Around the next bend: 2007
Unpacking the year’s micro/nano agenda before the trip even begins
By Charles Choi
The past is so, well, over. But 2007 is just a few holidays away. What should you expect for the coming year? How about a global ramp of nanotube production, the first big test of alternative electronics manufacturing, and a pitched battle over nano patent rights, to name just a few items. Read on for an advance peek at these and other tiny tech trends expected to drive micro/nano commercialization in the year ahead.
Call it the year of the multiwall tube. Experts say to expect a rapid increase in multiwall carbon nanotube commercialization efforts next year.
The floodgates are opening because pioneering nanotube maker Hyperion Catalysis’ foundational patents on multiwall tubes have expired. As a result, said Sean Murdock, the executive director of trade group NanoBusiness Alliance, “We should see a broader-based experimentation with multiwall carbon nanotubes and a growth in applications that use them.”
That will enable a gaggle of competitors to start cranking out multiwall tubes for all manner of applications, and the increased supply could create some price competition. But, experts say, carbon nanotubes are hardly all alike - and the differences in quality could cause production of commoditized multiwall tubes to shift to low-cost locations.
Bayer AG in Germany and Arkema in France have been very aggressive in entering the multiwall carbon nanotube space, with Bayer showing price leadership, said Matthew Nordan, president and research director at market research firm Lux Research. CNT Co. in Korea has also ramped up production, he said. Meanwhile, Paul Glatkowski, vice president of engineering at Franklin, Mass.-based carbon nanotube firm Eikos, pointed to Mitsubishi and Mitsui in Japan as leading suppliers.
Regardless of who the premier suppliers will be and how much they can produce, said Wasiq Bokhari, a managing partner at emerging tech advisory firm Quantum Insight, the multimillion dollar question is what the demand for carbon nanotubes will look like.
Many of the exciting device opportunities - such as in computer memory, video displays or medical diagnostics - demand single-wall tubes. “Unless really interesting high-value applications are found,” Bokhari said, “I’d say they (the multiwall tube providers) will follow a commodity path for cents per pound as filler materials - for instance, in car tires - which means most of the multiwall carbon nanotube companies will close down starting next year and multiwall carbon nanotube scale-up will move to Asia to do it cheaply.”
Not everyone agrees with that assessment, however. While Hyperion and other entrenched suppliers will no doubt see a slew of new competitors, Murdock and other experts say they are, at worst, likely to see only a limited erosion in price and market share.
It’s different from the dynamic that plays out when drugs go off patent, say experts. All the knowledge the original company developed for processing the product and integrating it into supply chains helps it maintain a leadership position despite the new players and the open playing field.
“It’s very, very difficult to get consistency of morphology and purity as you go through a (manufacturing) run, and other companies that can and will scale their production will have to go through the same learning curve we’ve already experienced,” said Michael Laine, director of business development at Hyperion.
At the same time, he argues, high-value applications may be gaining a foothold. Hyperion is currently substituting multiwall carbon nanotubes for carbon black in electronic applications such as in hard drives or wafer handling - applications that are considerably higher up in the value chain than automotive tires. In addition, “a lot of new processes in the electronics industry are demanding chemical or heat resistance while keeping the natural performance of a polymer, so multiwall carbon nanotubes can be used there for higher-end uses,” said Laine.
Certainly other high-value applications remain on the horizon. For example, new applications could emerge from the nanotube yarns developed by researcher Ray Baughman at the University of Texas at Dallas and his colleagues.
“You could imagine making a sandwich material there that could be incredibly stiff and strong for a construction material, and talking about millions of pounds of nanotubes needed per month,” said Bokhari. High value, meet high volume.
Manufacturing gets on a roll
Nanotubes won’t be the only newcomers claiming more space on the factory floor. Printed electronics and solar power cells will also begin to enter mass production in 2007 via roll-to-roll manufacturing innovations.
“In 2007, we’ll start to see a lot of companies start addressing how to take printed electronics out of the lab and into high volumes,” said Raghu Das, chief executive officer of printed electronic and RFID analyst firm IDTechEx in Cambridge, England.
