Why Quantum Computing Matters for National Security
When I first joined NSSIF (the National Security Strategic Investment Fund) I was assigned the role of investment lead for quantum. It was a moment when the science behind quantum computing had reached an inflection point. IBM had just surpassed the hundred-qubit mark and PsiQuantum emerged from stealth with a $450m Series D fundraise and the ambition to build a one-million-qubit machine.
The UK was (and still is) a hotbed for quantum science, and numerous British companies joined the global race to build a quantum computer. Accordingly, for a period of time, quantum investments were the priority for NSSIF and so I was kept busy.
We quickly established a deep portfolio of quantum hardware and software companies. There was no single scientific methodology more compelling than another, so we invested across the spectrum - photonics, silicon spin, superconducting circuits and ion traps, amongst others.
Last week companies such as PsiQuantum, IQM and Quantinuum announced fundraises at multi-billion-dollar valuations. Meanwhile Infleqtion and Horizon Quantum unveiled SPAC plans, and Oxford Ionics completed its sale to IonQ for $1.1bn (I was fortunate to lead the NSSIF investment in Oxford Ionics, amongst others). The hunger for quantum technology hasn’t abated.
But unlike AI, there is no ChatGPT for quantum computing. In fact, there isn’t a useful quantum computer yet. Nor is there a company which appears to have a clear lead in the race. And yet investors continue to pour money into these companies. Why? And, perhaps more importantly, why does quantum computing matter for national security?
Quantum computing promises breakthroughs in several defence and intelligence domains. In cryptography, it is likely to break today’s public key encryption standards, exposing sensitive communications unless new quantum-safe systems are adopted. In optimisation, it could transform logistics for force deployment, supply chains, and satellite constellations. In materials science, quantum simulation may accelerate the design of advanced sensors and stealth coatings.
Harnessing these capabilities could tilt the geopolitical balance of power for a nation. And so, much like the nuclear race of the 20th century, we now find ourselves in a race to acquire quantum technology. It is increasingly apparent that the competitor is China.
Readers of my weekly newsletter will know that China recently restructured some research labs in Hong Kong to focus on quantum science. Beijing’s strategy is to fold quantum into its wider apparatus of state-led industrial policy, supported by the principle of civil-military fusion.
Chinese quantum computing companies don’t report fundraising rounds because they’re largely state-backed. But we know that quantum is a priority for China, just as it is for the West. Recent tests of Chinese quantum technology revealed that it is not far behind Western companies. So why isn’t Western quantum science state-backed?
Until relatively recently, the development of quantum computing in the West would probably have been a government programme, much like the Manhattan Project was. The top scientists of our generation would have been invited to serve their nation in the interests of national security, as they are in China.
But the prosperity of humanity in recent decades has created large private capital markets. Citizens in the West have been able to convert their savings into investments at a greater scale than ever before. Historically, those savings might have been invested in the bond markets. But due to low interest rates in recent years, a greater proportion has found its way into venture capital funds.
And so enterprising scientists have greater access to capital than they did in the 1940s. This shift has transformed the development of frontier technologies in the West. Today, the default setting for a top quantum scientist is to found a company, raise money and develop technology. Venture investors understand that if quantum computing works at scale, it will upend many trillion-dollar industries.
From a portfolio perspective, quantum is the archetypal venture investment: one success could return an entire venture fund. That asymmetry is what keeps capital flowing into companies which are potentially still years away from a commercially useful machine. We are in a venture-backed race, where national security interests and investor returns are intertwined.
For Western governments, that is both a challenge and an opportunity. The challenge is that they don’t have direct control of the development of quantum computers, nor necessarily a say in the eventual outcome; the opportunity is to partner with multiple quantum companies. That can be through direct investment - the NSSIF model. This approach enables private capital to fund the technology’s development in ways that would be difficult for a government to achieve alone (unless, of course, that government is China).
This has the benefit of harnessing the powerful incentives of capitalism to drive development at the fastest possible pace. Each entrepreneur knows that if they win the race they might lay claim to a near-monopolistic position in this strategically important technology, with rewards measured in financial gain and geopolitical influence.
In the wrong hands, a million-qubit quantum computer could compromise the cryptographic foundations of a modern state, exposing military communications, financial systems, and critical infrastructure. Western governments must therefore fund grassroots research but also position themselves as early and trusted partners to the most advanced quantum companies. At the point when quantum computing reaches maturity, government will want to be one of the first customers.
Pete Hegseth, the Battle for Troy and Remote Drone Operations
I recently watched Pete Hegseth’s viral video in which he announces a Pentagon memo designed to accelerate the military’s adoption of drones. Although he stumbles through the delivery, the video is worth a watch, not least for its odd fusion of news anchor showmanship with government process.
It got me thinking about the future of drone warfare. That, in turn, got me thinking about the history of the Royal Air Force.
