Quantum communication technology has recently garnered significant attention and is heralded as a crucial direction for future information communication development. Let's delve into what quantum communication technology entails, its advantages, and its potential applications.

01. What is Quantum Communication?

Quantum communication leverages the principles of quantum mechanics, utilizing the non-classical properties of quantum states and their collapse upon measurement to transmit information. It encompasses technologies such as Quantum Key Distribution (QKD), Quantum Teleportation, and Quantum Dense Coding.

In contrast to traditional communication methods, quantum communication boasts high timeliness, robust anti-interference capabilities, exceptional confidentiality, and minimal signal-to-noise ratio requirements. Instead of traditional electrical or optical signals, the information carrier here is quantum states themselves.

The journey of quantum communication began in the early 1980s when physicists Charles Bennett and Gilles Brassard introduced the BB84 protocol, a quantum cryptographic method. This protocol employs quantum mechanics to transmit secret information via quantum bits, simultaneously detecting any unauthorized eavesdropping.

Global research on quantum communication technology is advancing rapidly. In 2004, Chinese scientists achieved a groundbreaking long-distance quantum key distribution, marking a significant milestone. Since then, domestic scientists and entrepreneurs have actively contributed to quantum communication research, yielding continuous advancements. Quantum communication technology is already being applied in high-security sectors like bank transfers, medical data transmission, and state secret exchanges.

As a cutting-edge technology, quantum communication holds immense development potential. According to Morgan Stanley, citing McKinsey's predictions, the global quantum communication market is expected to reach a value of $11 to $15 billion by 2035, growing to $24 to $36 billion by 2040, with a compound annual growth rate of 20%.

With continuous technological advancements and cost reductions, quantum communication is poised to become a mainstream communication method, ushering in unprecedented societal changes. From personal communication to national security, and from cloud computing to the Internet of Things, quantum communication promises more efficient, secure, and convenient services.

02. Overview of Related Concept Stocks

The quantum communication industry chain includes upstream components and core equipment, midstream transmission trunk and system platform construction, and downstream terminal product development and applications in military and national defense.

China leads the world in quantum secure communication technology, which is built upon Quantum Key Distribution (QKD). QKD can be categorized into Discrete Variable Quantum Key Distribution (DV-QKD) and Continuous Variable Quantum Key Distribution (CV-QKD). Here's an overview of related concept stocks:

The Quantum Communication Team at Southwest Securities notes that quantum communication is rapidly commercializing. China has established a nationwide quantum secure communication backbone network exceeding 10,000 kilometers, leveraging terrestrial optical fibers and quantum satellites. Future branch networks, metropolitan area networks, and industry applications are expected to accelerate. Estimates suggest a market space of approximately 50 billion yuan for quantum metropolitan area network construction in China, with C-end application markets also expanding.

A previous research report from Shanghai Securities also highlights the promising trajectory of quantum communication, with relatively low commercialization challenges. As quantum computing technology advances, the industry is anticipated to unlock vast market potential. Key stocks to watch include:

• Operators: China Mobile, China Unicom, China Telecom
• Optical modules: Tianfu Communications, etc.
• Computing power/computing power leasing: Unisplendour, etc.
• Quantum technology: Guodun Quantum, etc.

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