05 April 2004 00:01 [Source: ICB Americas]
Major chemical companies are taking nanomaterials seriously. Clay Boswell reports.
Now past critical mass, nanotechnology knowledge and investment have begun to grow exponentially, multiplying the opportunities for application and profit. Work in the field has been dominated by government labs, academia and start-up companies, but major players in the chemical industry recognize the key role they can play. They have formulated strategies, established research programs and made selective external investments and alliances to secure their place in the materials market of the future.
Some observers have attempted to estimate the value of the nanotech opportunity. The National Science Foundation, for example, projects that nanotechnologies and related products will generate $1 trillion per year in sales by 2015. Others dismiss such efforts. “To me, it’s meaningless to estimate a sales figure for nanotechnology since it is not an industry itself but rather a series of enabling technologies that will impact many industries,” says Neil Gordon, partner, nanotechnology, at Sygertech, a Montreal-based management consultancy for nanotechnology companies, and president of the Canadian NanoBusiness Alliance. “All we know is that the opportunities for nanotechnology are numerous and growing, and the implications are tremendous.”
“These types of markets imply dramatic changes in infrastructure and the realities of the commercial world,” says Samuel Brauer, senior research analyst at Business Communications Company Inc. (BCC) and associate editor at High Tech Ceramics News. “I don’t think that’s going to happen over the next six years. Most materials tend to affect things in an evolutionary manner,” he explains. “Economies don’t get turned upside down that quick.”
Confusing matters somewhat are the multiple definitions of nanotechnology. The National Nanotechnology Initiative (NNI), for example, says that nanotechnology is work “at the atomic, molecular and supramolecular levels, in the length scale of approximately 1 to 100 nanometer range, in order to understand and create materials, devices and systems with fundamentally new properties and functions because of their small structure.” Another definition calls nanotechnology the creation and use of structures, devices and systems having novel properties and functions because of their small or intermediate size. Still another emphasizes the ability to control or manipulate on the atomic scale with the aim of developing new materials and applications that exploit their unusual properties.
Nanodevices have captured the public’s imagination by way of movies, novels and popular science magazines, but talk of their commercialization is premature, says Mr. Brauer. “Most nanotechnology today and for the next five years involves new materials—not devices,” he asserts. The market for nanomaterials is less than $1 billion per year, according to Mr. Brauer. However, he notes, they are commercially important because they are enablers. For example, the largest and most significant market, chemical-mechanical planarization (CMP)totals only several hundred million dollars, but the materials used, such as colloidal silica or cerium oxide, are essential to the manufacture of semiconductor chips with increasingly smaller geometries. Following CMP are sunscreens and cosmetics, floor finishes, auto parts, scientific instrumentation, wire and cable, and research materials.
Nanomaterials have proven useful in these and other applications for two fundamental reasons. First, because nanoparticles are so small, they dramatically increase the amount of surface area contained by a given quantity of material. For example, an ounce of a typical powder has on the order of 10 to 100 square feet of surface. An ounce of single-walled carbon nanotubes (SWNT), on the other hand, has about 500,000 square feet. “There is not another material on the planet even close to this,” says Mr. Brauer. Only one-sixth the weight of steel, SWNTs are 100 times stronger. They are extremely efficient conductors of electricity, depending on their chirality, and they have excellent thermal properties.
The consequences for chemical reactions occurring on surfaces, such as oxidation, reduction, electron transfer, are significant, he notes. For example, in bulk form, aluminum metal is quite stable. When aluminum is in the form of nanoparticles, however, it will explode on contact with air. Indeed, nanoparticulate aluminum is being considered as a rocket propellant. For the same reason, solid catalysts are more efficient in nanoparticulate form.
Second, nanomaterials are useful because light and electron transmission are also functions of particle size. For example, ordinary titanium dioxide has long been used in sunscreens as an absorber of ultraviolet light. It is extremely effective, but it is unfortunately extremely white, as well, hence the white-daubed noses of sunbathers. Nanoparticle titanium dioxide, on the other hand, is a more effective UV absorber, and it does not reflect any color because its particle size is actually smaller than the wavelengths of visible light. Sunscreens containing it are therefore colorless. Carbon is another example. Whereas graphite is a poor conductor of electricity, carbon SWNTs are superb conductors, to the extent that researchers at the University of California, Berkeley, announced in January the first successful integrated circuit using nanotube transistors. And quantum dots—nanocrystals small enough to exist in the quantum confinement regime—fluoresce at different wavelengths depending on their size, an effect being used for biological probes and developed for electronic applications.
Materials with such characteristics have never been available before. “It’s one of the reasons why it’s going to take some time to develop applications to utilize these new and different properties that nanomaterials have,” says Mr. Brauer.
