The Business Of Nanotech

Stephen Baker and Adam Aston 2005 Business Week. Feb 14,

There's still plenty of hype, but nanotechnology is finally moving from the lab to the marketplace. et rea!y for cars, chips, an! golf balls ma!e "ith ne" materials engineere! !o"n to the level of in!ivi!ual atoms #ity the poor alchemists. They spent the $i!!le %ges in can!le&lit laboratories, laboring to bre" universal eli'irs an! to turn base metals into gol! or silver. They faile! utterly. (y the !a"n of the )cientific *evolution, researchers e+uippe! "ith microscopes foun!e! mo!ern chemistry && an! !ismisse! alchemy as hocus& pocus. (ut it turns out alchemists "ere ,ust a fe" centuries ahea! of sche!ule. To!ay, in sparkling labs e+uippe! "ith po"erful microscopes, scientists on three continents are promising !ramatic ne" materials an! me!icines that "oul! make alchemists prou!. This "ork takes place in the realm of nanotechnology, in!ustry's tiniest stage. The stan!ar! unit of measurement, a nanometer, is a billionth of a meter && barely the si-e of 10 hy!rogen atoms in a ro". .n this universe entire !ramas can unfol! on the tip of a pin, an! a snee-e packs the punch of a raging hurricane. /hy so small0 *esearchers have !iscovere! that matter at this tiny scale often behaves very !ifferently. /hile some of the science behin! this phenomenon is still shrou!e! in mystery 1page 234, the commercial potential of the infinitesimal is coming sharply into focus. Familiar materials && from gol! to carbon soot && !isplay startling an! useful ne" properties. )ome transmit light or electricity. 5thers become har!er than !iamon!s or turn into potent chemical catalysts. /hat's more, researchers fin! that a tiny !ose of nanoparticles can transform the chemistry an! nature of far bigger things, creating everything from fortifie! fen!ers to superefficient fuel cells. 6ngineers "orking at the nano scale have a bran!&ne" tool kit that's full of "on!er an! brimming "ith potential riches. 7o" it's time to start cashing in. Throughout 2005, companies large an! small "ill be rushing more nano&base! pro!ucts from labs to the marketplace. 8onsumers "ill encounter nanotechnology in the form of nick&proof trims on 9ummers, /ilson tennis rac+uets "ith

e'tra pop, even golf balls !esigne! to fly straight. .nvestors, mean"hile, "ill be face! "ith a sle" of bol! announcements. 5n Feb. 1, for e'ample, computer giant 9e"lett&#ackar! 8o. !isclose! a breakthrough in nanotechnology that, "ithin a !eca!e, coul! carry computing beyon! to!ay's silicon an! transistors. :/e are reinventing the computer at the molecular scale,: says )tan /illiams, an 9# senior fello" an! co&author of the report. For no", nano is starting out mo!estly. The biggest markets for nanoparticles remain in familiar pro!ucts, from the black rubber filler in tires, a ;4 billion in!ustry, to the silver use! in tra!itional photography. <u' *esearch .nc., a 7e" =ork nanotech market researcher, estimates that only ;1> billion "orth of manufacture! goo!s "ill incorporate nanotechnologies this year. That's little more than a roun!ing error in the global economy. Feverish %ctivity =et ne" nano&base! pro!ucts that coul! have a far bigger impact are only a step or t"o a"ay. /ithin the ne't t"o years, !iagnostic machines "ith components built at the nano scale shoul! allo" !octors an! nurses to carry pint&si-e laboratories in their briefcases, perhaps to test for 9.? or count "hite bloo! cells on the spot. 7ano sensors "ill scour airports an! post offices for anthra' an! sarin. To"ar! the en! of the !eca!e, scientists say, ne" computer memories compose! of nanoparticles coul! conceivably pack the !igital contents of the <ibrary of 8ongress into a machine the si-e of a yo&yo. (y that point, <u' pre!icts, nanotechnologies "ill have "orke! their "ay into a universe of pro!ucts "orth ;2@2 billion. 9o" !oes nanotechnology con,ure up such surprises0 7ature provi!es e'amples of this molecular magic. Think of coal compressing, over millennia, into !iamon!s. The gems are ma!e of the same carbon atoms. (ut they've been re,iggere! over time into or!erly crystal patterns linke! by superstrong chemical bon!s. )oft becomes har!, sooty blackness becomes glittering clarity. These !ays scientists can pull off such transformations bet"een coffee breaks. /ith atomic probes they manipulate molecules, one& upping $other 7ature. Aelving into the nano realm gives them startling surprises right in the ol! perio!ic table of elements && an! they're filing a flurry of patents to lay claim to these miraculous materials. :.t's a lan! grab,: says Aouglas )harrott, a patent la"yer at Fit-patrick, 8ella, 9arper B )cinto in 7e" =ork.

