Nanotechnology: Science and Computation

Commercializing Micro-Nanotechnology Products

© 2008 by Taylor & Francis Group, LLC

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Commercializing Micro-Nanotechnology Products

Edited by David Tolfree and Mark J. Jackson

Boca Raton London New York

CRC Press is an imprint of the Taylor & Francis Group, an informa business

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CRC Press Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487‑2742 © 2008 by Taylor & Francis Group, LLC CRC Press is an imprint of Taylor & Francis Group, an Informa business No claim to original U.S. Government works Printed in the United States of America on acid‑free paper 10 9 8 7 6 5 4 3 2 1 International Standard Book Number‑13: 978‑0‑8493‑8315‑1 (Hardcover) This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable efforts have been made to publish reliable data and information, but the author and the publisher cannot assume responsibility for the validity of all materials or for the conse‑ quences of their use. No part of this book may be reprinted, reproduced, transmitted, or utilized in any form by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming, and recording, or in any information storage or retrieval system, without written permission from the publishers. For permission to photocopy or use material electronically from this work, please access www. copyright.com (http://www.copyright.com/) or contact the Copyright Clearance Center, Inc. (CCC) 222 Rosewood Drive, Danvers, MA 01923, 978‑750‑8400. CCC is a not‑for‑profit organization that provides licenses and registration for a variety of users. For organizations that have been granted a photocopy license by the CCC, a separate system of payment has been arranged. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging‑in‑Publication Data Tolfree, David, 1938‑ Commercializing micro‑nanotechnology products / David Tolfree and Mark J. Jackson. p. cm. Includes bibliographical references and index. ISBN 978‑0‑8493‑8315‑1 (alk. paper) 1. Nanotechnology. 2. Microtechnology. 3. Nanotechnology‑‑Economic aspects. 4. Microtechnology‑‑Economic aspects. I. Jackson, Mark J. II. Title. T174.7.T65 2007 620’.50688‑‑dc22

2007025686

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Contents Preface......................................................................................................................vii Editors.......................................................................................................................xi Contributors.............................................................................................................. xv Chapter 1 The Path to Commercialization............................................................ 1 David Tolfree and Robert Mehalso Chapter 2 Entrepreneurship’s Role in Commercializing MicroNanotechnology Products................................................................... 29 Bruce A. Kirchhoff and Steven T. Walsh Chapter 3 Roadmapping Nanotechnology........................................................... 51 Steven T. Walsh, Bruce A. Kirchhoff, and David Tolfree Chapter 4 Technology Transfer of Nanotechnology Products from . U. S. Universities................................................................................. 71 Mark J. Jackson, G. M. Robinson, and M. D. Whitfield Chapter 5 Commercialization Strategies for Public Research Organizations: How to Move from Public Research into the Market by a Leading Dutch Institute.................................................. 81 Kees Eijkel and Arend Zomer Chapter 6 Market Analysis and Growth for Micro-Nano Products................... 105 Jean-Christophe Eloy Chapter 7 Oxonica Plc: A Leading U.K. Nanotechnology Business................. 143 Kevin Matthews Chapter 8 Zyvex Corporation: Providing Nanotechnology . Solutions — Today™........................................................................ 167 James R. Von Ehr II  © 2008 by Taylor & Francis Group, LLC

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Commercializing Micro-Nanotechnology Products

Chapter 9 microParts GmbH: The History of the Development of a Successful German Microsystems-Based Business.......................... 189 Reiner Wechsung Chapter 10 Shaping the Future............................................................................ 229 David Tolfree Chapter 11 Glossary............................................................................................. 253

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Preface Now, in the first decade of the twenty-first century, we are witnessing a quiet manufacturing revolution resulting from the rapid advances made in science and technology in the twentieth century. We are now in the information age and the third industrial revolution based on a knowledge-driven economy. Small technologies, led by micro-nanotechnology, the products of physics, chemistry and engineering and more recently biology, are key drivers of this economy. They are already impacting industries and are having a profound effect on the way people live and work. The ubiquitous use of computers and mobile telephones in industry and commerce, satellite links for communication, improved protective sunscreens, cosmetics, stain-resistant fabrics, composite materials for vehicles and sports equipment, portable diagnostic medical devices, targeted drug delivery systems, fire and water resistant coatings and materials for fuel cells are among some of the products currently on the market or are near-market. There is the promise of many more products in the foreseeable future. The further application of these technologies to manufacture new products and systems is well underway in the US, Asia and Europe but their potential disruptive nature, coupled with public concerns about some aspects of nanotechnology, have raised possible health issues that need to be examined. The emergence of the global market is producing unparalleled opportunities but is also forcing up the pace of international competition. Nations that have a strategy for economic development based on innovation and the exploitation of science and technology, since they are the key to wealth creation and prosperity, will become leaders in this market. We can expect a high demand for new products, systems and services to meet the growing needs of the new economies of Europe and Asia. It is predicted that the global market for micro-nanoproducts and systems will exceed $1 trillion in the next decade. Companies create wealth from the commercial exploitation of their intellectual property. Taking the results of research to full commercialization requires experience in design, manufacturing and marketing and a suitable infrastructure that encourages innovation and the training of technologists and engineers with an understanding of business. Competitive advantage is gained by deploying such a workforce for the development and realization of low cost, high quality products and services that offer at the right time unique advantages to the buyer. Failure to do this will put delays in the full commercialization cycle. Most Governments in the industrialized world are funding micro-nanotechnology research and development because of the economic benefits they will bring to their countries. At present the number of companies that have been successful in markets for micro-nanoproducts is relatively small but this is expected to grow significantly in the coming years. There is an urgent need to: raise awareness, encourage private investment, establish reliable manufacturing processes and agree on standards for design.

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Commercializing Micro-Nanotechnology Products

The manufacturing of micro-nanotechnology products raises particular challenges and important fundamental issues related to costs, yields and reproducible quality and acceptability. It is clear that new manufacturing methodologies and processes will have to be developed together with metrology systems, particularly for nanomanufacturing. These will need to extend across multi-disciplinary domains (mechanical, electrical, optical, chemical and biological etc.) if a wide range of new products and systems are to be realized. The challenge facing nations, regions and companies who embrace micro-nanotechnologies is to understand how to manage the economic and social changes they will bring about. The chapters in this book have been written by some of the world’s leading academics and practitioners. Chapter 1 sets the scene by taking the reader along the path to product commercialization, detailing the steps that are needed to convert an idea into a marketable product. Examples are given of products that have successfully entered the market. The authors relate their own experiences in developing and bringing micro-nanoproducts to the market. Chapter 2 is about the importance of entrepreneurship, what is needed to build a successful start-up business and the steps that need to be taken to finance and develop a marketing strategy. Roadmaps are essential tools for planning a future business or helping decision-makers to develop future strategies. Roadmapping nanotechnology is relatively new, so in Chapter 3 the authors discuss the various definitions of nanotechnology and how the issues they raise relate to the production of roadmaps. The various types of roadmaps and the methods used to collect information and produce them are described. In Chapter 4, the role of government agencies, private investors and corporations in expediting technology transfer from universities is covered with particular reference to the US National Nanotechnology Initiative. Public research organizations carry out much of the research and development in micro-nanotechnology. This can raise problems when reaching out into the commercial market place. In Chapter 5, the authors describe their experiences on how the Dutch Institute of Nanotechnology known as Mesa +, located within the University of Twente, developed a commercialization strategy based on a partnership with government and industry by applying the Triple Helix concept which is described in the text. The roles of the partners and the collaboration process at three levels, the conceptual level, the procedural level and the operational or practical level are described. Commercialization is about making products that sell in the market place. First, there has to be a market and then a knowledge of how to access it. In Chapter 6, Jean-Christophe Eloy, the Director of Yole Développement, a market research and strategy consulting company and world leader in the analysis and evaluation of the MEMS markets, explains how such markets are developed and analyzed. Examples are given with illustrations of a number of products such as ink-jets and pressure sensors and the markets they supply. In. the. remaining. Chapters,. 7,. 8. and. 9,. three. leading. micro-nanotechnology. development and manufacturing companies in the UK, US and Germany describe how their businesses started and progressed to become market leaders. They provide a valuable insight into how they overcame the difficulties of raising finance and finding the right product to develop for the growing market for micro-nanoproducts.

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Their experiences will be a valuable aid to anybody or any company wishing to follow a similar path to commercialization. In the concluding Chapter 10, the author takes an optimistic but realistic view of how the new technologies will shape the future. Based on current developments, he makes some guarded predictions up to 2030. Beyond that although predictions are tainted with speculation they can help readers visualize the shape of things to come. The book gives an appraisal of the current status of small technologies and their ability to produce and commercialize new products and systems. An outlook and future perspective of how micro-nanotechnologies will change the future is given to help those concerned about economic and social change. It will be of specific interest to people, companies, and governments wishing to invest in these new technologies and find out about more about the path to commercialization. The editors wish to thank all the chapter authors for their valued contributions to this book and to the many other professionals from whom we sought knowledge and assistance. We particularly acknowledge the proofreading skills of Valerie Tolfree, the wife of the lead editor, whose patience and encouragement helped in the writing of this book. David Tolfree and Mark J. Jackson Editors

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Editors David Tolfree, MSc., F.Inst.P., CPhys., F.IoN. is the co-founder and Executive Director of Technopreneur Ltd, a consultancy company for the exploitation of micro-nanotechnology, established at Daresbury in Cheshire, England. He is one of the founders of MANCEF (Micro and Nanotechnology Commercialization Educational Foundation), an international body dedicated to commercialization and education, and is currently its European Vice-President. David is also one of the founders of the UK Institute of Nanotechnology and is a member of its Advisory Board. He is a Chartered Physicist, a Fellow of the Institute of Physics and the Institute of Nanotechnology and has published over 130 papers, including news articles, chapters for books and conference papers, and has given interviews on television and radio. He is internationally recognized as an authority on the exploitation of micro-nanotechnology and co-authored chapters in the MANCEF International Microsystems and Top-Down Nanotechnology Roadmap. He is currently the guest editor and contributor to the International Journal of Nanomanufacturing; and is also on the advisory boards of a number of international conferences. David gained over 40 years’ experience in research, project management and the marketing of research facilities while employed by the Council for the Central Laboratory of the Research Councils (CCLRC) at Daresbury in the UK. His earlier career was spent doing basic research in nuclear particle and accelerator physics, reactor instrumentation, and nuclear weapons development. In 1994, whilst working at the Daresbury Laboratory, he was the first to establish non-silicon microfabrication technology in the UK, transferring much of it from Germany. At that time he was appointed to be the UK coordinator of the first European R&D Network in Microtechnology involving nine countries. He established the first industry-led UK network in LIGA technology, known as the LIGA Club, and acquired over £300K of industry funding for prototype microstructure development using deep X-ray lithography. Afterwards, he created the SMIDGEN (Small Microengineering Intelligence Design Generation Exploitation Network), a consortium of companies and universities, to drive the commercial exploitation of microsystems technologies. xi © 2008 by Taylor & Francis Group, LLC

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Commercializing Micro-Nanotechnology Products

Acknowledged by the UK Government’s Foresight Directorate as an example of best practice, it laid the early foundations to the UK MNT Network, part of Government’s £92 million Micro and Nanotechnology Manufacturing Initiative established in 2003. In 2004 David originated a successful proposal to the UK Northwest Development Agency to create a National Microsystems Packaging Centre in the North West of England. Since that time he has been proactive in the exploitation of micronanotechnology, working with Government Departments, Regional Development Agencies, companies, research institutes and universities worldwide. In 2005 he was the co-director of the COMS2005 international conference at Baden-Baden in Germany and a session chair at the COMS2006 conference in St Petersburg, Florida. He was on the Joint Organizing Committee of the COMS2007 conference held in Melbourne, Australia and is currently co-chair of the International HARMST-LIGA Commercialization Group. Mark J. Jackson, Ph.D., M.A., C.Eng., M.Eng. is Professor of Mechanical Engineering at The College of Technology, Purdue University. He began his engineering career in 1983 when he studied for his O.N.C. part I examinations and his first-year apprenticeship-training course in mechanical engineering. After gaining his Ordinary National Diploma in Engineering with distinctions and I.C.I. prize for achievement, he read for a degree in mechanical and manufacturing engineering at Liverpool Polytechnic and spent periods in industry working for I.C.I. Pharmaceuticals, Unilever Industries, and Anglo Blackwells. After graduating with a Master of Engineering (M.Eng.) degree with Distinction under the supervision of Professor Jack Schofield, M.B.E., Dr Jackson subsequently read for a Doctor of Philosophy (Ph.D.) degree at Liverpool in the field of materials engineering focusing primarily on microstructure-property relationships in vitreous-bonded abrasive materials under the supervision of Professor Benjamin Mills. He was subsequently employed by Unicorn Abrasives’ Central Research & Development Laboratory (Saint-Gobain Abrasives’ Group) as materials technologist, then technical manager, responsible for product and new business development in Europe, and university liaison projects concerned with abrasive process development. Mark Jackson then became a research fellow. In 2004 he moved to Purdue University as Associate Professor of Mechanical Engineering in the Department of Mechanical Engineering Technology. Mark is

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Editors

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active in research work concerned with understanding the properties of materials in the field of micro scale metal cutting, micro and nano abrasive machining, and laser micro machining. He is also involved in developing next generation manufacturing processes and biomedical engineering. Mark Jackson has directed, co-directed, and managed research grants funded by the Engineering and Physical Sciences Research Council, The Royal Society of London, The Royal Academy of Engineering (London), European Union, Ministry of Defense (London), Atomic Weapons Research Establishment, National Science Foundation, N.A.S.A., U. S. Department of Energy (through Oak Ridge National Laboratory), Y12 National Security Complex at Oak Ridge, Tennessee, and Industrial Companies, which has generated research income in excess of $15 million. Mark has organized many conferences and served as the General Chair of the International Surface Engineering Congress. He has authored and co-authored over 150 publications in archived journals and refereed conference proceedings, has edited a book on ‘microfabrication and nanomanufacturing,’ is guest editor to a number of refereed journals, and has edited a book on ‘surgical tools and medical devices’. He is the editor of the ‘International Journal of Nanomanufacturing,’ ‘International Journal of Molecular Engineering,’ International ‘Journal of Nanoparticles,’ ‘International Journal of Nano and Biomaterials,’ and is on the editorial board of the ‘International Journal of Machining and Machinability of Materials’ and ‘International Journal of Computational Materials Science and Surface Engineering.’

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Contributors Kees Eijkel Kennispark Twente Netherlands

David Tolfree Technopreneur Ltd Denton, Manchester, United Kingdom

Jean-Christophe Eloy Yole Développement Lyon, France

James R. Von Ehr II Zyvex Corporation Richardson, Texas USA

Mark J. Jackson Birk Nanotechnology Centre and College of Technology Purdue University West Lafayette, Indiana USA Bruce A. Kirchhoff Professor of Entrepreneurship School of Management New Jersey Insti­tute of Technology Newark, New Jersey USA Kevin Matthews Oxonica Yarnton, Oxfordshire, United Kingdom Robert Mehalso Microtec Associates Fairport, New York USA Grant M. Robinson Micromachinists LLC Purdue University West Lafayette, Indiana USA

Steven T. Walsh Alfred Black Professor of Entrepreneurship and Co-Director of the Technology Management Center Anderson School of Management University of New Mexico Albuquerque, New Mexico USA Reiner Wechsung microParts GmbH Dortmund, Germany Michael D. Whitfield Micromachinists LLC Purdue University West Lafayette, Indiana USA Arend Zomer Centre for Higher Education Policy Studies University of Twente Netherlands

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1

The Path to Commercialization David Tolfree and Robert Mehalso

Contents Introduction................................................................................................................. 2 Infrastructure for Commercialization......................................................................... 4 Basic Requirements......................................................................................... 4 Disruptive Technologies..................................................................................4 Government Infrastructure Programs............................................................. 5 Clusters and Supply Chain Networks..............................................................6 Intellectual Property and Patents.................................................................... 7 Summary.........................................................................................................8 Steps to Commercialization........................................................................................ 9 Meeting the Challenge.....................................................................................9 Ideas and Concepts........................................................................................ 10 Design, Modeling, and Simulation................................................................ 10 Integration...................................................................................................... 11 Standardization.............................................................................................. 12 Manufacturing............................................................................................... 13 Prototyping.................................................................................................... 13 Packaging....................................................................................................... 14 Testing and Reliability................................................................................... 15 Final-Product Realization and Marketing..................................................... 15 Examples of Products that have taken the Commercialization Path........................ 17 The Ink-Jet Printer......................................................................................... 17 A Brief History of the Ink-Jet Printer................................................. 17 Nano Coatings on Textiles............................................................................. 18 A Portable Blood Analyzer............................................................................ 19 Practical Experiences in Commercializing Micro/Nano-Based Products...............20 References................................................................................................................. 27

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Commercializing Micro-Nanotechnology Products

Introduction The ultimate value of any technology to society is its ability to generate useful and marketable products and systems using available practical knowledge and skills. Unlike curiosity-driven scientific research, the purpose of technology is to apply knowledge to facilitate design and manufacture. New products result from years of research and development. Research generates new knowledge and therefore intellectual property (IP). Real wealth derives from the commercialization of that IP. Possession of intellectual property is a necessary beginning of the commercialization process. Creating profit from commercialization is industry’s main interest and purpose. This is not the main purpose or first interest of academia since it derives most of its funding support from government. Universities are, however, under increasing pressure to raise revenue by exploiting their IP. Most have set up commercial offices that operate knowledge and technology transfer schemes to expedite revenue. This difference of purpose identifies the fundamental cultural gap between industry and academia. Most government bodies (national and regional) now recognize this cultural gap and are directing their funding strategies more towards projects that are likely to generate economic value and produce a return on the investment. Research and development programs are more likely to be funded if there is a clear path to commercialization and hence wealth generation. Funding bodies now look for a closer link with industrial priorities than to academic vision. The latter is, and will always remain, the source from which ideas and new initiatives emerge. Miniaturization technologies encompassing micro and nanotechnologies are current leaders in the industrial revolution that is driving the new economy. These technologies have the potential to provide an unlimited range of new products by leveraging skills from across many domains. They can be disruptive and thus create new product-market paradigms. Disruptive technologies lead to innovations that have a discontinuous rather than evolutionary nature.1 These discontinuous innovations can create unique products, processes, and services that provide exponential improvements in value for the customer or end user. But disruptive technologies are unstructured and have uncertain technological outcomes, making commercialization difficult to quantify and justify financially.2 They attract risks that have to be balanced against benefits when planning a development and marketing strategy. Many products have evolved over the last ten years using established manufacturing methodologies developed for the semiconductor industry. These microcomponents and microsystems are embedded in products and systems that are now part of everyday life. Some examples are mobile telephones, laptop computers, digital cameras, ink-jet printers, and a huge range of medical diagnostics. However, new products being produced using nanotechnologies largely depend on an advanced understanding of the behavior of materials and processes at the molecular level, where properties are different from operation at the more familiar macroscopic level. For example, there may be some toxicity issues associated with nanoparticles used in the formulation of a range of chemicals for consumer products, like sunscreens and cosmetics. Here, governments generally agree there is a need for further research

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The Path to Commercialization

Cash-flow Benefits Income

Reduction

Market Launch Time: years

Expenditure

Figure 1.1  Time-to-market reduction.

linked to new materials development to determine whether existing regulations for handling and manufacturing toxic chemicals need to be augmented when particles reach nano-dimensions.3 The inevitable convergence of bio- and nanotechnologies will produce unlimited opportunities for manufacturing new materials and products. In the pharmaceutical and biomedical industries, such products will have to undergo stringent tests and evaluation before they are accepted. This delays production and raises costs. The challenge facing researchers, technologists, and manufacturers is whether the same well-trodden path taken to commercialize macroproducts can be used for products based on a combination of micro- and nanotechnologies. This challenge will be greatest in the life sciences, which include medical diagnostics and surgical techniques. These new devices and techniques will revolutionize medical practices and health care. The challenge for companies is to reduce the time to market for new products as illustrated in Figure 1.1. This is particularly relevant for small companies where cash flow dominates profitability and survival of the business. In this chapter, we set out to describe the steps on the ladder that define the commercialization path for new micro-nanoproducts and systems. The complex, multidisciplinary and potentially disruptive nature of the processes used to manufacture micro-nanoproducts and systems makes advances along the path interactive. This path leads to the market but does not guarantee the product will be globally competitive and create a sustainable business. The issues that need to be addressed and the pitfalls and barriers that need to be overcome to achieve full commercialization of an end product from concept to final market penetration will be described. Some examples of products that have been successfully commercialized will be discussed at the end of this chapter.

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Commercializing Micro-Nanotechnology Products

Infrastructure for Commercialization Basic Requirements The absence of a suitable infrastructure that supports research, product development, and manufacturing of an end product is the main barrier to developing any commercialization strategy. Ideally, an infrastructure must support and incorporate a seamless path from concept to end-product realization for the market. The prerequisite for the government of a nation is to understand that success in the global market will bring economic benefits that surpass its capital investment. The challenge facing both public and private investors is to ensure the quality of the management, particularly relevant to emerging technologies, where there is a greater risk element. Technology alone will not ensure that products can be manufactured in volume, at costs a customer is willing to pay, and then delivered to the customers at the right time. Good management of the technological exploitation process is therefore an essential element for success. It is necessary for a nation to link its world-class research with a supporting exploitation path if it is to succeed in the global economy. Industry can no longer compete by selling products made with standard processes that can be applied anywhere in the world, particularly with countries with low-cost economies. Traditional manufacturing is now moving to Asia where labor costs and hence manufacturing costs are lower, and therefore profitability is higher for those who own the IP. Businesses must constantly innovate to raise the quality of production, introduce new product lines or services, and add greater value to their outputs. Those that embrace the new technologies will survive and prosper. Micro-nanotechnologies (MNTs) are among those enablers that will lead to the evolution of new products and new industries. Some of these will be different because they can have a “disruptive” technology base. That may create problems for those unprepared for the changes that such technologies will bring about. For example, ink-jet revolutionized printing in a very short time, causing difficulties for manufacturers of typewriters and more conventional forms of printing that had been unaware of the technological developments. Even if they had been aware, they did not have the technical knowledge or manufacturing infrastructure to support this new printing technology.

Disruptive Technologies A more detailed text on disruptive technologies can be found in Chapter 2, so here we shall just give a brief summary of what they are, since they influence the type of infrastructure required to enable companies to maximize commercial benefits. Disruptive technologies are those that do not support the existing product manufacturing linkages within the industries that embrace them. Thus, the companies that adopt these technologies must essentially revolutionize their manufacturing practices. This is nearly impossible for small companies as they lack the technology infrastructure or resources to dedicate to this task. It is also difficult for large companies to make changes and divert resources from what may currently be profitable endeavors. The innovation process that results from disruptive technologies is called “discontinuous,” where progress is made not through the conventional incremental,

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The Path to Commercialization Technology Push Basic Research

State of Industrial Manufacturing

Force Fit Prototypes Nonexistent Market Channels (primarily developed for Internal customers)

Bottlenecks Technological Development

Modifications to Existing Processes Initial Market Market Acceptance (one market accepts device technology then industry specific vehicles emerge)

Stable New Technology Robust Infrastructure

Market New Augmentation Markets New markets utilise e.g Inertial sensing existing productdevices for multiple technology, paradigm applications forming product platforms

Market Pull

Figure 1.2  Infrastructure model for discontinuous innovations.

continuous, or generational evolutionary processes, but rather through breakthroughs and significant modifications among a wide array of technologies. For this reason, to succeed with these technologies, governments must create an environment that supports discontinuous innovation. An infrastructure model is shown in Figure 1.2. This often requires investment in cutting-edge research, facilities, and equipment. Many large companies invest in their own research and development because it is critical for them in order to maintain their economic competitiveness. However, smaller enterprises need help. It is here where government investment has a pivotal role to play.

Government Infrastructure Programs A number of government-supported infrastructure programs now exist in many countries in Europe, Asia-Pacific, and in the U.S.A. Details of most of these programs can be found on appropriate Web sites. We shall outline a recent program established in the United Kingdom. After accepting a report by the U.K. Advisory Group on Nanotechnology Applications4 in 2003, the government sanctioned an investment of about £90 million for a micro-nanotechnology infrastructure development program. This leveraged an additional £300 million from development agencies and industry, thus encouraging a wider industrial interest, largely absent before 2003. Funds were provided to enhance some recognized centers of excellence and create new ones and also to support new industry-related projects. A key element of the infrastructural program was the formation of a national MNT network5 to bring together all the centers and the 12 regional development agencies into a working partnership. The object of this was to provide a market-orientated focus for facilities, people, and organizations engaged in MNT in the U.K.

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Commercializing Micro-Nanotechnology Products

Table 1.1 Global Funding for Nanotechnology R&D Programs Total World Funding on R&D Region U.S. European Union (FP6 + NGovs) Asia-Pacific Japan

> $10 Billion in 2005. (since 1997 $18 billion) ~$2.56 billion ($435 million VC funding) ~$2.37 billion ~$4.5 billion ~$2.28 billion

In the continental U.S., a vast infrastructure connects federal government funding programs initiated by DARPA (Defence Advanced Research Agency) or NASA (National Aeronautics and Space Administration) with the private sector. It is worth noting that the semiconductor industry spawned MEMS (microelectromechanical systems) technologies. It started as a segment of the semiconductor industry back in the 1960s, utilizing sensor technologies and later developing its own technology platforms. In the 1980s, MEMS became a fully established nomenclature. In Europe the term “microsystems technology” (MST) was the nomenclature used. MST was based on a wider and more descriptive definition embracing non-electronics components like mechanical, optical, and fluidics systems. Nanotechnology started to be used in nomenclature in the early 1990s. Today the more comprehensive terms “small technologies” or “miniaturized systems” are used. They embrace micro- and nanotechnologies. The interpretation of these technologies underpins the type of commercial infrastructure needed to exploit them. Hence a difference in approach exists between Europe and the U.S. Governments in all the major industrialized countries are now adapting their infrastructures to include R&D support for nanotechnologies. The current level of such support is shown in Table 1.1 above. The U.S. and some European infrastructure strengths are linked to the development of “clusters.” These are geographically close groups of interconnected companies and associated institutions in a particular field, linked by common technologies and skills. Most states have one or more clusters focused on various technology or product areas.

Clusters and Supply Chain Networks Clusters significantly enhance the ability of state and local economies to create wealth and build prosperity because they can act as the incubators of innovation. The primary elements they possess needed to transform ideas into inventions are summarized as follows: • • • •

Universities or research centers that generate new knowledge Companies that transform knowledge into products or new services Suppliers that provide critical components or equipment Marketing and distribution firms to deliver the product to customers

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The Path to Commercialization



Companies in strong industry clusters can innovate more rapidly because they can draw on the local networks that link technology, resources, information, and talent. Successful clusters are usually centered on a world-renowned research university. This model for a cluster has been adapted and used successfully in many regions and countries for progressing commercialization of MNT-based industries, notably in Germany and the U.S. According to Grace,6 on a global scale, more than 100 microsystems companies have been created in clusters. No fewer than 35 MEMS, microsystems, and nano clusters have been formed since the first one was created in Dortmund, Germany, in 1986. Further examples of industry MNT clusters will be given in later chapters of this book. Key elements in building commercialization infrastructures are the establishment of supply chain networks. These provide the support needed to ensure industrial sustainability in particular sectors. It is rare for companies, particularly small ones, to have all or even some of the experience or expertise required to design, develop, manufacture, and market products. An MNT-based industry, like any other, will not mature unless effective supply chains exist. Companies in supply chains do not necessarily have to be located in the same region but can be outside the country or region where the manufacturing is taking place. Where this applies, then, wellstructured communication networks are imperative. Having good Internet or personalized computer-based communications support is essential to any global business development. Supply chains give opportunities for growth to very small companies or start-ups. Being part of a supply chain gives visibility and accessibility to potential customers. It also reduces risk to the company and increases customer confidence. Micro-nanotechnology is already stimulating new business opportunities. Estimating the number of companies that are involved in product development and manufacturing worldwide is difficult. Kaiser7 estimates that currently worldwide there are more than 4000 companies and research institutes involved in nanotechnology, with about 2000 focused on services, 1000 focused on products, and 1000 on research; these contribute to the global network of suppliers. The leading countries are the U.S., Japan, China, and Germany. China is growing fastest with more than 600 nanotechnology companies currently registered. The inclusion of product manufacturers that make use of nanomaterials has increased in applications areas and redefined the classifications used to describe such companies.

Intellectual Property and Patents A MEMS patent review has been given in the latest edition of the Micro and Nano Technology Commercialization Education Foundation (MANCEF) Roadmap.8 Here the authors produce an analysis of patents and patent applications based on data from the U.S. Patent Office. Some of the key issues associated with intellectual property (IP) protection and patents are given below. The creation of intellectual property occurs at universities and research institutes that are generally funded by public monies; acknowledgment usually occurs through patent filings. Due to financial constraints, universities often do not file patents but publish papers instead, thus putting information into the public domain and reducing

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Commercializing Micro-Nanotechnology Products

the commercial value of the IP. In the U.S., however, there is a 12-month allowance after publishing to file a patent. Publishing by academics often brings earlier awards and is part of their cultural infrastructure. Patenting is a mechanism that allows individuals as well as small and large companies to protect their valuable IP. It is the only form of legal protection for assets from which income or wealth can be derived. A plethora of help exists for those wishing to patent. It is available through government agencies, private companies, and consultants. The process of patenting is expensive and takes a significant portion of budgets, particularly from small companies. Each country has its own system, so multiple patents are needed to protect IP internationally. Patents and agreements made in Europe and the U.S. are not always honored in Asia, so at times other protective measures have to be taken. Patents only deal with processes or products, not with conceptual ideas. They can also include modifications to materials and new design software. Multiple ownership of software can give problems when modifications made by one owner have not been agreed to or registered by the others. Nanotechnology is raising many issues, particularly in the biomedical field in areas like genetic modification and drug development. There are three types of patents: utility, design, and plant. The utility patent covers any new invention or discovery of a useful machine, process, manufacture, or composition of matter. These are recommended for new small companies like startups owing to their extensive coverage of new products. The design patent covers any new or nonfunctional design but not structural features. Plant patents are issued for asexually reproducing plants. The pathway to commercialization does not stop with the patent filing. Generally, patents from a number of sources must be compiled and integrated to build a portfolio to protect the new product or company that may be formed to produce the product. The new product is then developed around the portfolio of patents, and the final product will use the patents as protection to maintain a position in the marketplace. IP can be expensive to protect and can be a deterrent to investors. However, if a technological-based company has no IP, it is unlikely that an investor will invest without some form of asset to protect that investment. Micro-nanotechnology companies benefit from licensing patents if they have an inherent value to the company, since they constitute part of its asset portfolio. Sublicensing to manufacturers is often done to build up specific relationships with them and give protection from competitors.

Summary We can summarize the basic requirements and key elements for a working commercialization infrastructure as follows: • Commercialization strategy with market foresight and awareness • Appropriate level of investment in facilities for research and development • Appropriate level of investment in design and manufacturing facilities (including prototyping and end-product development)

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• • • • •

Trained personnel in MNT design manufacturing technologies and marketing Knowledge of existing and potential customer base for MNT products Engagement of stakeholders and society interest to allay fears and concerns Suitable environment for collaboration, partnerships and network clusters Appropriate protection for intellectual property

Steps To Commercialization Meeting the Challenge The ten major steps in the ladder to take an idea for a new product to the market are shown in Figure 1.3. Each step can be subdivided into smaller sets of tasks depending on the nature of the product and state of knowledge that exists. It is not a linear path, because of the disruptive nature of the technology and because we live in a world where change, challenge, and risk will always offer barriers to progress. It is not a path for the faint-hearted or for those without determination, knowledge, and experience. Experience shows that unless a suitable infrastructure, as described above, is in place, then it will be difficult, if not impossible, to take the steps on the path to commercialization. If the required infrastructure does not exist, then companies have to seek prototyping or manufacturing facilities outside their immediate location or country, Micro-NanoSystem End Product Realisation concept -design – prototype – End product manufacture-market Markets Final Product Pilot Production Process Steps

Reliability Verification Pre-production Prototype Manufacture Inspection and Testing Integration & Assembly of Micro Components

Microcomponent Fabrication Modeling-simulation Design for Manufacture Concept-idea-foresight

Package Design Interface Electronics

Product Development

Test Support Functions

Figure 1.3  Steps to commercialization.