Many small companies have been established to develop these materials and apply their unusual properties. Douglas Jamison, vice president of Harris & Harris Group, has identified over 400, he says, and there are more. Based in New York City, Harris & Harris is a public venture capital firm focused on investments in “tiny technology”—i.e., nanotechnology, microsystems and microelectromechanical systems (MEMS). Listed on the Nasdaq as TINY, the company made its first move into nanotechnology in 1994, investing in Nanophase Technologies, which has developed a method for the production of nanocrystalline materials called physical vapor synthesis. Since then Harris & Harris has put money into a total of 13 start-ups focused on both nanomaterials and nanodevices, the most recent being NeoPhotonics Corporation. On March 17, Harris & Harris announced a $2 million investment in the company, which is a developer and manufacturer of silica integrated optical modules and systems.
Several trends suggest that nanotechnology has reached a critical mass at which steady, linear development is giving way to exponential growth, says Mr. Jamison. In 2000, for example, government financing of nanotechnology R&D in the US, European Union and Japan took a dramatic turn upward after several years of linear growth. Likewise, the number of scientific publications with “nano” in the title grew slowly between 1984 and 1992, when it began to explode. The number of patents and research publications also took off at about the same time, as did US government funding of small businesses in the micro and nano sectors.
“If you are a venture investor, the risks are too great to enter the field any later than now, our early understanding of science at the nanoscale already providing remarkable potential commercial opportunities,” Mr. Jamison says. Taking advantage of these opportunities will not be easy, however. “This technology is very early, very complicated science,” he warns. “And if you don’t know how to work with universities, how to understand IP [intellectual property] concerns, how to differentiate what is just science from what are potentially engineering risks, you can get in trouble.”
“The framework of generations is key,” Mr. Jamison asserts, referring to a scheme developed by Mihail Roco. Currently chairman of the White House subcommittee on nanoscale science, engineering and technology and a senior adviser to the National Science Foundation, Mr. Roco has divided present and future nanotechnology development into four generations. The first generation, featuring passive nanostructures such as coatings, nanoparticles and bulk materials (nanostructured metals, polymers, ceramics and others) emerged around 2001. A second generation, active nanostructures—for example transistors, targeted drugs and chemicals, actuators and adaptive structures—should emerge around 2005. A third generation comprised of 3-D nanosystems drawing on heterogeneous nanocomponents, various assembling techniques, networking at the nanoscale and new architectures should follow around 2010. Mr. Roco says the most visionary scenario, molecular nanosystems consisting of heterogeneous molecules that mimic the processes of life, may occur after 2020.
Using Mr. Roco’s scheme, an investor can get a sense for how close a technology is to commercialization. For example, molecular electronics presents exciting possibilities, but it falls into the third generation, indicating a more distant return. “One may argue that there are at least three ‘science’ steps before molecular electronics can become a commercial reality,” Mr. Jamison point out. “That’s not just engineering—that’s potentially scientific breakthrough.” Harris & Harris Group has investments in nanotechnology from generations one through three. “Venture investors like to get in about five to seven years away from when a larger, established company would be interested in an acquisition or the start-up can do an IPO [initial public offering], so venture investors are actively looking for companies that are solving problems in generations two and three,” Mr. Jamison explains. “Generation four is premature, however.”
Nanophase, which Harris & Harris exited in 2001, is a generation one company. So are Nanotechnologies Inc., Nanogram Devices Corp. and Optiva, all Harris & Harris investments. Nanotechnologies Inc., which uses a pulsed-plasma process to manufacture metal and metal oxide nanoparticles, is already marketing these materials to the government. Nanogram Devices and Optiva, on the other hand, produce their nanomaterials for captive use in products further up the value chain. Nanogram Devices has a proprietary technology for making nanoparticles of silver vanadium oxide, a high-energy-density material used in long-lasting batteries for implantable medical devices. Optiva has developed a self-assembling liquid crystal that can be easily deposited on substrates to obtain a so-called “extraordinary wave polarizer” useful in flat-panel displays and other optical applications. While the end products are themselves devices, the applications do not involve any nanoengineering and therefore belong to generation one.
Harris and Harris Group retains an interest in Nanotechnologies and Optiva. As of March 16, however, the firm’s investment in Nanogram paid off with its acquisition by Wilson Greatbatch Technologies Inc., a developer and manufacturer of critical components used in implantable medical devices and other high-tech applications, for $45 million in cash. Harris and Harris Group’s gross proceeds from the sale total about $2.75 million.
Two other investments, Nantero and Nanosys, are developing active and 3-D nanostructures, which belong to generations two and three. “Both companies are focused on nanomaterials,” Mr. Jamison observes, “but they use their materials’ active structure in an actual device. Both entail knowledge of nanoengineering, or at least microengineering.” Nantero is developing a mechanical, rather than magnetic, form of random-access memory (RAM) that takes advantage of both the flexibility and electrical conductivity of carbon nanotubes (see sidebar). Nanosys is using shape-controlled inorganic nanocrystals to create active nanostructures such as photovoltaic cells and chemical and biological sensors.