The +uestions aroun! nano are no longer "hether it's coming or if it's real but ,ust ho" big it "ill be. )ome see nano simply as a ne" material revolution, akin to the !a"n of plastics. 5thers heral! a transition as !ramatic as mankin!'s a!vance from stone to metal tools. (ut those ha-y pre!ictions asi!e, the +uestions that are echoing from laboratories in Tokyo to the hectic offices of short& sellers on /all )treet are about money. /hich nanotechnologies "ill create ne" fortunes, in!ustries, an! corporate champs0 %ctivity on the groun! is feverish. )ome 1,200 nano startups have emerge! aroun! the "orl!, half of them in the C.). 8ompanies that long labore! in !ull&as&!ish"ater materials businesses are fin!ing that they can create a stir by trumpeting their mastery over age&ol! particles, from specks of ceramic to soot. (rokerages such as $errill <ynch B 8o. an! #unk, Diegle B 8o. are scouring the markets for nano&focuse! companies an! plunking them into nano in!e'es. $ean"hile, investors, torn bet"een an alluring ne" market an! the fear of a !ot&com&like bubble, are struggling to get a grip on e'actly "hat nano means for them. Their confusion is un!erstan!able. 7ano is not a single in!ustry but a scale of engineering involving matter bet"een 1 an! 100 nanometers. .nstea! of one ne" phenomenon, like the .nternet, nano offers ne" possibilities for thousan!s of materials that alrea!y e'ist. This means much of the early activity "ill likely take place at in!ustrial giants. %lrea!y, 1@ of the >0 companies in the Ao" Eones in!ustrial in!e' have launche! nano initiatives. )ays $argaret (lohm, manager of eneral 6lectric's nanotechnology research an! !evelopment programF :. lose sleep at night because e'pectations are so high.: 9o" !o these tiny molecules create big ne" pro!ucts0 )ometimes si-e alone is the key. 8onsi!er Au#ont's ne" ?oltron, a super& !urable "ire coating use! in heavy&!uty electric motors. .f you looke! at previous generations of such coatings through a po"erful microscope, the chemical components "oul! look loosely packe!, "ith irregular spaces bet"een the molecules. This structure lea!s the material to break !o"n more easily. ?oltron's nanoscale particles fill in many of the voi!s, making a stronger insulator that lasts longer. .n Au#ont's tests on electric motors, a coating of ?oltron e'ten!e! the time bet"een failures by a factor of 10, to more than 1,000 hours. %n! since such motors consume an estimate! 25G of C.). electric po"er, lengthening their life an! efficiency promises big energy savings. :This chemical combination can only be !one "ith nanomaterials,: says Hrish Aorais"any, a

