|By: scredly $$$$$|
07 Apr 2002, 09:06 PM EDT Msg. 771 of 771
Nanotechnology: A New World Is Born
Josh Wolfe, 03.14.02, 7:00 AM ET
NEW YORK - Don't confuse the stock market with the real world. The tech stock balloon is busted, shattered, gone. But the technology revolution is just getting started. Looming just ahead is what may well be its most exciting phase--nanotechnology. This will be bigger than the Internet and more far-reaching. It will create vast new wealth. It will destroy a lot of old wealth. And it will shake up just about every business on the planet.
Nanotechnology gets its name from the measurement called a nanometer, which is one-billionth of a meter--1/75,000th the size of a human hair. A nanometer comprises around four individual atoms. Here's why that matters so greatly: When we get down to this small size, the classical laws of physics change. Once they can manipulate atoms--which combine to form molecules, the building blocks of our natural world--scientists can create new building blocks that produce new materials with the exact properties they desire: smaller, stronger, tougher, lighter and more resilient than what has come before.
Nanotechnology will lead to incredible advances, some merely practical, others almost sublime. On the most mundane level: scratch-proof glass and tiles that shed dirt and never need cleaning. On a more sophisticated level: precision drug-delivery systems; computers the size of a sugar cube that could hold the entire Library of Congress; and building blocks to produce new materials with the exact properties desired. Already super-strong drill bits are being produced by a company called Nanodyne.
On a recent visit to Washington, D.C., I sat on a top-level panel on nanotechnology. Among the other participants were former Speaker of the House Newt Gingrich, National Science Foundation chief Mike Roco and Meya Meyyappan of NASA's Ames Nanotechnology Group. Gingrich was not exaggerating when he declared flatly, "Nanotechnology is our country's future." The others agreed.
But here's the danger: While the U.S. gained an early lead and never lost it in the computer and Internet revolutions, it is not the early leader in all areas of nanotechnology. Japanese scientists have already developed a lead in nanoscale circuits. Engineers in Germany are busily using nanotechnology to protect surfaces from dirt and grime.
So we have some catching up to do. When he was still in politics, Gingrich joined hands with his arch political enemy Bill Clinton to foster the National Nanotechnology Initiative in January 2000. Government spending on nanotechnology began in 1998 with about $115 million. Now the Bush Administration has grabbed the ball and is running with it: Bush has asked Congress to appropriate $679 million for 2003 to help us catch up.
This time the Europeans are determined not to be left behind. European governments, led by Germany, the U.K. and France, spent $164 million on nanotech in 2000. The European Union's Framework Program supports Nanotech above and beyond individual country's programs: For 2002-2006 the European Union has allocated $1.2 billion.
Europe is already an important Nanotech incubator. Germany's Nanogate Technologies GmbH is using nanotechnology to produce a coating about 100 nanometers thick that renders surfaces such as tiles and sinks stain- and scratch-resistant, and markedly easier to clean.
Nanogate has high hopes for its new coating. Some 4 billion square meters of ceramic tile are sold every year. Tilemakers can charge a premium for the coated tile and are expected to become eager customers for the nanotech product. The company expects to develop branding for its Sol-Gel product in the same way that 3M (nyse: MMM - news - people ) has with Scotchgard and Intel (nasdaq: INTC - news - people ) with PCs.
Nanogate takes a material to be coated, applies a layer of adhesive nanoparticles and then adds another layer of non-adhesive nanoparticles that bind to the first layer. The outermost part of this layer prevents other particles, like dirt and grime, from binding to it.
One customer, Duravit, a German bathroom-fixture manufacturer, already sells a broad line of products using Nanogate's technology. Nanogate-treated toilets, sinks and tubs are practically self-cleaning. Nanogate also sells the technology as a wax coating for about $25, and you apply it yourself. No U.S. companies offer competitive products yet, but DuPont (nyse: DD - news - people ) is working hard to catch up.
This is admittedly small stuff compared with tiny computers and targeted drug delivery, but it demonstrates how companies that master the technology will be able to produce an endless array of innovative products. Already Nanogate is extending its technology to industrial uses to keep machines and engines running cleanly and efficiently to eliminate downtime.
Privately owned Nanogate is still tiny, with sales this year of maybe $2 million, but Chief Executive Ralf Zastrau expects growth of between 50% and 100% over the next several years. Were it not for Ralf's heavy investment in R&D, I believe the company would be profitable ahead of its current projection of 2003.
Another promising nanotech company, spawned on the campus of University College in Dublin, is privately owned Ntera. Ntera's first product is NanoChromics, an ultra-thin display that looks like regular paper but can change what it displays, just like a computer screen or LCD. An initial $400,000 from the Irish government and European Union programs got Ntera started, but the company has since raised $26 million from private investors, including Dresdner Kleinwort Wasserstein and the Intel 64 Fund.
Several U.S. outfits are testing the same waters, but less successfully than Ntera. E-Ink (an MIT spinoff) and Gyricon (a Xerox Palo Alto Research Center spinoff) are making similar products but with a less efficient process. These companies rely on microscopic beads that change color when voltage is applied to them. One side is black, the other white. One side is positively charged, the other negatively. When electricity is applied, the particle can flip to the desired color and create a display bit. If enough of them line up, you can create the words on a page.
But whereas E-Ink and Gyricon require expensive custom-designed manufacturing facilities and new equipment to produce their displays, Ntera's technology is specifically suited for existing plant and equipment used by LCD manufacturers, which already dominate the electronic display market.
Ntera recently signed a co-development agreement with Merck (nyse: MRK - news - people ) to supply product to LCD manufacturers. In time, this process will be integrated at the LCD manufacturer's facility. There should be a lively market for the product. Retailers such as Macy's spend about $250,000 a week changing their in-store paper displays. Ntera's technology could save them worthwhile amounts.
Ntera is on a roll. It expects its NanoChromics line to generate 70% of next year's projected $4 million in sales, with the remainder coming from recently acquired Swiss firm Xoliox. Xoliox moves nanotechnology into yet another business. It uses similar materials to create a battery that lasts longer and produces energy more efficiently. With a focus on near-term revenue, an annual growth rate of nearly 100% and a pipeline of additional nanotechnologies in the works, Ntera is poised for tremendous expansion.
Right now Europe also seems ahead in developing nanotechnology to create materials for industries like cosmetics and textiles. Among the big European multinationals active in nanotechnology are BASF (nyse: BF - news - people ), Bayer (nyse: BAY - news - people ), Merck and Henkel Group.
This early European head start may not last, however. Lacking the U.S.'s deep capital markets, the Europeans depend more on government support, which is a cumbersome process. Ultimately there will be a surge in strategic alliances in this area as big U.S. companies partner with companies abroad. Already Procter & Gamble (nyse: PG - news - people ) has announced a partnership with BAE Systems (formerly British Aerospace) to create multidisciplinary centers of excellence for nanotech.
These are the early days in nanotechnology. Any businessperson and any business that neglects its promise will live to regret it. There are as yet relatively few direct ways to invest in the business, but this will change fairly quickly. Meanwhile, investors need to know which established companies are riding this wave of the future and which are not.
This report is dedicated to seeing that you stay up to speed on changes that may beggar all those that have gone before.