Harris & Harris Group is not the only venture capital firm with a special interest in nanotechnology. Draper Fisher Jurvetson may be the largest. Others are Savin Rosen, NGEN, Lux Capital and Ardesta. Industry-focused investors have also put money into nanotech companies as appropriate, and large, established businesses also play an increasingly important role in funding start-ups, as witnessed by Wilson Greatbatch’s acquisition of Nanogram. The chemical industry has not shied away, reflecting its growing awareness of nanotechnology’s potential. Only two years ago, companies were still asking what nanotechnology is, says Mr. Jamison. “I would say that there are probably very few large chemical firms now that don’t have a very well-articulated strategy for nanotechnology, both defensively and offensively. They’ve looked at it both ways—how’s this going to impact us, and how can we take advantage of it.”
In mid 2001, for example, Air Products and Chemicals Inc. formed a small but diverse team to consider how nanotechnology’s potential in specific markets intersected with the company’s key skills, capabilities and market positions. “It was a natural fit for us,” says Larry Thomas, business director, advanced materials. Whereas nanotechnology has been described as the point where surface science and materials science come together, he explains, these fields are also the basic underpinnings of Air Products.
The group developed a deliberate nanotechnology strategy for Air Products and made its recommendations about a year and a half ago. “The strategic objective is to try to leverage the nanotechnologies into our existing businesses to provide step change enhancement to our existing products, as opposed to incremental improvements,” says Jeff DePinto, business development manager in the corporate development office. “Nanotechnology has the potential to create new growth businesses in adjacent markets, as well.”
Air Products’ strength, Mr. Thomas notes, is its application understanding, which the company uses to translate technical capabilities into performance characteristics that solve customer problems. Much of the work in nanotechnology, particularly among start-ups, focuses on nanoparticles as an end in themselves, he says. “That’s not our focus. We take those particles, functionalize them, and formulate them to get a specific set of characteristics that our customers are looking for. It becomes another capability, just like surfactancy or free radical polymerization, that we can bring to the market.”
Partnering, an important part of Air Products’ nanotech strategy, is pursued by the corporate development office. “I can’t reiterate enough the importance of alliances and relationships with other companies,” says Mr. DePinto. Mr. Thomas agrees. “We’re trying to leverage all different ways of doing that,” he notes. “We participate in external venture funds, do venture funding directly with companies and have alliances established with universities. We’ve signed license agreements. We can form joint ventures or make outright acquisitions. By playing that entire range of ways of accessing technology and bringing it under our umbrella, we put ourselves in the best possible position to leverage the right technology for our customer base.”
For instance, Air Products made a minority equity investment in Nanotechnologies Inc. last June. “We surveyed the part of the value chain of nanoparticle production, and identified this company as having very unique technology for making nanoparticles that are more user-friendly than those produced by some of the other processes,” says Mr. DePinto. “Now we’re working with their materials to develop new applications that will either solve customers’ existing problems or create new businesses for Air Products.” Since January 2001, Air Products has also had a joint venture with DuPont called DA NanoMaterials, which manufactures and markets CMP slurries based on nanoparticulate colloidal silica. Air Products recently commercialized a nanoporous low-k dielectric material developed in-house, and other major applications may be commercialized by the end of the year, Mr. DePinto says. “Others are further out because they are so radically different from the existing technology,” he adds.
Honeywell Specialty Materials has also carefully targeted nanotech. Over the coming years, the company expects to invest roughly 10 to 15 percent of its overall R&D budget in emerging technologies, “a significant portion” of which will be dedicated to the development of nanosciences, including the design of material precursors for controlled assembly at the atomic scale and sensitive, selective chemical and biological sensors, says Kevin Snow, director of strategic technology development at Honeywell Specialty Materials. Honeywell is not a newcomer to the field, he notes. For example, its Aegis nylon includes exfoliated clay additives to improve its oxygen barrier properties. High-performance electronic packaging materials incorporating nanomaterials have been produced for the semiconductor industry since 1998. Nanotechnology is a key enabler in revolutionizing how materials impact performance, Mr. Snow says. It will play a critical role in Honeywell’s platform development strategy, which links customer application requirements to material and device performance. “Overall, we are well positioned to deliver novel system solutions to our key growth markets, including semiconductors, sensors, and engine systems,” he states.
Like Air Products, Honeywell is looking outward. “Honeywell will continue to develop its own enabling technology, but also will work in concert with the National Nanotechnology Initiative,” says Mr. Snow. “Additionally, we will continue to seek partnership opportunities with select universities, as well as government, enabling partners and strategic customers, to create new nanomaterials, assembly processes and devices for end-use applications.”