senior planning manager for Au#ont's nanotech research effort. $ost of the early a!vances in nano "ill improve "hat "e alrea!y have. 6'amplesF light"eight army fatigues that resist chemical "eapons an! foo! packaging !esigne! to keep last month's lettuce green an! crunchy. <ater this year, !uffers "ill be able to buy golf balls manufacture! by 7anoAynamics .nc. in (uffalo, 7.=., that are !esigne! to prevent a shift in "eight as they spin. This shoul! create balls that fly straight !o"n the fair"ay an! even hol! a stea!ier line on the putting green. :.f !eman! for the balls takes off, this coul! become a ma,or business for us,: says 7anoAynamics 865 Heith (lakely, "ho plans to sell the balls for a pricey ;5 apiece. (eyon! straight putts an! fresh pro!uce, can nano live up to its potential to create entirely ne" in!ustries an! corporate titans0 The ans"er !epen!s on ho" the players, from regulators to entrepreneurs, han!le a host of thorny challenges. overnments must !evise smart regulations to control ne" materials an! therapies. 8ompanies face logistical conun!rums, such as carrying out +uality control on shipments of minuscule carbon nanotubes an! silicon crystals && the .&beams an! sheet glass of this in!ustrial revolution && that are virtually invisible. The nascent in!ustry also must hammer out stan!ar!s an! enforcement practices that are sorely lacking. % 2004 stu!y by <u' *esearch foun! that many of the 200 global suppliers of basic nanomaterials faile! to !eliver "hat they promise!. :%s a group they have a frighteningly poor track recor!,: says <u' ?ice& #resi!ent $atthe" 7or!on. The upshot0 Cntil the in!ustry puts a +ualifie! supply chain in place, only innovators "orking "ith "orl!& class labs can count on reliable material. This limits access to nanotechnology an! hurts its gro"th. %n even greater challenge for nano in!ustries is to ensure that their ne" materials are safe in the human bo!y an! in the environment. )etbacks coul! sink nano companies an! even lea! to a global backlash among the same activists "ho are raging against genetically mo!ifie! foo!. :.'m "orrie! about an overreaction to both the hype an! the fear,: says Hristen Hulino"ski, an e'ecutive !irector at *ice Cniversity's 8enter for (iological B 6nvironmental 7anotechnology. )uch concerns rattle the e+uity markets. %s recently as last summer, about a !o-en nanotech companies "ere positioning themselves for initial public offerings. (ut last year's most "i!ely

anticipate! .#5 in the sector && a ;115 million offering for 7anosys .nc. in %ugust && "as "ith!ra"n at the last minute as investors coole! to a company rich in patents but still years from making a profit. 7o" the .#5 market appears stalle!, even for stars such as 7anofilm, a profitable ?alley ?ie" 15hio4 manufacturer of optical films, an! Honarka Technologies .nc., a <o"ell 1$ass.4 lea!er in plastic solar panels. #remature $arketing0 Aoubts an! confusion plague the market, "here even the !efinition of nano is open to !ebate. /hen $errill <ynch analysts release! their 7ano .n!e' last %pril featuring 25 companies, critics ho"le! that they "ere fueling hype && an! that a fe" of the pharmaceutical outfits on the list "ere inclu!e! simply because they engage! in the common practice of making molecules. $errill retoole! the list, limiting it to companies that publicly stress a commitment to nano. )till, $anuel #. %sensio, presi!ent of %sensio B 8o., a short&seller that is still betting against the stock of one nano in!e' company && 7?6 8orp., a maker of electronic sensor instruments && continues to grumble. :There is no market yet,: he says. :.sn't $errill attempting to create a retail fervor0: $errill's )teven $ilunovich, "ho !irects its nanotech research, respon!s that the firm covers only three of the stocks on the in!e' an! compiles the list not to recommen! investment vehicles but as a "ay to track the young in!ustry. :.t's a >0&year tren!, an! "e're only at the beginning,: he says. .n to!ay's cautious climate, investors are focusing less on !a--ling visions an! more on companies "ith real pro!ucts, customers, an! profits. The lea!ing performer in $errill's in!e' in 2004 "as $T) )ystems 8orp., a >@&year&ol! testing&e+uipment company "hose tools are "i!ely use! in nano labs. .ts stock rose 30G. 9arris B 9arris roup .nc., a venture&capital firm "ith heavy investments in nano, sa" its stock rise I5G && a sign that investors hol! high hopes for the segment. (ut most businesses selling true nano pro!ucts, from materials company %ltair 7anotechnologies .nc. to France's Flamel Technologies, a me!ical supplier, suffere! market !eclines through 2004. %n! the $errill in!e' fell another 12G in Eanuary, 2005. 7o !oubt nano is in for its share of bumps, "ith flops sure to outnumber successes by a "i!e margin. =et the technology of the tiny is on track to !isrupt nearly everything in its path, inclu!ing companies, in!ustries, an! universities. /hy0 %t the atomic level the boun!aries among biology, chemistry, physics, an! electronics