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which can substantially add to the development and production costs. Large-scale production is another hurdle that needs to be considered early on if the product falls into that category. Increasingly, such production can be done more economically in countries with low labor costs. Such countries do not always have the sufficient knowledge required to meet the stringent demands of manufacturing the product. It is essential to have an understanding of the viability of the market for the final product. With the rapid increase in technological development and the shorter lifetimes of products, the reduction in the time to market has become an important factor.9 Globalization has generated the need for global networks and supply chains. Manufacturing companies need to be part of these if they wish to have access to services and markets that may not be attainable in their own countries at competitive rates. There are many examples of innovative companies in the U.K. that, because of the lack of local facilities, have had to seek such assistance in Asia, the U.S., and Europe to manufacture their products.

Ideas and Concepts Every new product or system, innovation or invention is born from an idea or a concept produced by an individual or a group of individuals. These are sometimes driven by need, sometimes by inspiration, sometimes by a desire to make money — but more often by chance. The latter usually results from an association or interconnection between existing products or systems. There is a large gap between an idea and a proven concept. It may be termed a “chasm of death.” Most ideas do not make it across this gap. Advancing even to a point where an idea is conceptually viable takes both research and focused determination. It follows basically the path of any invention. In the multidisciplinary, multidimensional fields of MNT, specialized technology knowledge is essential. The field is relatively new, so there are unlimited applications and opportunities, but the problem facing the idealist or company who might see such opportunities is that to realize that vision, enthusiasm is not enough. It has to be backed up with knowing the best way to proceed, even to advance to the proof-of-concept stage. Most researchers applying for research grants for development projects are judged on their ability to make reasoned cases for success, usually based on the production of demonstrators to prove that the idea or principles used can actually realize a marketable product. Private investors also require individuals or companies to make convincing arguments or demonstrators to back up their claims. A demonstrator is still a long way from the manufacture of a reliable end product. Our model for successfully producing a product is to be sure that each step along the path shown in Figure 1.1 can be taken. We shall outline what is required to take these steps.

Design, Modeling, and Simulation Once a proof-of-principle has been carried out to test that the science is sound, then a design study is the next step. With miniaturized components, devices, and systems, an integrated approach must be taken. The design must satisfy a number of criteria. The knowledge and tools must be available. Gone are the days of a draftsman’s

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sketch design on a drawing board. Microengineering requires a different skill set and software tools. Computer-aided design (CAD), modeling, and simulation tools are vital for finding the best solution to a product development, particularly when many components have to be integrated on a single microchip or substrate. Computer simulations shorten development cycle times, lower costs, and enhance final product performance. This enables optimization of assembly and component integration, thus reducing the probability of failure at the prototype stage. Sometimes the first prototype can be used as a demonstrator to test out the product specification. Many companies now provide software packages for MEMS-based devices, but gaps exist down at the nanoscale. Some customized software for drawing nanoscale patterns for nanolithography is now available. Good design has to take into account all stages of manufacture and include all aspects of packaging to achieve a successful end product. Commercially available software products available from a variety of companies like ANSYS Inc. and Coventor are written for the microsystems environment. In order to simulate complex 3-D geometries, either the Finite Element Method (FEM) or the Element Boundary Method (EBM) needs to be used. The accuracy of simulation and modeling is dictated by a knowledge of the material properties and its behavior at small scale where large surface-to-volume ratios dominate. At these levels, surface forces such as adhesion, stiction, friction, wear, surface tension, viscosity and electrostatic charge have to be considered. Reliability becomes a major problem because the lack of understanding of how material properties age, or the rate at which they change from the original design point when in different operating environments, is one of the many challenges facing designers. In aerospace, automotive, and medical applications, reliability and longevity are of utmost importance. Here, a zero tolerance to failure is required. As we move into the nanotechnology domain, quantum effects become important. New sets of modeling software and design methodologies are required for atomic and molecular scale processes before any realistic advances can be taken. Although much progress has been made in modeling and simulation, software for use at the micro-nanoscale needs more development for accurate simulation.

Integration The rapid growth of microchip and microsytems technology has led the electronics industry toward integration of more functionality onto a single chip. This decreases costs and gives increased reliability to products since they contain fewer discreet components. A number of review articles in a dedicated edition of the International Newsletter on Micro-Nano Integration (MSTnews)10 outline the importance of the subject to manufacturers. In particular, the European INTEGRAMplus project11 has successfully demonstrated the value of integrating micromechnical and microfluidic systems based on silicon chips. This is predicated on the adoption of a multitechnology and multidomain approach with a focus on integrating silicon-based components with other materials such as polymers as platforms for packaging and interfacing to the macro-world. It also provides a design methodology in the CAD environment for the design of components and associate electronics.

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The systems integration approach is now being adopted by most designers and manufacturers and provides a low-cost option for companies, particularly small- to medium-sized companies that do not have the necessary in-house experience or resources to do it alone. The U.S. National Nanotechnology Initiative (NNI)12 has identified manufacturing technology as one of its “grand challenges,” a key area for investment. It has a target to establish ten R&D integration facilities or centers for nanoscale and microscale testing and manufacturing before the end of 2007. Other countries are pursuing similar initiatives. Micro-nano integration has been slow owing to different levels of maturity on the two technologies. Microsystems technology is more mature and serves many mass markets. In comparison, nanotechnology is still mainly embedded in the research base of many countries. Most of the current work integrates low-dimensional materials in microsystem components. The IBM Millipede Project13 is an example of micro-nano integration. Millipede is an atomic force microscope (AFM)-based data storage concept. Thousands of nano-sharp tips punch indentations representing individual bits into a thin plastic film; a data storage density of a trillion bits per square inch, 20 times higher than the densest magnetic storage currently available, is achievable. It opens up new horizons in high density data storage. Other applications that can be envisioned are in large-area, high-speed imaging and high-throughput nanoscale-lithography as well as atomic and molecular manipulation/modification. Another example of micro-nano integration is the development of single molecule biosensors that have microelectronic interfaces. These are packaged to be available as handheld instruments and give rise to a whole range of portable biomedical devices.

Standardization Industry needs agreement on standards before any new manufacturing methodology can progress. Manufacturing standards are a continuing issue for the MEMS/ MST/NEMS industries, but progress is being made. Unlike the mass production associated with the semiconductor industry, where standards for processing are generally accepted, MEMS and NEMS products do not have the same magnitude of volume production. It is too early for the adoption of standards in nano-manufacturing except in materials production. Additionally, each product is unique, requiring different manufacturing approaches to produce the product. Here health and safety rules will have to be adopted as more manufacturers come into business. The setting of internationally acceptable standards is one of the many challenges to be faced. Setting and agreeing on standards is now a serious issue for manufacturers of products based on the use of micro-nanotechnologies. Nanotechnology poses special problems that relate to whether top-down or bottom-up manufacturing methodologies are required. There are many standard development organizations worldwide. Inside Europe, the Network of Excellence in Multifunctional Microsystems (NEXUS) is a leading body. In America, the Institute of Electrical and Electronic Engineers (IEEE) and the National Institute of Standards and Technology (NIST) and, in Japan, the Micromachine Centre (MMC) are key players. The main international bodies are the

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Semiconductor Equipment and Materials International (SEMI) and the International Organization for Standardisation (ISO). International Organization for Standardization (ISO). The latter facilitates the development and communication of standards for the semiconductor industry. It has been the leading organization in setting standards for MEMS and nanotechnology. In 2005, an agreement was reached between the American IEEE and SEMI to foster MEMS and nanotechnology standards.14-15 This underpins the importance given to the establishment of standards for the new emergent manufacturing industry. In addition to acceptance by the world’s leading countries, the global community must also agree. Each of the organizations above has produced or participated in surveys and reports representing the views of their own members. The European project MEMSTAND16 (standardization for microsystems technology) established a roadmap to forecast the future trends of standardization.

Manufacturing Acronyms: MEMS (Microelectricalmechanical Systems) MST (Microsystems Technology) NEMS (Nano-Electrical-Mechanical-Systems) RF (Radio Frequency) CAD (Computer-Aided Design)

Prototyping There is prototyping, rapid prototyping, and preproduction prototyping. All are essential prerequisites for volume manufacturing. Modeling and simulation tools theoretically can make it possible to take the design directly to the preproduction prototyping stage. In practice, the tools are not mature enough for this to happen. For this, there has to be integration of these tools with the fabrication processes; they need to operate across many technology domains to enable designers to produce systems-based products and services. The manufacturing of micro-nano structured devices raises challenges. Few companies currently have the experience or expertise to carry out prototyping without assistance. Companies often form partnerships or strategic alliances with foundries or specialist providers for this purpose. As more and more companies are realizing the importance of the need for integrated solutions, the need for engineering simulation becomes a major factor to ensure company success. The fundamental physics and engineering that govern the behavior of micronanoproducts differ from their counterparts in the macro world. Conventional scaling down from the macro level to the micro level and beyond usually does not work. Prototyping places demands on design and modeling tools. There is an urgent need for improved tools for specific needs. At the nano level, molecular modeling exists, but for practical purposes of manufacturing, very few useful packages are available. A working knowledge of CAD is essential. The type of simulation software used will depend upon the application and the operational environment. As microsystems increasingly have to work in complex domains, such as RF, optics, and harsh

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environments, many different software suites may be needed to integrate the application with a specific functionality. These enable the design engineer to predict the behavior of microstructures and microsystems under a multitude of physical effects such as electrostatic loads, stress, heat, and electromagnetism. These CAD products can, as they mature, replace hardware prototyping and enable the testing of designs, thus providing an engineering simulation solution that is fast, efficient, and more cost effective.

Packaging Packaging is fundamental to product functionality and is required to interconnect, protect, and provide an interface to the macroworld to facilitate human interaction. It is the most costly part of the process cycle and can represent up to 80% of the total product development costs. Packaging is central to the design process and must be considered at that stage, often beginning at the wafer level. Critical features include cost, reliability, and accuracy. Most microproduct failures have resulted from designs that have failed when packaging solutions are added late in the product development. The same applies for products that have embedded nanocomponents, nanomaterials, and nanosystems. Packaging design must relate to the operational environment. In sensor and actuator applications, it must protect and interact with the environment. For other applications, it may be isolated as in accelerometers or gyroscopes. For medical in vivo systems, complex packaging is required and can be the most important and most costly part of the device or product. Good interference-free RF or optical connectivity is placing increasing demands on packaging when the device or component has to operate in a harsh chemical or biochemical environment. Packaging also has to be reliable to work in multidomain technologies that include structural, mechanical, electrical, optical, thermal, chemical, and radiation environments. A series of connections and interconnections is required in moving from the nano-size domain to the micro-size domain where humans communicate with products. Whether it is for optics, fluidics, thermal, mechanical, or electronics, combining functions in a micro- or nanosystem complicates the interconnection schemes and will sometimes require a new fabrication and packaging approach. The packaging of MEMS/MST devices and systems ultimately determines their commercial success. Each product has its own specific requirements related to the environment in which it has to operate. MEMS packaging is more challenging than IC packaging due to the diversity of MEMS devices and the requirement that many of these devices be in contact with their environment. MEMS devices are more complex, having 3D geometries, often with moving parts that are vulnerable to dust and moisture, mechanical stress, and vibration; therefore, greater protection is required. Packaging materials are critical to obtaining the correct protection in a particular environment. Sealing and bonding of these materials sometimes require special techniques, particularly for operation at high temperatures. Most companies find that packaging is the single most expensive and timeconsuming part of the manufacturing process. As for the components themselves, numerical modeling and simulation tools for MEMS/NEMS packaging are virtually

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nonexistent. Approaches that allow designers to select from a catalog of existing standardized packages for a new device without compromising performance would be beneficial. This is essential if large-scale manufacturing is to develop across the wide product domains.

Testing and Reliability Long-term reliability is essential for all miniaturized components if they are to be incorporated or embedded into products. Failure usually means replacement of the whole product. Production and assembly methods for integrated circuits and MEMS systems make replacement of individual components or maintenance schemes too costly. No product will retain its market credibility without total product reliability assurance. Design for reliability must understand, identify, and prevent failures before the manufacturing stage is reached. All possible failure modes in different environments must be vigorously tested to ensure that failure model predictions are verified. Lack of knowledge between material properties and process parameters could lead to failure after manufacture, resulting in expensive recall for the product and loss of manufacturer and market credibility. Some industries are more sensitive to this than others, notably the automotive and aerospace industries, which are among the large-scale volume manufacturers. PATENT-DfMM17 (The European Network of Excellence) provides European industry with support for integration and reliability issues. This ensures that problems affecting the manufacturing and reliability of micro-nano products can be addressed before prototyping and manufacture starts. Members of this network engage with the European Aerospace community to support manufacturers. Failure modes need to be programmed into the test procedure. Procedures will vary for different types of devices.

Final-Product Realization and Marketing The reader is referred to Chapter 6 on “Market Analysis and Markets” in this book, but we will outline here some of the fundamental issues because they constitute the most important step that needs to be considered on the path to commercialization. Fundamentally, buyers or customers probably do not care how the product was made or have any interest in the technology used to produce it. Their interest in the product is based on its performance and cost advantage. Therefore, normal marketing practices are the same as for any other product. Companies are cautious about this because of any adverse publicity that may have resulted from other products using the same technology where problems have arisen. This is particularly the case for nanotechnology. For example, new sunscreen product manufacturers often refer only to the advantages not the technology that gave the advantages. The problems experienced by Monsanto over genetically modified plants are often related to nanotechnology. Initially this deters manufacturers of food or healthcare products from using the term. Success in achieving a marketable final product means the journey is nearly over, but the final destination of penetration into a competitive market is still to be reached. In a changing global market where market forces operate and demand can fluctuate, the ogre of risk lurks. There are no certainties, and success or failure

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hangs on the marketing skills of the company and its agents. Prior to reaching the end-product stage, the diligent company would have already put in place a marketing strategy based on all available market intelligence. This will take into account the sales impact that the new product will have on the competition, if any exists. Companies often do not pay enough attention to product promotion and publicity, although it should be inherent in their marketing strategies. This can result in a lack of awareness of the prospective buyer, thus delaying early sales. Increasingly, buyers scan the Internet for new products or updates of existing products. This is now an attractive and cost-effective medium for promotion since changes and updates can readily be made, particularly for high-tech products. But expectation and demand must be met; otherwise credibility is quickly lost. This can be a major problem with high-volume Internet-based sales when demand can exceed availability. Some examples of new products now on the market are listed below. These were taken from the Forbes.com website.18 • • • • • • •

Apple IPod with sub 100 nm elements in its memory chips Choleterol-reducing nanoencapsulated oil, Shemen Industries Canola Active Nanocrystals that improve the consistency of chocolate Zelen Fullerene C-60 Day Cream Easton Stealth CNT baseball bat Nanotex textiles ArcticShield polyester socks from ARC Outdoors with 19 nm silver particles that kill fungus to reduce odor • NanoGuard developed by Behr Process for improved paint hardness • Pilkington’s self-cleaning Activ Glass • NanoBreeze Air Purifier from NanoTwin Technologies, where the UV light from a fluorescent tube cleans the air by photochemical reactions with nanoparticles Between 2006 and 2008, the following key products will be available on the market: • Intel products with 45 nm linewidth transistors (available from 2008)19 • Batteries that are increasingly incorporating nanostructures • Flexible, cheaper, or more luminous flat-screen displays In addition to the products listed above and many others that are likely to be available in the coming years, we will outline below three product areas that are having a profound impact on society: ink-jet printers, coated textiles (clothing), and portable blood analyzers.

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FIgurE .  I-stat blood analyzer and cartridge.

 

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FIgurE .  Value of the MEMS markets.

© 2008 by Taylor & Francis Group, LLC







FIgurE .  Airbag module (Bosch) source.

FIgurE .  Gyro sensor (Bosch source). © 2008 by Taylor & Francis Group, LLC

FIgurE .  Zyvex nProber with positioners aligned 250 microns apart from each other, just a few millimeters above the center stage.

FIgurE .  This Easton road bike, created using Zyvex’s NanoSolve materials, was given to President George W. Bush in June 2006.

© 2008 by Taylor & Francis Group, LLC

FIgurE .  Four NanoEffector® Probes in a Zyvex nanomanipulator.

© 2008 by Taylor & Francis Group, LLC

FIgurE .  Schematic diagram Respimat brochure.

© 2008 by Taylor & Francis Group, LLC

FIgurE .  (d) Robotic system for mounting and assembling Respimat.

FIgurE .  Respimat production line.

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Figure 1.4  Ink-jet printers.

Examples of Products that have taken the Commercialization Path The Ink-Jet Printer A Brief History of the Ink-Jet Printer Some of the following information has been obtained from the Castleink website.20 The four companies that are market leaders in the supply of ink-jet printers are Hewlett Packard, Epson, Canon, Brother, and Lexmark (see Figure 1.4). In the mid-1970s, printer companies realized the potential of ink-jet technology that would make dot matrix printers obsolete. The challenge, however, was to develop a way to create an affordable ink-jet printer that would reliably create high-quality prints and work with desktop computers. It was the need for a portable, easy-to-use printer to use with desktop and laptop computers that produced the customer demand. The quality of the printed page depends largely on the relationship between the ink, the print head, and the paper. Researchers had to find a way of creating a controlled flow of ink from the print head onto the page and preventing the print head from becoming clogged with dried ink. In 1976, the ink-jet printer was invented, but it took until 1988 for it to become a home consumer item with Hewlett-Packard’s release of the DeskJet. Liquid ink-jet printers generally fall into one of two classes — continuous and drop-on-demand. In a continuous ink-jet printer, a continuous spray of ink droplets is produced, and the unneeded droplets are deflected before they reach the paper and recirculated for reuse. This technique permits very high-speed drop generation, one million drops per second or faster, but is expensive to manufacture. The drop-on-demand ink-jet printers produce ink droplets only when needed. The two most common technologies to drive the droplets out of the print head are thermal (used by Hewlett Packard, Lexmark, Canon, Olivetti, and others) and the piezo-electric effect (used by Epson). The thermal technique has been by far the most successful because printers can be produced inexpensively.

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The biggest challenge for piezo-electric ink-jet technology is the cost and difficulty of producing print heads. Today Epson has a very successful line of piezoelectric color printers, namely the Stylus color and Stylus photo family of printers, offering photographic quality.

Nano Coatings on Textiles Numerous fabrics based on nanocoated fibers are now becoming available on the market. Based on the lotus-leaf principle, whose fine surface structure makes it impossible for water molecules to stick to its surface, nanoparticles dispersed in a solvent can be coated onto fabrics. During volatilization, the nanoparticles independently start to affix themselves to the substrate surface, align themselves, and eventually form a network-like structure. This self-structuring process works downwards, sideways, and upwards, resulting in a three-dimensionally linked network. The U.S. company Nano-Tex LLC has developed and licensed a range of fabrics under the labels Nano-Care,® Nano-Dry,® Nano-Pel,™ and Nano-Touch.™ The fibers of these fabrics have been enhanced to make them behave like the lotus leaf with stain-resistant properties but with their initial material properties remaining unchanged, i.e., they are machine washable and can be tumbled dried; and they feel, look, and possess breathability qualities like the original fabric, so they remain totally unaffected by the treatment. In the nano-enhanced clothing, the fibers have tiny whiskers aligned by spines to repel liquids, reduce static, and resist stains. The properties can be summarized as follows: • Water droplets simply pearl off the fabric • Dirt, grease, and oil spots can be easily removed using a little water • The impregnation is very durable and remains virtually unaffected by wear and tear or washing • The impregnation can be reactivated at any time by the application of heat (e.g., from a dryer or iron) The treatment keeps wearers dry and comfortable by taking moisture away from the body at least ten times faster than most resin-treated cotton fabrics available today. A report published in Innovative Products Based on High-Tech Textiles21 states that “the future of the textile and clothing sector lies not in price reduction but in more intelligent products with additional functionality.” It classified intelligent clothing into five major areas: transfer systems; adaptive systems; smart clothing; transponder systems; and microtechnology and nanotechnology. The textile industry is vital to health and competitiveness of many countries’ economies. Many U.S. and European companies outsource manufacturing to Asia, but they retain much of the IP. Nanotechnology offers solutions for keeping the textile industry competitive through the use of nanotechnology. The wider availability of Nano-Tex stain-resistant clothing and fabrics is starting to revolutionize the textile industry. Europe (EU) has identified the use of nanotechnology as the key to the future competitiveness of its textile industry.22

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Figure 1.5  Nano-Tex shirt showing coffee stain removed.

Nano-Tex shirts are some of the early products that are finding their place in retail outlets. The authors possess products like the ones shown and can verify that they repel most materials that stain, such as red wine, coffee, blackberry jam, tomato ketchup, and mustard (see Figure 1.5).

A Portable Blood Analyzer The i-STAT Corporation’s handheld blood analyzer system, the i-STAT System23 (see Figure 1.6), has the potential to revolutionize the way healthcare is administered. It developed a low-cost blood analysis instrument that fits in the palm of the hand. The device is used with one of many different test cartridges to produce accurate results from just a few drops of blood in about 2 min. The tests include electrolytes, blood gases, immunoassays, and coagulation measurements. The instrument is completely

Figure 1.6  (See.color.insert.following.page.16.).I-stat.blood.analyzer.and.cartridge.

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automated and requires no medical specialist to operate it. Each cartridge is capable of performing up to eight tests. The portable blood analysis system eliminates the traditional process of sending a blood sample to a central laboratory for analysis then waiting for some time before the results come back to the patient. Adopting this device means major changes to the way hospitals do blood tests. This initially did raise, and still does, problems of acceptance by the professionals, as it is seen as an example of a disruptive technology that threatens jobs and traditional practices. This is a common problem with new medicine and healthcare diagnostics when the limitations are not due to the technology or public acceptance but to hospital laboratory management adapting to change. Over the last 5 years, the acceptance problem has been largely overcome, and iSTAT has doubled its revenues. It hopes to increase its growth rate significantly over the coming years. Currently 15 million cartridges are being manufactured each year, but the company has the capacity to produce 40 or 50 million units.

Practical Experiences in Commercializing Micro/Nano-Based Products The methodology of commercializing products has remained fundamentally unchanged since the first Industrial Revolution. Design, prototyping, piloting, and production processes have become more efficient through new techniques such as lean manufacturing, as well as computerization and automation. However, most of this knowledge and commercialization infrastructure is optimized for products at the macroscale, not the micro- and nanoscale. In practice, every step in the commercialization pathway for micro- and nanobased products requires significant new knowledge and new approaches. In this section, the commercialization pathway will be viewed from the perspectives of conceptualizing, designing, prototyping, piloting, and manufacturing micro- and nanosystem-based products in 15 different companies, all of which had manufactured products as a basis for their business model. These companies were focused on automotive, aerospace, medical, military, telecommunications, or consumer markets. Each company faced challenges at every step on the commercialization pathway when trying to adapt an infrastructure based on commercializing macro-based products to build a micro- or nano-based product. Many micro- and nano-based products travel the commercialization pathway toward the marketplace, but few are able to overcome the challenges. Actual company names have not been used to preserve confidentiality. As with most new technologies, micro- and nanotechnology-based product concepts are primarily developed in research environments at universities and research institutions. Fundamental intellectual property is developed from that beginning. Because micro- and nanotechnology are in their infancy, most original patents are still in effect and must be licensed for product companies to have freedom to operate. This creates a significant burden, particularly for start-up companies that must negotiate numerous licenses to insure freedom to operate and produce a product. It is difficult for a start-up company to know what intellectual property it may need when the product has not yet been designed. From our sample of start-up companies, each

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had to license intellectual property from more than one source. This is understandable since most research in micro- and nanotechnology areas is funded by governments. Many funded programs focus on similar areas at different universities and in various countries. Principal university investigators collaborate with one another on a global basis and move from university to university. This results in a dispersion of intellectual property that is difficult to aggregate to form the basis for a company. In one example, at a major United States university, more than 25 microtechnology-based patents were accumulated in the university portfolio. When the patents were analyzed for commercial opportunity, there was not enough intellectual property for a start-up company to have freedom to operate. However, after extensive searches to explore the aggregation of patents from other universities, three companies were formed. Standing alone, none of the universities had hope for a return on their research investment when considering their individual patent portfolios. However, the aggregation of patents resulted in all institutions having a return on their investment. Many of the micro- and nano-based start-up companies considered here did very little intellectual property analysis — some did none at all, even with significant committed venture funding. When considering a start-up company or a product in the micro/nanotechnology space, it is important to do an extensive intellectual property analysis in the specific area to determine the landscape of the intellectual property. As the design matures, the intellectual property landscape should be constantly reviewed to ensure that paths are taken that allow freedom to operate and to generate new intellectual property. As the product concept is developed and as design begins, significant challenges arise when attempting to use conventional macro-based product design methodologies. One of the first challenges is human resource related — the availability of engineers who think and design at the micro- and nanoscales. Challenges begin with universities where researchers and scientists are educated in micro- and nanoscale domains, each in a very specific area. However, researchers and scientists are not product design engineers. In developing a product concept, researchers and scientists address only about 10% of the total pathway to commercialization. Product design engineers provide a unique capability to successfully move along that pathway to commercializing a product. They start where the scientist leaves off and take the concept all the way to the finished product. For the most part, universities teach design at the macroscale, with little if any education at the micro- and nanoscale. The typical design engineer develops a specification for a product, deriving its expected performance, shape and size constraints, electrical requirements, etc. A design engineer in the conventional macroworld uses known standards and metrics for piece parts and processes. He would use supplier catalogs to find components that meet the product requirements. If he needed to fabricate parts, he would use readily available materials with properties that are understood. He would use manufacturing processes that are standardized and well understood, such as machining and injection molding. If the engineer needed a piece of equipment for manufacture or assembly, he would select a supplier who manufactured the equipment as a standard catalog item. It would be delivered to the expected specification and perform in an expected manner. The design engineer would not risk selecting components or equipment that were unproven.

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At one company that had especially elegant micro/nano product designs, the design engineer was asked how he developed such elegant designs. He responded, “I go into a trance and shrink myself down (as he contorted himself in his chair and began to slide under the table) and put myself inside the device I am working on. I visualize the inside connections and interfaces and design the device from the inside to the outside.” How does one transfer this capability to a university professor teaching design engineering, who most likely has never commercialized a macroproduct and probably has no idea about micro and Nan design? Companies that are successful in designing micro- and nano-based products do not rely on the experienced macrodesigners. They bring baggage from the macroworld that does not lend itself to success in designing micro- and nano-based products. The successful companies hire recent college graduates who are open-minded, very bright, creative mechanical engineers who are not indoctrinated in traditional methods. These engineers have no preconceived ideas of what the limits are. Understanding materials is also important. The industrial designer (even one experienced at the macroscale) who is creative, excellent at visualization, and more of an artist than an engineer can also be very successful at micro- and nanoproduct design. In micro- and nano-commercialization, there are few simulation and design tools and standard manufacturing processes, as well as a lack of metrics, standards, and specifications. There is no repository of knowledge for the design engineer to reference. A great deal of knowledge has been generated by companies that have commercialized, or attempted to commercialize, micro- and nano-based products. Since that knowledge was generated in an industrial environment, most of it has not been published or disseminated to the public. At one company, nearly $50 million was spent developing interfaces, packaging, and manufacturing and assembly processes to produce an ink-jet print head. The processes developed could be applied to other microfluidic products; however, they were never published and only disseminated as those who were involved moved into new jobs at other companies and shared their knowledge. Progress has been made in simulation and modelling software at the microscale, but there are significant challenges at the nanoscale. For example, modeling of injection molding processes at the microscale with nano-tolerances is not possible. One company making a microfluidic medical diagnostic device had to resort to trial and error to mold a precision part to nano-tolerances. In developing the tooling to produce the part to specification, 55 modifications were made to the mold, requiring a significant amount of time and money. For silicon-based MEMS devices, reasonable simulation and modelling software exists to support commercialization. The same is true for microfluidics. The difficulty in modelling and simulation comes at the interfaces and connections between the micro- or nanoscale and the human interface at the macroscale where the products are used. As design progresses, the engineer has to consider how he will build the device to make the first prototype. Engineers, particularly those with experience in macroengineering, would design the prototype to be made in a model or machine shop using traditional machining and forming equipment. This approach will surely result in failure of the product to be optimized. It will not meet performance, size, functionality, and cost requirements, if it functions at all.

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A company building an imaging device that was embedded into its customer’s imaging product exemplifies the importance of starting out on the right footing to build the first prototype. Because of time and cost considerations, the company decided to build the prototype using conventional macro approaches. The imager was far larger than originally envisioned, its performance was lower than expected, and the cost was significantly higher. The customer was no longer interested in embedding the imager into the product; the cost to redesign it to accept the imager was no longer justifiable considering the now fewer advantages. The imaging device company could not change its design to reflect the advantages of microtechnology because it had built an infrastructure of people and equipment from the macroculture. This company is no longer in business. The micro/nano product design engineer must work closely with process, equipment, manufacturing, assembly, and facilities engineers. This team approach is necessary to design an optimized product. There is a lack of standard, off-the-shelf fabrication and measurement equipment, parts, connections, packaging, processes, and micro-assemblies. Therefore, product design, process development, manufacturing, assembly, and unique facility requirements must be considered together when designing micro-nanoproducts. All of the companies that produced a successful product had to practice the integrated team approach, mainly to develop processes and equipment for manufacturing, assembly, and measurement. One example was a company developing a page-width (300 mm), ink-jet print head for precision, high-speed printing. At that time, the semiconductor industry had developed processes and equipment for 200 mm wafers. To achieve precision and diameter in the ink-jet nozzle position, submicron lithography was necessary. However, at the time, no equipment existed that could handle parts that were 300 mm in length, and no equipment existed that was able to handle geometries different from a silicon wafer. In addition to designing lithography equipment (which included designing unique energy sources), a totally new process and new equipment were needed to coat a resist to the thickness specification. No measurement equipment existed for submicron measurements over a length of 300 mm. This equipment had to be designed and built. The process to fabricate the ink-jet nozzle structure consisted of 54 variables that had to be precisely controlled. The world’s top statisticians said it was not possible to control the process and produce a consistent product. Dr. Taguchi became involved, applied the Taguchi Method for Robust Design (a revolutionary approach at the time), and within 30 days a predictable, consistent, and repeatable product was delivered. In another example at a different company producing a thermal ink-jet print head with a silicon print element, similar experiences with a team approach were necessary. The print element was made by bonding two silicon wafers together — one a fluidic structure for delivering the ink and the other the substrate for the drive electronics and heating element. After bonding (equipment, process, and adhesive for bonding had to be developed), the wafer stack was diced to separate the print elements. Dicing through the wafers to expose the nozzles had to produce a mirror finish with no chipped edges, as illustrated in Figure 1.7. A chip on the nozzle edge would change the surface energy condition, causing the ink-jet drop to stray off course. This would reduce the sharpness of the printed image.

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Silicon Wafer Microfluidic Nozzle Structure

Heater and Electronics Layer

Silicon Wafer Electronics

FIGURE 1.7 Microfluidic nozzle on silicon wafer.

Each year, millions of wafers are diced for the electronics industry by specialty dicing suppliers in the Far East. There were many suppliers who claimed they could meet the dicing requirements for the ink-jet nozzles. Even when they tried to improve their processes, they could not come close to meeting the quality requirements necessary for dicing ink-jet nozzle structures. Because the ink-jet print head performance was dependent upon a chip-free nozzle edge, the company undertook developing the dicing process. A high-performance dicing saw was purchased and modified by dynamic balancing and precision temperature control of the cutting fluid, as well as other modifications. This achieved a significant improvement — but it was not good enough. Then dicing blade performance was investigated with suppliers who thought their experience and expertise produced the best blade possible — but it was not good enough. The company undertook a development effort to select the appropriate material and develop a dicing blade to meet the ink-jet requirements. When the dicing blade was developed, the process was offered to dicing blade suppliers to produce dicing blades to meet ink-jet requirements. None of the suppliers were able to expand their vision and change their manufacturing processes to make blades to address new markets. It was necessary for the company to build a dicing blade manufacturing operation to meet its quality needs. The new dicing process was able to produce a high-quality mirror finish, with no chips at the nozzle edges. This dicing process was accomplished at speeds considerably faster than the speeds at traditional suppliers and was achieved with a much higher quality output. With nearly every micro-nanosystem product, suppliers who were considered to be top quality could not meet the requirements of micro- and nano-based products. They were boxed in by their past and believed, from their experience and years of process improvements, that their processes were optimized to be as good as they could be. A new view from outside the box (a disruptive approach) can produce significant improvement to meet the unique requirements of micro- and nanosystems and is generally necessary for successful product commercialization.