A case in point is Nanosolar Inc. After raising more than $75 million in funding in 2006, the Palo Alto, Calif., firm will begin constructing a roll-to-roll printing plant in the San Francisco Bay area in 2007 that it says could produce more than 200 million solar cells a year - or an output of 430 megawatts - using nanoparticle ink. Nanosolar also aims to build a plant in Germany to assemble those cells into what it claims could be more than a million solar panels a year.
Nanosolar’s technology is based on thin films of the semiconductor material copper indium gallium diselenide, or CIGS. The company plans to pursue the solar farm market as well as the housing and commercial building market with roofing, walling and windows that have integrated solar energy collection.
A number of other solar cell companies are pursuing high-throughput methods as well, but not necessarily roll-to-roll printing. Halfmoon, N.Y.-based DayStar Technologies plans to produce 20 megawatts of its CIGS cells by the end of 2007 using roll-to-roll sputtering, according to Terry Schuyler, DayStar’s vice president of sales and marketing. HelioVolt, based in Austin, Texas, intends to begin construction on a factory in 2007 to produce nanomaterial-based CIGS cells based off its proprietary field assisted simultaneous synthesis and transfer (FASST) process. The company declined to disclose the volumes it intended to manufacture.
It is hardly a U.S.-centric trend. NanoIdent of Linz, Austria, is also investigating printable solar cells and producing devices via roll-to-roll fabrication. “They have been quietly but effectively establishing themselves as a leader in printed semiconductors for more than four years,” said Bokhari. NanoIdent was co-founded by Franz Padinger, the former chief technology officer of Konarka Austria, and has on its scientific advisory board Niyazi Sariciftci at Johannes Kepler University in Linz, a colleague of Alan Heeger, the Nobel Laureate discoverer of organic semiconductors.
In 2007, Bokhari said he expects NanoIdent to commercialize its first product, a printable organic semiconductor-based photodetector. Next year, he added, the company may also debut a printable fingerprint reading photosensor through its subsidiary Biometrics GmbH, as well as a photosensor printable onto microfluidic lab-on-a-chip devices through its subsidiary BioIdent Technologies in Menlo Park. He expected NanoIdent to have a working photovoltaic cell in 2008 that could be ready for commercialization in 2009.
By late 2007, PolyIC, a German joint venture between Siemens AG and Leonhard Kurz GmbH, should begin trials of roll-to-roll printed RFID transistor circuits with companies, IDTechEx analyst Das said. He added that Colorado Springs-based OrganicID is also going after roll-to-roll printing of RFIDs, and was recently acquired by Weyerhaeuser of Federal Way, Wash., an international paper company. “We should see a lot of packaging and paper and board companies get involved in printed electronics,” such as Stora Enso in Finland and Tetra Pak in Sweden, he said.
The field of printed electronics also needs to bring more printing companies in, said Motorola’s director of printed electronics, Daniel Gamota. He said the International Electronics Manufacturing Initiative (iNEMI) will unveil a roadmap for printed and organic electronics around February 2007, and will recruit more printers into the field as well as establish goals for the technologies over the course of next year.
Legal eagles start duking it out
All the micro/nano action won’t be happening on the factory floor, however. Some of it will take place in the courtroom. Experts have long pointed to single-wall carbon nanotubes as an area where overlapping patent claims will lead to a courtroom showdown but nanopharma may get there first.
The lawsuit expected to draw attention in 2007 is that between Irish drug maker Elan and Los Angeles-based competitor Abraxis Bioscience. Elan filed suit in July 2006 against Abraxis for infringing on two of its patents regarding nanoparticle formulations of anticancer drugs with Abraxane, the first nanoparticle drug approved by the FDA.
In 2005, Abraxis posted $134 million in Abraxane sales, a reformulation of the breast cancer drug paclitaxel. It promotes the drug with AstraZeneca. Abraxis denied the allegations and filed a counterclaim against Elan, challenging the validity of their patents and requesting a jury trial.