Some chemicals companies—Ciba, General Electric, Dow, DuPont, Praxair, and Rohm and Hass, along with Air Products—have taken an active role in setting the nanotech agenda by joining the “Nanotechnology and Nanomaterials by Design” thrust area of the Chemical Industry Vision 2020 Technology Partnership, an industry-led partnership and process aimed at identifying common problems and leveraging technical expertise and financial resources to develop the critical enabling technologies of the future. The nanotech group’s immediate objective is to define R&D priorities that help ensure that government funding agencies focus on areas of nanomaterials and nanotechnology relevant to the chemical and materials processing industry. The group’s long-term objective—its vision for 2020—is stated in its December report: “The US chemical industry will offer a ‘library’ of diverse, high-quality nanomaterial building blocks with well-characterized compositions, stable architectures, and predicted properties. Safe, reproducible, cost-effective, and clearly defined manufacturing and assembly methods will be available to incorporate nanomaterials into systems and devices designed to perform specified functions while retaining nanoscale attributes.” The group has laid out a roadmap of milestones through 2020.
Meeting the technological ambitions of this roadmap does not guarantee commercial success. While performance is key to nanotechnology’s value, each solution’s overall cost may have greater influence on market acceptance. “We’ve seen the failure of advanced materials to take off as a sector,” Sygertech’s Mr. Gordon cautions. “In some cases, you may need a ten-times improvement in performance to get consumer interest.” But performance is just one factor to consider along with the new material’s price, quality and consistency, interaction with other ingredients, environmental im-pact, other costs for switching materials, delivery times and quantities and risks for changing suppliers. Many advanced materials have never made it into mainstream applications because the existing solution is sufficient. In construction, for example, cheap and abundant local materials such as wood and lime are perfectly adequate for most requirements. Nanomaterials have an additional advantage, however. “Instead of just substituting one material for the same quantity of another, you’re going to be able to get away with using a lot less of the nanomaterial,” he says. “That’s where the real cost-savings are going to come from, even if the price per pound is higher.”
A second barrier to adoption is accommodation by the complex of businesses supporting the production and delivery of every end product. “You have a very extensive and elaborate value chain of suppliers working with subcontractors working with multinational corporations, which often have regulatory agencies to deal with, and each step of the value chain could take a long time for testing, productization and fine tuning,” Mr. Gordon points out.
Another potential roadblock is fear. Historical examples such as asbestos and fanciful futuristic scenarios such as Michael Crichton’s novel Prey are stirring public anxiety and even growing opposition to nanotechnology. Forewarned by the public relations disaster of genetically modified food, those with a stake in nanotechnology are taking the issues seriously, from government bodies such as the National Science Foundation to commercial concerns such as chemicals giant DuPont, which recently released a study of its own pointing to the inhalation dangers posed by carbon nanotubes.
“I’ll credit organizations such as Greenpeace for bringing the dialog to the surface where it needs to be,” says Sygertech’s Mr. Gordon. “Health risks from ultrafine particles, toxic materials and biohazards, whether nano or not, that’s a real issue. Fortunately, we have regulations and safety practices, established over the years, that must be respected. I would credit companies such as DuPont with taking a leadership role in that area. But you can’t stop the research. If you have scientists working on cures for cancer, clean water, cheap energy and so on, you have to let them continue.”
Nanotechnology is not entirely new,notes Air Products’ Mr. DePinto. “Car-bon black, fumed silica and fumed alumina are nanomaterials that have been around for some time. There is a lot known about the EH&S [environmental, health and safety] aspects of those materials as they exist in the agglomerated state, although little is known about how those materials behave in discrete, unagglomerated nanoparticle form. More novel compositions also need study, and there are consortia in Europe and the US doing that.” In most applications, consumers will not actually be exposed to nanoparticles, Mr. Thomas points out. Instead, the particles will have been incorporated into a matrix—for example, in a urethane coating. The most serious concerns regard factory workers handling nanomaterials in bulk, he says. “The issue is one of health and safety in the controlled environments of our manufacturing facilities, where there is a history of developing good hygiene practices. It’s a challenge the chemical industry has met before.”
Expertise of this sort is another benefit provided by the entry of large chemical companies. “The large materials players, by being serious in nanotechnology, are going to deal a lot more with these issues than a start-up because they have the resources,” Harris and Harris’s Mr. Jamison observes. “That’s one reason why it’s good that the large players have developed key strategies, why the industry has put together a Vision 2020 report, which addresses the need to know how to characterize. We need to deal with these issues, with public perception, but first we have to get more data.”
Micrograph of a nanowire curled into a loop in front of a human hair.
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