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Companies that were successful in high-volume manufacturing of micro- and nano-based products integrated fabrication and assembly under one roof. Micronanoproducts require environmentally controlled conditions, are sensitive to rough handling, and generally require additive processing of one process step onto another. Success generally requires an integrated approach. For example, a coating on a substrate, followed by a screen-printed layer, followed by an adhesive layer, etc., is an integrated approach as compared to the conventional macro-approach of piece parts that arrive at the assembly line individually and are then assembled. The conventional wisdom of a supply-chain approach is not effective in the manufacture and assembly of micro- and nano-based products. One company used the conventional supply-chain approach to attempt to build an ink-jet print head. Because of the nature of additive processes, the print head traveled more than 1000 miles from supplier to supplier for the fabrication steps to occur. Packaging and shipping costs were high. Cleanliness requirements were impossible to maintain. When the print head did not function, it was difficult to find the cause of the problem. This type of supply chain approach is akin to each process step in a CMOS (complimentary metal oxide semiconductors) semiconductor fab being performed at a different fab in a different location. The company ultimately integrated manufacturing under one roof. This resulted in significant quality and yield improvement and a large cost reduction. Most importantly, manufacturing issues were observed and addressed quickly, and the product was a market success. Figures 1.8a and 1.8b illustrate the traditional and the integrated approach to manufacturing. The supply-chain approach cannot be successfully applied to micro/nano-based products if the full performance, size, and cost advantages of these products are to

FIGURE 1.8A Traditional manufacturing equipment. Layout considering a piece-part philosophy.

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FIGURE 1.8B Integrated, automated manufacturing layout of equipment for each step in a process to build and/or assemble a complete ink-jet print head.

be realized. The integrated approach was used in all of the companies that successfully commercialized a high-volume micro/nanoproduct. For low-volume products, the cost for equipment and facilities may not warrant the integrated approach. However, performance, size, and cost of these products will not be optimized. Customers may also have great difficulty moving out of their paradigm to envision new market opportunities with micro- and nano-based products. They often have trouble communicating in the language of micro- and nanotechnology. Lack of understanding makes customers reluctant to accept these new technologies as part of their product offering because they are steeped in traditional engineering and manufacturing methodologies. A nano-based process was developed to make fuel injection nozzle structures for a large automotive company. The vice president of manufacturing, with decades of traditional manufacturing experience, became increasingly frustrated even as the program exceeded performance and cost expectations. He retired, abruptly, because he had no frame of reference at the nanoscale. He could not make decisions on something he could not see. At the same company, internal political and organizational issues began to surface. After millions of fuel injection structures had been delivered defect free, one of the most powerful groups responsible for the product delivery process, the Quality Department, began to feel threatened. As it became evident that this group was no longer influential and jobs would be eliminated, roadblocks were put in place attempting to limit the program’s effectiveness. When jobs are threatened, defence mechanisms are often put in place by both engineers and managers. Successfully selling a micro/nano-based development or product program to a traditional customer is a significant challenge. In working with customers,

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particularly those with traditional products and infrastructures, one must be sure that senior management supports micro/nanotechnology-based products. Generally, senior management is very interested in high-performance products at a lower cost. This is not necessarily true for all those in the organization below the senior management level, where significant change in infrastructure may have to occur to deliver disruptive new products. To ensure that customer requirements are understood, it is necessary to find a champion below the senior management level. This person should know the company’s product infrastructure and organization structure. He should be a maverick who does not play by the corporation’s book of rules and is not afraid to bypass all intermediate management and go directly to senior management to get roadblocks quickly removed. Each organization has a few of these types; they are the “change makers” that force a company to consider new products. These general comments and specific examples and recommendations are the summation of experience from companies that were commercializing micro-nanointegrated products. Those products include a variety of ink-jet print heads, optical switching devices, medical laparoscopes and endoscopes, implantable medical sensors, medical diagnostic point-of-use microfluidic sensors, automotive fuel injection systems, infrared imagers, vehicle stability management control systems, and energy power devices. As time moves on, universities continue to provide excellent research and intellectual property for future micro- and nano-based products. Education for design engineers continues to be lacking. Simulation and modelling software continues to evolve, particularly for microsystems and microfluidic systems. Some dedicated equipment is available for micro- and nanofabrication with continued evolution. Building prototype, pilot, and production quantities continues to be very difficult. The micro-nano model shop or machine shop does not exist. Germany, specifically the Dortmund Cluster, which includes the Microfactory concept, is building a micro-nano commercialization infrastructure. In Melbourne, Australia, MiniFab is beginning to evolve to provide a commercialization infrastructure. However, in general, governments are lacking vision by not investing in and developing a commercialization infrastructure, thus not taking advantage of what will be considered the greatest economic development opportunity in history.

REFERENCES 1. Walsh, S. and Suleiman, M; Models for the commercialisation of disruptive technologies, International Journal of Technology Transfer and Commercialisation, 3, 187– 198, 2004. 2. Walsh, S, MANCEF Roadmap, Sept. 2002. ISBN:0–9727333–0–2 3. Royal Society Policy Document, Nanoscience and nanotechnologies:opportunities and uncertainties, July 2004, ISBN 0-85403-604-0. 5. The U.K. MNT Network, http://www.mntnetwork.com/. 4. Taylor, J.M., Report New Dimensions for Manufacturing — A UK Strategy for Nanotechnology; DTI pub 6182, June 2002. 6. Grace, R., Technology cluster development: the MEMS industry report card 2006, Small Times, January 2007.

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7. Kaiser, H., Report: Summary about the State of Nanotechnology Industry Worldwide 2003–2015, www.hkc.com/nanomarkets, 2006. 8. The MANCEF Roadmap (2nd edition) ISBN: 0–9727333–0–2; Chapter 4, 2004. 9. Tolfree, D. and Eijkel, K., Reducing time-to-market for nicrotechnology produced products, presented at the World-Nano-Economic Congress — Europe, London, 6 November 2003. Talk only reference on www.world-nano.com/WNEL-London. 10. Micro-Nan Integration; MST News, No. 4, August 2006. 11. Richardson, A. and Pickering, C., The INTERGRAMplus Access Service, MST News, No. 4, August 2006. 12. The U.S. National Nanotechnology Initiative, http://www.nano.gov. 13. Eleftheriou et al., Millipede – a MEMS-based scanning-probe data-storage system, IEEE Transactions on Magnetics, 39, 928, 2003. 14. SEMI Standards, www.semi.org/standards, 2004. 15. IEEE Standards, www.ieee.org/standards, 2004. 16. Standardization of microsystems technology — European Commission Project July 2002. 17. Richardson, A., Design for Micro-Nano Manufacture, PATENT-(DfMM), 2003, www. patent-dfmm.org. 18. http://www.forbes.com in 2005. 19. http://www.castleink.com/a-inkjet-printer-history. 20. NewScientist.com, news service, 27 January 2007. 21. Innovative Products Based on High-Tech Textiles, 57, 2004.

22. EuroFutureTex Conference. November 8–9, 2005, Padua, Italy. 23. http://www.abbottpointofcare.com/istat/products/analzsers.htm.

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Entrepreneurship’s Role in Commercializing Micro-Nanotechnology Products Bruce A. Kirchhoff and Steven T. Walsh

Contents Introduction............................................................................................................... 30 Folklore.......................................................................................................... 30 Two Classes of Technologies.................................................................................... 31 Evolutionary Technologies............................................................................ 31 Disruptive Technologies................................................................................ 32 Demand Pull and Technology Push Marketing Strategies....................................... 33 Technology Class Matched to Market Strategy........................................................34 Market Strategies for Evolutionary Technologies.........................................34 Market Strategies for Disruptive Technology................................................ 35 Silicon Pulling Industry: Evolutionary Technology...................................... 36 Silicon Pulling Industry: Disruptive Start-Ups............................................. 37 Examples of Disruptive Micro and Nanotechnologies............................................. 38 Micro Technology: Semiconductor Technology22......................................... 38 Nanotechnology: Gene Splicing24................................................................. 39 Sources of Disruptive Technology............................................................................40 Recommendations for Starting a New Technology Business................................... 41 Determining the Nature of Your Technology................................................ 41 Financing Technology Start-Ups................................................................... 41 Selling Your Second First Product................................................................ 43 Distribution is Frequently Complex..............................................................44 Do not Give up Your Original Product Idea.................................................. 45 Create a Team................................................................................................ 45 Do not Write a Business Plan........................................................................ 47 Summary and Conclusions....................................................................................... 48 References................................................................................................................. 48 29 © 2008 by Taylor & Francis Group, LLC

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Introduction The purpose of this chapter is to examine the role of technology in new micro and nanotechnology business formations so as to debunk some misperceptions in current folklore and to suggest guidelines for starting a new technology-intensive firm. The widely believed folklore is that newly formed technology-intensive firms succeed using radically new technologies to commercialize disruptive innovations. It is argued that new technology-intensive firms are best at doing this because they have no existing customer base to please and no internal bureaucratic organization to resist change. Much credit for popularizing this concept goes to Christensen in his book The Innovators’ Dilemma.1 Although not a new concept in the academic literature, Christensen successfully brought this information to a much wider audience. We begin by discussing the current widely believed folklore and demonstrating why it is an oversimplification of reality. Next we provide descriptions of the two classes of new technologies and how these should dictate start-up market strategies. This is followed by a description of two well-known examples of disruptive technologies, one micro and one nano, that have entered world markets in the last 50 years. We use this background information to offer some guidelines for starting a micro or nanotechnology business in today’s markets.

Folklore Christensen’s hypothesis does not agree with actual experiences. The precise operating pattern that the vast majority of new technology firms use to accomplish technology commercialization is not uniform from business to business, and no clear patterns exist because each technology firm’s commercialization effort is unique; no two are exactly alike. Christensen offers this hypothesis as though most newly formed technology firms succeed using disruptive innovations. However, this is a role rarely played by the new firm. More often the invention is based upon a unique use of existing technology, and entry occurs when new firms create substitute or replacement products for the established competitive firms’ existing products/customers. This provides a quick way for the new firms to enter existing markets and achieve relatively quick profitability. Second, contrary to Christensen’s general hypothesis, major established firms’ competitive responses to new high-tech entries have historically protected the major established firms while harming the new firms that threatened existing markets. Often, some established firms respond by simply copying the new technology and forcing the new firms to sue to enforce patent rights, a procedure that often causes new firms to fail. In other situations, established firms will defensively guard existing distribution systems to constrain the new firms’ access to markets. A new paradigm has emerged in the last 20 years reducing the economically vicious competition between large established technology firms and new start-up firms as envisioned in Christensen’s hypothesis. Many major corporations are now acquiring or licensing the intellectual property of new technology firms that have developed products based on radically different technologies than those possessed by the major firms.2 This acquisition process appeals to these acquiring firms because it may be a less expensive way to acquire new technology or simply a speedy way

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to enter new markets — or both. This seems to indicate a growing awareness of the value of innovations brought to the market by new technology firms. This has been true in the micro and nanotechnology fields. Thus, new technology firms have discovered new operating procedures that promise better results. Rather than threatening the existing major firms in a given market, the ambitious firms seek to partner with or become a part of a major firm that takes on the marketing of the product. Still, some new firms continue to independently struggle and achieve success. Behind this complex appearance of new technology firm behavior lay some fundamental principles based upon technology management theory developed over the last 30 years that not only describes the role of new technology firms but also prescribes the appropriate methods that lead to their success. The following sections begin by summarizing the theory of technological inventions as developed by academic authors over the last 30 years. Two classes of inventions have evolved from this theory based primarily on two different science sources. In addition, we provide an example of successful micro and nanotechnology firms in both classes. Then, we describe the two major methods of marketing matching the two classes of technology where each method offers different opportunities and threats. Lastly, we provide some guidelines for high-tech start-ups that emerge from an analysis of how these theories can be implemented for survival and profitability.

Two Classes Of Technologies Herein we use the term innovation as has been widely used in management of technology literature. An innovation is the commercialization of an invention. An invention is a new idea or a new combination of existing ideas. In high-tech companies, the invention embodies one of two classes of technology defined in the last 20 years. The academic research literature has agreed that there are two classes of technology: (1) evolutionary, sustaining, incremental or “nuts and bolts” technologies; or alternatively (2) disruptive, radical, emergent or step-function technologies. For simplicity in this chapter, we use the terms evolutionary and disruptive.

Evolutionary Technologies Evolutionary technologies might be described as “business as usual” with a continuous flow of technical inventions emerging from R&D based upon the supplier’s core technical competencies and/or from customers’ suggestions or requests. Evolutionary technologies, also referred to as incremental, sustaining, competence enhancing or “nuts and bolts” technologies, build off of the existing body of knowledge with respect to production capabilities and manufacturing or processing practices and as such have known performance levels and forms of application.3,4 Technologies can originate either inside or outside an industry. Those that originate inside are said to be based upon “core competencies” of corporations in the industry as defined by Prahalad and Hamel.5 The basis for technology is the organizations’ core competencies that evolve into a stream of “continuous innovations” that are delivered to customers as either replacements or substitutes for existing products or as new

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or greatly improved products. These two product categories are driven by different customer interests and different marketing strategies as discussed below. Replacement or substitute products are those that customers knowingly request to meet their needs, improve their operations, reduce costs, increase the quality of their product, or to produce a competitive advantage in their markets. Major new or greatly improved products are not knowingly requested by customers and do not meet needs that are known to the customers. Thus, although one dominant technology underlies the inventions, the technology’s evolution over time offers the opportunity to invent products for which there are ready buyers or create new inventions that satisfy customer needs that are not apparent to the buyer.

Disruptive Technologies Disruptive technologies frequently find their origins in new science, most of which emerges from academic or corporate R&D or independent scientific research. Schumpeter6 observed that innovations with major impact upon economic activity originate from outside the industry that they affect. Schumpeter also argues that these innovations emerge from and become the reason for the formation of new independent firms, i.e., entrepreneurship. To the extent that Schumpeterian product innovations are technology based, he argues that new independent firms are well suited to bring innovations from outside the existing industry structure and creatively destroy the market structure therein.7 Schumpeter’s observations agree with those of more recent theorists. Abernathy and Utterbach8 state that such technologies are built upon new knowledge and/or new manufacturing practices and are applied to create entirely new product-market paradigms that are often opaque to potential buyers. Further, Anderson, and Tushman,9 evolve from Abernathy and Clark10 and others discussing an “era of ferment” when new technology product paradigms are vying to become the industry dominant design. Bohn11 notes that measuring and managing these technologies is difficult. Bower and Christensen12 further expand this definition with the statement that technology is considered disruptive when its utility generates service products or physical products with different performance attributes that may not be valued by existing customers. Such technologies are applied to create entirely new productmarket paradigms that are often opaque to potential buyers.13 Commercialization products derived from disruptive technologies are frequently referred to as “radical or discontinuous innovations.” Academic research that develops new science sometimes results in the academic researchers starting new companies to invent and commercialize new products and services. And some new science originates in the R&D departments of major corporations. These are sometimes not wanted by the founding corporation and are rejected for development within the major firms and frequently are either licensed or spun off to new technology firms. The technology founders are sometimes encouraged to or willingly leave their employers to pursue their new science into a product invention. As with evolutionary technologies, disruptive technologies can create innovations that provide two categories of products: replacement or substitute. However, neither category of these is fully recognized by buyers as beneficial to their interests.

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Moore14 states that this customer negative evaluation aspect of disruptive technologies by noting that these technologies generate discontinuous innovations that require users/adopters to change their behavior in order to make use of the innovation. As such, disruptive technologies often require that buyers change their behavior or thinking so to be able to use the products to which the innovations are applied effectively. Inventions that are entirely new products requiring user change behavior are not initially recognized by buyers as being beneficial at all. Commercializing these inventions can be very difficult due to this buyer change behavior no matter how strong the new value proposition is either in a personal or an organizational setting. To overcome buyer/user resistance to adopting disruptive technologies, producers of such innovations must demonstrate that such technologies provide significant cost reductions and/or performance improvements. In this way, customers are found who are willing to take the risks of newness. These totally new inventions based on new science and disruptive technologies are what Schumpeter calls “creative destroyers.” By his definition, such innovations are so radical that they destroy existing markets and the dominant firms that supply these markets, replacing them with entirely new markets and firms based on new technology.15

Demand Pull and Technology Push Marketing Strategies Along with two classes of technology, there are also two types of marketing strategies for new technology products as frequently noted in the academic literature. Demand pull marketing is widely recognized and finds its theoretical underpinnings in the writings of economists over many years. Most recently, economic researchers have described this type of marketing as “opportunity recognition.” One definition of opportunity recognition is that entrepreneurs earn profits as a result of success in finding and exploiting perceived opportunities in the market.16 This definition has found reinforcement in the work of Kirzner,17 who suggests that alertness to opportunities in the marketplace and acting quickly to exploit the void in buyers’ needs is the entrepreneur’s chance to earn temporary excess profits. Kirzner’s theory basically argues that entrepreneurs must discover opportunities where demand exists for the technological innovations they have. In other words, it is demand by an existing unsatisfied buyer that creates the opportunity in the market. Technology push marketing finds its origin in Schumpeter,18 who argues that the primary driver of the economy is innovation. Innovation comes from an entrepreneur’s intrinsic drive to innovate. This intrinsic drive results in the introduction of new products and services different from those in the marketplace. He argues that unique new products are often created without a well-defined market. Thus, contrary to demand pull theory, technology push market strategy emerges from the technology itself. This dichotomy of demand pull/technology push is frequently found in the academic literature. However, few entrepreneurs use purely one or the other. Thus, although described here as a dichotomy, they are really two ends of a continuum where reality is somewhere in between. Nonetheless, we will argue herein that a

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technology entrepreneur’s choice of market strategy along the continuum should depend on the type of technology that underlies the product or service invention.

Technology Class Matched to Market Strategy Market strategies need to be matched to the class of technology present in a product invention. This matching is shown diagrammatically in Figures 2.1 and 2.2. First is evolutionary technology; second is disruptive technology.

Market Strategies for Evolutionary Technologies Putting the technology class together with market strategy yields an interesting set of relationships. Beginning with evolutionary technology, Figure 2.1 shows how this technology based on known science produces a continuous flow of innovations that can either be buyer pulled or technology pushed. Core competencies are a foundation for developing evolutionary technologies. Evolutionary technologies are used to create continuous innovations that are then used for replacement/substitute products or alternatively new or major improvement products. Notice that when buyers’ needs are well known, an appropriate technology invention can be created with evolving technology that can meet the known demand. Thus, the invention can be targeted to specific buyers and can be “buyer pulled” into the customer’s hands. However, when the buyer’s needs are identified by the supplier but not well known by the buyer, it will be necessary to technology push the invention by offering it as a major improvement or a new product that can produce a competitive advantage for the customer, such as increased quality or decreased costs. The definition of the uniqueness of the evolutionary technology is essential but usually easy to determine. Typically, for buyer pull market strategy, the potential buyer is a well-known customer and approaches a firm’s sales department requesting some kind of new product of major improvement associated with an existing product or service the firm previously provided. Your response is to apply your core competence technology to produce the desired invention, which the customer then buys. Identifying an invention that is truly unique will involve somewhat greater difficulty. Typically, this invention emerges from R&D based on an evolution in the firm’s core competency technology. While it shows potential for application to Technology Source

Firm Core Competencies

Technology Focus

Evolutionary

Innovation Type

Continuous

Market Strategies

User Application Type

Market Pull

Replacement or Substitute

Technology Push

New or Major Improvement

Figure 2.1  Evolutionary technology commercialization model.

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existing customers, some market research by your sales personnel will be required to learn more about your customers and identify their existing need that is not currently in the forefront of their thinking. Then your sales force is challenged to make the customers desire to add this invention to his current list of needs and eventually buy the invention. This invention can be sold on the basis of major improvements in quality or significant reductions in costs. Either of these results will give your customer a strategic advantage in competitive markets. This is the essence of technology push market strategy and should be the major work of well-trained sales professionals. In the section above, we provide an example of a start-up business that used well-known science to create a new unique product that potential buyers needed. Dialogic Corporation started with one scientist and two experienced technical marketing/managing professionals. The two industry-experienced team members saw the potential need for a unique invention derived from known technology, and they teamed with the scientist to create the invention that became their first product. Subsequently, they were able to create a major company in their chosen field with significant financial success for all three founders.

Market Strategies for Disruptive Technology Selecting a radical innovation product and matching it with the appropriate marketing strategy requires more serious thought. As shown in Figure 2.2, much like evolutionary technology, the market strategies are technology push and market pull. However, whenever possible, it is desirable to choose inventions that can appeal to the potential customers so that buyer pull marketing can be used. The reason is that technology push for radical innovations is far more complex and time consuming than for continuous innovations. Typically the start-up does not have the established customer relationships, and the potential customers will recognize that the innovation will require major behavioral change. And behavioral change of this type is commonly traumatic and undesirable. Thus, it may take years before the first sale is achieved. Many start-up technology firms begin with a new technology that will create radical innovations that will be a hard sell to potential buyers. Unless such firms have major financial investments or are personally wealthy, they are at great risk of business failure. For example, Genentech formed the first gene splicing pharmaceutical company by embracing a new science. Genentech attempted to find buyer Technology Source

Technology Focus

Innovation Type

New Science

Disruptive

Radical

Market Strategies

User Application Type

Technology Push

Creative Destroying

Market Pull

Replacement or Substitute

Figure 2.2  Disruptive technology commercialization model.

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acceptance of substitute and replacement products with only modest success. Since Genentech had raised $35 million with the public sale of stock in 1980, it persevered and eventually after 12 years finally scored with a truly new innovation that provided the basis for major growth in its revenues and profits.19 In today’s economic environment, it may be possible to identify other suppliers that already provide products to those buyers who are likely candidates for your disruptive technology products. One or more of these suppliers may be willing to form an agreement with a start-up firm that is pursuing a disruptive technology that is interesting. This has become especially common in the biopharmaceutical industry where technology sharing among established industry members and new firms is becoming very common. This is a possible way of gaining financial assistance that will allow a long-term project to commercialize a disruptive technology. On the other hand, if you have start-up team members who have established customer relationships with potential buyers, then you have an advantage to use your technology with a buyer pull strategy. The team members with customer contacts become the major mechanism to identify buyer needs for products that can be substitutes or replacements for products that these potential buyers already own. Substitutes and replacements have to demonstrate significant quality improvements or cost reductions to close the sale. This is the quickest way to assure survival and become profitable. However, no doubt you would prefer to see a more unique invention that will take advantage of your technology’s major advantages for applications that seemingly need major improvements. It is a long hard pull, however, to bring a disruptive technology into successful products that provide profitable operations. It is better to take the quick route to survival and profitability before switching your attention to your “dream product.” But keep your dream, for you may be able to afford the challenge of creating profitable operations with the dream product in the future. It will take years to bring the dream invention into a profitable product and creatively destroy the established market structure. It took Intel 10 years from the development of the 4004 microprocessor in 1971 to the 8086 that became the big product in 1981. It took another 13 to 14 years for the microprocessor to creatively destroy the established computer industry. And this happened only because a large number of other technologies interacted with the microprocessor — software and hardware — as it evolved into a creative destroying product.

Silicon Pulling Industry: Evolutionary Technology Our research has developed a major example drawn from research on the silicon pulling industry. Newbert, Kirchhoff, and Walsh completed a study of the independent new firms formed in the semiconductor silicon pulling industry worldwide from 1953 through 1989. Semiconductor silicon is well known as a major microtechnology raw material.20 Our research looks solely at the newly formed independent firms. Six of the thirty-two start-up firms in our study of semiconductor silicon pulling were first to adopt newly marketed technologies and successfully beat the major suppliers to the market with the new technology. In all cases, these firms were started by individuals who had existing contacts with one or more of the current buyers in the industry. In

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addition, the newest technology was recently introduced in the industry, and their entry can be described as “early followers.” Since these firms knew the industry buyers, and buyers knew the new technology, they used buyer pull with minor technology push market strategy. This worked well as they acquired market share quickly before major firms entered this market. This combination of new technology with demand pull and minor technology push strategic marketing used by these six startup firms resulted in four of them becoming very successful and the other two modestly successful. All survived or were acquired by larger firms at a profit.

Silicon Pulling Industry: Disruptive Start-Ups On the other hand, firms that introduced the radically new inventions had little knowledge of the current buyers. Lack of knowledge of the market required that these companies emphasize technology push with minor buyer pull marketing strategy. Of the seven firms that used this strategy to sell radically new technologies, one failed with losses after 12 years, another performed poorly and failed after nine years, three performed modestly, and two performed very well and survive today. One of these successes remains independent, and one was acquired by a larger corporation. Three of the seven firms initiated the “float zone process,” a major radical technology change that received weak acceptance in the market. One of these was the poor performer that eventually failed, and the two others are still alive and profitable but with specialized, niche market products. The experience of the seven creative, very early entry firms are typical of those start-ups that bring disruptive technologies into existing industries. On the other hand, these seven firms entered the market by introducing new evolutionary technologies that they developed through research and development. They based their effort on the supposition that the buyers in the industry would want to buy this new technology. However, new, radical innovations were not widely accepted by the buyers who resisted the turmoil of adopting a new technology that would require major new investment and operating changes. Thus, these very early entry suppliers found considerable resistance to their product offerings for several years and were not as financially successful as the early followers of this new technology. In other words, these seven firms that created and introduced radical inventions drawn from disruptive technologies were not the major benefactors of the new technologies’ commercialization. The early followers with the stronger marketing knowledge achieved the greater benefits. It appears from this information that the market pull strategy augmented with a technology push component was more successful than technology push strategy augmented with only a minor market pull emphasis. This finding is true for new, independent firm entries into the silicon pulling industry prior to 1990.21 It is important to note that these findings are presented to make our point about market strategies and may not apply to other industries in other time periods. Next, we focus on both evolutionary and disruptive technologies as we look at the past and future of micro and nanotechnologies.

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Examples of Disruptive Micro and Nanotechnologies It is relatively easy to identify micro and nanotechnologies that fit the definitions of disruptive and evolutionary — historically they are defined in terms of subsequent events. Forecasting which technologies will qualify as disruptive with radical innovations is very difficult since the definitions themselves are presented in the form of an examination of the technology’s impact on the buyers and the markets. For example, in hindsight, the invention of the transistor and its disruptive nature is clearly evident now, almost 60 years later. However, it seems obvious that this was not recognized until after the invention of the integrated circuit and then the programmable microprocessor. Also, one can say that the nanotechnology discovery of the makeup of the human genetic code is a disruptive technology. But, this did not become a reality until the early 1990s and has not reached its full potential for disrupting the pharmaceutical industry even today. In the following two sections, we explore the transistor and the human genetic code as two examples of disruptive technology.

Micro Technology: Semiconductor Technology22 Semiconductor technology was invented in 1947 at Bell Laboratories. The fundamental technology was a new understanding of the physical properties of silicon — quantum physics. This new science had all the characteristics to become a disruptive innovation. As time passed, its disruptive characteristics became apparent. The transistor became a production product in 1949 and was used solely for telephone switching, the purpose for which it was invented. Gradually, the transistor evolved into a substitute for vacuum tubes in electronic equipment — pull out a vacuum tube and put in a transistor. Radios were first. In 1958, Texas Instruments invented and patented the integrated circuit, a major improvement on the transistor but still relying on the physical properties of semiconductor silicon. In 1968, a newly formed firm — Intel Corporation — began to manufacture memory chips (integrated circuits). In 1969, Intel received an order from a Japanese company, Busicom, to make an integrated circuit chip that could be programmed to do many, many different math functions. Ted Hoff realized that it would be more interesting and efficient to do this with a programmable microprocessor. Hoff completed the semiconductor chip in 1971, but Busicom lost interest. Still, the first microprocessor, the Intel 4004, was made available for sale. Programmable processors found a small market in mainframe computers that used them to operate peripheral equipment commanded by the mainframe. Hobbyists also found them interesting. There was no big profitable business. Still, the microprocessor technology spread among several new start-up companies, including Zilog. Then in 1977 (30 years after the invention of the transistor), Apple Computer (a newly formed independent firm) introduced the mass market to these devices by adding a keyboard and some additional components to a Zilog Z-80 processor. Most important of all, Apple established a retail distribution system to sell these computers. Evolution has taken this science of quantum physics and created the microcomputer that has changed the lives of people everywhere and creatively destroyed all but one of the major computer manufacturers that dominated the computer manufacturing industry through the 1990s.23 However it took 40 years for this “quantum

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physics, semiconductor technology” to be identified as a truly disruptive technology. And a great deal of evolutionary technology was added over the 40 years to achieve this. But note the important key roles played by newly formed technology firms: Fairchild, Intel, Zilog, Apple, Osborne, Compaq, and Gateway, Dell, Microsoft, Lotus, Novel, etc. Not all survived, but each added a component to the technology evolutionary process. Some of these were marketing and distribution innovations, but each was built upon inventions of other start-up technologies developed by firms that created hard drives, component designs, software, etc. So we can credit major industry and market changes on the science of quantum physics that made silicon a special material in 1947. Still, this technology would have been nothing without the evolutionary technologies — most of which originated from newly formed technology firms.

Nanotechnology: Gene Splicing24 Currently, the healthcare industry is undergoing an explosion of new treatments, products, and processes based upon gene splicing (now termed biotechnology). This began with the discovery of the science of gene splicing technology in 1974. A twoyear-old start-up company named Genentech decided to be the first to enter this area of technology in 1976. With much fanfare, in 1980, it was able to obtain considerable investment capital based primarily on the development of one biological compound (with no real market) and speculation about the promise of gene splicing technology. However, the technology did not produce products that created the majority of its revenues until 1987. As early as 1980, Genentech’s technology yielded products that were as good as existing products (for example, its first human growth hormone), but these products did not have the improvement in quality or reduction in price that made them attractive to the majority of buyers. Genentech relied upon licensing fees for its first two products and did not begin marketing its own product until 1985. In 1988, Genentech for the first time reported more revenues from product sales than from contract research and returns on invested capital. Commercialization of gene splicing became the major contributor to sales in Genetech’s 12th year and 14 years after discovery of gene splicing science. By the late 1990s, a host of newly founded gene splicing companies appeared. All of these took advantage of the fundamental research discoveries that evolved the technology. But interestingly, the major pharmaceutical companies continued to focus on chemistry and made little attempt to enter the biological field until after 2000. This allowed the gene splicing companies to gain an advantage, especially in oncology (cancer treatment). So, by 1996, 22 years after the discovery of gene splicing, the industry begins to produce products that are superior to those offered by the chemistry-based pharmaceutical companies. And the path to technology adoption has included and still does include many newly formed firms. Currently, the new firm phenomenon continues but now in the form of research organizations with alliances to the major firms that have established the market distribution systems. Alternatively, new firms are formed with plans to create a product that will make the firm attractive for acqui-

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sition by a major firm. Now, the chemical pharmaceutical companies are buying some of these new firms.

Sources of Disruptive Technology Not all disruptive technologies originate in new start-up firms. Bell Labs and the transistor is an example of a large firm producing and profiting from a disruptive technology. Keep in mind that the transistor was invented after 13 years of Bell Laboratories’ research for a reliable replacement for the mechanical switching system, a system that was widely used to replace telephone operators. Its nearly instant commercialization is attributed to the anxiously waiting AT&T telephone market.25 New firms have a vital role in the evolution of disruptive technologies into major markets. Newly formed firms carry out much of the technological evolution from the transistor to microprocessor. Many of these grew up in Silicon Valley, and many were at least partially financed by NASA R&D in its effort to find reliable, lightweight electronics equipment for space travel. Few commercial products emerged directly from the NASA research, but the research advanced the technology that became staples of the commercial products a few years later.26 Customer resistance to radical innovations based on new science means that the sales effort needed to launch a truly disruptive innovation can be very expensive and time consuming. Genentech, based upon belief of the radical new technology of gene splicing, raised $35 million in investor capital in 1980. Such large sums early in the life of a start-up can easily carry a firm through the early product development process. If you have this kind of venture capital backing, you can also do this with a disruptive technology. However, few new technology ventures are able to obtain capital of this magnitude. That is why evolutionary technology is the mainstay of new technology firms. This approach needs to be emphasized when searching for venture financing. New science directed into replacement or substitute products that do not involve major customer behavior changes are much easier and less costly to sell. Intel did not capitalize on the microprocessor it invented until Apple demonstrated the value of the microcomputer. Then, Intel entered with the microprocessor as a better processor in response to IBM’s defined need for building and selling microcomputers in a market that was five years into its expansion phase. By then, Intel had the advantage of 11 years of technology evolution to respond to this buyer’s needs. Genentech’s survival for 11 years without a major successful product is indicative of what a relatively new firm can do with a disruptive technology when it has plenty of venture capital. However, it did take 12 years for its gene-spliced products to become its major income generator. Disruptive technologies take time to develop profitable markets if they are used to market radical innovations using technology push market strategies.