“People will want to watch that because there is a big, big thicket of intellectual property surrounding nanocrystalline drugs. There are some 30 companies involved, and a lot of key intellectual property goes way, way back,” said Lux’s Nordan. “For instance, Drug Delivery Services (DDS) in Germany had a milling process to produce drug nanocrystals, and is now owned by SkyePharma, which licenses the technology to Baxter. SkyePharma also purchased RTP Pharma for its nanocrystalline drug reformulation technology in 2001.”
What’s more, the case could kick off a trend. “This case is very interesting because I think it’s the start of a big wave of new patent infringement cases dealing with nanotechnology, as more patents in nanotechnology accumulate and more products reach the market,” said William Prendergast, an intellectual property lawyer at Brinks Hofer Gilson & Lione in Chicago. “The patents at issue here with Elan, assuming they’re valid, are broad enough to cover other nanoparticle formulations of drugs that Abraxis or others might have in the pipeline.”
Nano financial markets go global
For most micro/nano companies today, patenting is a global phenomenon. So, apparently, is finance.
Startups have always had problems making it past the valley of death, that difficult stage between proof-of-concept and the marketplace. It’s an especially acute problem for micro and nanotech since the extensive R&D often required can drain coffers and turns away prospective investors. As a growing number of startups have discovered, there is another nasty surprise awaiting those that make it across the valley and become a public company: the Sarbanes Oxley Act of 2002, which was passed in light of financial scandals at corporations such as Enron, Tyco and WorldCom. Compliance with the demanding legislation can require millions of dollars.
Now London is calling. In the last year startups have reported brokers approaching them regarding the prospect of going public on the London Stock Exchange’s Alternative Investment Market for small companies, or AIM, in order to skip the burden of Sarbanes-Oxley.
“It’s like a water balloon - if you squeeze one place, it all goes somewhere else. I would expect more nanotech companies to appear on the AIM in the next six to 12 months,” said Gabor Gabai, chair of Foley & Lardner’s private equity and venture capital practice. “There has been a tremendous amount of interest and brokers who have been talking to clients of mine about doing an AIM deal.”
Micro and nanotech startups are growing increasingly mature, and their investors are looking to cash in before their stakes get diluted by new investors. “A lot of companies are not interested in going public on American stock exchanges and subjecting themselves to all the extra expense that Sarbanes-Oxley and other rules demand of them,” Gabai said. “So they’re looking at alternative markets, and the AIM is certainly one of those.”
Beside the AIM, Gabai noted other markets in the European Union, such as Frankfurt, as well as ones in Asia could be promising. “Even central European countries are starting to have reasonably good markets. I don’t think nanotech companies will go to central Europe, but they might want to do two markets or more at the same time in Europe.”
Foreign markets not only offer less restrictive regulations, but also alternative investors. “You hear a lot of talk about a cabal of only 40 institutional investors in the United States now willing to look at nanotech companies,” Gabai said. “But there is a lot of foreign money out there a company could reach to get around this cabal.”
“No small company can afford Sarbanes-Oxley. We’re all getting driven out. And this year London’s been trolling the waters,” echoed Paul Glatkowski, Eikos’ vice president of engineering. “They’d love to bring in all that high tech. Our company and a large number of others have been courted to go IPO there. And it’s tempting. The London Stock Exchange is killing Nasdaq in IPOs, with almost twice as many IPOs in 2005.”
The challenge will be whether companies can maintain investor interest after going out on an alternative exchange. “It’s not clear yet how stable these are, how likely investors in those markets are to hold their shares and have an appetite for follow-on offerings, (or) whether you can get analysts to follow your company,” said Gabai.
Acronym of the year: EHS
In short, it’s not clear whether such markets pose a healthy alternative. But there are other health concerns on the horizon: 2007 is the year experts say ordinary people will realize nanotechnology is entering their lives in everyday things like food. And public interest groups will grow increasingly coordinated to shape popular opinion of it. EHS - or environment, health and safety - will be a major theme.
Press coverage, said David Rejeski, director of the Project on Emerging Nanotechnologies at the Woodrow Wilson International Center for Scholars, will begin “moving out of technical magazines and the science section of The New York Times and into broadcast and popular magazines.” There was a story in Elle magazine in 2006, he said, and more mainstream coverage is likely to come. “We’ll probably get more pieces in fashion magazines, and those will reach millions of people, or in Consumer Reports or local newspapers, and reach whole new segments of society it never did before.”
