australian government said in an April press release. “It also offers exciting opportunities for our quantum sector that will drive significant economic benefits.”

However, the deal has raised a number of questions since being announced. These concerns include how PsiQuantum was selected, why Australia is betting so big on a single quantum technology, and the exclusivity of the deal, given PsiQuantum is also working on a quantum computer for the U.S.

What quantum computing technology is PsiQuantum developing?

The Australian and Queensland governments have jointly invested AUD $940 million (US $630 million) into PsiQuantum to build the world’s first utility-scale, fault-tolerant quantum computer in Australia, near Brisbane Airport in Queensland.

PsiQuantum said the computer will “solve commercially useful problems across industries built upon chemistry, math, and physics,” transforming critical industries like renewables and “propelling the global economy for decades to come.”

SEE: How the Australian Government’s quantum gamble will impact the local IT industry

The investment is split equally between the Australian and Queensland governments, with each contributing approximately AUD $470 million to the project. The parties have said the investment will involve a financial package comprising equity, grants, and loans.

PsiQuantum plans to scale a fusion-based architecture using a photonics approach, which encodes qubits into particles of light. The start-up will leverage advanced semiconductor manufacturing industry infrastructure to fabricate and test millions of photonic devices.

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This would result in a quantum computer with enough physical qubits to enable error-correction. PsiQuantum’s utility-scale system will have 1 million physical qubits and be hyperscale in footprint with a modular architecture able to leverage cryogenic cooling technologies.

What questions have been raised about the PsiQuantum deal?

The success of the PsiQuantum’s project could give Australia a jump-start in quantum computing and facilitate further enrichment of Australia’s local quantum technology industry. But there are still a number of questions about the deal since it was announced in 2024.

PsiQuantum is not an Australia-based quantum computing company

Two of PsiQuantum’s co-founders — CEO Jeremy O’Brien and Chief Architect Terry Rudolph — are from Australia. O’Brien’s career includes a decade at the University of Queensland, where the idea and early research for a photonic-based quantum computer was born.

However, PsiQuantum is based in the U.S. The investment in a U.S.-based quantum start-up has been questioned by local players, especially in the context of the Australian government’s Future Made in Australia policy, which seeks to invest more in Australian companies.

Paul Fletcher, Australia’s shadow minister for science, Arts, Government Services, and the Digital Economy, claims other local quantum companies — such as Silicon Quantum Computing, Diraq, and Quantum Brilliance — were not considered closely for investment.

Is investing in a single quantum company a gamble?

Should Australia be acting like a venture capital firm?

This question arises as Australia invests a substantial amount of public money in the hope of “picking a winner” in the quantum race, though the specific technology is unproven.

Australia has concentrated a significant portion of its quantum investment — and associated risk — in a single company, whereas other countries are spreading their quantum bets more widely due to the uncertain nature of the market and technology.

For example, the U.K spent just technology/uk-s-bet-on-psiquantum-is-one-fiftieth-the-size-of-australia-s-20240513-p5jd0k” target=”_blank” rel=”noopener”>$17 million to lure PsiQuantum to open a plant there. The U.K., like other countries, is investing smaller amounts across a range of competing technologies so that it can pivot when required.

SEE: Security experts welcome NIST’s new encryption standards for quantum computers

In a letter to the Australian National Audit Office, Fletcher wrote:

“Currently throughout the world there are different types of quantum technologies under development. Eminent global academic quantum experts, including Australian academics, are unable to say for certain which technology will be proven and be able to be delivered at scale.”

A review of the PsiQuantum investment process may be undertaken

In August 2024, Australia’s Acting Auditor-General Rona Mellor confirmed that the Australian National Audit Office was considering an official audit of the PsiQuantum deal.

Responding to a letter and referral by Shadow Minister Paul Fletcher, Mellor indicated that it had been added for consideration to its program of work for this financial year.

Another issue that could be reviewed is the expedited Expression of Interest process, which sought feedback from other Australian quantum companies regarding potential investments in their companies. Fletcher called the process a “sham” given parts of the PsiQuantum deal were moving ahead.

PsiQuantum to build quantum computer in the U.S. in 2028

Australians may only have a year to enjoy owning the first useful quantum computer. Soon after Australia’s announcement, PsiQuantum revealed it would build a second computer in Chicago in the U.S. by 2028, where it would be leveraging learnings from the Australian experience.

The U.S. deal raises questions over the value Australia is receiving from its $1 billion spend, given the technology will soon be located elsewhere, and the intellectual property gained by PsiQuantum in the development of Australia’s computer will be leveraged by the U.S.

PsiQuantum assures Australia quantum leap a good investment

In a statement shared by the company, PsiQuantum said it first approached Australia under the former Morrison Government in June 2021 through trade and investment commission Austrade, and was subsequently connected with a global business attraction taskforce, which began to explore the company’s proposal.

“Following these initial meetings and a change in government, PsiQuantum engaged in an extensive period of discussions and evaluations including rigorous due diligence conducted into the company’s technology, led by the [Australian] Chief Scientist, as well as commercial, financial and other key operations,” the statement said.

“It was after this intensive diligence process that PsiQuantum and the Australian Commonwealth and Queensland government proceeded and eventually reached an agreement and announced the investment and partnership in April 2024.”

Potential to build out local Australian quantum computing ecosystem

PsiQuantum said “a useful quantum computer stands to make a broad impact across the critical industries that will use it and their investment into the region”.

The PsiQuantum deal includes a commitment to help foster Australia’s quantum computing industry. It has formed a strategic partnership with five Queensland universities to build targeted education programs for skills in quantum computing and other advanced technology industries.

“Australia and Queensland have been world leaders in the field of quantum computing for decades, and this partnership builds upon that foundation,” PsiQuantum’s Jeremy O’Brien said in a press release. “This collaboration will help ensure that Australia is developing the necessary skills and driving research to continue leading this field for decades to come.”

PsiQuantum’s statement also points to a report from Mandala Group, which projects the quantum computing project will create 2,800 jobs and $5.1bn in direct economic activity in Australia and Queensland by 2032. “PsiQuantum will be hiring at for at least 400 roles across a wide variety of technical and non-technical functions as part of the expanding operations in Australia,” PsiQuantum’s statement said.