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Recommendations for Starting   a New Technology Business There are many books and magazines in libraries and elsewhere that explain how to start a business. Not many are directed to the technology entrepreneur. Here are some differences that set the high-tech start-up apart from all those books and magazines. These recommendations emerge directly from the technology discussion above. And each of these is discussed in the following sections. First, when starting a new firm, make an effort to determine if your technology is evolutionary or disruptive. Second, do not expect major financing from outside investors. Third, do not be dismayed if your first product does not receive acceptance from your first few potential customers. Fourth, find out how similar products are distributed to customers. Fifth, do not discard your ideas for the eventual use of your disruptive technology. Sixth, create an entrepreneurial team early in the development of your start-up. Last, do not bother spending a lot of time writing and rewriting a business plan; this may work for a coffee shop or a package express company, but it is not for new high-tech businesses — unless you really need someone else’s money to begin the business.

Determining the Nature of Your Technology As evident above, there are significant differences in new firm success determined by the nature of the technology. Disruptive technologies based on new science meet substantial customer resistance and require considerable time, effort, and money to obtain the first sale and enough sales revenue to survive long enough to become profitable. Evolutionary products are usually easy to identify since these are built upon a known technology, not new science. Often, the evolutionary aspect will be obvious if you can clearly identify potential customers who will need your product. Self-assessment of a technology is unlikely to be done without prejudice in favor of the scientist’s views of the technology. Technologies become the favorite subject of the inventor and bias every discussion. It is best to try the invention on some knowledgeable persons. One way is to find a no-cost source of an assessment of the invention. Many universities or incubators have technology assessment procedures. Also, ask technology-savvy friends, relatives, or colleagues. Ideally, you know someone who works for one or more potential buyers, and a properly directed inquiry will gain useful information.

Financing Technology Start-Ups Obtaining borrowed money from a bank or other lending institutions is impossible unless (1) personal assets (house, paid-up insurance policy, etc.) can be pledged as collateral or (2) until the business has at least three to five years of profitable operation. Many entrepreneurs do not know this when they start. They usually try to obtain loans from banks and are depressed when they learn that they cannot. The rejection that is received is not because of the invention idea or the character of the individual(s) involved in the start-up. The lender simply is a risk-adverse institution that is lending someone else’s (depositors) money in the face of strict government regulations. And that collateral mentioned above—that borrowed money obtained as

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proceeds from a second mortgage or other personal assets—is personally borrowed money. The borrower must repay this money, and the firm has no obligation to pay. Firm failure or bankruptcy means the borrower must repay the debt. Contrary to what some law firms advertise, forming a corporation is no protection from this personal liability to repay borrowed money. Lenders will always require entrepreneurs to sign personally for borrowed money. Ask an accountant about this. Although not as risk adverse, venture capitalists in all but Silicon Valley and, more recently, Boston are very, very reluctant to invest in a technology start-up that has no cash sales booked.27 Real booked sales confirm the value of the product and company. And, few venture capitalists have the enthusiasm for the invented product until it has passed the test of actually being sold. Applying for and receiving competitively determined government research funding can generate interest among venture capitalists. Sometimes, but not often, investors will carefully examine start-ups that have received research money from a government agency because the funding suggests that outside experts consider the technology to be valuable. The primary source of research money from the U.S. government is the Small Business Innovation Research Program (SBIR).28 The SBIR program is federal legislation that requires 13 agencies of the U.S. government to spend 3% of their extramural R&D budget with small businesses. Each agency issues requests for proposals (RFP) for research that are competitively evaluated on technological quality. The funding, when received, allows all rights to the intellectual property to remain with the small business. In other words, this is investment capital for which you never issue shares of your firm or pay back. In addition, venture capitalists prefer to see a firm receive both first- and second-stage SBIR grants for research on a specific technology. Venture capitalists evaluate this as stronger evidence of the value of the technology. Other countries in the European Union have similar programs modeled, to a degree, upon the SBIR program in the U.S. It is worthwhile to check on the availability of such programs. Given the risk associated with new technology, start-up financing is rare for new technology firms. Without major outside financing, personal resources and those of the start-up team members, friends, or family will be necessary to start the business. A stream of cash income flow from product sales will not develop for at least 12 months. Even if the first sales are made quickly, they are likely to be made on a “pay later if you are satisfied with it” basis. This can delay the receipt of cash for as much as 4 or 5 months. In addition, few technology startups develop a product that sells within 6 to 12 months. Many steps are required to generate the first sale. Starting a technology firm is an expensive experience. Most successful technology entrepreneurs develop the technology, obtain an assessment of the technology, file a patent application, and create a prototype before they leave their paying jobs. When the firm is first started, examine the cash that is available to the business and determine how long it will last. If it is not enough to last at least 12 months, find more cash investment. Frequently, neither you nor members of your start-up team will draw a salary from this business until many sales begin and collections are made.

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Selling Your Second First Product Market research is much more complex than it may appear. As suggested above, potential customers are contacted, the technology is described, and drawings, sketches, or definitions of the product and its actions will be presented to seek the potential customers’ approval of the new venture. The meeting will likely go well, but little useful information on the potential customer’s real interest will be obtained. It is very difficult to obtain accurate information in an interview when the presenter is enthusiastic about the invention. If the entrepreneur presents a persuasive argument, the potential customer will undoubtedly agree that this is a great product idea that should be pursued and offered in finished form when the first product is produced. What this means is that few people will argue with anyone who persuasively argues an issue. Most of us are socially conditioned to avoid arguments with other people of casual acquaintance. Pushing the other person to agree causes agreement simply to avoid arguing. Furthermore, the potential buyer probably does not fully understand the technology since it exists as a real, understandable thing only in the mind of the entrepreneur. Diagrams, equations, sample computer code, and other technological information will not adequately convey the technology. To understand a real technological concept, most of us need to see the product that has the technology imbedded in it. So a prototype is necessary. Do not underestimate the complexity of your technology and its inclusion in a new product. Market research done without a prototype is unlikely to solicit meaningful information. No matter how much market research is conducted, only the presentation of a prototype will elicit meaningful responses. The prototype gives the viewer understanding of exactly what the technology is. So with a prototype, approach one or more potential customers. If the potential customer simple agrees with your presentation and promises to look into your technology at another undefined time, the customer does not understand your technology and does not want to understand. If the potential customers begin to debate about the claims for the product, it means they are interested. The lack of the potential customers’ agreement combined with responses stating that this is not a product they can use may well lead to their suggestion that this technology could create a different product that they could use. The reason for this is that the prototype gives them understanding about the technology and stimulates their thinking about how it might meet their needs. Thus, if the prototype is successful in demonstrating the technology and if the potential customers understand and are interested, they can creatively imagine another, different product built from this technology that could solve some problem they have today. If three or more potential customers suggest the same product idea, they have defined your saleable product. That is a good job of market research. Pause and think, but build a new prototype that meets the specifications that they have described. This “second product experience” is so common among the technology start-up firms we have known that we always discuss it with neophyte technology start-up firms. This extends to software development firms — perhaps more to them than product firms. We refer to it as “How to achieve success with your second first product.” We have never found a way to avoid the second first product problem (or opportunity).

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One way to avoid the second first product problem is to acquire a team member that has been selling similar products to the same customers you are targeting. Even though this is one possible way, it does not always work; however, it is worth a try. For example, in 1983 a Ph.D. physicist joined with two salesmen to form Dialogic, Inc. The salesmen worked for two different suppliers selling equipment and parts to telephone switching equipment manufacturers. Telephone answering systems were becoming more popular and doing more complex functions. The salesmen thought they knew a major problem with the existing answering systems. The scientist recognized that a piece of sophisticated hardware could replace some complex software and provide a faster more responsive answering system. Since they knew the customers and knew their needs, this should be a snap. They began product development using existing technology and completed a finished model in one year. But, when they approached customers, they received the response that this was not exactly what was wanted. Instead of a single-line answering system, customers wanted a multi-line system. After 6 more months of R&D, Dialogic introduced its second first product, and sales took off. It seems that sometimes even the most experienced and knowledgeable persons still need a second first product. However, they would have been successful earlier if they had taken a prototype around to their customers first. Dialogic went public in 1994 and was wholly acquired by Intel in 1999. Needless to say, the founders benefited financially.

Distribution is Frequently Complex One question that should be asked of potential customers in early discussions is how similar products are distributed to the potential customers. Distribution is often more complex than most technology entrepreneurs are able to imagine. Typically, technology products are not sold to consumers. They are sold to other manufacturers who sell to consumers. For example, computer hard drives are not sold directly to the vast majority of consumers; instead, they are sold to computer manufacturers. Thus, all the knowledge you may have acquired about selling consumer products is useless. We have experience with several medical device manufactures. The industry is characterized by devices that are installed by doctors in hospitals or outpatient clinics run like hospitals. One entrepreneur assumed he would be successful by having salespersons call directly on the doctors, similar to Avon or other house-to-house sales techniques. But there are thousands of doctors. Think of the cost of creating such a massive sales force. The entrepreneur thought it would be possible to reach these doctors by advertising on TV. This is very expensive advertising that is trying to reach a small and unique population of doctors who watch relatively little TV. The largest pharmaceutical firms have large sales forces, but these firms are selling multiple products that only doctors can prescribe. This type of technology marketing to other firms is quite common, and distribution systems exist. It is desirable to define the distribution system by which products similar to yours are delivered to buyers. For this inventor’s product, a team of our students began by contacting the purchasing manager of the university’s hospital. By questioning hospital purchasing personnel and a few doctors, the team discovered a very complex system involving

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individual doctor evaluation and approval, hospital committee evaluation and approval, and then a purchasing organization that buys this type of product only from a cooperative distribution organization that services many hospitals. And, the cooperative distributor buys individual products from other distributors. In other words, the medical devices these companies made are not bought directly by doctors. Normally, doctors and hospital staffs make the purchase decision, but actual hospital purchases are made through 2 or 3 levels of distributors. This complex distribution system is a major barrier (or opportunity) for selling medical devices to the healthcare industry. In our experience, few medical device start-ups know this complexity exists. And many of these start-ups have products that are practical, evolutionary technology inventions that could save lives or improve the quality of life of patients. Other industries have similar complexities. Knowing the name, telephone number, and location of the individual who makes the buying decision is very important. And if that individual is in a large corporation, it can take years of sales visits to identify the proper processes and people that will buy this type of new product. Any salesperson who has gone through this process knows the difficulty of finding the buyer in a large firm. With new products, the common way to obtain sales is to identify a firm that already distributes products to those whom you believe will be buyers of your product. Then find a salesperson in that distributor’s organization that knows who, where, and how your potential customers buy your kind of product. Then negotiate and sign an agreement with the distributor to handle your product for a percentage of the sales price. The names of distributors can usually be found in trade journals. Personal relationships are vital in selling new products. Knowing who, what, where, and when is of great value. This is why venture capitalists prefer to invest in companies that can list probable buyers of an entrepreneur’s product, including names, titles, and telephone numbers of these probable buyers. The venture capitalist makes a few telephone calls to some of these names and determines if you really know these people. If you do, your firm’s stock value is pushed higher.

Do not Give up Your Original Product Idea These same personal relationships can be used to launch the product of your dreams. Somewhere after sales of the second first product are progressing well, congenial, collegial relationships have been established with many customers. Now is the time to rethink the original radical innovation and build the first prototype updated over time by the evolution of the technology. Now, since the customers have confidence in the products and personnel of the firm, one or more may be willing to give the radical innovation a try — especially if it will provide a competitive advantage for their business. Then your dream product will become a major factor in creatively destroying the established market structure.

Create a Team A one-person start-up technology company is a rarity in today’s world. Realistically, starting and managing a technology business is far more complex than a new retail

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store, restaurant, auto repair shop, or a consulting business. It is the rare individual who has all the specialized knowledge and skills that are required to start a technology business. And, money is harder to attain since there are only a limited number of people who will believe in your technology’s promise of future success and profits. The head entrepreneur must assess his/her knowledge, skills, and experience to determine what specializations are missing. Then, the entrepreneur must find persons who possess those missing specializations. Below is a list of the key people that should be in the start up team. R&D: A strong technical specialist who can carry on the R&D work of converting technology into saleable products is essential. Marketing: At first glance, distribution systems can appear to be very complex, but in reality they are not complex if you have a team member who knows the market and the potential buyers you are targeting. Try to obtain an experienced marketing professional with knowledge of the industries that you believe are most likely to contain potential customers. Manufacturing: Manufacturing a prototype and bringing it to actual production-level manufacturing requires special skills, so an experienced manufacturing manager makes a useful addition to your team. Human resources: The process of hiring, firing, and compensating employees is fraught with major issues such as taxes, social security, healthcare benefits, and antidiscrimination and handicap access laws. And the process of selecting employees can be very challenging. A team member with experience in human resources can be worth a lot in avoiding the sinkholes in employee regulations and laws and selecting the proper employees. Finance: Private accountants can be hired by the hour, but the complexity of guiding and operating a business requires much more than an accountant. A financial specialist is the person who plans and executes the steps necessary for survival and eventually profitability. You need a team of 3 to 6 competent people to start a new technology firm. Chief executive officer/manager: Management is an important skill. A professional experienced manager is valuable. This is why most venture capitalists install their own experienced CEO when they invest in a technology firm. This is a very important part of the team. In fact, the initial team may consist of fewer specialists by using outside organizations. Human resources can be acquired by using an employee leasing firm. Rather than hiring employees (non-ownership participants are employees), you lease them from the leasing firm. This gives you a zero employee firm since owners are not employees under U.S. law. This is different in some European Union nations. In addition, you need a certified public accountant, a patent attorney, and a business attorney. Also, there are many accounting firms that will not only keep your books but also provide management information reports (different than the accounting data routinely provided by accountants) and consult about the firm’s finances. A manufacturing manager need not be hired if you sub-contract all manufacturing to a reliable manufacturing company. The choice of this manufacturer is critical, and it may be desirable to hire an experienced manufacturing specialist to assist in choosing a firm to do your manufacturing.

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That leaves the founding team as three persons: a CEO, a technical R&D expert, and a marketing specialist. The technical expert frequently is the lead entrepreneur and takes the CEO role. You will notice that Dialogic began with two technical sales engineers and a Ph.D. physicist. The Ph.D. shared the CEO responsibilities with the two technical marketing experts. After 3 years of profitability, the team hired an experienced CEO.

Do not Write a Business Plan Every book, radio and TV program, and magazine on entrepreneurship states emphatically that an entrepreneur begins a new business by writing a business plan. However what is the purpose of a business plan? Most planners will tell you it is important for a business organization to have clear goals and objectives to know where it is going and to communicate this to the employees. Only in this way can the firm be sure that all members of the organization are working toward the same goals and objectives. Thus, experts conclude that business plans are a necessary part of starting a business. This seems logical, but it takes a lot of time and money to create a business plan. And in the early months, the firm probably does not have employees. Banks and venture capitalists are not interested in funding the firm, so a plan serves no purpose in the early development of the business. It is not obvious who will benefit from the business plan. Some say the entrepreneur will benefit by thinking through the directions the new firm will take in the future. It is unlikely, however, that a small technology start-up firm of two or three team members has communication difficulties experienced by large corporations. Moreover, during the early stages of developing a new technology business and a saleable product, it is not definite that the first invented product will be saleable. And the type of product, proposed market for it, cost of producing it, and price may change quickly as market research reveals a different product and perhaps a different market. Also, technology may evolve that suggests a better product. A written business plan becomes obsolete every month, perhaps every week. With only a few people involved in the start-up, it is easy to express and agree on a long-term direction for the firm without having a formal written business plan. Communication can be achieved by informal conferences with all old and new team members. These conferences can be “spur of the moment” with a loose agenda. The major purpose is to interact to discuss and decide what the company is doing and what it wants to do as a business. The basic topics are how to survive, generate revenues, and eventually generate profit. Somewhere along the way, the discussion includes the subjects of how the shares of founder stock will be distributed and how all shares of stock will eventually become cash income for the holders. The technology should not be a major topic since only one or two of the team members are interested in the details about the state of and future potential of the technology. A business plan can require a large amount of team members’ time. Alternatively, the firm can spend a large amount of its limited cash to buy someone to write the plan. So, when the decision is made to find an outside investor to put money into

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the firm, the time has come to write the business plan. The plan’s value is to persuasively explain the future of the firm to someone outside of the founding team. Hopefully, a well-developed team exists and sales have been made. Team quality and sales revenue are the strengths that need to be presented to potential investors through the business plan. This is the firm’s plan for the future, including the opportunity for all investors to take their original investment and profits out of the company as cash payments when it becomes successful. It is a fact of new businesses that no investor, nor team member, wants to leave all the hard-earned profit tied up in the business forever.

Summary and Conclusions Starting a high-tech company is an exhilarating experience. However, technology dominates the form and process of technology entrepreneurship. The two types of technology, evolutionary and disruptive, require that the firm market strategy be created to accommodate the technologies’ unique character. Evolutionary technology offers the faster route to sales revenue. Disruptive technology offers more long-term opportunity for profitability but also requires a long time before revenues are seen. Obviously, the latter also requires much more invested money up front. Both of these can create products that can be sold with technology push or buyer pull marketing strategies. The real challenge is to correctly assess the technology so that a saleable product can be put on the market in the shortest time period. The sooner sales revenues are collected, the less up-front capital investment will be required. And, contrary to recent popular theory, it is not a requirement that a disruptive innovation must be produced. We have provided 7 guides to follow when starting a high-tech business. Most of this comes from our own experiences, especially with fellow university colleagues, clients of our incubators, entrepreneurs that sought us out, those we met at professional meetings, and businesses we have started ourselves. As you contemplate starting your own technology businesses, keep in mind that the first step is to obtain an assessment of your technology. Search for a university or government organization that provides assessment of new technologies. The assessment may not be the final word on your intentions, but it should give you some additional information to think about.

References

1. Christensen, Clayton M., The Innovator’s Dilemma, Harvard Business School Press, Boston, 1997. 2. McHugh, J., Forget old-school R&D. These companies purchase their ideas one startup at a time, Wired, July 6, 2006. 3. Foster, Richard N., Timing technological transitions, in Technology in the Modern Corporation: A Strategic Perspective, M. Horwitch, Ed., Pergammon, New York, 1986. 4. Bower, Joseph L. and Christensen, Clayton M., Disruptive technologies: catching the wave, Harvard Business Review, 73, 1995. 5. Prahalad, C.K. and Hamel, G., Corporate imagination and expeditionary marketing, Harvard Business Review, 69, 81–92, 1991.

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6. Schumpeter, Joseph A., Capitalism, Socialism and Democracy, Harper and Brothers, New York, 1942. 7. Schumpeter, Joseph A., The Theory of Economic Development, Harvard University Press, Cambridge, 1934. 8. Abernathy, William J. and Utterback, James M., Patterns of industrial innovation, in Readings in the Management of Innovation, 2nd ed., Tushman, M.L. and Moore, W., Eds., Harper Collins, New York, 1988. 9. Anderson, P. and Tushman, M., Technological discontinuities and dominant designs: a cyclical model of technological change, Administrative Science Quarterly, 35, 604–633, 1990. 10. Abernathy, W.J. and Clark, K.B., Innovation: mapping the winds of creative destruction, Research Policy, 14, 3–22. 11. Bohn, R.E., Measuring and managing technological knowledge, Sloan Management Review 36:3, 61–73. 12. Bower, Joseph L. and Christensen, Clayton M., Disruptive technologies: catching the wave, Harvard Business Review, 73, 43–53, 1995. 13. Bower, Joseph L. and Christensen, Clayton M., Disruptive technologies: catching the wave, Harvard Business Review, 73, 43–53, 1995. 14. Moore, Geoffrey A., Crossing the Chasm: Marketing and Selling Technology Products to Mainstream Customers, Harper Business, New York, 1991. 15. Schumpeter, Joseph A., The Theory of Economic Development, Harvard University Press, Cambridge, 1934, p. 75. 16. Schmookler, J., The Theory of Economic Development, Harvard University Press, Cambridge, 1966. 17. Kirzher, Israel M., Perception, Opportunity, and Profit: Studies in the Theory of Entrepreneurship, Chicago University Press, 1979. 18. Schumpeter, Joseph A., The Theory of Economic Development, Harvard University Press, Cambridge, 1934. 19. Barker, R., Taking stock of Genentech: are investors overestimating its promise?, Barron’s National Business and Financial Weekly, March 4, 1985, p. 6–7. 20. Newbert, Scott L., Kirchhoff, Bruce A. and Walsh, Steven T., Defining the relationship among founding resources, strategies, and performance in technology intensive new ventures: evidence from the semiconductor silicon industry, Journal of Small Business Management, in press, July, 2006. 21. The cost of a manufacturing plant exceeded $500 million by 1990, and no new firms were founded thereafter. 22. The information in this section has been taken from various parts of two sources:. Chandler, Alfred D., Inventing the Electronic Century, The Free Press, 2001.. Kaplan, David A., The Silicon Boys, William Morrow and Company, New York, 1999. 23. IBM is the only major producer of mainframe and minicomputers that survived the microcomputer revolution. 24. The information in this section was taken from two sources: Barker, R., Taking stock of Genentech: are investors overestimating its promise?, Barron’s National Business and Financial Weekly, March 4, 1985, p. 6–7. www.gene.com – Genentech’s website last accessed March, 2000. 25. Chandler, Alfred D., Inventing the Electronic Century, The Free Press, 2001. 26. Zhang Junfu, High Tech Start-Ups and Industry Dynamics in Silicon Valley, mimeo, Public Policy Institute of California, 2003. 27. Junfu Zhang, Easier Access to Venture Capital in Silicon Valley: Some Empirical Evidence, mimeo, Public Policy Institute of California, 2006. 28. Full information can be found at: http://www.sba.gov/sbir/indexsbir-sttr.html.

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3

Roadmapping Nanotechnology Steven T. Walsh, Bruce A. Kirchhoff, and David Tolfree

Contents Introduction............................................................................................................... 51 What is the Nature of Nanotechnology?........................................................ 53 But what is Nanotechnology?........................................................................ 53 It is often easier to relate the nature of nanotechnology than attempt to define it................................................................................................ 53 What is Roadmapping?.................................................................................. 54 Background............................................................................................................... 55 The First Law of Small Technology.............................................................. 57 The Second Law of Small Technology.......................................................... 57 The Third Law of Small Technology............................................................ 58 The Fourth Law of Small Technology........................................................... 59 Methodology and Information Gathering................................................................. 61 Background.................................................................................................... 61 Methodology.................................................................................................. 62 Data Collection.............................................................................................. 63 Discussion................................................................................................................. 63 Conclusions...............................................................................................................66 References.................................................................................................................66

Introduction Technology roadmaps are a type of strategic plan that attempts to align the research, development, and application of technology with business goals. Unlike strategic plans, however, technology roadmaps often integrate the talents of diverse stakeholders to solve current problems. They help industry, its supply chains, academic and research groups, and governments come together to jointly identify and prioritize the technologies needed to support strategic R&D, marketing, and investment decisions. The various definitions of roadmapping that are used will be discussed with the special issues of roadmapping disruptive technologies. Microsystems and nanosystems are potentially disruptive technologies, so roadmapping them is of special significance. Disruptive technologies can redefine the competitive landscape in traditional 51 © 2008 by Taylor & Francis Group, LLC

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industries and create new ones. Companies and governments that ignore the impact of such technologies do so at their peril. Strategic roadmapping for any technology is an enormous task. This task is made all the more daunting by the newness of a technology, the extent of its useful industrial breadth, the choice of a firm, industry, or region perspective, and finally the degree to which the technology either supports or tries to expunge a current industry technology product paradigm. In this chapter, we will examine the nearly 100 years of efforts that have gone into making technology roadmaps of all types. We recognize that roadmaps have, over this span, been a primary tool to establish new technology into companies, nations, and regions. They have helped to give a focus to strategic vision and policy-making for companies and governments. Numerous elements comprise a roadmap, including the work of many individuals needed to carry out the task of completing it. As a rule of thumb, the larger the audience and size of the stakeholder group, the greater the number of participants required to cover all interests. Furthermore, the nature of the technology under review can add much complexity to the process.1 Nanotechnology2 is vastly different from semiconductor technology.3 Semiconductor microfabrication technology is a fast-paced high technology base that has enjoyed the same technology lifecycle curve for nearly 60 years. Nanotechnology, on the other hand, is an emergent and often disruptive technology that has the potential to redefine the product technology paradigm in several industries, thus making the nanotechnology roadmapping task all that more difficult. Nanotechnology is one of the reasons why the pace of technological change in the world is increasing exponentially,4 making it difficult for strategists and policy makers to fully utilize technologies for competitive advantage. In this introduction, we provide a view of the nature of nanotechnologies and some useful definitions and a discussion on the formational issues of roadmaps. Roadmapping is now an established tool. Over a number of years, many different types of roadmaps have been produced covering almost every sector of technology. Until the publication of the first MANCEF International Roadmap (IMR) in 2002, there were none that specifically covered the special issues associated with the roadmapping of disruptive technologies. This roadmap was the result of 4 years’ work of more than 325 companies and 400 people from 4 continents, including most of the major companies that are involved in the development and production of miniaturized components and products. Many useful lessons were learned during the production of this roadmap, from the process of compiling it, to the differing views and approaches made to the understanding of the technologies. In this chapter, we shall use the MANCEF roadmap as our example since it will help the reader understand the nature of miniaturized technologies and how the roadmapping process can bring opportunities and benefits to companies and nations that want to take the path to commercialization.

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What is the Nature of Nanotechnology? Nanotechnology is enabling technology5 in many commercial fields. It is disruptive to the technical skill base that it requires to produce products. Nanotechnology can be bifurcated into “Top-down” and “Bottom-up” technologies.

But what is Nanotechnology? It is often easier to relate the nature of nanotechnology than attempt to define it.

There are actually a number of different definitions of nanotechnology. Those who work in the field will be reminded of the old adage “I will know it when I see it.” Any unifying definition is further complicated by the hype associated with nanotechnology since that has created different visions in the minds of non-scientists and technologists. We will discuss the origins of nanotechnologies and the usage terms. The definition of nanotechnology has migrated and expanded over time due to a widening of scientific and public interest in research in this field dating back even further than Richard P. Feynman’s classic presentation, “There is Plenty of Room on the Bottom.” 6 The technical definition of nanotechnology is generally attributed to Taniguchi.7 Initially the field was defined in a purely technological realm, but new definitions are being produced to include the concerns and interests of wider technical and social communities. We start our discussion with Taniguchi’s definition, which states that nanotechnology is “the production technology to get extra high accuracy and ultra fine dimensions, i.e., the preciseness and fineness on the order of 1 nm (nanometer, 10 -9 meter in length).” The term “nano” comes from the Greek word meaning “dwarf.” The name of nanotechnology originates from the nanometer. In the processing of materials, the smallest bit size of stock removal, accretion or flow of materials is probably one atom or one molecule, namely 0.1 ~ 0.2 nm in length. Therefore, the expected limit size of fineness would be of the order of 1 nm. Accordingly, nanotechnology mainly consists of the processing of separation, consolidation, and deformation of materials by one atom or one molecule. The definition used by the United States Group, Nanoscale Science, Engineering and Technology Sub-Committee (NSET) in 2000 states that nanotechnology is research and technology development at the atomic, molecular, or macromolecular levels, in the length scale of approximately 1–100 nanometer range, to provide a fundamental understanding of phenomena and materials at the nanoscale and to create and use structures, devices, and systems that have novel properties and functions because of their small and/or intermediate size. The novel and differentiating properties and functions are developed at a critical length scale of matter, typically under 100 nm. Nanotechnology research and development includes manipulation under control of the nanoscale structures and their integration into larger material components, systems, and architectures. Within these large-scale assemblies, the control and construction of their structures and components remain at the nanometer scale. In some particular cases, the critical length scale for novel properties and phenomena may be under 1 nm (e.g., manipulation of atoms at ~ 0.1 nm) or be larger

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than 100 nm (e.g., nanoparticle reinforced polymers have the unique feature at ~ 200–300 nm as a function of the local bridges or bonds between the nanoparticles and the polymer).8 There are many other definitions that are influenced by the geographical region or technological environment in which they are derived, the community that is presenting the concept, or other factors. The U.S. National Nanotechnology Initiative definition is one of the most useful and explicative and can be directly related to that used by NSET. They suggest that a certain technology can be considered a nanotechnology only if it involves all of the following three attributes: • Research and technology development at the atomic, molecular, or macromolecular levels, in the length scale of approximately 1–100 nanometer range • Creation and use of structures, devices, and systems that have novel properties and functions because of their small or intermediate size • An ability to control or manipulate on the atomic scale However, for the purposes of roadmap discussion, it is important to understand the basis for the definitions used. Nanotechnology is the practical application of nanoscale science. The British Royal Society has made a clear distinction between these: Nanoscience is concerned with the study of novel phenomena and properties of materials that occur at extremely small length scales — “on the scale of atoms and molecules.” Nanotechnology is “the application of Nanoscale science, engineering, and technology to produce novel materials and devices, including materials for biological and medical applications.”