lose much of their meaning. The sciences start to merge. $any of the "inners in nano "ill be those that can reach across ol! boun!aries an! create novel hybri!s. .sraeli biologists an! electrical engineers, for e'ample, have teame! up to attach !na to carbon nanotubes to create microscopic transistors. These assemble themselves in the lab follo"ing a biological blueprint. The result is an inanimate transistor && but one that gro"s, like a ta!pole or a toenail. Fun!ing $agnet 8ompanies that can bring such innovations to market stan! to restructure entire in!ustries. Horea's )amsung roup plans to pro!uce T? !isplays featuring the most prominent buil!ing blocks of the 7ano %ge && carbon nanotubes && by 2002. .f successful, these screens coul! be lighter, cheaper, brighter, an! more energy& efficient than to!ay's mo!els. The technology "oul! sprea! +uickly from T?s to computer screens, even electronic billboar!s. 6 is a!!ing a ne" nano&focuse! "ing to its *BA center in 7iskayuna, 7.=. The company "on't !isclose the si-e of its investment but says a 50&member team of researchers is looking to see! nano into everything from me!ical technology to lighting to high&performance turbines. For entrepreneurs, nano spells fun!ing. ?enture capitalists have investe! ;1 billion in nano companies, nearly half of it in the past t"o years. $ean"hile, government fun!ing is hol!ing stea!y at ;4.I billion annually, nearly e+ually !ivi!e! among %sia, 6urope, an! 7orth %merica. The cash is pouring into university labs an! ne" nano corri!ors from %lbany to )hanghai an! Fukuoka prefecture in Eapan. :%ny professor "ith his hea! scre"e! on has move! research programs into nano,: says reg (lon!er, a partner at $orgenthaler ?entures. $any of the early prospectors are focusing on health&care testing tools, "hich are far less regulate! than me!icines an! therapies. <ab7o" .nc., an %ustin 1Te'.4 startup, has its sights set on a!!ressing the %.A) epi!emic. Csing minute channels an! sensors, the company has !evise! a bloo! laboratory on a chip the si-e of a business car!. The patient places a single !rop of bloo! on the chip, "hich is then inserte! into a small electronic rea!er. /ithin minutes, 9.?J%.A) patients can get a count of their "hite bloo! cells && a crucial metric for treatment. 8urrently that test takes "eeks or months in poor regions of the "orl!, "here bloo! samples are trun!le! back an! forth in slo" trucks. #atients can !ie "aiting for

the results. <ab7o"'s technology has the potential to spee! %.A) treatment in much of the "orl! && an! let <ab7o" cash in on the ;5 billion global market for point&of&care testing. .n 5ctober, <ab7o" got ;14 million in e+uity fun!ing from a consortium le! by eorge )oros. The company hopes to roll out its systems in )outh %frica by the en! of 2005. *e! Flag $ore !ramatic breakthroughs are e'pecte! "ithin t"o or three years as companies !eveloping novel me!ical proce!ures begin to emerge from the regulatory ma-e. %lrea!y, nano&i-e! versions of e'isting !rugs are causing a stir. <ast month, %merican #harmaceutical #artners .nc. shares surge! 50G on ne"s that the Foo! an! Arug %!ministration ha! approve! the marketing of %bra'ane, a nanoscale protein&base! !rug for the treatment of metastatic breast cancer. The nano version is able to s+uee-e into places in the bo!y that its e'isting macro counterpart cannot "ithout intolerable si!e effects. Further out, researchers are "orking on customi-e! treatments, such as nanoparticles built to match the uni+ue genetic profile of a patient's cancer cells && an! programme! to seek out an! !estroy them. 9un!re!s of these therapies are in the "orks. $ost "ill fail. (ut if even a han!ful succee!, they coul! change me!icine. To achieve such triumphs, nano companies must s+uelch fears about the effects of the particles in the bo!y. /orries gre" last spring "hen researchers at )outhern $etho!ist Cniversity reporte! brain !amage in a large&mouth bass that ha! been s"imming in an a+uarium stoke! "ith common carbon&base! nanoparticles kno"n as buckyballs. %lthough far from conclusive, such fin!ings raise re! flags "orl!"i!e && an! they e'ten! far beyon! the net"orke! legions of activists. <ast year, giant reinsurer )"iss *einsurance 8o. "arne! against a rush into nano, citing :the unforeseeable nature of the risks it entails an! the recurrent an! cumulative losses it coul! lea! to.: 5ne in!ustry that shoul! be able to tap nano's potential "ithout those risks is semicon!uctors. %s the circuits an! path"ays on the chips gro" tinier, manufacturers are running into problems. 6lectrons tunnel through flimsy "alls that are only several atoms thick. The electricity coursing through the intricate ma-e generates searing heat, "hich is increasingly costly an! har! to control. %s the in!ustry struggles to maintain $oore's <a", "hich pre!icts the !oubling of computing po"er every 13 months, costs are e'plo!ing.

