Advanced Packaging - The Riley Report

(March 19, 2008) — Like a view of the Grand Canyon, your view of nanotechnology depends upon where you stand. From the casino world of venture capital, the prevailing view appears to be that nanotechnology is not a winner. Billions of research dollars, millions of favorable words, thousands of proposals, hundreds of startups – yet not a single public stock offering (IPO). The buzz is beginning to die along with the dollars, as impatient investors turn elsewhere.

In December, the New York Times identified three nanotechnology-based companies marching towards IPOs. Last month one of them, NanoDynamics, stubbed its toe. Its $100,000,000 IPO, withdrawn in the U.S. last year because of market conditions, was filed with the Dubai Stock Exchange on February 11. On February 14, NanoDynamics voluntarily de-listed from that exchange, and began returning investor's money. The cause of the aborted IPO has not been made public. One analyst suggested that the lead underwriter would not, or could not, produce its share of the proceeds. The consequence may be more nanophobia in the investor community.

In the current marketplace view, some form of nanotechnology is reportedly used in 200 commercial products, predominantly in cosmetics, clothing, and sporting goods. But sunscreen, golf balls, and stain-proof pants aren't the transformational mother lode that peddlers expected. Taiwan reported this month that their nanotechnology production over the last five years totals nearly $10 billion. I assume that neither report includes automobile tires, which have used nanoparticles (carbon black) to improve their performance for nearly 100 years.

In a microelectronic products view, the time horizon for widespread nanotechnology introductions appears to be 5 to 10 years away. The parade is being led by large, established companies like IBM, Hewlett-Packard, GE, Fujitsu, and others. For example, Hewlett-Packard has begun manufacturing prototypes of a silicon chip combining both conventional electronics and molecular components to shrink the size of field-programmable gate arrays (FGPA). IBM reported last month that self-assembling nanotechnology will begin to be used for spacing interconnections in their high-end processors by 2009.

While nanotechnology research is expensive, commercialization is even more expensive. The major hurdle is moving nanotechnology out of the laboratory and into high-volume production. VLSI Research forecasts the cost of new wafer fabs rising in the near future from the present $3 to $5 billion dollars to $12 billion. That big-bucks hurdle makes startups unlikely commercialization competitors; well-established, patient capital dominates.

From the research viewpoint, widespread progress is being made in translating a growing scientific understanding into working demonstration devices. The Materials Research Society, with a majority of members from academia, is a good indicator of nanotechnology research activity. The November 2007 meeting comprised 42 technical symposia in different areas, with more than 4,600 presentations. Over half of the symposia included at least 1 nanotechnology-related session. In that meeting, Fujitsu Laboratories described microvias with the highest density of carbon nanotubes yet reported. They followed up this month by announcing a new nanoscale carbon composite combining graphene multilayers with multi-walled carbon nanotubes.

In summary, while academic researchers perhaps view the Grand Canyon of nanotechnology as an explorer's paradise, major companies see it as a potential gold mine, and venture capitalists apparently see it as a money pit. Perhaps all of them are right!

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