What is Roadmapping? There is no definitive definition of technology roadmaps. A number of people have expressed their views. Robert Galvin9 states that a roadmap “is an extended look at the future of a chosen field of inquiry composed from the collective knowledge and imagination of the brightest drivers of change in that field.” Others emphasize the ability of roadmapping to provide a vision of the future.10-15 Distilling from these, the most useful working definition of technology roadmapping is “a needs-driven technology planning process to help identify, select, and develop technology alternatives to satisfy a set of product needs.” Expanding this, it brings together a team of experts to develop a framework for organizing and presenting the critical technology-planning information to make the appropriate technology investment decisions and to leverage those investments. Given a set of needs, technology roadmapping process provides a way to develop, organize, and present information about the critical system requirements and performance targets that must be satisfied by certain timeframes. It also identifies technologies that need to be developed to meet those targets. Finally, it provides the information needed to make trade-offs among different technology alternatives.16 Roadmapping is gaining in popularity and importance as academics and practitioners are aware of the increasing importance of technology in the strategic process.17

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Some strategic theories like competency-based strategies place technology and technology management as the foundation of a company’s search for competitive advantage. They claim unique technologies are a necessary, if not a sufficient, condition for long-term success.18-19 Yet even as technology is recognized as critical and interdependent in a company’s strategic process, this focus on technology makes the strategic process more complex. Technology was once thought by strategists as one dimensional and easy to embody in the strategic process.20 It is now recognized as multidimensional and having primal influence on the strategic process. Further, some of the important managerial aspects of technology, trends in technology development, and sourcing are changing. For example, embodied technology capital and expense costs, the importance of technology at the interface of disciplines, technology complexity, the rate of technology change, global technology sourcing, and many more strategic aspects of technology are more dynamic than ever. Moreover, the importance of long waves and disruptive technology to regions and firms is more understood.21-23

Background Whatever definition of nanotechnology is adopted, technology roadmapping has become an important tool for placing technology in the management process. Today corporations like Motorola, Corning, Phillips, and ALCOA24-27 use roadmaps as part of their strategic process, product development process, R&D efforts, etc. Technology roadmapping is a powerful process for supporting strategic and tactical management decisions.28 Governments, companies, and industrial consortia utilize technology roadmapping to explore and communicate the dynamic linkages between technological resources, organizational strategies, and the changing environment.29-30 Two aspects define the task of a technology roadmap:31 (1) the nature of the technology under question and (2) the audience for the intended roadmap. In our discussion, we will cover the nature of technology, utilizing terms such as enabling or industry specific technology, disruptive or sustaining.32 Until recently almost all roadmap studies were performed on sustaining (established) technologies that are characterized by rapidly changing (high technology) industries such as those involved in semiconductor microfabrication or aluminum production. Indeed, semiconductor technology invented in 1947 was disruptive. It was not until late in the 1970s that an industry roadmap was undertaken.33 Further, nanotechnology is such a broadly defined technology base that it has expressions, which in some industries are disruptive, while in others are sustaining in nature. The roadmap selection process is driven by the commercial nature of the technology under consideration and modified by the strategic nature and scope of the roadmap project. The roadmap selection processes that have embraced enabling technologies logically follow a series of questions that help to bind and define the task. Questions are: • enabling versus product- or industry-specific technology base?34 • potentially disruptive versus sustaining technology?35

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Technology bases are said to be enabling when they form the basis for solutions that address many product technology paradigms in separate industry settings. The semiconductor-based transistor is such a solution set. This means that the roadmapping professional will have a variety of competing technologies that are specific to the application space under investigation. The terms disruptive and sustaining technologies are ubiquitous in the literature.36 Here, we see an example of a definition that emphasizes their utility as a construct central to the issue of nanotechnology roadmapping. Disruptive or potentially disruptive technologies can set up production platforms based on new sets of technological competencies. They create product technology paradigms that challenge and, if successful, render useless the currently utilized manufacturing competency base or the sustaining technology base. A disruptive technology base usually provides a substantially better value proposition along at least two critical dimensions to be considered commercially viable. When a disruptive technology becomes an industry standard, it becomes sustaining in nature. Sustaining technologies are those that underpin industry standard technology-product platforms. Improvements to these technologies are focused on making expensive changes. The roadmap selection process defines the parameters for the roadmap under question. However, when you have a dichotomy that works, this is exceptionally useful as described in the MANCEF Roadmap by Elders and Walsh.37 The problem with nanotechnology is that it is enabling and simultaneously sustaining in some industries while disruptive in others.38 The nature of a roadmap is further modified and bounded by its strategic purpose. The following sets of constructs help to define those bounds. These constructs include the following bifurcations: • Corporate versus industrial in nature • Market versus technologically concentric • Regional versus international in scope Perhaps the biggest strategic modifier of a roadmapping exercise is the purpose of the roadmap itself.39 The stakeholder group who is developing the roadmap will determine its strategic focus. An industry-based roadmap, for example, will be different from one carried out by a company. National or regional roadmaps for international markets have not had a history of success; however, limiting the geographic scope often provides a focus to a dominant technological pathway for a particular region. Similarly, a concentric market focus or a concentric technological focus either by a company or an industry will determine its boundary. Technological roadmaps are now used for tactical as well as strategic purposes.40 Roadmaps differ between physical and service product planning,41-42 product family tree development versus single product development, and service and product technology process planning. Further, technological roadmaps, in practice, are strongly linked to market forecasting efforts sharing many of the same tools, such as the Delphi method and others. Some authors of roadmaps suggest that roadmapping can be performed on two levels, industry or corporate. Further, these levels necessitate a differing scope of

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efforts in terms of time, cost, level of effort, and complexity. Moreover, they provide an overall differing process between a company and an industrial process. Finally, we suggest that roadmapping processes for disruptive technologies may need to be different in scope. In many ways, the roadmapping process has become a victim of its own success. The process provides such value to the strategic planning of companies and regions that many have sought to apply it to technology foresight, technology forecasting, data scanning, etc. We now consider nanotechnology-based roadmaps. They inherently differ from the sustaining technology-based roadmaps. Such technologies are the basis for specific technology product paradigms that set the path for major industries. The Semiconductor Microfabrication Roadmap (SMR) benefited greatly by the success of the semiconductor industry that had a single technology focus. Let us consider some of the differences between nanotechnology and semiconductor microfabrication. The following questions raise interesting problems: Why was it so hard for “Small Tech” based solution suppliers to use Moore’s Law43 in the same way that semiconductor fabricators do? What does that suggest for the “Small Tech” based solutions communities? Semiconductor microfabrication benefits from Moore’s Law. Does nanotechnology have a Moore’s Law equivalent? These problems may result from the lack of a unit cell for nanotechnology, unlike all electronically driven microsystems that have transistors as units. If it is true that “Small Tech” has no transistor-like unit cell, then this leads to a series of laws that might suggest production space and standardization strategies.

The First Law Of Small Technology There is no unit cell. The suggestion that no unit cell exists when considering nanotechnologies presents a manufacturing production problem. This law eliminates much of the promise of cross-industrial learning and acts as the basis for many of the next three “Small Tech” laws. While the semiconductor industry focuses on the furthering of MOS technology and, to a smaller extent, bipolar technology, this lack of similar process technologies simply does not exist in the newer small technology paradigms. Where it is true that there are groupings of MEMS production processes, which share many process steps, it is more true to say that there are at least 40 varied routes for manufacturing processes in the MEMS industries. The emerging and encompassing nature of nanotechnology-based applications provides for even more varied based production pathways. This means that the transference of learning in production of micro and nano devices will not keep pace with the learning achieved by their semiconductor cousins in the near future. This leads to the “Second Small Tech Law.”

The Second Law of Small Technology Application, One Process. This law was first presented by Eloy at a meeting in 200444 of “Small Tech.” Designers choose production pathways that are application specific. It suggests serious implications for the roadmapping process. Companies that embrace new nanotechnology-based products will most likely have to modify an existing process

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radically in order to produce it. Further, even though there exists many ways to produce a given product, some of these will be much less cost effective and efficient. In the MANCEF International Roadmap,45 examples are given of many process variants for top-down and bottom-up nanotechnologies that are often specific to a certain application area or group of applications. For example, the top 10 to 15 MEMS companies use many similar process steps but very dissimilar processes. Texas Instruments, Analog Devices, and Sandia National Laboratories are three leaders in surface MEMS technologies and have been integrating MEMS and semiconductor microfabrication for years. Yet the complexity and typology of these processes are very different. They are different since different end users and product applications drive them. Other industry leaders, Hewlett Packard, Honeywell, and Kulite’s, for example, use other MEMS and NEMS technologies to meet their customer needs and have not only varied processes from each other but from many of the other top ten producers.46 Again, technology choices are driven by applications rather than any unit cell considerations. One implication of this reality is that MEMS or NEMS based foundries, whether commercial or captive, have a difficult time following the semiconductor foundry model.47 Micro and nanotechnologies currently do not have a dominant manufacturing technology as does the semiconductor microfabrication industry’s bipolar or CMOS, ensuring processes in that industry have much more in common than MEMS and NEMS. Nano-based foundries face many more problems than their semiconductor-based cousins. Some foundries trying to provide solutions to a wide variety of applications have had exceptionally high development costs. Many NEMS foundries have learned to tailor the projects they accept to meet their existing or planned capabilities. This strategy has been used with success by such firms as Dalsha and Colybris. Minfab in Australia has taken an islands of competence approach that has been successful for them. This describes only the front-end manufacturing reality of “Small Tech.” There are also back-end issues for “Small Tech” commercial solutions. Nano and microbased devices interact with the macro world by communicating, sensing, or actuating along many different paths. Many applications require pathways to sense or actuate in a wide variety of mediums. The importance, cost, value, and problems of nano- and micro-based packaging are well known. Micro and nano applications that sense differing properties have radically differing packaging requirements. This is the base for the second law of “Small Tech.”

The Third Law of Small Technology One Application, One Process, One package. The success of small technologies and their increasing importance over the last decade have become evident. Yet many of the applications share technologies in both the front-end and back-end process have little in common except that they are small. Companies with the highest volume productions enjoy process standardization that derives from high-volume processes. However, the lack of a unit cell does not allow the multiplication effect that comes from the acceptance of common processes across applications. Testing is application specific, leading to the Fourth Law of “Small Tech.”

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The Fourth Law of Small Technology One Application, One Process, One package, One Testing Procedure. The Fourth Law was derived from MANCEF’s First International Top Down Nanotechnology Roadmap produced in the late 1990s.48 The Fourth Law suggests that alternatives to the semiconductor foundry model might be necessary. This law drives many to think that where some applications might follow a semiconductorlike model, more seem to follow the precision machining, islands of competence, or shared facilities model. These four laws provide a basis to understand “Small Tech” and how it should be treated in a roadmapping process. These laws suggest that successful technology product packages and test paradigms will be modified and shifted to other application spaces as is being done by Olivetti ink-jet to microfluidics, Bosch bulk automotive sensors to the commercial sensors, and many others. These laws modify greatly any nanotechnology-based roadmapping. Nanotechnology-based process then differs greatly from a traditional roadmapping process in many ways: • The breadth of the technology and the types of technologies in its base are exceptionally varied. • This requires a roadmapper to be selective. For example, the MANCEF process49 focuses on a subset of nanotechnology. Another roadmapping study focused on Atomically Precise Manufacturing (APM). This roadmapping requires a focus on a new, emerging, enabling and disruptive technology base, which does not have, for the most part, dominant technology product architectures within solution sets they provide. The MANCEF roadmapping process utilized these constraints in order to deal with: • the enabling or meta-systemic nature of the markets that nanotechnology addresses • the flexibility required of firm-based nanotechnology product platform that companies need to develop in order to be robust and address the uncertainties of different markets • The MANCEF roadmap process, unlike traditional ones, did not focus solely on current or future nanotechnology but applied to a specific market to replace a technology derived from a particular market application space. The process also reviewed the traditional technology product paradigm in the existing space that nanotechnology sought to replace. Finally, MANCEF selected other competing technologies seeking to replace that same industry-based technology product paradigm.50 The MANCEF roadmap process addressed the reality of competing technology product paradigms. • The roadmap process must address not only the technological hurdles that face an emerging industrial solution set but also be a source of confidence for all in the emerging technology solution set value chain acting, thereby acting as a bridge to overcome customer fear of change, the essence of the physiological hurdles involved in managing solutions based or disruptive technologies.

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Roadmaps were developed in response to the growing recognition of technology’s primal importance in the corporate strategic process. Roadmapping is the oldest strategic tool utilized to insert technology into the strategic process of a company. It has morphed over the years and now is designed to have both a strategic and tactical value. The roadmap, much like a business plan, is a living document. Many find the roadmapping process every bit as beneficial to a company as the final outcome of the roadmapping process itself. Developing a living roadmap document in any subset enabling technology is a daunting task for a strategist or roadmapping team. Many differing subsets of small technologies can be applied to almost any product arena, but the roadmapping space can soon exceed the scope of any one group. Companies that use micro- and nanotechnologies to develop products that seek to change the manner of technology- product- manufacture- paradigm in a given application space face great risk. An industrial roadmapping process may not reduce that risk but often defines that risk more clearly. This process, for example, will help identify and quantify the nature of the technological, infrastructural, and philosophical barriers to market entry that the companies will face. A huge resistance still exists to the adoption of any new technology-based solution in our society. Roadmaps can help to overcome that resistance. This was the case with MANCEF RF MEMS Roadmap50 that created an output that limited uncertainty and therefore risk for the constituent area. The roadmap noted the RF MEMS-based solutions were not trying to displace a current technology product paradigm but were trying to provide the best value solution compared to other technology product paradigms. Finally, when an emergent enabling technology product solution is trying to replace an existing technology solution, the roadmap chart should be modified to include defined and well-understood steps. We must be able to show the market that there is a great deal of value embodied in our technology product paradigm at all those levels. Current technology roadmapping uses computer graphical techniques to convey information to their users and provide constructs for their developers. These often link technologies to components, components to products, and products to markets in visual displays. The focus here is on industrial roadmapping utlizing visual displays. Figure 3.1 provides a general schematic of a multitiered technology roadmap. Markets Systems Components Technology Time

Time

Figure 3.1  A multitiered visual output of a technology roadmap.

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Methodology and Information Gathering Background Before any roadmap can be produced, the methodology of collecting and analyzing information needs to be established. This is easier to do for a roadmap that is focused on a specific technology and when the consultation process requires only small groups of experts. It is very different than that required for developing the MANCEF international roadmap and others of similar size. They required large numbers of experts from different countries to provide input at conferences, workshops, by email, and other means of communication. Let us now look at the production of smaller, more specific roadmaps. One of the authors, David Tolfree, was involved in setting up a number of expert technology-focused groups as part of the U.K.’s micro-nanotechnology manufacturing initiative and infrastructure development program. The challenge was to find the best way to identify and bring together experts who could provide the information necessary to compile an accurate roadmap for the area of technology selected. Although a number of consultation workshops on micro-nanotechnologies had been carried out, none had actually produced strategic data from which a useful roadmap showing the future directions for the technology could be compiled. The experience and lessons learned from this exercise, carried out over a year for six areas of technology, are outlined below. The motivation for the U.K. work was based on the urgent need to identify and bring together people from disparate groups, some of which had been working in the field of micro-nanotechnology for many years. In 2003, the government had allocated about £100 million over six years for developing and enhancing open access centers for micro-nanotechnology and for creating a national network51 in which they could operate. In 2006, more than 700 organizations and companies were identified as working in the field and joined or became associated with the network. Initially the following four key areas were identified: nanoparticulates; nanomedicine; nanometrology; and nano-manufacture and integration.52 It was within these general areas and in the context of the national network that it was decided to form groups from identified experts whose purpose would be to advise and assist the government on the future directions of micro-nanotechnology where future funding could best be focused to expedite commercialization and business growth. The first step in the process was to decide where the U.K.’s technology strengths were and to bring together key representatives from industry, academia, and appropriate government departments following the Triple Helix concept.53 It was decided to select technology areas where groups or committees already existed since they would already have the necessary expertise and knowledge. The following six technology areas in which to form groups were selected: silicon technology; integration technology; design, simulation, and modeling; gas sensing; polymer manufacturing; and nanoparticle manufacturing. These represented some of the communities that are growing in strength in the U.K. Each of the communities had a champion, usually an individual representing his own organization. That person was responsible for developing the field and overseeing its growth. Each was approached, and all consented to taking part in the study. Everybody agreed that roadmaps were an

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essential tool to identify core needs and to track strategic directions and were therefore willing to cooperate in the roadmapping exercise.

Methodology The MNT network database and personal knowledge were used to identify and make contact with key people and invite them to dedicated one-day roadmapping workshops appropriate to their area of interest. About 20–40 people from industry, research organizations, and academia attended the workshops. A four-stage process was used as represented in Figure 3.2. The participants needed to possess sufficient knowledge about the technology, the products it could produce, the existing markets and possible future ones, and the status of business development in the fields. The first task was to arrive at a consensus on the current status of the technology and then move on to provide a vision of where they saw future developments and where they believed it should go in 20 years. The following stages were to determine what barriers there were to achieving the goals and what decisions were required to overcome the barriers.

Time

Present Business & Activities

Where are we now?

Future Aspirations for Products and Services

Where do we want to be?

Barriers to Progress

What is stopping us getting there?

Solutions and the Way Forward

What needs to done to overcome barriers?

Example of Post-its board

Skills Tooling Costs

Material Drivers Markets

Quality People Needs

Figure 3.2  Stages of the roadmapping exercise.

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Data Collection Small groups numbering four to five people appointed a chairperson and debated among themselves the key issues and answers to the following questions: • • • • • • • • • • • •

Where are we now? Where do we want to be? What is stopping us getting there? What needs to be done to overcome the barriers? Within each one of the headings above, participants addressed specific topics such as: Who are our present customers? What are the current trends? What are the main drivers? What is the status of the current competition? Who are the present leaders in the field? What are the technology gaps? Do we have the right skills?

Color-coded hexagonal-shaped ‘post-its’ were used at every stage of the process to gather written statements that were then pasted on a board for all to see and comment upon. Then, using the post-its, people were asked to make choices and select their priorities. The data were collated and analyzed by the session chairman,54 who originally developed the operational technique described above. This exercise proved to be extremely useful and enjoyable to participants. It provoked positive dialogue, resulting in valuable data to be collected and thus enabling useful roadmaps to be produced with strategic objectives. Roadmaps created using such data help decision-makers to formulate meaningful strategies and plans for the future. This type of roadmap is essentially a living document and has a current value. It is designed to be updated as new information becomes available. Unlike the larger international roadmaps, these enable more current and near future assessments of technological trends to be made.

Discussion This roadmapping process based on nanotechnology, which is an enabling disruptive technology base,55 needed a new perspective on technology roadmapping. The MANCEF roadmapping process has undergone continuous development since 1996. This had to capture both the specific nature of the technology and also the differing nature of the innovation process on which it is based. This means that the roadmapping process had to capture the technology impact paradigm that describes a technology as either disruptive or revolutionary (the manner in which a product is manufactured radically changes, eliminating the former competencies) or sustaining (evolutionary), which is supportive of the current technology paradigm.

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Technology Focus

Innovation Type

New Science

Disruptive

Firm Core Competencies

Evolutionary

Radical

Continuous

Market Strategies

User Application Type

Technology Push

Creative or Destroying

Market Pull

Replacement or Substitute

Market Pull

Replacement or Substitute

Technology Push

New or Major Improvement

Figure 3.3  Technology commercialization model.

Markets

Materials

Medical

Electronics

Building Blocks

NanoMaterials

NanoTools

NanoStructures

Modeling,

Micro &

Technology

Science

Synthetic, Nano Supramolecular,

Metrology

Advances in Chemistry Physics

Engineering

Biology

Figure 3.4  Nano markets as extracted from patent search.

A model of innovation based on technology impact and resultant modifications to user behavior is shown in Figure 3.4. We describe as one case resultant user interactions with the resultant product or innovation as requiring a user change paradigm and therefore is discontinuous (user has to change) or in the other case where the user does not have to change their behavior continuous or (evolutionary).56 The ultimate end user, when obtaining a traditional product, does not necessarily know that the product she is using or that was integrated into her system is made in a nontraditional

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manner. These final products are often designated as replacement applications and demonstrate how disruptive technologies can be commercialized. Successful disruptive technologies over time become “high tech” sustaining technologies. This can be seen in nanotechnology-based products such as ferofluidic bearings for use in hard drives for computers. These were first produced by a company in the early 1980s57 and are now in use in all personal computers in the world. One result of the MANCEF Nanotechnology Roadmap process was that no matter how hard we tried to define what nanotechnologies were, the roadmapping task remains difficult because at one level nanotechnology could be considered as nanoscale science. It appears to those involved in the effort that there was more meaningful commercial discussion at the next level down. There is a better understanding today for what is occurring in the domain of nanomaterials versus materials, nanoelectronics versus electronics, and the like. Further review of the patent literature suggested dominant patents in terms of citations and numbers in the areas of nanomaterials, nanoelectronics, and nanobiology. The MANCEF Roadmapping team focused its efforts in the development of roadmaps around disruptive and evolutionary technology-based products developed integrating nanotechnology in materials, electronics, and biomedicine (see Figure 3.4). The nanoelectronics/nanocomputing industry today is dominated mainly by large semiconductor firms and their suppliers providing integrated systems. This segment has focused on active bulk nanotechnology advances, which include some companies focusing on atomically precise manufacturing for use in positioning and other subsystems. Nanotechnology application examples include Zyvex partnering with chip equipment maker FEI to bring atomically precise capabilities to their systems and Genus with its atomic layer deposition. Further, in areas such as ion implanting, doping, low and high K dielectric, especially in reference to semiconductor development, traditional suppliers that extend these technologies are more likely to be the dominant suppliers. Materials and equipment suppliers that can utilize nanotechnologies to improve their value proposition to the semiconductor marketplace have annual market sales in the tens of billions of dollars. The MANCEF group examined atomically precise manufacturing as developed by Zyvex. The movement towards atomically precise manufacture, which forms the basis for the utilization of nanotechnology, is being addressed in two fundamentally differing pathways — the top-down and bottom-up nanosciences. The distinctly separate approaches are moving towards the same ultimate outcome of atomically precise manufacturing. In the top-down realm, research is performed with an eye on reducing the scale and feature size of existing processes. For instance, in optical lithography approaches, used in IC foundries, feature size of less than 100 nm is being implemented to reduce the power consumption and increase the transistor density.per.square.inch.of.silicon..In.this.realm,.we.see.the.use.of.MEMS.and.eventually. NEMS assemblers building smaller and smaller systems. In the bottom-up realm, we see the work of naturally occurring atomic and biological forces being utilized as the primary manufacturing tool set. The use of ionic charges, atomic lattice holes, catalytic reactions, atomic mobility, and biological selectivity are some of the numerous forces put to work to fabricate complex atomic structures. It is in this realm that the carbon nanotube and buckyball configurations of carbon reside (as shown in the

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patent discussion above) to be contributing to numerous products. In the engineering approaches, the development of atomically thin monolayer self-assembly units enables unique selectivity for sensing applications. The future of self-assembly is the selective directed location of the self-assembly sites. As researchers more effectively control self-assembly, they will be enabling a new form of imaging to the design at the atomic layer, thereby competing directly with lithographic processes. Whether top-down or bottom-up techniques are used, nanoscience and nanotechnology will be the first to achieve atomically precise manufacturing. It is clear that in the first decade of the twenty-first century, we are embarking on engineering at a level never before conceived. Cost effective fabrication of nanoscale electronic devices could be achieved by combining bottom-up fabrication of silicon nanowires on silicon substrates with topdown formation of connecting electrodes by optical lithography. Limitations of conventional lithography and etching to define nanosize structures are driving up costs of the top-down approach. Bottom-up techniques are not hindered by these problems but suffer from low productivity and nonuniformity. A combination of selected bottom-up and top-down methods can bring forth complicated devices and systems at a fraction of the cost presently accrued due to adoption of only top-down approaches.

Conclusions We have provided some new thinking on nanotechnology and roadmapping. We further defined a roadmapping process based on the differing nature of technologies, covering disruptive technology. This process is developing well, but there is still further work to be done. What has been learned will be incorporated in the next set of nanotechnology roadmaps. All roadmaps seek to link technology to a single market or product or a market grouping. Due to the nature of nanotechnology, the exact character of any technology product paradigm is difficult to predict in advance. MANCEF has added a significant step to roadmapping disruptive technologies that embraces market drivers rather than markets or products.

References

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30. Kostoff, R.N., Eberhart, H.J. and Toothman, D.R., Database Tomography for Information Retrieval, Journal of Information Science, 2, 4, 1997. 31. Radnor, M., Roadmapping: How Does It Work in Practice? Proceedings of the National Center for Manufacturing Sciences Conference and Exposition, 14 1998. 32. Kostoff, R.N. et al., Citation mining: integrating text mining and bibliometrics for research user profiling, JASIS, 52, 13, 2001. 33. Linstone, H.A., Complexity science: implications for forecasting, Technological Forecasting and Social Change, 62, 79–90, 1999. 34. Linton, J.D. and Walsh, S.T., Roadmapping: from sustaining to disruptive technologies, Technological Forecasting and Social Change, Elsevier Science, 71, 1–3 (3), 2004. 35. Kassicieh, S. and Walsh, S., Models of disruptive technology commercialization, International Journal of Technology Transfer and Commercialisation, 3, 187–198, 2004. 36. Linton, J.D. and Walsh, S., Integrating innovation and learning curve theory: an enabler for moving nanotechnologies and other emerging process technologies into production, R&D Management, 34, 513–522, 2004. 37. Walsh, S. and Elders, J., Eds., International Roadmap on MEMS, Microsystems, Micromachining and Top Down Nanotechnology, MANCEF, 614, Naples, Florida, 2003. 38. Walsh, S. and Kirchhoff, B., Entrepreneurs’ opportunities in technology-based markets, in Technological Entrepreneurship, Phan, Phil, Ed., Information Age Publishing, Greenwich, 17 – 31, 2003. 39. Phaal, R., Farrukh, C.J.P. and Probert, D.R., Technology roadmapping—a planning framework for evolution and revolution., Technological Forecasting and Social Change, 71, 5–26, 2004. 40. Petrick, I.J. and Echols, A.E., Technology roadmapping in review: a tool for making sustainable new product development decisions, Technological Forecasting and Social Change, 71, 81–100, 2004. 41. Baker, D. and Smith, D.J.H., Technology foresight using roadmaps, Long Range Planning 28, 21–28, 1995. 42. Linton, J. and Walsh, S., From bench to business, Nature of Materials, 2, 287–289, 2003. 43. Walsh, S. et al., The search for the unit cell for micro and nano technology through nanopatterning, Journal of Microlithography, Microfabrication, and Microsystems, 2006. 44. Yole, J.C., The state of the micro nano industry, Spring FIF Meeting Proceedings, 2004. 45. Walsh, S. and Elders, J., International Roadmap on MEMS, Microsystems, Micromachining and Top Down Nanotechnology, MANCEF, 614, Naples, Florida, 2003. 46. Linton, J.D. and Walsh, S., Integrating innovation and learning curve theory: an enabler for moving nanotechnologies and other emerging process technologies into production, R&D Management, 34, 513–522, 2004. 47. Walsh, S. et al., Commercialization of microsystems, International Roadmap on MEMS, Microsystems, Micromachining and Top Down Nanotechnology, MANCEF, 33–68, Naples, Florida, 2003. 48. Walsh, S., Giasolli, R. and Elders, J. The second edition of the International Micro – Nano Roadmap, 674, MANCEF, Naples, Florida, 2004. 49. Walsh, S. and Elders, J., International Roadmap on MEMS, Microsystems, Micromachining and Top Down Nanotechnology, MANCEF, 614, Naples, Florida, 2002. 50. Walsh, S. et al., RF MEMS, International Micro – Nano Roadmap (2nd Ed.), MANCEF, 40–152, Ch. 2., Naples, Florida, 2004. 51.. UK.MNT.Programme,.http://mnt.globalwatchonline.com.

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52. Tolfree, D.W.L., Commercialisation of nanotechnology in the U.K., 10th International Commercialisation of Micro and Nanosystems Conference, Baden-Baden, August 21– 25, 2005. 53. Leydesdorff, L. and Etzkowitz, H., Emergence of a triple helix of university-industrygovernment relations, Science and Public Policy 23, 279–86, 1996. 54. Dr Alan Smith, U.K. Co-Director, U.K. MNT Network, 2006. 55. Elders, J. and Walsh, S. Ch. 1 Introduction, International Roadmap on MEMS, Microsystems, Micromachining and Top Down Nanotechnology, MANCEF, 26–32,Naples, Florida, 2003. 55. Walsh, S., Kirchhoff, B.,and Newbert, S., Differentiating market strategies for disruptive technologies, IEEE Ttransactions on Engineering Management, 49, 341–351, 2002. 56. Myers, D. et al., A practitioners view: evolutionary stages of disruptive technologies, 49, 322–329, 2002. 57. Walsh, S. and Kirchhoff, B., Entrepreneurs’ opportunities in technology-based markets, Research in Entrepreneurship and Management, 2, 2002. 58. Boylan, R. and Walsh, S., Ferrofluidics A, submitted to the On-line MOT Case Journal., 2000.

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Technology Transfer of Nanotechnology Products from U. S. Universities Mark J. Jackson, G. M. Robinson, and M. D. Whitfield

Contents Introduction............................................................................................................... 71 Investments from Venture Capitalists........................................................... 72 Start-Up Companies in Nanotechnology....................................................... 73 Role of Government in Nanotechnology Commercialization.................................. 73 Role of Academic Research in Commercializing Nanotechnology Products.......... 74 Technology Transfer for Nanotechnology Products................................................. 76 Intellectual Property — Impact and Ownership...................................................... 76 Patents............................................................................................................ 77 Trade Secrets................................................................................................. 77 Copyrights..................................................................................................... 77 Role of the Entrepreneur, Major Corporations, and National Laboratories in Commercialization......................................................................................... 78 Concluding Remarks................................................................................................. 78 Internet resources...................................................................................................... 79

Introduction Technology transfer from universities is largely dependent on support from government agencies, private investors, and corporations. Investment decisions are a major force in how nanotechnology develops, and this is dependent upon the support from government, academia, private investors, and corporations. Nanoscale science and engineering activities are growing in the U.S. The National Nanotechnology Initiative (NNI) is a long-term research and development (R&D) program that began in 2001 and coordinates 25 departments and independent agencies, including the 71 © 2008 by Taylor & Francis Group, LLC

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National Science Foundation, the Department of Defense, the Department of Energy, the National Institutes of Health, the National Institute of Standards and Technology, and the National Aeronautical and Space Administration. The total R&D investment in 2001–2005 was over $4 billion, increasing from the annual budget of $270 million in 2000 to $1.2 billion including congressionally directed projects in 2005. An important outcome of the NNI is the formation of an interdisciplinary nanotechnology community with about 50,000 contributors. An R&D infrastructure with more than 60 large centers, networks, and user facilities has been established since 2000. This expanding industry consists of more than 1500 companies with nanotechnology products with a value exceeding $40 billion at an annual rate of growth at about 25%. With such growth and complexity, participation of a coalition of academic organizations, industry, businesses, civil organizations, and government in nanotechnology development becomes essential. The role of government continues in basic research, but its emphasis is changing, while the private sector becomes increasingly dominant in funding nanotechnology applications. The promise of nanotechnology will not be realized by simply supporting research. A specific governing approach is necessary for emerging nanotechnologies. This chapter explains the roles of each player and their impact on the technology transfer process.

Investments from Venture Capitalists Investment in nanotechnology can gain much from venture capitalists (VCs). Venture capital is money that is invested in unproven companies with the potential to grow into multibillion dollar industries of the future. Venture capitalists are sources of financial and business resources that seek to control part of the business. VCs expect to capture 50 to 70% of return on their investments in a four-to-seven-year time period, which is the time it takes to get the start-up company to reach liquidity in terms of acquisition, merger, or initial public offering. Nanotechnology start-ups are not particularly attractive to VCs at the present time because the commercialization horizon is far too long. Start-up companies are particularly attractive to VCs because: • The company has a particularly innovative product that is disruptive and has a sustainable business advantage. • The company has a large and growing market that is worth $1 billion and grows at a rate of 50 to 70% per year. • The company has products with a very short time-to-market horizon (less than two years). • The company has a successful management structure with experienced executives. • The company has an established customer base with strategic partners that will provide a strong revenue stream. Nanotechnology is not a single market but a series of enabling technologies that provide groundbreaking solutions to high-value problems in every industry. Product innovations are characterized by the application of nanoscale materials or with process technology conducted at the nanoscale that changes the functionality of the product.

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Start-Up Companies in Nanotechnology Start-up companies in nanotechnology should be measured by the same metrics as other start-up companies in terms of income generating business dynamics and costcontrolling business issues such as sales strategy, management structure, allocation of capital, marketing, business models, product introduction, etc. The key difference of nanotechnology start-ups is that they possess a technology platform that is composed of intellectual property generated by a team of scientists who are interdisciplinary in nature with no business strategy, focus, or management structure. The team is composed of highly respected academic scientists who can lever sources of funding through research contracts. In their initial stages, these companies team up with established companies to help them validate products, provide a channel for marketing and selling products, and provide expertise in manufacturing. At this stage, nanotechnology start-ups are characterized in the following primary categories: materials; biotechnology; software; electronics; instrumentation; and photonics. The greatest growth is in the area of materials, even though most of the funding has gone to developing nanophotonics’ and nanoelectronics’ products.

Role of Government in Nanotechnology Commercialization The role of government in nanotechnology is to support research and development relevant to national priorities, to support the development of a skilled workforce, and to support infrastructure such as government laboratories and research centers to advance nanotechnology. In 2000, the U.S. government announced the National Nanotechnology Initiative, signed into law in 2003 by President George W. Bush, that creates a mission enabling the government to establish goals, priorities, and metrics for the evaluation of federal spending on nanotechnology. The law also provides for investment in nanotechnology through strategic programs and interagency cooperation between government departments. The government also supports the development of workforce education by allowing interested parties to promote the development of curricula via funds channeled through the National Science Foundation (NSF). NSF funds in workforce development are focused on universities to establish the fundamental education in nanoscience and technology and on community colleges that provide training in nanotechnology activities such as manufacturing process operations, materials production, etc. Articulation agreements also provide pathways so that community college graduates can proceed to universities involved in nanoscience and technology in the form of two-plus-two degree programs. Government also provides funds to allow the national laboratories to conduct fundamental research in nanotechnology. The provision of instrumentation is essential, especially to major corporations and small-to-medium enterprises that normally cannot afford to purchase such instrumentation. In the U.S., job creation is down to major corporations and especially SMEs (Small and Medium Size Enterprises), and it is considered essential that job creators gain unfettered access to these facilities. Nanotechnology education and outreach has impacted more than 10,000 graduate students and teachers since 2005. Changes are in preparation for

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education, by the introduction of nanoscience at an early age. Nanotechnology education has been expanded systematically to earlier education, including the NSF’s Nanotechnology Undergraduate Education programme (NVE) that has awarded more than 80 awards since 2002, and high schools (since 2003), as well as informal education, science museums, and public dissemination. All major science and engineering colleges in the U.S. have introduced courses related to nanoscale science and engineering in the last five years. NSF has established recently three other networks with national outreach addressing education and societal dimensions: (1) The Nanoscale Center for Learning and Teaching aims to reach 1 million students in all 50 states in the next five years; (2) The Nanoscale Informal Science Education network will develop, among others, about 100 nanoscale science and technology museum sites in the next five years; and (3) The Network on Nanotechnology in Society was established in September 2005 with four nodes at Arizona State University, University of California at Santa Barbara, University of South Carolina, and Harvard University. The Network will address both short-term and longterm societal implications of nanotechnology, as well as public engagement. All 15 Nanoscale Science and Engineering Centers sponsored by the NSF have strong education and outreach activities.