The price of a ne" semicon!uctor fabricating plant is pro,ecte! to reach ;10 billion by the en! of the !eca!e. 7ano innovators aren't likely to replace the silicon chip anytime soon, but they coul! help ease the s+uee-e over the ne't !eca!e. This process has alrea!y starte! "ith memory chips, the least complicate! kin!. /ithin t"o or three years, !evelopers hope to make viable memory chips from spaghetti&shape! carbon nanotubes, each one only 1 nm "i!e. Further out, engineers are learning ho" to replace minuscule metal circuits an! gate"ays on to!ay's chips "ith ne" nano&engineere! materials. .($ researchers have built transistors "ith carbon nanotubes that promise :a huge leap in performance "hile cutting heat loss,: says #hae!on %vouris, a researcher at (ig (lue's 7anometer )cale )cience B Technology <abs. Aespite this progress, it's a long hike to nanocomputing, not a sprint. 9# researchers !on't e'pect their platinum circuits to !ebut until 2011 at the earliest. %n! it "on't be until much later in the ne't !eca!e, say scientists, that nanotechnology may be able to provi!e a ne" architecture for faster computing in the post&)ilicon era. The future of nanotechnology0 .t may seem strange no", but "ithin a !eca!e or so the term is likely to vanish from syllabuses an! portfolios an! remain part of company names only as a vestige of the past. %fter all, nano !enotes only si-e. 5nce "ork on that scale becomes routine, that bu--"or! "ill fa!e. (ut the physical "orl! && me!icines, metals, an! even the roles the elements play && "ill be utterly change! by this revolution, all brought about by bits far too small for the eye to see. The 7ano Cniverse 6'pan!s %cross The $aterial /orl! 7anotechnology is taking its first steps into basic materials, from coatings to khakis. (ut over the ne't t"o !eca!es it "ill sprea! into virtually every in!ustry. % look at "hat's happeningF T55<) 1%?%.<%(<6 75/4 .$#%8TF 7e" tools for nano !evelopment are crucial enablers. /ithout them nano particles are too tiny to see or engineer. 8ompanies that sell atomic&force microscopes an! machines that manipulate molecules are early "inners in nano.

#<%=6*)F F6., 7ano.nk, ?eeco. 89%<<67 6F The market is up an! running. 7o" it's crucial to keep innovating. $%T6*.%<) 176KT T9*66 =6%*)4 .$#%8TF <ighter tennis rackets that serve up aces, paint that !oesn't peel, fabric coatings that "on't stain. =ou "on't notice the nano && only that pro!ucts "ork better. #<%=6*)F >$, Ao" 8hemical, Au#ont, 7ano)cale $aterials, 7%)%. 6, 7anoAynamics,

89%<<67 6F $anufacturing certain nanoparticles in in!ustrial +uantities is still a stretch. Too much hype follo"e! by a pro!uct failure coul! hurt. 676* = 176KT F.?6 =6%*)4 .$#%8TF <o"&cost nano&base! films promise to capture more of the sun's light than to!ay's photovoltaics an! coul! spark a revolution in solar po"er. 8arbon nanotubes sho" potential for use in super& electric batteries an! hy!rogen storage. This improves the o!!s that hy!rogen fuel cells coul! replace fossil&fuel engines. #<%=6*)F 8arbon 7anotechnologies, m#hase Technologies, 7ano)olar, 7anosys, CltraAots. 89%<<67 6F #romising lab "ork "ill take time to scale up && an! bring costs !o"n. 96%<T9 8%*6 176KT 6. 9T =6%*)4 .$#%8TF #ortable labs to provi!e instant analysis for everything from !iabetes to 9.? are in the "orks. .mplantable health monitors && far smaller than pacemakers && coul! use nanomaterials to !ra" po"er from the bo!y's heat. Cltraprecise nano agents may ultimately be able to kill cancer cells or bombar! the bloo! vessels that nourish tumors. #<%=6*)F (io#han, 6, Eohnson B Eohnson, <ab7o", 7anokinetics, 7%)%, Luantum Aot. 89%<<67 6F 7oninvasive !iagnostic tools shoul! come to market fairly soon && if companies can prove to regulators that

