As quantum computing nears commercialization, hardware roots of trust may be an early beneficiary of post-quantum security deployment

Overview

Morgan Stanley believes fault-tolerant quantum computing could reach a commercially meaningful stage around 2029–2030 and may undermine existing public-key cryptographic systems such as RSA and ECC. Given “harvest now, decrypt later” risks, regulatory migration roadmaps, and infrastructure replacement cycles, post-quantum security construction needs to begin before Q-Day. The report focuses on hardware roots of trust at the server and chip levels, viewing them as foundational to PQC implementation.

Core views

The report sees PQC as the primary entry path for post-quantum security, but PQC addresses only algorithmic resistance to quantum attacks; key generation, storage, and protection still depend on hardware roots of trust. PUFs can use inherent physical characteristics of chips to generate device-unique keys, reducing the risk of key cloning or extraction while potentially easing the performance, power, and area burden associated with PQC deployment. The commercial PUF market is relatively concentrated, with Synopsys and eMemory among the key participants; advanced process nodes and larger key requirements may increase the appeal of oxide-based PUFs.

Analysis framework

Using quantum-computing industry roadmaps, government PQC migration requirements, and chip-application penetration rates, the report combines PQC adoption rates across chip types, PUF adoption rates across PQC solutions, and encryption-processor adoption rates to develop scenario estimates for the PUF-PQC semiconductor IP market, while assessing investment implications for IP vendors and adopters.

Methodology notes

• Market SizingScenario Analysis

  Base, bull, and bear cases

  Estimates the hardware quantum-security IP market based on varying assumptions for PQC penetration, PUF adoption, and chip coverage.

• Technology FrameworkHardware Root of Trust

  PQC and RoT are complementary

  PQC protects cryptographic algorithms, while hardware roots of trust protect keys, device identity, secure boot, and firmware validation.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• eMemory (3529.TWO)

  PUF IP vendor

  Strengths

  The report believes NeoPUF has potential advantages in advanced-process scalability, low power consumption, and next-generation hardware-root-of-trust applications; it receives an initial Overweight rating.

  Weaknesses

  PUF remains a relatively emerging and small-scale IP market.

  Comparison

  Compared with SRAM PUFs, oxide-based PUFs may offer lower area and power overhead while improving scalability at advanced nodes.

  Risks

  Quantum-computing progress falls short of expectations, competition among PUF solutions intensifies, or customers shift to in-house development or alternative technologies.

• Synopsys (SNPS.O)

  Semiconductor IP and EDA vendor

  Strengths

  It has a broad IP portfolio, customer relationships across chip-design workflows, and hardware-security integration capabilities; it has acquired PUF IP vendor Intrinsic ID.

  Weaknesses

  PUF is expected to make only a limited near-term contribution to overall earnings.

  Comparison

  Its scale, product breadth, and bundling capabilities may be superior to those of focused vendors.

  Risks

  Competitors such as eMemory could reshape the competitive landscape, although the report considers the financial impact on Synopsys limited.

• Cadence

  EDA and hardware-security IP platform

  Strengths

  Its acquisition of Secure-IC strengthened embedded-security, hardware-root-of-trust, and PUF capabilities; its customer base supports the promotion of security IP.

  Weaknesses

  The revenue contribution from post-quantum security has not yet been clarified.

  Comparison

  It may expand coverage through system-level integration and design-tool bundling.

  Risks

  Uncertainty remains around sources of PUF technology, alternative solutions, and the pace of customer adoption.

• Aspeed (5274.TWO)

  Post-quantum security adopter

  Strengths

  Identified by the report as a key adopter and assigned an Overweight view.

  Weaknesses

  The report does not provide a quantified contribution from quantum-security revenue.

  Comparison

  Compared with pure-play IP vendors, its benefit path depends more on product adoption and end-market deployment.

  Risks

  PQC standards deployment and downstream demand may fall short of expectations.

• IBM

  Participant in quantum computing and quantum-security services

  Strengths

  It has a full-stack quantum roadmap and can support enterprise PQC migration through software, consulting, and hybrid cloud.

  Weaknesses

  Standalone quantum-hardware revenue may remain limited before breakthroughs in fault tolerance, logical qubits, and practical workloads.

  Comparison

  Its business is more diversified than that of pure-play quantum companies, while quantum-security migration provides an earlier and less binary monetization path.

  Risks

  Quantum-related revenue may still represent only a very small share of the overall business initially.

• Quantinuum、IonQ

  Direct quantum-computing exposure

  Strengths

  Could benefit from growth in government, research, and commercial demand if technology roadmaps and commercialization execution succeed.

  Weaknesses

  They carry greater technology and execution risk than diversified technology companies.

  Comparison

  They offer more direct upside exposure to quantum computing, but performance is more sensitive to technology timelines.

  Risks

  Uncertainty remains around logical-qubit quality, error rates, system reliability, customer utilization, order-to-revenue conversion, and continued cash investment.

Key data

• Quantum infrastructure market size forecastUS$110 billion in 2040The report's forecast for quantum-infrastructure TAM.
• PUF-PQC IP market sizeUS$310 million in 2030Base case.
• PUF-PQC IP market sizeUS$600 million in 2030Bull case, assuming adoption expands to CPUs, GPUs, and ASICs.
• PUF-PQC IP market sizeUS$4 million in 2025Current market size used by the report for comparison.
• PQC penetration in the semiconductor industryApproximately 25%The report expects overall penetration by 2030; automotive ADAS, defense, and similar applications could exceed 50%.
• Quantum-computing commercialization timing2029–2030Industry roadmaps point to an inflection point for commercially meaningful fault-tolerant quantum computing.

Impact & implications

The investment implication is that the monetization window for quantum security may precede revenue from general-purpose quantum-computing hardware. Regulatory compliance, long-term key-protection needs, and server-refresh cycles could create multiyear migration demand; however, for large platform companies, quantum security is more likely to strengthen product portfolios and customer stickiness in the near term than to materially alter overall profitability.

Risks

• Quantum-computing commercialization and the development of fault-tolerant capabilities proceed more slowly than expected.
• Competition intensifies in foundational PUF solutions and post-quantum security technologies.
• New quantum cryptographic technologies or alternative security architectures emerge.
• PQC standards migration, customer budgets, and hardware-refresh cycles may be delayed.
• Technology milestones may not translate into near-term commercial revenue or profitability.

What to watch

• Progress by IBM, Quantinuum, and others in logical qubits, error correction, and reliability.
• PQC migration rules, compliance deadlines, and implementation pace in the United States, the United Kingdom, and other regions.
• Actual adoption rates of PQC and hardware roots of trust across semiconductors, cloud, networking, and data centers.
• PUF design wins, licensing, and royalty progress at vendors such as eMemory, Synopsys, and Cadence.
• Expanded adoption in security-sensitive applications such as automotive ADAS, defense, CPUs, GPUs, and ASICs.