In 1918 the United Kingdom was the first country in the world to create an independent air force. The RAF was born at the end of the First World War as rapid technological progress, iterated in the skies above the battlefield, turned a civilian curiosity into a devastating military capability. Air superiority would go on to be a decisive factor in all subsequent conflicts.
In June 2024 Ukraine created the Unmanned Systems Force (USF), a new and entirely separate branch of the armed forces. Hegseth’s video is a nod to the realisation that the Ukrainians had a year ago – we are on the cusp of a new technological era.
But if we wind the clock forwards, what does such an era look like? The remote drone operations recently executed by Ukraine and Israel could be a window into that future.
The missions were carried out deep inside enemy territory using drones remotely controlled from thousands of miles away. In both cases, fleets of drones were concealed inside modified trucks before being activated and piloted to their targets - latter day Trojan Horses.
The Trojan template
The Trojan Horse is perhaps the paragon of defence tech innovation. After a decade of failed attempts to breach Troy’s defences, the Greeks changed their strategy. They constructed a giant wooden horse, hollowed out to hold a small group of elite soldiers, then appeared to retreat.
Believing the war was over, the Trojans brought the horse inside the city as a trophy. That night the hidden soldiers emerged, opened the city gates for the secretly returned Greek army, and sacked the city. It was not brute strength that ended the war, but deception and creativity.
What Ukraine and Israel demonstrated last month was a contemporary version of the same logic. But to understand why only they could do it, we need to examine how they fight and how they build.
Institutionalising experimentation
The ancient Greeks had a culture of military innovation which enabled them to experiment and invent. They famously developed the torsion catapult; a first of its kind, long-range precision weapon. They also designed the trireme; a new type of highly manoeuvrable ship designed for ramming attacks.
Both Ukraine and Israel have embedded similar experimentation directly into their military frameworks. In Ukraine, this is driven by battlefield necessity. In Israel, it is a matter of long-term strategic culture.
Ukraine has been fighting Russia for more than three years. Throughout that time it has contended with inferior resources and limited access to conventional firepower. Rather than match Russia gun for gun, it chose to innovate its way around the problem.
Instead of dedicating itself to increased production of artillery munitions, it invested heavily in unmanned systems. The country built a domestic drone industry almost from scratch, producing 300,000 drones in 2023, then 2.2 million in 2024. It aims to produce 4.5 million in 2025.
Israel, by contrast, is not constrained by limited resources but driven by its unique security environment. It has existential threats on multiple fronts and a longstanding doctrine of pre-emption. Its defence and technology ecosystems are tightly intertwined. Programs like Talpiot and Unit 8200 recruit young people with exceptional technical ability and give them both academic education and military responsibility.
These programs serve not only to develop military technologies but also to seed entire industries. Israel’s ability to carry out next generation drone operations is supported by a continuous supply of top-drawer technical talent that can quickly build and operationalise capabilities.
Conflict begets innovation
The Greeks only considered the Trojan Horse after ten years of frustration. It was desperation that gave rise to the strategy that finally ended the war.
The same can be said for Ukraine. Facing a resource-rich enemy, Ukrainians have become exceptionally creative. Amongst other achievements, they have developed unmanned surface vessels (USVs) which have been so successful at sinking enemy ships that the Russian Black Sea fleet is now effectively confined to port. The war has created a proclivity to experiment that would be difficult to replicate in peacetime.
Israel faces a different kind of pressure. It has been in open conflict with Iranian-backed groups since 7th October 2023 and has lived with the threat of annihilation since its creation in 1948. Surrounded by potential enemies, it has maintained advantage through technological advancement. Its Iron Dome, for example, was a breakthrough capability and is now the template for Trump’s Golden Dome. For decades, it has approached conflict as a testing ground for new technologies.
The lessons we can learn in the West
In Ukraine and Israel there is a tight feedback loop between battlefield experience and technical execution. If a new system works, it is used. If it fails, it is replaced. Success is measured in battlefield victories, not project management green ticks.
In the West we won’t be planning Trojan Horse-style operations anytime soon. That is fine - we don’t need to. But we are rightly aspiring to that velocity of innovation.
At the moment Western procurement cycles last longer than some wars. Our militaries have the technical capability to build Trojan Horses but they lack the institutional flexibility to deploy them in time to matter. Meanwhile, Ukrainian and Israeli militaries are designed to adapt quickly and deliver results.
The ancient Greeks knew that the willingness to act on a new idea is just as important as the idea itself - something that Pete Hegseth seems to have understood.
How did China Come to Lead the World in Defence Tech?
Last month I was in the room for Pete Hegseth’s keynote speech at SOF Week. He’s a gifted public speaker and, although I’m not a MAGA guy, I found myself enjoying his performance.
More interesting than his delivery was the content. He made no mention of Ukraine but referred multiple times to the threat posed by ‘communist China’. That will be no surprise to Americans. But Europeans worry less about China.