nanomaterials in,ecte! into the bo!y "on't !o harm. 7%756<68T*57.8) 176KT A68%A64 .$#%8TF (y 2020 han!hel!s packe! "ith nano"ires coul! "iel! unimaginable po"er an! terabytes of memory. 8arbon nanotubes are top conten!ers to replace silicon&base! chip technology, "hich coul! hit physical limits by 2015. 7anotubes can emit light, too, so they're being !evelope! to replace bulbs an! illuminate flat&panel !isplays. #<%=6*)F 9#, .($, .ntel, 7ano&#roprietary, 7antero, 7?6, )amsung, Dettacore. 89%<<67 6F To scale up to!ay's nanochip prototypes && ma!e of ,ust a fe" circuits && to the billions nee!e! "ill re+uire a leap in manufacturing technology. 7e" $aterials *ene"e! #ro!ucts 7anotech can help cars resist !ents && an! make me!ical tests spee!ier T5C 9 The truck be! of nanocomposites <57 <.F6 6's turbines more efficient $'s 9ummer 92 )CT is line! "ith rugge!

7anoceramics promise to make LC.8H )TCA=

% nanofilter from <ab7o" "ill give patients a fast count of "hite bloo! cells 7anotechnology )tep (y )tep The carbon nanotube, first !iscovere! by 768 in Eapan in 1@@1, is one of the most versatile an! promising nanomaterials. 9ere's a nanotube's voyage from lab to market. 1. 8*6%T6 )cientists !irect a bolt of electricity && or an intense flash of laser light && into a high&pressure chamber of gas rich in carbon

molecules. This sparks the formation of cylin!ers of carbon atoms, or nanotubes. /hile nearly invisible, these threa!s are 10 times stronger than steel an! e'tremely heat&resistant. 2. 67 .766* Csing chemicals an! beams of energy, scientists have learne! ho" to sort out an! manipulate !ifferent classes of nanotubes. )ome types con!uct electricity, others are especially strong. )cientists are "eaving them into fortifie! string an! fabrics. >. 6K#6*.$67T *esearchers have been incorporating nanotubes into basic materials, from te'tiles an! plastics to "iring on miniature electronic circuity. Teaming "ith biologists, they're attaching the hollo" tubes to organic molecules an! testing them for me!ical therapies. 4. %##<= 7anotubes sho" promise in a vast array of pro!ucts, starting "ith to!ay's superstrong fabrics. .n time nanotubes may replace the transistors on ultrafast computer chips, light up the pi'els in ne" T?s, an! give birth to shape&morphing plane "ings. AataF *ice Cniversity, (/ 7ano *isks To cash in on nanotechnology, companies must overcome a sle" of challenges. The three biggestF 9=#6 Think .nternet bubble 2.0. 6'travagant hopes coul! fuel a global surge of investment follo"e! by a backlash "hen pro!ucts stumble in the market, are ni'e! by regulators, or fail to impress. This coul! slo" !evelopment of nanotech by years. T5K.8.T= The air an! "ater aroun! us are a"ash in harmless, naturally occurring nano&particles. (ut if any of the ne" engineere! nanoparticles are foun! to "reak havoc in the bo!y, the entire fiel! coul! face the same fervent global opposition that has hobble!

genetically mo!ifie! foo!. T.$.7 $iracles often arrive late. 8onsi!er genomics. % !eca!e ago it promise! sca!s of !rugs an! me!ical therapies that are still pen!ing. $arket turmoil, public fears, or pro!uction scre"ups coul! cause !elays in nano, hol!ing up breakthroughs in energy an! me!icine for a !eca!e or more.