Role of Academic Research in Commercializing Nanotechnology Products Under the National Nanotechnology Initiative (NNI), the National Science Foundation plays the largest role in funding nanotechnology research in the U.S. Additional funding is provided by the Department of Defense, Department of Energy, National Institute of Health, NASA, Environmental Protection Agency, and the Department of Agriculture. The NSF has created a tier of funding where one-year exploratory research is funded in addition to five-to-ten-year center awards. Each tier creates a different level of maturity of nanotechnological development that is crossdisciplinary. Nanoscale Science and Engineering Centers (NSEC) are awarded for five years initially and are used as focal points for developing infrastructure and providing a basis for further funding from other sources. NNI has been recognized for creating an interdisciplinary nanotechnology community in the U.S. Two significant and enduring results have emerged from this investment: the creation of a nanoscale science and engineering community, and the fostering of a strong culture of interdisciplinary research. The following centers have been created under the auspices of the NNI: • Columbia University — Center for Electron Transport in Molecular Nanostructures • Cornell University — Center for Nanoscale Systems; Rensselaer Polytechnic Institute — Center for Directed Assembly of Nanostructures • Harvard University — Science for Nanoscale Systems and their Device Applications • Northwestern University — Institute for Nanotechnology

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• Rice University — Center for Biological and Environmental Nanotechnology • University of California, Los Angeles — Center for Scalable and Integrated Nanomanufacturing • University of Illinois at Urbana-Champaign — Center for Nanoscale Chemical, Electrical, Mechanical, and Manufacturing Systems • University of California at Berkeley — Center for Integrated Nanomechanical Systems • Northeastern University — Center for High Rate Nanomanufacturing • Ohio State University — Center for Affordable Nanoengineering • University of Pennsylvania — Center for Molecular Function at the Nanoscale • Stanford University — Center for Probing the Nanoscale • University of Wisconsin — Center for Templated Synthesis and Assembly at the Nanoscale • Arizona State University, University of California, Santa Barbara, University of Southern California, Harvard University — Nanotechnology in Society Network Centers from the Nanoscale Science and Engineering Education Solicitation • Northwestern University — Nanotechnology Center for Learning and Teaching. NSF Networks and Centers that complement the NSECs include Cornell University and 12 other nodes creating the National Nanotechnology Infrastructure Network • Purdue University and 6 other nodes creating the Network for Computational Nanotechnology; Oklahoma University, Oklahoma State University and the Oklahoma Nano Net • Cornell University STC: The Nanobiotechnology Center. With about 25% of global government investments in nanotechnology, the U.S. accounts for about 50% of highly cited papers, ~ 60% of USPTO patents, and about 70% of start-up companies in nanotechnology worldwide. Industry investment in the U.S. has exceeded the NNI in R&D, and almost all major companies in the traditional and emerging fields have nanotechnology groups at least to survey the competition. Small Times magazine reported 1455 U.S. nanotechnology companies in March 2005, with roughly half being small businesses, and 23,000 new jobs were created in small start-up nano companies. The NNI SBIR investment was about $80 million in 2005. More than 200 small businesses, with a total budget of approximately $60 million, have received support from NSF alone since 2001. Many of these are among the 600 nanotechnology companies formed in the U.S. since 2001. All Fortune 500 companies in emerging materials, electronics, and pharmaceutical markets have had nanotechnology-related activities since 2003. In 2000, only a handful of companies had corporate interest in nanotechnology (fewer than 1% of the companies). A survey performed by the National Center for Manufacturing Sciences at the end of 2005 showed that 18% of surveyed companies are already marketing nanoproducts. More

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than 80% of the companies are expected to have nanoproducts by 2010 and 98% in the longer term. Therefore, the role of academic research will play a significant part in this growth.

Technology Transfer for Nanotechnology Products Technology transfer is conducted at research-intensive universities for a number of reasons. The first is that there is a federal mandate that universities allow discoveries to be available for commercialization. This is an important means of attracting talented faculty that would not otherwise be attracted to a teaching environment into positions within a university. The other reasons include providing equity to faculty members and providing goodwill that will encourage faculty, alumni, to become donors to the university and to become engaged with the process of commercialization at the university. Technology is usually transferred when the professor responsible for the invention allows the university to file a provisional patent, thereby allowing the university to provide a license to the professor to commercialize the technology. The commercialization is dependent upon the knowledge created by the professor, and this in turn allows the professor to be rewarded with a 25 to 50% share of the royalties generated by the patent, which is very generous compared to the private sector. The office of technology transfer at the university is a key gateway to commercializing such a patent. However, the office of technology transfer has responsibilities such as protecting the professor’s intellectual property, finding a market for the invention, and formulating contracts between the professor, the university, and the private investor. Thus, the success of commercializing the invention depends on the abilities of both the technology transfer office and the professor. There are cultural issues that need to be addressed at universities that are keen on transferring technology to the market. The ability to share the knowledge with the public must be restricted, and this is usually at odds with the “publish or perish” attitude at most academic institutions. However, the type of business relationship will dictate what can and cannot be revealed. In various forms, the relationship can be based on providing licenses to commercialize, faculty consultancy, strategic partnerships with university spin-off companies, special funding schemes for faculty research, and research partnerships with major corporations.

Intellectual Property — Impact and Ownership During the growth of nanotechnology during the 1990s, the number of papers containing the word “nano” increased fourfold according to the ISI Science Citation Index. By 2004 it had risen to more than 20,000 articles. The U.S. Patent Office has issued more than 15,000 patents containing the word “nano” up to the year 2006. Many companies are now placing a greater emphasis on intellectual property (IP). Strong IP portfolios decide whether a nanotechnology company can survive or not.

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Patents Utility patents offer protection for inventions that can be classified as a novel process or method, or a piece of apparatus that is useful and nontrivial. The exchange of the idea for protection seems obvious but may also alert the world of the idea. However, under U.S. law, the patent is protected for 20 years and prevents others from making and selling the invention contained within the patent. Once granted, it is essential that the patent is protected so that maximum returns can be made from the patent. A strong patent with a solid portfolio can be the foundation of creating wealth from a nanotechnology patent. Protecting nanotechnology-based patents may be difficult because not all of the knowledge is known to protect it from being exploited by other nanotechnology players. Because nanotechnology is interdisciplinary, it is more difficult to create a novel patent because it may be on a different scale. Therefore, only partial protection can be guaranteed. Therefore, the decision to protect the idea using patents must be considered very carefully.

Trade Secrets A nanotechnology company can also use trade secrets to protect its intellectual property through the use of trademarks. As of 2005, approximately 1800 trademarks containing the word “nano” have been registered and are pending. Trade secrets can be indefinite unless publicly disclosed. They can be revealed if the product is reverse engineered. However, because of the scale involved, it may be difficult to reverse engineer a nanotechnology product. Hence, trade secrets may work if employees maintain confidentiality even when they leave the employ of a particular company. The employment of nondisclosure agreements may also be useful, especially when employees move from their original employment with the company.

Copyrights Copyrights protect the idea, which is not the case for patents. Protection under copyright protects the idea for up to 100 years for work that is made for hire. This is the case for nanotechnology industries. The case for patenting appears to be self-defeating compared to trade secrets and copyright protection. However, filing a provisional patent as opposed to a utility patent does indeed show to potential investors that the patent is pending and also who the inventor is. This last statement is interesting in that in the U.S. the patent system is based on a “first to invent” standard rather than “first to file” standard. This is unique to the U.S. and does not exist in other countries. The process of filing a provisional patent is simple, inexpensive, and announces the origin of the invention. A provisional filing also preserves the right to foreign filings. The restrictions on innovation may stem from patent filings. This may be due to the narrow scope of the inventor’s claims in the patent or to the way that the research was initially funded. If the patent is borne out of government funding, then the government can issue a royalty-free license to the inventor of the patent. This provision was made under the 1980 Bayh-Dole Act and gives universities and small business entities freedom to commercialize the invention at no cost. However,

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innovations that stem from the invention are still governed by the original license, which may cause problems if the business is sold to a third party after the patent and license has been issued. The issue of developing an intellectual property policy and its impact can take many different forms depending on the short-, medium-, and long-term goals of a nanotechnology business. However, combinations of using patents, trade secrets, copyrights, and trademarks can ensure that businesses create revenue streams over differing time scales.

Role of the Entrepreneur, Major Corporations, and National Laboratories in Commercialization It should be noted that entrepreneurs are individuals who commercialize products with the aim of making money. This does not appear to match that of the requirements of a professor or research team employed in a university or a national laboratory. Entrepreneurial activity is characterized by the building of a team dedicated to commercializing nanotechnology products, and this is discussed elsewhere in this book. The major corporations play a very important role in commercializing nanotechnology. They are particularly interested in using nanotechnology to enhance and functionalize existing products at all length scales. The corporations are heavily involved in developing their own technology but do maintain an active interest in how government is funding nanotechnology programs and do look at the spin-offs that emerge from nanotechnology-funded programs. The national laboratories are not charged with commercializing nanotechnology products, but they do provide access to very expensive equipment that can be used to develop nanotechnology products. This is particularly so with large equipment such as synchrotron radiation sources that are used in LiGA applications.

Concluding Remarks The National Nanotechnology Initiative has done much to fund the research and development needed in U.S. universities to commercialize nanotechnology products. However, the commercialization of nanotechnologies for U.S. universities is dependent upon research teams and their relationship with offices of technology transfer at their home institutions. Although funding is well supported by many U.S. government departments, commercialization is left in the hands of the business relationships made between the research group, offices of technology transfer at universities, and the private sector. Further strengthening of the commercialization route may be necessary in the future if nanotechnology products are to become more widespread in our society. Governments need to address this problem owing to the amount of resources that need to be provided to fund research and developments in nanotechnology.

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Internet resources http://www.osha.gov http://www.cdc.gov/niosh/ http://www.epa.gov http://www.niehs.nih.gov http://www.fda.gov http://www.nano.gov/NNI_Strategic_Plan_2004.pdf http://www.nnin.org http://ncn.purdue.edu/ http://www.cpsc.gov http://www.nanomanufacturing.eu

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Commercialization Strategies for Public Research Organizations: How to Move from Public Research into the Market by a Leading Dutch Institute Kees Eijkel and Arend Zomer

Contents Introduction............................................................................................................... 82 Mesa+ Institute for Nanotechnology Within the University of Twente.................... 82 Setting the Stage: Micro-Nanotechnology, Commercialization, and Cooperation.. 83 Dynamics in the Field of Micro-Nanotechnology.........................................84 Cooperation in a Triple Helix of Academia, Industry, and Government...... 86 The Role of Public Research Organizations.................................................. 89 Entrepreneurs and Venture Capitalists..........................................................90 The Role of the Regional Government.......................................................... 91 Creating the Right Structures...................................................................................94 Accommodating Your Organization.............................................................94 Creating Facilities with a Common/Shared Interest.....................................97 Networks........................................................................................................99 Inspiring Culture..................................................................................................... 100 Accelerating the Commercialization Process......................................................... 102 Conclusions............................................................................................................. 103 References.............................................................................................................. 103

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Introduction In this chapter, we focus on the issues associated with forming and maintaining a collaborative partnership between three main parties, academia, industry, and government, in the building of a suitable commercialization infrastructure for micronanotechnology. Our experiences are based on the work of the MESA+ Institute, a research and development center in the Netherlands. First, the work of the institute, its history, and the importance of its location in the region will be described. We introduce the Triple Helix1 model as our concept to describe the respective roles of the partners, their interactions, and the contribution that each makes. This is central to the successful implementation of a commercialization strategy. Subsequently, practical recommendations and experiences from MESA+ will be discussed.

Mesa+ Institute for Nanotechnology Within The University of Twente MESA+ was founded in 1999 from a merger between MESA and CMO (the Center for Materials Research). CMO was the materials research consortium of the former faculties of Applied Physics and Chemical Technology that existed since 1985. In later years, CMO’s focus expanded towards the development of devices and systems. This was a domain in which MESA (Microelectronics, Sensors, & Actuators) was also active. MESA was established in 1990 as the cooperation between different research groups at the university in the areas of micro electronics, materials engineering, sensors, and actuators. In addition to that, MESA’s research agenda also became more active in the materials research field. Thus, combining the two centers into MESA+ was a logical step for both CMO and MESA. Participating research groups in MESA+ come from several different disciplines: chemistry, electrical engineering, applied physics, mathematics, and biophysics. In 2006, MESA+ employed approximately 450 people. About 300 of these are scientists, which include more than 200 Ph.D.s and postdocs. The estimated turnover of the Institute in 2006 will be almost 45 million euros, of which almost 57% was acquired from external sources. These external sources are research grants from national research councils, European Union research programs, and industry. MESA+ also receives industry financing directly for contract research or facility sharing. Commercialization is a key element in the development strategy of MESA+. It helps to attract industrial funding and encourages the spinning-out of companies that could become partners in future research activities. The socioeconomic environment in which the University of Twente and MESA+ operates is an important driver for its entrepreneurial activities. The University of Twente is a relatively young university, founded in 1961 in the eastern part of the Netherlands, in a region confronted with unemployment and economic restructuring due to the decline of a dominant textile industry. It is therefore not surprising that the University of Twente sees itself as an important player, one that can provide knowledge and skills for companies located in the region. Reacting to the economic downturn and threats of severe budget cuts in the 1980s, the university established an entrepreneurial culture and strategy within its departments,2 a culture

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that would not just provide students with an academic education but would also be able to attract a significant amount of high-tech firms to the region. In line with this, the University of Twente implemented a number of technology transfer schemes to support the commercial exploitation of knowledge acquired through industry-related research projects. Examples of such schemes are the Temporary Entrepreneurial Positions Programme (TOP), a Business and Science Park, later developed into a broader Knowledge Park, and the “Holding Technopolis Twente,” a limited company that acts as a holding company for university participations. Recently the university structured all its internal commercialization processes in the “Innovation Lab Twente.” The university is very successful with its TOP program. This scheme offers an interest-free loan, office space, advice, training, marketing, and financing strategies to start-ups that are planning to use knowledge produced at the University of Twente. These and other schemes and institutional arrangements have made the University of Twente “a central partner of the provincial government and regional development agency.”3 The University of Twente and MESA+ play an important role in creating a regional cluster of companies, academic research communities, and a well-educated workforce. Since 1980, the university has spun out some 600 new firms, leading to approximately 6000 direct jobs. During the last 15 years, MESA+ spun out some 35 technology-based companies. The new jobs created by these companies generate an improved economic climate for the region. The activities of MESA+ and the University of Twente described above must also be seen as part of the activities of other players in the region, i.e., the regional, provincial, and municipal governments whose primary objective is regional economic development. They hope to accomplish this, among other things, by supporting organizations and networks dedicated to commercialization. Two examples of regional network initiatives that have been developed in the region are: TKT (Knowledge Kring Twente), a network of high-tech companies that exchanges information for the improvement of high tech businesses in the region. TNKO (Twente Network for Knowledge-Intensive Entrepreneurship) is a network for knowledge-intensive entrepreneurs in their starting phase. A list of such initiatives and other organizations is given by Mensink et al.4 Recently, Kennispark, another initiative, was founded to specifically improve the economic cluster around the campus of the University of Twente. Partners that cooperate in Kennispark range from the TKT network to the regional development agency, i.e., Oost N.V. as well as the college in Enschede (Saxion Hogeschool) and the business accelerators of the University of Twente. The Innovation Lab of the university is an integral part of Kennispark. Kennispark is cooperating with other partners in business, higher education, and government.

Setting the Stage: Micro-Nanotechnology, Commercialization, and Cooperation The last paragraph has shown that the University of Twente and the MESA+ research institute reside within a larger regional ecology of companies and governmental organizations. It is within this larger ecology or landscape where all the parties have

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to collaborate with each other in order to succeed. In this section, we will explore the nature of commercialization in the field of micro-nanotechnology.

Dynamics in the Field of Micro-Nanotechnology An important and much discussed topic is how to be successful in commercializing micro-nanotechnology following the path described by Walsh or Abernathy & Clark.5-6 We shall focus on the interorganizational aspects of the commercialization process. First, we will address the different markets or industrial linkages in which the new technologies need to position themselves. New technologies sometimes provide an answer to current innovation needs in established industry chains. For example, the introduction of new, stronger lightweight materials will provide innovation steps that will make new and improved products. Such innovations are at the technological core of the product or its production processes. Product platforms within an established industrial infrastructure are mostly very well developed in all aspects of production, distribution, use, marketing, recycling, etc., and with that, one identifies a well-established community of suppliers, systems integrators, etc. This is known as the virtuous innovation cycle. On the other side of the spectrum, we find products and related technologies that challenge the existing industrial paradigm, either through the fact that such products and technologies could become competitors of existing solutions (“the transistor versus the vacuum tube” in the early 1960s) or create completely new fields of applications currently not occupied (Internet in the 1980s). Such innovations are not rapidly taken up by the industrial infrastructure and the market. Existing industry is either not flexible enough to absorb these innovations or would gatekeep the developments to protect its position. This is the area of the disruptive innovation cycle. On the one side of the dichotomy, we see new technologies that are willfully incorporated into existing technological regimes because they either pose no threat to the current regime or can be beneficial for the existing regime. On the other side of the dichotomy, we find the new technologies that have the potential to challenge the existing regime. So, while the first type will not experience much resistance because of its beneficial or nonthreatening characteristics for the current regime, the other type will find resistance in the introduction of new technologies because it they existing practices and may require long development paths. In a situation where the industrial environment is well developed (virtuous cycle), a strategy is prevalent in which there are strong links with the industry leaders and most important niche players. Between product, market specialists, and enabling technology specialists, teams work on roadmaps to define the roadblocks for innovation or to open up new market opportunities for the technology-product platform. clearing research and development it is clear who to talk to and what to protect. Industry is more likely to identify relevant intellectual property (IP) issues that require protection before technology transfer and licensing can proceed. Companies have established supply networks so are able to proceed to production. People experienced in technology transfer issues need to be available in universities. It is interesting to note that most of the successful central technology transfer offices in universities and institutes tend to focus on the pharmaceutics and medical

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sectors. University technology transfer offices therefore employ people with a range of experience and expertise in areas such as customer relations, IP, legal issues, etc. In the more chaotic environment of potentially disruptive technologies, with their uncertain development paths, a completely different approach to technology transfer is required. First, there is no predictable development path. Roadmaps tend to discuss potential use of a technology rather than define technological steps to product evolution. Business development in new or young enterprises therefore is a combination of business sense, strong networks, and a profound knowledge of the technology and its development. Technologists have to be aware of the potential impact of their work; they have to understand the product environments and be aware of the fact that they provide just a partial solution to someone’s problem. If a company is a supplier of a potentially disruptive technology, then it will probably not be successful in building relations with other companies in the same market sector. Leaders would not be interested in a development that has a potential of challenging the current market paradigm. They would tend to use such a company as a gatekeeper rather than a supplier. Companies that are interested in commercialization tend to be those looking for unique opportunities for growth or sustainability. Disruptive technologies influence the approach made toward technology transfer: ideas have to come from the interaction of people focused on applications and markets with the people focused on technology development. Because there are no clear roadmaps, ideas and knowledge exchange is not structured. Therefore, it is essential to create as much interaction as possible between the product and market strategists and the technologists. Opportunities, solutions, and new fruitful ideas are built on the combination of the two. With an absence of structured roadmap processes, one has to rely on intense daily contact (“coffee table and lab floor”) to maximize the transfer and the growth of new ideas. Technology transfer becomes a body contact sport, so maximize the chances for body contact. The characteristics of the industrial landscape in the micro-nanotechnology community are related to the above mentioned dynamics. Apart from a number of large-volume applications taken up by the existing value chains (ink-jet printer heads, hard drive head systems, micro-mirror devices for image projection, etc.), the field is a gathering of smaller entrepreneurial companies; therefore, the learning process is slow. Many organizations actively support their members in accelerating the learning process through better understanding of the market and industrial process. Such organizations are focused on a particular technology field (i.e., the Institute of Nanotechnology, UK (i.e., MIG, MEMS Industry Group, or IVAM Germany), and on commercialization, MANCEF (the Micro and Nanotechnology Commercialization Education Foundation). In this system, production infrastructure is either focused towards one of the larger applications mentioned above or has the difficult task of integrating various technology platforms and acting as a foundry for different customers. We expect a further maturing of the field, leading to increased standardization, but at the same time expect parts of the field to continue to be based on a wider set of technologies, expressing themselves in different combinations in products. In that regard, the field of micro-nanotechnology resembles the field of precision

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engineering rather than semiconductors, where a “unit cell” for design and production is established at a very high technological level. We have tried to show that a commercialization process is not only shaped by its technological possibilities but also by the players that are present or not present in the innovation process. Our message is that an optimized commercialization process takes into account the differences in the role that the technology can play in different product applications, e.g., chip-technology in an existing microsystem technology regime or for an application in a laboratory analysis setting. We feel that players who are linked to the process of commercialization, i.e., research groups, universities, private industry, and local and national government, should be aware of the needs of commercialization trajectories and their respective role in the trajectory. Below we discuss the use of the Triple Helix of university-industry-government concept as a process for cooperation.

Cooperation in a Triple Helix of Academia, Industry, and Government The idea of a Triple Helix of university, industry and government has been introduced by Leydesdorff and Etzkowitz.7 The Triple Helix model tries to conceptualize the interactions among three types of parties in the contemporary knowledge-based society. The model itself is unclear about how the actual interactions take place between the parties. The use of the Triple Helix as a heuristic model, however, is useful because it provides a way to show the interrelationships among innovation, the commercialization processes, and the parties involved. In the contemporary knowledge-based society, the Triple Helix Model8 authors claim the different academic, industrial, and governmental partners communicate increasingly with each other. Furthermore, regional governments and municipalities also play an important role in the co-creation of the regional landscape or cluster. Within this cluster, the successful collaboration among the industrial, academic, and governmental partners is important to success. The Triple Helix model states that the three parties, academia, industry, and government, have more or less demarcated roles; the contemporary Tri-lateral Networks and knowledge-based society operates in a Hybrid Organizations different way. In contrast with earlier times, organizations in contemporary society had overlapping institutional spheres. Figure 5.1 shows a visualization of the Triple Helix Model. Academia The authors also see the emergence of hybrid organizations at the interfaces of the different parties, such as the Kennispark concept mentioned earlier. Public and private activities differ strongly in State Industry nature. Though they may operate in the same environment, their basic goals and interests differ strongly. Public activities Figure 5.1  The triple helix model of uni- are put in place to cover a certain need versity-industry-government relations.

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that is recognized in the public arena. They are task driven and usually receive a basic budget from a public authority to perform that task. Its management decides on the basis of many issues, societal issues (setting the right example, stimulating the desired long-term development, etc.) from to political or financial issues. The stakeholders are many and are represented in long decision chains with often a strong democratic input. A private activity receives its income from its activities in the market; its management decides in line with the desired strategic development of the enterprise in the market, so decision chains are short. Interestingly, a well-chosen public activity will address a need. Such a need could be translated into “market” in a private setting. Indeed, many public activities could be considered for privatization. As a result of that, the rules for running that activity will change, and the character of the organization will change. This usually leads to a larger “economic transparency” but less societal embedding. In between the public and the private set of rules, an abundance of minefields and pitfalls exists. Many public-private partnerships have shown the problems related to the marriage of the two. Public entities can cooperate with private ones and vice versa, as long as it does not force one into adopting the rules of the other. If the basic set of rules for the public or private environment is not damaged or corrupted, the different parties involved can keep their integrity and strength and work from that into a fruitful cooperation. In every western country, there are numerous examples of the emergence of hybrid organizations among the Triple Helix parties, such as university incubators established to support start-up companies that are based on academic knowledge. Science parks are founded to create geographical concentrations of industry and academic research; they do encourage spin-off companies themselves and can be considered hybrid organizations, i.e., companies with primary interests in wealth creation but stemming from an organization with a dominating interest in new knowledge and often partially owned by the universities themselves. It is these types of organizations that are trying to cross inter-organizational boundaries, stretching and merging different roles. And these organizations, like spin-offs, science parks, or mixed industrial-governmental interest groups, are important bridge builders in the collaboration process. Intermediate companies or organization are often embedded into a stakeholder’s organization, with a task to build relationships with the other partners. Due to the nature of the industrial community, the host of the intermediate organization is often a public stakeholder, either a government or a research institution. It is rare for private companies to be recognized as intermediate organizations. If so, they act on the basis of a clearly defined business model. The most successful ones are active in the intellectual property field; the British Technology Group is one such example. Where a public research organization has the role of primary player, a number of different forms are found, ranging from a Technology Transfer Office through sharing of facilities and start-up support programs to forms of active business development. Examples are many, including the commercialization policies of organizations like Forschungszentrum Karlsruhe GmbH (FZK), Institute of Microtechnology Mainz (IMM), Institute of Nanotechnology Exploitation (INEX), and MESA+. In some cases, we see authorities or mandated bodies taking the role of primary partner to initiate a commercialization structure. Examples are Centre Suisse d’Electronique

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et de Microtechnique (CSEM) and the recently opened Microsytems Technology (MST) factory in Dortmund. We see different solutions in which certain organizations are taking up a primary role in the commercialization process or parts of the process. The power of each of these initiatives is that the initiatives are supported by all the partners in the Triple Helix, perhaps not always in terms of funding but at least in terms of strategic cooperation. We regard this as a condition sine qua non. As hybrid organizations predominantly stem from one of the parties, they can be seen as underlining that partner’s principal role in the commercialization process. This often leads to the partners pursuing commercialization in that regional environment — viewed as an undesired development. Parties involved in the commercialization process for MNT must be made to be aware of their commitment to other partners, to acknowledge the role they play in the larger environment or “innovation landscape,” and to recognize the crucial contribution that each party delivers to the shared goal of the cluster. Subsequently, each can, of course, translate this collective goal to their own. Industry partners located near a university or research center have access to knowledge and academic expertise, including technology transfer facilities. Universities benefit from a good growing local economy because it helps them to procure funds for research from industry and makes them more aware of industry’s needs. Finally, the governmental partners benefit from the creation of new jobs and hence increased economic development. In addition to the emphasis on collaborations between regional players, we wish to stress the importance of excellence of every respective individual player in the regional cluster. Excellent commercialization processes need fine-tuned collaborations and fertile boundary conditions, but they also need excellent partners to work with. Mediocre research and development performance does not create long-term sustainability. Academic partners need to extend their roles and participation in commercialization activities. The same applies for excellence in entrepreneurship, which is a condition sine qua non for commercial success. Maintaining the thrust for excellence in the core competences of the three Triple Helix parties is paramount. Only from such positions can strong bridges in the Triple Helix approach to commercialization be built. A vital economic cluster needs equally excellent entrepreneurs and researchers. In recent years, universities have been encouraged by national governments to engage more in commercialization activities. Universities can and should stretch their boundaries by establishing incubators and commercialization funding schemes, as well as spin-off companies so long as this does not compromise the core academic activities of the researchers. Similarly, companies must become involved but not undermine their need for profitable business. The right balance has to be struck. The idea of collaboration among different partners, to form a vital regional economic cluster based on their own excellence, has to be maintained at a regional economic level. The idea can be translated to very tangible structures. In the Twente region, for instance, a project was started to help beginning enterprises achieve their growth opportunities by the coaching of experienced entrepreneurs. Another project aims to combine spin-off ideas from the university with entrepreneurial students from the Saxion College in Enschede. This combination then should result in business teams

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with strong entrepreneurial skills as well as a thorough understanding of the potentials of new products and product development. These projects consist of the University of Twente, the Saxion College in Enschede, the regional development agency (Oost N.V.), as well as an existing network of entrepreneurs (TKT). The projects illustrate the potential of collaborations between academic and governmental actors. The whole process of collaboration should be a process of being excellent in your own field as well as working together. Not only can the players themselves create these linkages, but governmental partners, for instance, can create the structures (such as incubators, commercialization funding schemes, and science parks) all for the improvement of commercialization processes and the vitality of the regional economic clusters. So far we have mostly stressed the interrelationships of the different partners and their need for excellence. In the coming paragraphs we will elaborate on the roles of the respective players in the multi-partner environment during the commercialization process.

The Role of Public Research Organizations The traditional nineteenth and twentieth century roles of universities have been education and research. In the past decades, these roles have been extended to include a greater involvement with industry and the regional development organizations. Universities can benefit from income derived from commercially exploiting their knowledge base.9-10 This has been helpful in creating closer involvement with organizations outside of the university. Universities, however, must still retain excellence in their main role as educators. The academic system is geared towards academic excellence. The key driver is “being the best in your peer group”: discovery of new things and subsequent publications. Since the timescale between scientific research and its commercial exploitation is about 20 years, a university or an institute should educate young people and do good research. This is crucial to a university’s success in the competitive arena of education and R&D. Although universities and institutes disseminate their findings in the scientific arena, a pathway towards commercialization and transfer of knowledge is less common. In most countries, this role is not made a priority by universities. There is a large difference among researchers in their understanding of that issue. There is a plethora of reasons why universities should be involved in commercial exploitation, some of which are summarized below: • • • • • • •

Attractiveness of the R&D activity for industrial partners New R&D projects emerging from the high-tech cluster Sharing of facilities, leading to a broader and healthier equipment base Political support and visibility Inspiration, increased relevance of R&D Interesting jobs for graduates and Ph.Ds Extra income

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Communicating these advantages, showing best practices, and learning from experience are the means for promoting a culture that invites researchers to look beyond their scientific community. If done the right way, commercialization enriches the research group. MESA+ has added commercialization to its formal mission and strategy and added a commercialization portfolio to the institute’s management. It turns out that active commitment is a very strong promoter. MESA+ is a university research institute that has defined commercialization as one of the key issues in its strategy. In order to achieve the goals set, we use a bottomup approach. Focus is put on the internal culture and organization in the direction of SME’s, on cooperation with the other crucial partners in the region, and on accompanying measures such as infrastructure, venture capital, etc. We focus on a cluster of industrial activities that shows cohesion and covers the most important markets, technologies, and positions in the chain. The whole system is based on the concept of seamless microengineering.

Entrepreneurs and Venture Capitalists As mentioned earlier, the various scattered and often competing interests of the industrial partners, along with the broad range of miniaturization technologies, make it hard to initiate coherent and encompassing commercialization activities for public R&D from the private side. We do find many singular R&D projects where public R&D and industrial partners engage in a well-defined effort to further develop an interesting technology platform. Joint strategies from industry associations, however, are very limited and do not cover the scope of miniaturization technologies. They often are limited to roadmapping in specific areas or to specific attempts to define standards. Some individual private entities have positioned themselves as commercializing IPR (intellectual property) from public R&D. There are a growing number of IPR brokers that offer their services to public R&D organizations. On top of that, there is a growing group of business development groups looking for existing technological solutions they can further develop within certain market areas. Generally, such organizations have limited success in leveraging the research population and research funds due to the difference in character and the limited alignment of interest. We see this as a strong drawback in commercializing public R&D, since a number of strong existing resources and networks are left unused. The market focus and business strategy of such organizations, on the other hand, are a clear advantage. In the private environment, the existence of a strong business case is the key element for success. In the past years, we have seen a number of new collaboration schemes that are set up by or are in cooperation with broader industrial associations. To give some examples: • Cooperation in facilities, where companies can grow their production facilities while keeping investment needs moderate. Such cooperation schemes can be found in Dortmund (MST-factory) and recently also in Twente. • Cooperation in a scheme where experienced entrepreneurs coach young entrepreneurs with an interesting promise for growth. In Twente, this is

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embedded in the so-called Mindshift program run by the Technology Circle (TKT), 150 technological enterprises with a link to the university. The Mindshift scheme couples coaching (TKT coaches and third-party coaches) with a financial participation scheme. • Cooperation in a joint office and lab facility. In Twente this is becoming a key driver in the environment of the University campus: bringing equipment and people together to facilitate critical mass and exchange of know-how. In all of these examples, the relevance to the company’s bottom line is clearly visible. Such schemes tend to be strong and sustainable after a first period of public support.