Should we? Hegseth’s speech got me thinking about how China went from being militarily irrelevant to a defence tech superpower.
From Buyer to Builder
When the Chinese Communist Party (CCP) came to power in 1949 China’s economy was overwhelmingly agrarian. It was among the poorest countries in the world, with a GDP per capita of $95.
In the 1950s and 1960s it began importing tanks, fighter jets and submarines from the USSR. During the 1970s and 1980s, after its re-engagement with the West, it imported some non-lethal technology from France and Israel. Even the US sold it a few transport helicopters. That stopped in 1989 after the Tiananmen Square massacre. The West imposed arms embargoes, and Russia became its arms supplier.
But post-Soviet instability forced China to begin innovating domestically. By the early 2000s it had increased its R&D budget and began improving domestic capabilities in electronics, missiles and naval power.
That coincided with the beginning of globalisation and a period of sustained economic growth for China. It channelled its new-found riches into the development of defence capabilities.
Both of those trends accelerated after Xi Jinping came to power in 2012. American consumers bought more Chinese-made products, and the CCP spent that money developing more military capability.
Civil-Military Fusion: The Engine Behind Innovation
Many nations manufacture their own weapons and ammunition. But China suddenly became one of the foremost defence technology innovators. How?
The reason is doctrinal: the CCP has pioneered a principle called civil-military fusion. Everything, from AI research at Baidu to quantum computing labs at Tsinghua, is potentially dual-use. The boundary between civilian and military R&D is deliberately porous. Xi Jinping even created a commission to ensure its correct implementation.
That would feel very unusual in the West, where we instinctively separate defence and civilian innovation. But for China it’s a guiding principle. One which has transformed its entire tech ecosystem into a military supply chain.
The Air Domain
After importing Russian fighter jets for years, in the 1990s China acquired the right to manufacture Russian Su-27s domestically. This enabled it to study modern aircraft design and paved the way for the domestically developed Chendgu J-10.
Still in service, the J-10 is a modern fighter comparable to Western fighters like the F-16. Its first combat use was last month when Pakistani J-10s reportedly shot down some French-made Rafales used by India’s air force.
China is now developing a 6th generation fighter, dubbed J-36. It is optimised for long-range supersonic flight and notable for its stealth features and tailless design, putting China ahead of the US in the race to field the next generation of fighter jet. Both J-36 and the American F-47 are larger aircraft with longer range and better stealth capabilities than antecedents, hinting at a new type of air power competition.
The Maritime Domain
In just 30 years, China has gone from coastal defence force to technologically advanced blue-water navy. It is one of just five countries capable of domestically building aircraft carriers, and its Type 055 destroyer is broadly regarded as the best in its class.
It has developed a number of innovative platforms which are unique among militaries. One is a barge with a bridge that can extend from the bow onto a beach. The barges can connect to form giant causeways. That is useful if you want to get troops and vehicles onto, say, a nearby island.
It is also the first country to build a drone ‘aircraft carrier’. Many navies have understood that drones will be a feature of naval air power in the future, but China is the only country to have built a ship dedicated to the technology.
It has also developed long-endurance underwater unmanned vehicles (UUVs), a large trimaran-design unmanned surface vessel (USV), a deep-sea cable cutting device and the ‘underwater great wall’ – a network of seabed sensors and sonar arrays across the South China Sea.
The Space Domain
What began as a state programme focused on prestige space missions has evolved into a powerful dual-use ecosystem. China now operates a full-spectrum space capability including launch vehicles, its own satellite navigation system (BeiDou), Earth observation satellites, anti-satellite weapons and a modular space station (Tiangong).
China was the first country to launch a quantum communication satellite (Micius) in 2016. It followed this up in May 2025 with quantum-secured communications across a distance of 12,900km between China and South Africa.
It has developed a bullet-shape satellite designed for very low earth orbit (VLEO) - an initial step towards building a 300-satellite constellation for remote sensing and communications.
It has tested hypersonic orbital glide vehicles which blur the line between spacecraft and weapon system. These could pose a novel challenge to existing missile defence systems and probably form part of the rationale behind Trump’s Golden Dome project.
Some Chinese satellites have demonstrated the ability to autonomously dock, capture, and manipulate other satellites, such as the Shijian-21. These are dual-use technologies which are useful for debris removal but also anti-satellite (ASAT) strategies.
An American problem?
Pete Hegseth is right to be concerned. Civil-military fusion has transformed the economics of Chinese defence tech and Western consumers have filled the coffers of the CCP.
Does any of this matter to Europe? For many on the continent, it doesn’t. At least not directly. Where the US sees China as its primary adversary, Europe sees Russia.
Will that change? Probably not in the short term – Russia will be an existential threat until Europe has properly re-armed. That is simply a matter of geography. In the longer-term Europe will not want China to replace the US as the world’s policeman. For the moment, that is a problem it has chosen to ignore.