At the same time, 2007 will also see “an explosion of NGO (non-governmental organization) activity on the national, local and international levels regarding nanotechnology, and not just in the environmental groups, but the public health and labor NGOs as well,” Rejeski said.
“The crosstalk between public interest groups has increased dramatically on this,” said Jennifer Sass, senior scientist at Natural Resources Defense Council, an environmental group. “Plans are beginning to get made, reaching common ground on what we want to see, what information we think the public should have, what kinds of restrictions we want on the pace of nanotechnology, or if not restrictions, increases in health and safety testing.”
Kristen Kulinowski, director of the International Council on Nanotechnology (ICON), said consumer advocates will demand more oversight. “You’ll see consumer groups get interested in 2007 and start to test manufacturer claims for whether or not nanomaterials are in certain products.” ICON develops and disseminates information about potential environmental and health risks of nanotechnology. It is managed by Rice University’s Center for Biological and Environmental Nanotechnology.
Ironically, some corners of industry will retreat from the fray. Food and personal care companies, for example, are likely to stay quiet regarding nanotech, “either halting nanotechnology research programs or pursuing them but making the word banned within their organizations,” said Lux’s Nordan. “I know of at least two personal care companies that have delivered the message from on high explicitly not allowing the words ‘nanotechnology,’ ‘nano-engineered,’ ‘nano-capsule,’ or anything else like them.” But it may remain a peculiarly western phenomenon. Nordan says nano-terminology in products is increasingly promoted and embraced in eastern Asia.
Companies like L’Oreal, Colgate and Palmolive have very strong customer relationships with nano-encapsulation companies like NutraLease in Israel or nanoparticle companies like Salvona in Dayton, N.J., “but you never hear about it,” Nordan said.
Some businesses are going out of their way to say they don’t use nanotech. Seven cosmetics companies, including Aveda, told Alternative Medicine magazine in May they have specifically chosen not to use nanoparticles in their products. “I think you may see next year that once nanotechnology reaches food, it will touch the third rail. I don’t think the nano community has any idea how much voltage there is there,” Rejeski said. “A lot of savvy NGOs are waiting for that to come out.”
The NanoBusiness Alliance’s Murdock thinks industry will “absolutely, unequivocally” increase efforts at outreach and education of the public next year. “We’re considering forums open to the public to reach a broader group, and creating a network of experts to talk about specific topics of interest, and more frequent webcasts and information online,” he said.
Murdock also said the Alliance is conferring with its members to determine whether best practices in nanotech labs and plants could be used to establish a baseline, a process he said would be formalized in 2007. Michael Laine of Hyperion Catalysis said the company already works with federal agencies on best practices for industry, and activities are underway to develop best practices for characterization, handling and monitoring of nanomaterials.
Expectations are mixed when it comes to government activity. The NanoBusiness Alliance’s Murdock expects to see the rollout of the basic level of EPA’s voluntary stewardship program in 2007, under which manufacturers would alert officials about the nano-products they are producing and tests they are running on them to understand the materials.
“I think you’ll see relatively good adoption of it,” Murdock said. The United Kingdom began its voluntary reporting scheme for industry and research organizations regarding nano-products in September.
However, Kulinowski said the relevance of the voluntary program may be challenged by reviews of 15 nanomaterials the EPA has conducted during the last two years that were reported via pre-manufacturing notices (PMNs). They ruled that one of those nanomaterials, a carbon nanotube, had unique properties that made it different from its bulk counterpart and that it therefore required more testing.
“When you look at the ruling on the carbon nanotube, you see 80 pages of absolutely nothing. It’s all been redacted - information on the specific compound, the company, the types of tests performed, and so on,” Kulinowski said. “It’s impossible to ascertain the level of scrutiny this compound underwent.”
That could turn out to be another major item on the agenda. Kulinowski pointed out that the EPA is only going to get more submissions for review of nanomaterials. Greater transparency into the EPA review process, she maintained, would benefit all the stakeholders from the public at large to the actual researchers and developers of nanomaterials and nano-enabled products.