The Role of the Regional Government The discussion about the role of government organizations as partners in the innovation system mostly tends to focus on the role as a facilitator. As partners, national, regional, as well as international governing bodies can play an important facilitating role by developing support schemes or agencies that facilitate the spinning out of knowledge and the creation and growth of new firms. Regional authorities have interest in the creation of an environment that supports both job and wealth creation. In the Twente region, these interests make the regional partners (i.e., municipalities and provincial authorities) very influential in relation to the support schemes underlying the commercialization of academic knowledge and, more specifically, the creation of new companies. The regional authorities do not play a central part in the commercialization process itself but are enablers of the whole process. They are an important vehicle to create a common agenda and to bond together parties who have in themselves diverging interests. Because they are interested in jobs and wealth creation, they should not just focus on new jobs and industrial turnover but rather think of regional success in terms of the economic cluster we have talked about. This focus automatically creates a broader horizon in which there is time, and hopefully a sense of urgency as well, that different parties should be involved in a long-term commitment to create this cluster. Since neither industrial partners nor public research organizations are very much inclined to take a proactive approach by individually investing in these schemes, regional authorities should take these support schemes not only as a chance to improve the success of certain parts of the innovation trajectory but also to use the support schemes to create longer lasting bonds among the different parties. Through this, one might be able to create the sense of a community (in which several parties are willing to give up their short-term individual goals and in return get a long-term strategic agenda that can be a basis for a vital economic cluster). The mechanisms regional authorities can use are plentiful. The investment in physical infrastructure such as facilities like science parks and cooperative research centers is a good way to establish collaboration between industrial partners and researchers. Another possibility is support networks or support schemes co-financed by regional authorities and public research organizations. One interesting initiative in the Twente region in this regard is the Regional Innovation Platform. It gathers key people from the Triple Helix and across the most important economic sectors in the region. Based on the

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joint financial commitment of all parties, a fund of 200 million euro has been made available (50 from the province, 50 from the municipalities, and 100 from industry) to support a regional innovation agenda, which was conceived in an intense interaction between the field and the Innovation Platform. The result is an increased commitment, an improved vision on the development of the region, a stronger lobby, and a joint agenda coupled to relevant funds. The Twente region, as well as all other regions in the world, has the challenge not only to create vital economic clusters by intertwining commercialization and innovation activities of the different actors but also to create the boundary conditions for vital clusters. Creating a density of talent is one of the most important ones besides a good logistical as well as knowledge infrastructure. This density of talent relies in large part on the quality of life a region has to offer. Although the Twente region is not well known for its high-paid and high-vacancy rate of jobs, the region has the benefit of relatively cheap housing in relation to the more densely populated territory west of the Netherlands and has an excellent quality of the environment. A very distinct feature of authorities is their risk aversion mentality. Whereas risk is an intrinsic part of private enterprise and academic work, public authorities are pressed by the population not to waste taxes on risky support schemes or other instruments that have the potential to fail. There is a very moderate incentive for success but a very large negative incentive for failure. Considering the interests of regional governments in the creation of wealth and jobs, miniaturization technologies compete with other technologies and with policies and initiatives of a very different type, such as roads or business parks. Authorities will generally be reactive on a given subject: there will have to be a clearly expressed need or desire, especially including the industrial community, before policies will be defined. Regional authorities often have a more hands-on approach and can relate more closely to a certain application field or technology. For the long-term sustainability of an initiative, the continued support of authorities is very important. This support in time should shift focus from financial support for R&D or for commercialization policies towards general support initiative. For the public research organizations and the industry, this implies that there has to be a visible evolution towards a mature economic cluster to ensure further support. If there is no visible success on a relatively short term, say two to three years, governments will become very hesitant to invest further in innovation in certain areas. One reason for this hesitation to commit to these long-term processes is the nature of these democratic systems that are more inclined to doubt and subsequently to call off succeeding investment steps or change directions. Of course industrial partners and public research organizations have this as well, but the perseverance in certain activities can deteriorate very fast if no visible progress has been made. And one needs to develop strategies that take into account these needs of governmental partners if one wants the government to support certain schemes. In the text above, we have tried to stress the interrelatedness of commercialization activities by discussing the importance of collaboration in the commercialization of micro- and nanotechnology. We feel that parties should be aware of each others’ respective roles in the commercialization process and construct long-term shared strategic goals. Engagement in commercialization activities by every party,

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Private Primary Actor

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whether government, industry, or public research organization, means a long-term commitment process. Investors cannot expect immediate returns or that their investments will help solve issues on a long-term basis. Instead, it is a long-term commitment to each other, and a constructive attitude in this collaboration process should be the basis for a shared long-term and strategic goal. The success and sustainability of a commercialization effort requires an integrated approach that includes the Triple Helix stakeholders. Central in the system should be a focus on markets and opportunities as a balanced counterweight to the existing technology-push in the academic environment. A very strong linkage to the academic system is of crucial importance: the alignment of interest of the commercialization effort and the academic system mitigates risk and increases knowledge and information flow. It allows some form of leverage of existing public funds in the very early stages. However, market orientation and business strategy should be the leading factors. Figure 5.2 below shows a simple indication of pros and cons of the various approaches we encounter on a number of key success elements related to the key players involved. Any choice for a commercialization approach should be aware of its weaknesses and create solutions to have a chance of success. From these schemes and activities that support and enable successful commercialization, the primary players should work together. The role of the government can be very productive in this situation as it is able to provide incentives to academic

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and industrial parties to overcome individualistic goals and to let the different interests converge on a collective level. The trick here, however, is to let the partners build towards these collective agendas, not to bend them in types of ways by forcing them to do things they would otherwise not do or are not particularly well equipped to execute. Below we will take some ideas to a more mundane level by putting forward a number of observations and suggestions based on experiences from MESA+. These observations and suggestions deal with structural and cultural aspects in the collaboration process as well as some remarks on the acceleration and the smoothening of the practice of commercialization in the micro-nanotechnology field. Because the observations and suggestions originate from experiences at MESA+, most of the mentioned points will put forward MESA+ as a dominant entity in the support of collaboration among academia, industry, and government. This, however, should not persuade our readers to think that the academic community should have a dominant role in the support of collaboration. We once again would like to refer to Figure 5.2, this time to show that multiple types of partners can have a more or less leading role in building towards the other partners.

Creating the Right Structures The creation of support schemes, incentive structures, and all kinds of other schemes and structures is the most obvious if one wants to improve the commercialization process. In the past two decades, MESA+ has created, helped with, and witnessed several initiatives to increase the success of commercialization activities. On a structural level, there are three types of initiatives that have contributed significantly to more successful commercialization around MESA+: • Initiatives that pertain to the internal organization of MESA+ to improve the performance in the commercialization process of the research institute itself • The creation of international, national, and regional networks that aim to join industrial, academic, and government actors on different levels • Initiatives that focus on facility sharing and more specifically collaboration through the use of facilities

Accommodating Your Organization In recent years, the internal organization of MESA+ has undergone several changes to accommodate a successful commercialization of its knowledge. A set of processes and procedures is necessary to support the commercialization process from within the organization. Over the years, MESA+ has created standard agreements for knowledge transfer, facility sharing, participation in spin-off equity, and participation of MESA+ personnel in spin-off companies. Furthermore, the communication of all of these measures is equally important. For the personnel of MESA+, it is fairly clear what they can and cannot do when they want to work with or set up a new company and what the possible prospects are for the company. For the external

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parties, mainly industry, it should be clear as well what can be expected from the research institute. Often, a private enterprise wants more than described above. It would like some exclusive issues and guarantees that support its continuity or limitations for the research organization with respect to its relationship with other parties. Such items have a chance of exerting a considerable amount of stress on the relationship. Therefore, the basis of the relationship, as well as the reasons why the other partner is engaged in the relation, should be well understood by both sides. If so, the relationship can withstand a considerable amount of stress around these additional items. We have developed a participation procedure in which the research group takes a share in the starting company in return for patents, licenses, and other forms of rights with respect to R&D results in a certain technology-market intersection. Such an arrangement evens the way for fruitful communication and cooperation without interfering with the core tasks of each partner. As a basic rule, we make sure that a financing partner is also involved as a shareholder. With all this we aim to create a stable environment in the early, vulnerable stages of a company. It also prevents the so-called transfer barrier, where people are very willing to assist the young entrepreneur, but from the moment a profit is made, researchers tend to guard new and interesting ideas and findings. “Why should the company make money with my ideas?” MESA+, in this case, uses different combinations of the following: • Transfer of a patent or a license, or the right to patent a certain invention. • Rights on publicly owned IPR on future developments. The private partner would like to prevent new findings in its core activity field from going to others, perhaps even to competitors. In this issue, we usually use a right to bid on any future IPR (patents, licenses) owned by the public research organization, in the case it decides to sell. The arrangement forbids the organization to sell to a third party under the price offered by the private partner. • Preventing the public research organization to perform any competing activities in the development or production phase. In this arrangement, the public research organization acknowledges the private partner as its preferred partner in these activities. It will not become active in development or production itself. • Right to protect new knowledge generated by the public research organization, if this organization decides not to protect these results itself. This arrangement is always coupled with a share in the company, or an agreement on royalties, to ensure mutual benefit. • Acknowledging the private partner as the preferred partner for development and production in research contracts of the organization. • Agreeing on mutual commissions for acquiring customers or projects for the other party. In each element, a considerable effort has been made to minimize the possibility of stress and keep the core of the arrangement in place. Separating low-stress issues from high-stress issues is the most important aspect of building long-term

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relationships with your industrial partners. This allows both parties to keep a position of excellence in their own fields and concentrate on core competencies and processes. The new relationship should not constrain the core activities of the research institute or the industrial partner. Therefore, any combination of the elements mentioned above will form a relatively stress-free basis for cooperation. Parties can respect and assist each other on this basis. Potentially stressful additional items can be added on top of this basis to fine tune the relationship. Furthermore, organizations should keep all arrangements limited in time, topic, and personnel: • Restrict the agreement to an academic chair or a defined number of people. Inventions in a certain field can, by chance, pop up at any place in the research organization. Especially in universities, it is crucial to make arrangements with the group in question. If other groups come up with interesting results, these are not included in the deal. • Restrict the agreement to a certain technology field. Try to define, as much as possible, which technological area is subject to the arrangements. • Restrict the agreement to a certain application or market field. • Restrict the agreement in time. These basics will prevent “proliferation” of rights and will allow for restructuring the relationship in time. MESA+ usually uses 3-year periods. This also allows the public research organization to be a partner in a future financing round. Alongside the points that are mentioned above, which concern the more processrelated improvements, the aspect of coordination has been very important in accommodating the research institute to acquire a more commercialization-aware stance. As we have emphasized before, low- and high-stress activities should be separated from each other, and commercialization activities should never compromise the core activities of researchers in a public research organization, since this will pose a threat to their excellence. This was a heavy weighing argument in the coordination of the commercialization activities throughout the MESA+ organization. MESA+ has concentrated the coordination and support around commercialization on a central level. The organization employs a technical commercial director who is responsible for commercialization and business venturing activities. Recently, a technology accelerator has been set up centrally by MESA+ to scout and implement new micro and nanotechnology business cases. One of its most important goals is to obtain commitment from governmental, academic, and industrial funding sources. This is one of the examples where commercialization activities are placed in close cooperation with, but organizationally outside, the core academic process so as not to compromise the research process. At the same time, these types of structures enable the organization to devise a central mission statement and structure that emphasize the commercialization of knowledge that is produced within the institute. The actual business development process is run in very close cooperation with the decentralized level (the work floor). It is the researchers who can see the potentials of new technologies as well as possible technological hurdles. The central staff (technical-commercial director, technology accelerator) will support the work floor in their

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ideas and plans to valorize a part of their research. This supports the commitment to the commercialization process and aligns strongly with the disruptive character of micro/nanotechnology commercialization processes, which require a strong mutual involvement of entrepreneurship and technology development (commercialization as a body contact sport). Through this organizational scheme, the whole chain of technology development through to commercialization and entrepreneurship remains strongly linked, from idea generation through to spin-out and growth. This decentralized approach is powerful, since it allows every single person in the organization to understand his or her added value and importance to the commercialization process, instead of the university’s technology transfer office alone. One way to accommodate this understanding is to devise processes and structures that support commercialization and are carried by the central organization and the research process. These efforts in turn will provide the organization with a framework to work from and consequently will contribute to a culture in which commercialization will become a more and more obvious part of the research process, not so much in the daily work of research but as a point of attention that one keeps in the back of the mind and the development of the skills to cooperate effectively. Cultural aspects will be discussed in more depth in the next paragraph.

Creating Facilities with a Common/Shared Interest Facilities are a powerful tool to create links between industry and the academic community. Since the lab facilities of MESA+ are the pivotal point of its operations, this has been a natural basis from which to attract industrial partners and help spinoff companies in their early years. On its own, MESA+ has developed the following facility sharing structures: • The use of MESA+’s existing R&D facilities for development and/or production. The user of the facilities pays a full-cost tariff per unit of time used. It is in the interest of both parties to increase the use of facilities. In their investment strategy, the public research organization will therefore take the interests of the private users into account. In normal operation, we will grant equal rights to a company user compared to a public researcher to prevent a double standard. In the exceptional situation that conflicts arise (e.g., breakdown of equipment, fully booked equipment), this principle will be maintained as long as possible. If this is impossible, the public users will prevail. • The use of technological facilities by company personnel is standardized and embedded as an integral part of the activities in the central labs of MESA+. This leads to a turnover in man hours of almost 30% by start-ups for the clean room labs. This number is still climbing. Also, dedicated clean room space and offices for the companies themselves have been realized. This indicates the mutual dependency and trust that has been realized over the past 15 years. • Co-investment in equipment. This allows the exploitation of a wider equipment basis. We make sure that the equipment is owned by the most relevant

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party and will grant rights of use to the other party for a rent based on integral cost that takes the co-investment and the strategic cooperation into account. • Sharing of offices and buildings. Being close together and meeting one another on a daily basis is a very strong catalyst for new ideas and mutual enrichment. By using the same physical environment, this closeness is supported. We observe a growth in information exchange and cooperation on different levels and an increase in new business ideas, to the benefit of both parties. • Keeping the channel of new publicly available knowledge and know-how open. Companies as well as research organizations have a variety of knowhow and knowledge that is, in principle, open to the public. Opening up communication on these issues in an early stage will help both sides to increase their general knowledge base. This process counteracts the competitive shielding of information between companies, or the “transfer barrier” within the academic workplace, discussed above. The highly frequent and unplanned encounters of researchers from academia and industry in the labs and at the coffee machine allow ideas to flow more easily and problems to be solved faster. What we aim to avoid is a one-way, one-partner view on commercialization. Instead, talking to different persons of other types of organizations keeps you open to new ideas and invokes a joint vision on commercialization. Sharing valuable resources creates a common base of operation where people from industry and researchers can meet each other. From this perhaps mundane level of cooperation and shared interests, the different partners can build towards each other (e.g., by the acquisition of new equipment that is too expensive for individual parties). Since micro- and nanotechnology are mostly characterized by the presence of multiple technology/application domains, this results in a desired high level of contact, leading to faster commercialization processes. The creation of places where knowledge and entrepreneurship meet is relevant in this context. Facility sharing creates a great center of gravity for these encounters. Facilities, however, are not merely an issue of luring industry to your own facilities to have them in your proximity. The broader development of an environment in which industry can take up residence is significant as well, especially with regard to spin-off firms. It should be the job not only of the public research institute to look after these issues. Universities and regional authorities can be helpful and instrumental in the creation of such facilities. The campus of the University of Twente is an example where the university in collaboration with municipalities and other regional authorities has developed several schemes that facilitate the industry in its settlement in the vicinity around the university campus and the collaboration with the university. The university campus is being seen more and more as a shared facility in itself. This can be seen in the Kennispark concept, where next to joint R&D programs, a strong emphasis is put on the further development of the area around the university campus. One part of that development concerns a masterplan for the campus and the adjacent Business and Science Park, focusing on an optimized environment for knowledge transfer. Sections for joint labs, for high added value production, for

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services, etc., are identified and defined for further development. This master plan is an important guideline for all future building developments and plays a central role in acquisition of new companies. The Business and Science Park was put in place 25 years ago to foster high-tech economic development around the university. In the Kennispark concept, it is integrated with the campus, which already houses some 100 small firms. The second part of that development is a 40,000 m2 joint facility for companies on the edge of the university campus and directly adjacent to the university’s core facilities, such as the clean room and the biomedical labs. This joint facility allows companies to build their joint labs and develop themselves in an optimal environment. The building is run by external parties and is developed as a project adjacent to the university, not as part of the university. This building is the core of all future facility sharing activities. The Kennispark concept already houses a number of incubator buildings run by the Business Technology Center (BTC), a private company owned by the regional development agency, a project developer, a bank, the municipal college Saxion, and the University of Twente. In its 25 years of existence, it has been extremely successful in fostering new business development.

Networks Networks are another crucial addition to the regional environment. While emphasizing networks, we will again start with the organization itself and move on towards initiatives that are more externally structured, i.e., national and international networks. The networks that MESA+ focuses on are networks of experienced entrepreneurs, networks for finance, and networks that support crucial information and experience. In the area of experienced entrepreneurship, Kennispark, joining efforts for all commercialization activities in the area, has a number of partner networks. First of all, there are a number of company associations that create a relevant environment for starting and growing entrepreneurs. The Technology Circle Twente TKT, for instance, binds together some 150 technology companies that have a relation with the university, mostly as spin-offs. TKT offers joint interest groups, contact with experienced entrepreneurs, information on relevant technological fields, support for acquiring new personnel, etc. A new and interesting effort here is the Mindshift program that could be explained as “experienced entrepreneurs helping young entrepreneurs.” On certain relevant technology areas, we find TIMP, a group of biomedical companies that offer a package in the market, or MINACned, the Dutch Micro/Nano Cluster, founded by MESA+ in the late 1990s. For MESA+, the Dutch National Nanotechnology Initiative NanoNed and the Microtechnology Initiative MicroNed are relevant networks that encompass many research groups next to large groups of active companies in the field of MNT. All of these networks are linked into the regional system and actively supported. The network for financing revolves around a number of key organizations and key persons. The most relevant organization is the Participation Fund East Netherlands, a public fund with a section, Innofund, devoted to seed financing. This fund links

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into several other financing parties and angel networks. Through some individuals and especially some of the Technology Accelerators (on-campus business developers), private persons from the financing community are linked into the system. Kennispark and MESA+ actively support these relations. One of the reasons to do so is to make the various properties of the Twente system known to the financing community. This lowers risk perception and increases deal flow. This is done through various topical meetings and programs. Finally, MESA+ invests heavily in international networks that support both research and commercialization. The research network partly is oriented towards other large institutes that have a strong national role and combine research with commercialization. The most prominent network in this regard is based on the link with the National Institute for Nano Technology (NINT) in Canada and is linked with the California Nanosystems Institute, the University of Tokyo, and the Korean Institute for Machinery and Materials. This network focuses on the research community and helps define regional and international programs that support multidisciplinary research and commercialization activities. A strong relation exists with MANCEF, the Micro and Nanotechnology Commercialization Education Foundation. MESA+ has always been a strong supporter of this foundation, for a number of reasons: increasing the speed of learning, increasing the value of international networks, and increasing the visibility of the MESA+ commercialization effort.

Inspiring Culture One of the key ingredients of a strong commercialization community is the internal culture. The culture should support ambition, risk taking, and cooperation. It should enable all parties to recognize mutual added value and support respect and trust. These elements will form the basis of a strong, result-oriented culture for commercialization. Creating a culture in which parties can see the relevance of commercialization and can see the relevance of investing in relations that do not produce immediate yields can be quite challenging. In MESA+ this has been a long-term process in which developing support structures on a central level has been quite helpful. By supporting bottom-up initiatives and communicating possibilities of commercialization top-down, awareness can be created on the shop floor. Key components in creating such a culture have proven to be the following: • Show and celebrate success. Successful forms of cooperation, of business development, or of company success are the most convincing arguments for commercialization efforts. Success should be celebrated. It attracts attention of researchers, who recognize the success and will become more interested in creating such success in their own environment. It will also challenge other entrepreneurs to become focused and sharpen their plans. • Use convincing advocates. MESA+ is lucky to have its key scientists very active and successful in the area of commercialization. They show that commercialization is fun and that it can indeed contribute to scientific quality, if played the right way. Commercialization effort doesn’t compromise

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scientific quality. We have used a number of renowned international scientists to underline that message on the MESA+ yearly symposium throughout the years. People like George Whitesides, Fraser Stoddart, Jim Heath, and many others can provide an outside view of how great science and technology can align with great commercialization. A long-term relationship is the obvious and ultimate goal if one wants to build a vital cluster. Trust and courage in this respect play a significant role. Creating networks and collaboration structures among entrepreneurs, researcher organizations, and authorities is a question of trust. Without this trust nothing goes. This trust, however, is a long-term commitment process where small steps in initial stages lead to more and more trust over time. Only after a while, when trust has been established, will partners dare to have the courage to take the risk that is needed for progress. Showing courage within a larger organization also points towards the need for leadership commitment and the need for strong key persons in the organization. Entrepreneurs within an organization, backed by long-term and visionary support from upper management, are needed, especially on the side of academic institutions and authorities. The above-mentioned risk-averse nature of such organizations often prohibits such an attitude. The stronger the cooperation and joint vision that is in the Triple Helix cooperation, the bigger the space will become for entrepreneurship and courage in the process. Creating a culture on the university level is something that definitely has played a role in the story of MESA+. In the 1980s, the term “entrepreneurial university” meant to focus more on external funds to create income for education and research, not commercialization per se. In the 1990s, MESA+ was mostly engaging in facility sharing as a form of entrepreneurial activity, which occasionally also saw the emergence of new companies. Facility sharing in these times was mostly seen as a way to earn some extra money to help carry the heavy load of cleanroom facilities. Around 1995, however, people began to see the importance of facility sharing beyond this very direct income benefit and saw the other advantages as well: knowhow exchange, inspiration for business cases or research programs, etc. Facility sharing contracts became increasingly bigger and took the interests of the companies involved more into account. Furthermore, not only did MESA+ rent equipment to others, sometimes equipment was hired by MESA+ from others. MESA+ started to rely on other party’s equipment instead of reinvesting itself. In the early 1990s, enterprises that were spun-out for the most part were based on creating interfaces between existing industry and the university for access to techniques and facilities. Twente MicroProducts for instance was a company that initially started as an interface-like foundation. By the year 2000, it had developed towards a mature and separate entity with a distinct business model and separate products. Since the mid 1990s, independent new businesses, based on products in growing markets with a solid financing structure and business model, have become a central point of attention at MESA+. This step could only be taken after MESA+ found ways to understand the dynamics of such companies and ways to structure its relationship with these companies. Illustrative for this change in mindset is the European Membrane Institute that was established in 1995. The Institute’s main purpose is to “offer industry and public

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organizations a platform where short-term research and development projects in the field of membrane science and technology can be carried out.” In addition to that, activities also include literature studies and marketing assessments. So far we have talked about culture only in the university and on the level of the academic researcher. We would like to conclude this paragraph by addressing the role of the authorities. This should be a role that includes thinking along with the universities and industry, acting supportively, and in the process being able to bear some risk yourself. The most important learning part for the industry is to appreciate the role of the government and universities and to learn to live with their restraints and limited ability to act in entrepreneurial fashion. They need to take time to understand the nature of academic and authoritative activities and implement this in their own business development strategies. In all, it is clear that focus is put on creating the right environment and culture to allow things to happen. Opportunities and initiatives arise through a bottom-up approach of people from R&D and companies meeting in the institute, the labs and buildings, and at coffee tables and bars. This culture helps people build successful relationships.

Accelerating the Commercialization Process Finally, we would like to make some brief comments on an important practical part of the commercialization process which thus far has not been addressed on a detailed level. Active business development is essential to speed up the process and increase quality of commercialization through existing or spin-out companies. The ways in which business development can take place are quite diverse and show, once again, that partners in the innovation process act from different perspectives based on their strong points but still are able to stretch their roles. At the University of Twente, every one of the four technological institutes has its own technical-commercial director, Next to Internal Affairs; these directors are responsible for business development on a decentralized level. They are the first contact point for aspiring entrepreneurs in the Institute, for patents, for company networks, for facility sharing, and for business ideas. The technical-commercial directors each have a business developer to support this role, especially from a market perspective. The business developer at MESA+ has a role that is optimized towards the specific nature of the MNT work field. He constantly scans the MESA+ research activities, from his market networks and experience. Yearly, he defines 1 or 2 out of 50 or more business ideas to meet specific criteria that could support spin-out in a later stage. He starts maturing the business case in question, making use of the existing research volume and adding development, IP policy, business model, financing strategy, and market links. He then carries the business case further to spin-out. A number of strong private financing parties are linked in to his activity, allowing a strong further development of the business case after spin-out. Such a model provides extra strength to the business development activity in MESA+, not only from the point of view of producing high-potential ventures but also from the point of increasing the speed of learning in MESA+. Already, the

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business development activity has shown a number of weaknesses in the rest of the system that could be improved to the benefit of many of the parties involved. Business developers can play a significant role in the early stages of spinning out ideas. These initiatives mostly do not rely solely on the proactiveness of individual researchers, but scouting new ideas is an important part of the activities. The MESA+ business developer has set the following goals: • Obtaining commitment from government, academia, and industrial funding sources. • Selecting candidate technology platforms potential for commercial benefit at an early stage. • Performing market analyses. • Supporting the development of proof of concept products. • Approaching potential clients and securing the necessary minimal intellectual property rights. • Pursuing non-diluting equity sources that will enable proof of concept technology platforms to cross the so-called “Valley of Death” to become manufacturable products. Thus it tries to offer strong process on financial, market oriented, and technological feasibility aspects.

Conclusions Experiences at the MESA+ research institute illustrate that it is important to take into account the different natures of the three types of parties involved in the collaboration process. Different parties have different roles and natures, and other parties should understand these roles. On the other hand, parties should not indiscriminately persevere in sticking to their “natural” roles. Since their interdependence in the commercialization process and in the creation of a vital regional cluster is undeniable, building shared long-term agendas is, in our view, the most efficient and productive approach. Public research organizations as well as governmental partners can nevertheless initiate their own programs and support structures. They should, however, keep in mind how the next step can be made in the commercialization process towards viable business cases. The whole commercialization process for all the parties is one big learning experience that takes time, effort, trust, and courage. It is not only a learning process for the public research organization itself, which tries to commercialize its knowledge, but also a learning experience for the governmental bodies and industrial sector partners who can benefit from increasing collaborations and more optimized tuning of activities among different organizations.

References

1. Leydesdorff, L. and Etzkowitz, H., Emergence of a triple helix of university-industrygovernment relations, Science and Public Policy 23, 279–286, 1996. 2. Clark, B.R., Creating Entrepreneurial Universities: Organizational Pathways of Transformation. International Association of Universities and Elsevier Science, Paris and Oxford, 1998.

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3. Benneworth, P., Academic Entrepreneurship and Long-Term Business Relationships: Understanding ‘Commercialization’ Activities. High Technology Small Firms Conference 2006, Enschede, The Netherlands. (URL: http://www.utwente.nl/nikos/htsf/ papers/benneworth.pdf). 4. Mensink, G.J., Groen, A.J. and Jenniskens, C.G.M., Monitor Technostarters Overijssel. Nikos, Dutch institute for knowledge intensive entrepreneurship, Enschede, The Netherlands, 2005. 5. Walsh, S.T., Kirchhoff, B.A. and Newbert, S., Differentiating market strategies for disruptive technologies. IEEE Transactions on Engineering Management, 49, 341–351, 2000. 6. Abernathy, W.J. and K.B. Clark, Innovation: mapping the winds of creative destruction. Research Policy 14, 3–22, 1995. 7. Leydesdorff, L. and Etzkowitz, H., Emergence of a triple helix of university-industrygovernment relations, Science and Public Policy, 23, 279–286, 1996. 8. Leydesdorff, L. and Etzkowitz, H., The dynamics of innovation: from national systems and “Mode 2” to a Triple Helix of university-industry-government relations. Research Policy, 29, 109–123, 2000. 9. Slaughter, S. and Leslie, L.L., Academic Capitalism: Politics, Policies, and the Entrepreneurial University, The Johns Hopkins University Press, Baltimore, 1997. 10. Etzkowitz, H., Research groups as ‘quasi-firms’: the invention of the entrepreneurial university, Research Policy, 32, 109–121, 2003.

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Market Analysis and Growth for Micro-Nano Products Jean-Christophe Eloy

Contents Objectives and Definitions...................................................................................... 106 A $5.6 Billion Market in 2005................................................................................ 107 Evolution of MEMS Markets....................................................................... 109 Mobile Phone and Consumer Applications: The New Target for MEMS Devices.............................................................................................. 110 New Offers: From Device to Module Business........................................... 112 New Industry Organization.................................................................................... 112 Examples of the Evolution of the MEMS Companies............................................ 114 SiTime: After 25 years of R&D, now MEMS Oscillators are Entering the Market......................................................................................... 114 SiTime History.................................................................................. 114 SiTime Facts and Figures.................................................................. 115 SiTime Production Activities............................................................ 115 SiTime Competitive Situation........................................................... 117 Bosch: World Leader for MEMS Sensor Manufacturing, Expanding in Automotive and Consumer Markets................................................. 117 Bosch History................................................................................... 117 Bosch MEMS Business Facts and Figures....................................... 119 Bosch Production Activities............................................................. 123 Bosch Competitive Situation............................................................. 124 Development of Foundries and Contract Manufacturers............................ 125 Japanese Mems Markets......................................................................................... 126 The Market for Equipment and Materials for the Development of Mems Devices......................................................................................................... 129 Analysis of the MEMS Equipment Market................................................. 129 DRIE: A Key Process for MEMS Manufacturing — and IC Manufacturing.................................................................................. 130 An Overview..................................................................................... 130

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Deep Etching Mostly Used for Inertial MEMS Devices and Silicon Microphones........................................................... 131 Analysis of the Nanomaterials Markets.................................................................. 137 Applications of the Nanomaterials.............................................................. 139 Business with Nano Materials..................................................................... 140 Long-Term Vision................................................................................................... 141 Reference................................................................................................................ 142

Objectives and Definitions MEMS devices have different definitions and content in different countries worldwide; for example: • Microtechnique in Switzerland, Microsystem Technologies in Germany, MEMS in the U.S., Micromachine in Japan, ink-jet head business in HP (Hewlett Packard) • Is MEMS an industry, a part of the semiconductor world, a part of the micromechanical world, or a part of sensor world? Our goal in this chapter is to make more visible the MEMS/MST business and provide accurate data on MEMS and MNT markets, business trends, and industrial strategies. The MEMS field is an industry with its own rules, technologies, roadmaps, equipment, and materials manufacturers. I am using the following definitions in this chapter: • MEMS (Micro-ElectroMechanical Systems) • Only devices with moving parts in µm to mm range and using photolithography process for manufacturing. The methodology used for the market evaluation considers: • Only stand-alone MEMS components, not the global system that includes the MEMS devices. • Volumes and prices are for a packaged MEMS (including or not electronics according to the component technology). Information has been gathered directly from the following:

a. System manufacturer: car equipment manufacturers, IT equipment, and medical devices manufacturers b. Devices manufacturers: key MEMS inertial sensor manufacturers worldwide c. Companies involved in the MEMS business: fabless, equipment manufacturers, material manufacturers d. Face-to-face meetings have been set up with the key persons in these companies in Europe, North America and Asia, which is part of the common, day-to-day work of YOLE Développement.

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Silicon Sensing Element Asic (hybrid approach)

Packaging Operations

First Level Packaged Devices = Component

Wire bonding of the die to a metal can

Integration Chip + ASIC Cointegrated (monolithic)

SMI (USA) Pressure Sensor

Figure 6.1  Definition of the terms used in this report (1). Second and Third Level Packaging With Electronic

SIP

DIP

Without Electronic

TO-8

Transducers With Special Housing

Or with Long Distance Amplification = Transmitter

Surface Mount Package

Figure 6.2  Definition of the terms used in this report (2).

Figures 6.1 and 6.2 give an explanation of the words we are using in the rest of this chapter. All our analyses are based on components (i.e., first-level packaged device).

A $5.6 Billion Market in 2005 The MEMS market reached $5.1 billion in 2005.1 Figure 6.3 shows the latest YOLE Développement forecast on the MEMS market, 2005–2010, based on silicon; another strong MEMS market is based on polymer, mainly for drug delivery and in vitro

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12,000

µ-fuel cells RF MEMS

10,000

Microfluidics MOEMS (incl. DMD) Gyroscopes

Market in $M

8,000

Accelerometers Silicon microphones Pressure sensors

6,000

Inkjet head

4,000 2,000 0

2005

2006

2007

2008

2009

2010

Figure 6.3  (See.color.insert.following.page.16.).Value.of.the.MEMS.markets.

Table 6.1 MEMS Markets 2005-2010 Ink-Jet Head Pressure sensors Silicon Microphones Accelerometers Gyroscopes MOEMS (incl. DMD) Microfluidics RF MEMS µ-fuel cells Total

2005

2006

2007

2008

2009

2010

1,532 911 65 394 398 1,292 404 105 0 5,101

1,663 1,053 116 431 435 1,743 453 128 0 6,022

1,660 1,150 172 472 506 2,069 508 150 0 6,687

1,881 1,172 259 571 595 2,348 629 199 1 7,655

2,004 1,206 330 699 691 2,748 732 259 26 8,695

2,015 1,254 398 860 801 3,154 849 331 65 9,727

diagnostic, not reported here. We expect that the MEMS markets will reach $9.7 billion by 2010, representing a compound annual growth rate of almost 15%. The value of each of the major MEMS market is shown. Our forecast 2006 was little higher in 2005 (we estimated a 2005 market at $5.6 billion). The main difference comes from a decrease of Texas Instrument sales (8% decrease compared to a forecasted 20% growth) and an adjustment of the value of the industrial pressure sensor market. In recent years, the MEMS industry has seen several important evolutions: • Continuous growth of markets with applications that are booming (silicon microphone, TPMS, 2D and 3D accelerometer); > 100% growth since 2004.

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• Device manufacturers are more and more often proposing modules in order to add value (for example, TPMS compared to pressure sensor). • Enhanced development of consumer applications. • Strong development of contract manufacturers and foundry business, averaging more than 35% growth. • Strong M&A activities with creation of new important players (acquisition of BEI Technologies by Schneider Electric, including Systron Donner; acquisition of First Technology by Honeywell; and a series of acquisitions by measurement specialties). • Changes in the manufacturing policies of several key players (introduction of the new permanent ink-jet head by HP, for example).

Evolution of MEMS Markets In the different MEMS product family, the following trends can be seen: • Ink-jet head markets: growth of the market value will eventually reach saturation around $1.8 to $2 billion. However, the number of devices sold will decrease strongly due to manufacturing changes at HP with the introduction of the Scalable Printing Technology (SPT); the HP heads are not disposable, and the new head is big and helps create faster and more precise prints. • Pressure sensor: the growth of the medical and automotive business is stable (around 12%). New applications like the Tire Pressure Monitoring System for cars are boosting this market (and Infineon/Sensonor account for the majority of this growth). • Silicon Microphones: the market has seen almost 100% growth in volume. Knowles Acoustics, with 100 M units sold, is the only player producing in volume at the moment. SinionMems, Memstech in 2005 and Akustica in 2006 now have devices available, and 2006 was a year of price pressure with another 100% growth in volume. • Accelerometer: the acceleration sensor market has evolved considerably. The automotive business is increasing rapidly with the growth of the Electronic Stability Program (ESP) (main players are VTI Technologies and Bosch). Consumer applications have started to use MEMS sensors in volume applications, including mobile phones (human machine interface, activation of logos, etc.), GPS, and pedometers. The number of new systems using the accelerometer is very important, and we think the market has great potential. The ability of device manufacturers to make profit out of these applications is another story as price pressure is very high. • Gyroscopes: here also, there has been strong growth of the overall market, due to different applications. The ESP market is growing very fast, with adoption of the system in medium-end cars. Silicon and quartz devices are competing on this application. GPS is another growth area, both for automotive and autonomous systems (stand alone or within two years included in a mobile phone). We have also seen a strong development of silicon-based

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•

•

•

•

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military and security applications, with the introduction of new devices from Honeywell. Optical MEMS: this area is still dominated by the Texas Instruments DLP. Although in 2005 there was a small decrease in the DLP market (DLP business from Texas Instruments decreased by 8%, due to price reduction and inventory adjustments), 2006 and the following years will see a restart in growth. Other applications like IR image sensors (micro-bolometers) are also growing very fast for security applications (the automotive business will really not start before 2008). The optical telecommunications area is also restarting at a very low level (less than $70 million) and is expected to grow by a few percentage points each year. Several new products are close to commercialization, including bar code readers, head-up displays, and head-mounted displays. Microfluidics: the microfluidic field is mainly a nonsilicon business (polymer is the key material for this application). But a few systems are using silicon to activate fluids or for other specific detection applications. This is a small business, with 8% growth anticipated. RF MEMS: despite several announcements, only two products are now on the market in volume: the FBAR (Agilent and Infineon are the main producers) for telecommunication applications (replacement of ceramic duplexer) and the RF switch for automatic test equipment (new devices launched by Teravicta and Panasonic). We do not see a strong growth of the RF applications for several reasons — MEMS-based RF switches still remain expensive and are not currently adapted for mobile phones. New interesting devices have been announced in 2005 for availability in 2006, including the replacement of quartz oscillator using a MEMS-based oscillator (SiTime). Micro fuel cell: several companies, including Hitachi, NEC, Fujitsu, and STM, have announced the launch of micro fuel cells for 2007 and 2008 (using methanol or hydrogen technology). We think that the start of the market will have a significant impact on MEMS business, starting in 2009 or 2010.

Mobile Phone and Consumer Applications: The New Target for MEMS Devices Microelectronics has led to the explosion of consumer electronics sales. The key challenge for the industry now is to make complexity invisible, to make technology intuitive, and to make access natural. The drivers for this are wireless functionality and a need for increased portability. The killer convergence application is the mobile phone. It started life as a device to make voice calls, but now it is doing a lot more. The mobile phone is gradually assimilating the functions of the PDA, laptop, and digital camera. The mobile phone will become the logical consolidator for multimedia and gradually increase its broadcast functionality.

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Since 2004, a key event has happened. The mobile phone industry is looking at the use of MEMS devices and linked technologies in order to bring new functions and solve key problems. The MEMS applications range for mobile phones is quite large: • Silicon microphone: improves the manufacturability of microphones for similar performance compared to ECM • 2D and 3D accelerometers: adds functions for man-machine interface and silent mode activation • RF MEMS passive and active devices: provides better integration of passive devices for RF module and better frequency agility • Gyroscope for camera stabilization and GPS: enables real digital imaging and preserves the GPS signal • Microfuel cell: provides longer lifetime for the batteries The functions to be integrated in the mobile phone are very important, i.e., replacement of the ECM microphone, new human machine interface, RF module with more frequency agility, new optical and image capture functions, positioning systems, identification, and new long lifetime batteries. At long last, MEMS devices are now methodically entering into the mobile phone business, offering key devices in order to leverage these new functions. The applications of these different devices are quite diverse and are enabling interesting technology features and, at times, are pure gadget. The applications and markets for MEMS in mobile phones were close to $2 million in 2004 and will go up to more than $250 million by 2008. The volume applications in 2005 were the 3D accelerometer for human-machine interface (volume sales at Analog Devices, MEMSIC, VTI Technologies, Freescale, and several other companies in North America, Europe, and Japan) and silicon microphones. There are several important considerations that MEMS devices still need to address in the consumer markets: • Standard package (especially CSP/WLP) • Package size : 1.2 mm ×5 mm × 5 mm max (to be included in mobile phone) • Small silicon die (less than 2 mm × 2 mm) in a 6’’ wafer (i.e., between 3500 to 5700 dies per 6” wafer) • Price between $1.5 to $2 max (less than $0.4 for Si microphone) • Digital output One of the key challenges for the mobile phone industry is price pressure. The price of MEMS devices has to be in the range of a few cents to two dollars maximum in order to be compatible with mobile phone pricing. One example: the use of gyroscopes for mobile phone camera stabilization will be only a solution for a three Mpixel sensor. Below this size of image sensor, a software solution will be sufficient. Fortunately, compared to the automotive industry, MEMS manufacturers have the ability to decrease the specifications of devices (in terms of reliability, lifetime, and specifications) in order to reach price targets. The price target for MEMS devices in mobile phones is clearly an issue:

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• For microphones, the price of the ECM microphone is $0.3. • For 3D acceleration sensor, the price target is less than $2. • For RF MEMS, the challenge is to be included in SiP/SOC approach, with an adapted price. These price targets are very aggressive, and cost effectively manufacturing such devices will be a challenge. The next months and years will determine if MEMS will be key devices in mobile phones. Offering devices at a higher price is possible, but only if the functions of the new device are enabling the service providers (the wireless communication service providers) to sell new services to recover that cost, as was the case with the image sensor. This is one of the biggest challenges for MEMS in mobile phones. Device manufacturers considering these applications are talking with service providers in order to understand the potential service to support — such as using the sensing capability of MEMS, extended battery life, etc.

New Offers: From Device to Module Business One of the key trends of 2005 has been the evolution of several players changing their offer from MEMS-based devices to a MEMS-based module. We see this trend in several applications, including the silicon microphone (new product launch by Knowles Acoustics and SonionMEMS), inertial sensors (with the development of the Inertial Measurement Unit), chemical sensors (MICS has changed from device manufacturers to module manufacturers), and more than ten other products. This is a very strong trend and will impact heavily the way MEMS manufacturers are working (especially given increased cost pressures).

New Industry Organization MEMS manufacturing activities have evolved rapidly over the last two years. MEMS manufacturers worldwide have basically seven different business models (see Figure 6.4). The differences between the different types of MEMS manufacturers are very important and include these different business models: • System manufacturers with internal fab: 200 companies worldwide use this business model, including world leaders like Bosch, Delphi, and Hewlett Packard, as well as large companies with small MEMS operations but sufficient for their business (like Fujikura and Endevco). They have their own MEMS facilities for the captive market, and several companies are also serving external customers. • Off-the-shelf device manufacturers: this is the second biggest part of the MEMS business. Large device suppliers like VTI Technologies, Infineon/ Sensonor, Freescale, and Analog Devices are concentrating on MEMS devices and selling to all possible companies worldwide. • Fabless companies: this business model is growing. As MEMS foundry services and contract manufacturers become a real business, fabless

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Market Analysis and Growth for Micro-Nano Products There are currently 7 different business models for MEMS companies

Business Models

Components Manufacturers

Foundries (Dalsa, APM, TMT, Neostones)

Contract Manufacturers Colibrys, Micralyne, Tronic’s, Memscap, Silex …

System Manufacturers Design Companies

«Off-theshelf » MEMS Components (AD, STM, Freescale …)

Integrated Fab (HP, Bosch, Olympus, Honeywell ...) Fabless (Akustica, Knowles …)

Engineering & Design (Lionix …)

External MEMS Fab with Internal R&D (bio Mérieux …)

Figure 6.4  MEMS business models.

companies have been very active over the last three years. Akustica, Discera, Knowles, and Lightconnect are key examples of such business activities. The relationship between fabless and contract manufacturers is still very complex because the management of intellectual property is always a challenge. The model can lead to months of discussion on who owns what part of the process, flow, and design. This is currently a key problem for this MEMS market. • Contract manufacturers: these companies are developing specific processes for their customers and then using the developed processes to deliver devices to the customer. Such agreements are generally made with exclusive rights or at least lead time because the customer of the contract manufacturer has financed the process development, paying the NRE cost. • Foundries: MEMS foundries use their available processes to manufacture MEMS devices for external customers. The design of the customer generally must be retargeted to the foundry processes in order to take into account the characteristics of the available process. Apart from the development of MEMS markets, the industry has entered a new phase with the recent industry consolidation in the past ten months. In 2002 and 2003, several MEMS companies disappeared due to a lack of business or difficulties with launching real products. The remaining companies (almost 350 MEMS manufacturers worldwide) are healthier, seeing a strong growth in their revenue and perhaps becoming profitable like HL Planar, Tronic’s Microsystems, and Silex. The important movement that started mid-2004 is industry consolidation — Colibrys (Switzerland) acquired Applied MEMS (U.S.A.), Schneider Electric (F) acquired Kavlico (U.S.A.), MSI (U.S.A.) acquired more than six companies in 2004, and Qualcomm (U.S.A.) acquired Iridigm Displays (U.S.A.).

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A few companies like Honeywell, GE, MSI, Schneider Electric, and Meggit Electronic have clearly announced their intention of important external acquisitions in order to gain access to key technologies and markets and find growth opportunities in MEMS-related businesses. We will certainly see a continuation of this trend in 2007 and beyond. Another key driver in the industry is the opening of vital industrial companies to external customers such as Honeywell, Bosch, Sony, Olympus, and Omron, which are now opening their manufacturing facilities for external customers. For example, two years ago, in order to attract more business, Bosch created an external customers’ business unit, able to develop and sell devices for automotive system manufacturers (sometimes competing with Bosch) and more generally for industrial partners. New players are also appearing. Thailand now has a public company manufacturing MEMS devices (MEMStech, the former EG&G Heimann MEMS activities); there are more than ten MEMS manufacturers in Taiwan, working as a foundry, manufacturing ink-jet heads, pressure sensors, and silicon microphones. Japanese companies have also restarted the investment in MEMS. Yole Développement has identified more than 90 companies developing and manufacturing MEMS devices. This year ten of them are launching new 3D accelerometers for consumer applications. The Japanese MEMS industry is characterized by a very strong presence of fab integrated in system manufacturers such as Olympus, Canon, or Fujikura, or device manufacturers (like MEW and Oki). On the other hand, there are few design houses; this function in the industrial food chain is mainly realized by R&D organizations and universities.

Examples of the Evolution of the MEMS Companies I will take two examples of companies showing the evolution of the MEMS industry: Bosch, the world leader for MEMS sensor, and SiTime, one of the new MEMS startups with strong potential.

SiTime: After 25 years of R&D, now MEMS Oscillators are Entering the Market SiTime History SiTime was founded in December 2004 in order to industrialize and commercialize MEMS resonators. The technology has been licensed from Robert Bosch, using a specific process developed by Bosch (Episeal and MEMS First process). The management of the company is led by Kurt Petersen, a MEMS pioneer and very successful founder of more than five companies. Markus Lutz and Aaron Partridge, who invented the process at Bosch, have joined the company with Petersen in order to bring their technical and industrial expertise. Now the company has 50 full-time employees developing the business and the technology of the company. Some data on the quartz market are important. The Quartz resonator market is a ten billion unit business per year, with an average price of $0.35 per unit. The market is very fragmented, with 18 companies sharing 80% of the market and the remaining 20% in the hands of dozen of other companies, either involved in high-end or

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very low-end applications. In addition, the IC timing market is worth $2 billion and involves different companies, like Texas Instruments and Cypress. SiTime Facts and Figures SiTime generated $11.5 million in a first venture round in 2004. The second venture round of $12 million was closed in April 2006 and a third round took place in May 2007, but the amount and the investors involved is confidential. The most interesting point of SiTime activity is its different business models. The company is providing the following offers: • For system designers, the company is selling MEMS oscillators, which are replacing quartz devices. This business is supported by a distribution network like Future Electronics in Europe. SiTime now has distributors in every industrialized country. The target here is to compete directly with quartz devices. • For IC manufacturers, SiTime is selling the resonator only, so the IC customer is able to develop its own PPL/ASIC in order to integrate the resonator and the MEMS resonator in its application, taking full benefit of the small size of the resonator. The market target here is system-in-package (SIP) and also multi-chip module solutions. • For quartz manufacturers, SiTime is proposing specific projects in order to develop specific resonators, assemble the MEMS resonator with the existing products of the quartz manufacturers. Here is the area of custom projects, with direct work with quartz manufacturers So SiTime is able to work with any kind of customer, including standard quartz customers and IC timing and quartz manufacturers, which were initially competitors. Therefore, the business models of the company are very smart. SiTime has already signed two agreements: one with Ecliptek (U.S.) and the other one with Micro Crystal (CH), the quartz crystal manufacturer of the Swatch Group. Ecliptek has already announced several products, included in the EMOtm family. The pricing in volume is announced at $0.7 per device. The main feature of the device proposed by Ecliptek is the QFN package of the device, using plastic injection molded packaging, allowing ultra-miniature footprint and low cost (see Figure 6.5). For this agreement, according to our analysis, SiTime is selling to Ecliptek a MEMS oscillator so that Ecliptek can build on top of it its own product. The agreement between Micro Crystal was made in the first half of 2006. The details of the agreement have not been disclosed, but we can imagine that SiTime will also deliver the resonator to Micro Crystal. SiTime already has 5.5 million units that are ready to be shipped, and they expect to sell more than 1 million units before the end of 2007. SiTime Production Activities SiTime is a fabless company and uses the vast infrastructure of the semiconductor fabless model. In fact, SiTime has developed the design of its resonator and the

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Programmable PLL and Compensation Die

Standard QFN Lead Frame

SiRes MEMS Resonator

Figure 6.5  SiTime packaged device.

linked IC, but the company has also developed the process used to manufacture the Programmable PLL and compensation circuit. The resonator was developed with the understanding made at Bosch, with a collaboration from Stanford University and also the support of SVTC, and 8-inch 65 nanometer private facility. This work was transferred to Jazz Semiconductor, where the technology is in high volume production, and the ASIC is manufactured by TSMC, both on an eightinch line. SiTime has introduced in October 2006 a first product of its type, the SiTO1OO™, a MEMS resonator that is the smallest in the world. This new device is shipped in the die format and provides a square wave signal in the megahertz range. It could be flip chipped on a substrate or another device or wire bonded on an MCM. The device is so small that 25 8-inch wafers are enough to produce 1,000,000 devices.

Infrared and Phase Contrast Visible Light Microscope Photos

Figure 6.6  SiTime resonator structure.

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The first applications targeted by SiTime are notebooks, cell phones, and DSC. The automotive market will be serviced by the end of 2008. The MEMS resonator technology does not allow the company to target high-end quartz at this time, but this will come later. SiTime Competitive Situation SiTime has in front of its activities the following three types of competitors: • Quartz manufacturers like NDK, Epson, Kyocera, KDS, Vectron etc., which are directly competing with the MEMS oscillator of SiTime (the first device of SiTime available is also compatible pin to pin with Epson and other device manufacturers). • Silicon oscillator manufacturers, like Linear Technology, Cypress, etc. • Other MEMS oscillator manufacturers like Discera, Silicon Clocks, and VTI Technologies; but here these different companies have a common target: make the MEMS oscillator credible in order to compete with quartz. SiTime is the most advanced company at the moment. So the competitive landscape is completely crowded, but, like Knowles Acoustics with the launch of the silicon microphone, the competitive advantage of a MEMSbased device is big enough to hit heavily the market. For SiTime, the business models are very smart.

Bosch: World Leader for MEMS Sensor Manufacturing, Expanding in Automotive and Consumer Markets Bosch History Robert Bosch GmbH was created in 1886 and now employs more than 240,000 people. Sales reached 41,461 billion euros in 2005, with R&D expenditures of 3073 million euros. The Bosch group is active in the automotive equipment market (world leader and 63% of the sales group in 2005), in industrial technologies (mobile hydraulics, etc.), and consumer goods (washing machines, etc.). MEMS activity at Bosch started in 1987 as a research area. The steps in the development of MEMS activity at Bosch can be analyzed in two different ways: product development and process development. Bosch’s development of both specific processes and devices demonstrates its strategic approach and originality. Both steps are analyzed in the following timeline: Product development: • 1987: • 1989:

Start of MEMS R&D activity Creation of a MEMS development department

 The text on this page has been updated from the original by Mr. Joe Brown — the Co-founder of SiTime.)

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• 1993: Introduction of the first MEMS product in volume production (pressure sensor) SOP micromachined mass flow sensor • 1995: SOP micromachined accelerometer • 1997: Silicon gyro in volume production, first generation • 1998: Market introduction of second generation accelerometer • 2002: • 2004: Market introduction of second generation gyro (surface micromachined sensor) • 2005: More than 100 million MEMS devices produced in one year Process development: 1992: DRIE process developed (named the “Bosch” process) 1995: Release of silicon surface micromachining design rules 1996: First Multi-Project Wafer run 1999: Invention of the EpiPoly encapsulation enabling MEMS in standard low-cost IC packages Release of bulk micromachining design rules • 2002: • 2003: Invention of the EpiSeal process, enabling sealing of cavities within a MEMS process, avoiding the use of seal glass for inertial sensors, for example • 2004: Development of a new process using porous silicon in order to create cavities inside a device, without using wafer bonders and enabling all silicon processes (APSM, Advanced Porous Silicon Membrane) • • • •

The last two processes have and will have an important impact on price reduction for pressure and inertial sensors. In parallel with the history of the R&D and product introduction schedule at Bosch, we can define several steps in the Bosch involvement in MEMS fields: • 1987 to 1993: Development of a key MEMS process and of several products (pressure sensors, acceleration sensors mainly) • 1993 to 1998: Introduction of the silicon accelerometer and gyro families • 1995: Start of foundry activity • 1997: Start of component sales to external customers in the automotive fields • 2005: Creation of Bosch Sensortec in order to address nonautomotive business and the need for foundry services The organization of the Bosch group is quite complex. The MEMS activities are shared among different organizations within the group: • Corporate R&D is involved in new concepts and new sensor development. All the sensor activities are coordinated with the group in order to reuse products and development and maintain the leadership of Bosch in sensor markets.

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Table 6.2 Evolution of Sensor Size (Source Bosch) First Generation

Second Generation

Third Generation

6.6 mm² 8 mm²

4.2 mm² 6.5 mm²

2 mm² 5 mm²

1 axis accelerometer 2 axis accelerometer

• R&D activities are located in the Stuttgart and Reutlingen (Germany) area, but Bosch also has a Research and Technology Center in Palo Alto (California, U.S., founded in 1999). Bosch is also a long-term industry member of BSAC (Berkeley Sensor and Actuator Center). • MEMS design, development, and manufacturing is embedded in the Automotive Electronics Division of the Automotive Technology business section and is in charge of the development and manufacturing of MEMS devices for the group. Manufacturing activities are based in Reutlingen, Germany, for the front end. Back-end manufacturing is carried out in several Bosch plants (Germany, Spain, etc.) but also uses external subcontractors (organizations like Amkor, ASE, etc.). • Bosch subsidiary Bosch Sensortec is dedicated to the nonautomotive business (mainly for consumer applications) and is working as a fabless organization, developing MEMS devices that are manufactured in the Bosch manufacturing facility in Reutlingen. • Bosch is also involved with other MEMS companies. It is a key investor in SiTime (linked to a technology transfer).

Bosch MEMS Business Facts and Figures The family of Bosch products includes the following devices: Inertial sensors: • Accelerometers for airbag and ESP (see Figure 6.7) • Gyroscopes for airbag, electronic stability program (ESP), and navigation systems Pressure sensors: • • • • • •

Manifold air pressure Barometric air pressure (engine management and airbag) Engine monitoring (high pressure) Fuel tank pressure Diesel particle filter pressure sensor Side airbag pressure sensor

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Chemical sensors: • Climate control sensors Bosch does not publish individual device sales, but according to our estimates, cumulative volume production since the beginning of Bosch production is as follows:

Figure 6.7  (See.color.insert.following.page.16.).Airbag.module.(Bosch.source).

Figure 6.8  (See.color.insert.following.page.16.).Gyro.sensor.(Bosch.source).

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• Acceleration sensor: 250 million sensors for the accelerometer structure (see Figure 6.10) 170 million sensors • Pressure sensor: 27 million sensors (see Figure 6.11 for the gyroscope • Gyroscope: structure) 60 million sensors • Mass flow sensor: Figure 6.9 shows the evolution of Bosch’s sensor size. The number of units produced is increasing every year, but, in parallel, Bosch is decreasing the size of the device. Table 6.2 indicates decrease of die size from generation to generation. The decrease in dimension is a result of significant price pressure. There is no Moore’s law in the MEMS field, but there is clearly a year-to-year size reduction due to customer price pressure. Several methodologies are used in order to decrease price:

Figure 6.9  Evolution of sensor size (Bosch source).

730 µm 813 µm 668 µm

Figure 6.10  Example of accelerometer structure (Chipworks source).

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× 300 #11

100 µm BOSCH RT

3.00 kV AE/QMM–S1

5 mm

Figure 6.11  Example of gyro structure (Bosch source).

Table 6.3 Evolution of Sensor Manufacturing and Sales Number of MEMS devices manufactured, in M units (Bosch data) Sales in MEuro (YOLE data)

1999

2000

2001

2002

2003

2004

2005

25

  50

  60

  67

  81

  93

105

80

140

150

160

210

260

325

• • • •

Decrease in the size of the active element Change in the sensing element structures (for example, for the gyroscope) Integration of the electronic circuit very close to the MEMS device Development of new process steps in order to decrease the manufacturing price (for example, the porous silicon process) • Development of low-cost packaging in order to avoid ceramic packaging for inertial sensors For example, the manifold air pressure (MAP) sensor price has declined by more than 60% between 1994, the first design, and 2004. The major price decrease can be attributed to the evolution of the packaging: Bosch was using metal can packaging at the beginning and then moved to hybrid substrate and finally, for the last generation, to premold packages.

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With the gyroscope, Bosch started with a ring comb drive structure, but the new generation uses a new coupled rectangular structure in order to obtain a better signal. From the first “macro” mechanical design in 1995 to the last surface micromachining device in 2005, the price has decreased by more than 70%. Table 6.3 provides a YOLE evaluation of the MEMS business at Bosch. The leveraged effect of Bosch MEMS activity on Bosch business is very important; the electronic sales generated by the MEMS devices are multiplying MEMS sales by a minimum factor of four. So the MEMS business has always been considered a strategic field at Bosch. Key growth applications for Bosch are ESP and engine management systems (especially diesel injection). Overall business is growing, but these two applications are by far the fastest growing ones. It is important to note that Bosch has changed its business model from that of internal fab for a system manufacturer to that of a sensor supplier for the automotive equipment manufacturers (a change made in 1997) and to the model of sensor manufacturer for consumer applications (a change made in 2005). We analyze these changes in more detail later in this chapter. We estimate at YOLE that in 2005 sales of Bosch devices outside the Bosch group accounted for approximately 17 to 20% of overall business. The nonautomotive business was just starting in 2005 and will be more significant in 2006 and in the coming years. The list of Bosch customers outside the Bosch group is clearly confidential, and no official data are available on the companies that are using Bosch as a sensor supplier. The applications where Bosch does external business are related to navigation systems (supplying gyroscopes), airbag systems (acceleration sensors, gyroscopes and pressure sensors), and engine control sensors (pressure sensors). These fields are also areas where Bosch is competing at the system level with its customers from the device level. This situation is accepted by the customers because of the performance, price, quality of Bosch products, and the fact that they value Bosch as a stable and reliable supplier. Competition with Bosch at equipment level could be an issue for several customers. Another important evolution in Bosch MEMS activity is the development of the cluster concept. Car manufacturers are increasingly interested in having a few “sensor clusters” that diffuse the information to the different pieces of equipment inside the car. Bosch has developed several sensor clusters, mainly for chassis control. Such clusters (like the MM3) integrate a gyroscope, acceleration sensors (used as premold sub modules), full digital processing, CAN interface, and more. The price impact of clusters is significant by enabling less wiring, centralized electronics, and sensing. Also, the signal can be reused by other equipment within the car. Bosch Production Activities The Bosch manufacturing facility, based in Reutlingen, operates with the following specifications:

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• 6’’ manufacturing line • 4000 m² of CMOS fab, where the MEMS front-end manufacturing is done • 3000 m² of MEMS back-end fab, where specific MEMS processes are used and a 1200 m² of clean room expansion just opened in 2006 • 45,000 wafer starts per month • 100 million MEMS units produced in 2005 • Test center and assembly line for packaged MEMS products • 300 employees in MEMS production • 250 employees in MEMS R&D In addition to the Reutlingen fab, Bosch has a back-end facility in Madrid (mainly for accelerometers). But all silicon parts are manufactured in Reutlingen. Bosch only uses silicon wafers (no SOI production as far as we know). The manufacturing line is today a six-inch line. Bosch has announced it is investing in a new eight-inch line, both for IC and the MEMS manufacturing. The new fab will be operational in 2008 and will require an investment of 550 million euro. This investment is linked to semiconductor manufacturing, but it will heavily impact the MEMS business at Bosch. The unit production capacity will be multiplied by 2.5, also enabling cost savings in manufacturing (due to the effect on batch processing) and preparing Bosch in the development of consumer markets. As far as we know, the six-inch line will stay in Reutlingen. Bosch Competitive Situation Bosch is involved in a complex competitive situation. Competitors of Bosch are at different levels:

a. System manufacturers: Conti Teves is the main competitor for ESP; Delphi, TRW, and Siemens VDO are all competing in one way or the other with Bosch. Several of these companies have internal MEMS fabs (like Delphi), and the others use sensor suppliers, including Bosch, to obtain MEMS devices. b. Automotive sensor manufacturers: VTI Technologies, Analog Devices, etc., for acceleration sensors; Systron Donner, Panasonic, Infineon/Sensonor, etc., for gyroscopes; and GE Novasensor, Freescale, etc., for pressure sensors are all competing with Bosch at the device level. c. Consumer sensor applications: MEW, Kionix, Analog Devices, etc., are also the main competitors for the consumer markets. Until now, Bosch Sensortec was only visible in the acceleration sensor market (with 2 axis and 3 axis sensors). The Bosch group is the world leader in automotive electronics, and the MEMS group at Bosch is by far the world leader in sensor manufacturing, with the broadest product range. The closest competitor is 35% smaller in size and has a limited growth rate.

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$700 $600

US$

$500 $400 $300 $200 $100 $0 2003

2004

2005

2006

2007

2008

2009

2010

Figure 6.12  MEMS contract manufacturers and foundries market estimation.

Development of Foundries and Contract Manufacturers In 2004, the MEMS foundry and contract manufacturing business was $130 million, according to Yole Développement, with an anticipated 40% growth rate for at least the next three years. Compared to MEMS markets, the foundry and contract manufacturers market is roughly 3% of the total MEMS business — very low compared to the semiconductor industry. Today, most of the contract manufacturers have a full plate, both for development projects and production. We anticipate that the MEMS foundry and contract manufacturer markets will reach total revenues of more than $500 million by 2010 (a 3 × market increase over a six-year period). We can see that most MEMS foundries have grown 35% or more. This growth is due to two primary factors: a continuous increase in activity for existing companies like DALSA Semiconductor, IMT, Silex, Tronic’s, SMI and Micralyne, and increased activity of Taiwanese MEMS foundry activities, mainly linked to Taiwanese markets. New players are entering the market, targeting high-volume applications like silicon microphones, inertial sensors, and ink-jet heads. New players like Dai Nippon Printing (inertial sensors) and Sony (silicon microphones) are now producing large volumes of MEMS devices on an eight-inch line. The example of Sony is significant; in 2005 Sony produced 100 million units for Knowles Acoustics with a significant growth rate (more than 100% per year). A majority of the more traditional MEMS foundries and contract manufacturers have moved or are now moving from four-inch to six-inch manufacturing. In 2004, the MEMS foundries and contract manufacturers secured most of the top ten places for the highest growth companies. We forecast a two-phase evolution over the next five years: • Strong growth of at least 35% between 2005 and 2008, due to new production of key growth applications linked to mobile phones and consumer applications. • Growth after 2009 will drop back to 15 to 20% per year.

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In addition to the introduction of new products, we will see over the next few years that today’s system manufacturers who have integrated manufacturing facilities will increasingly subcontract manufacturing to MEMS foundries/contract manufacturers. HP and Lexmark are clear examples of system manufacturers with internal facilities that also use external foundries in order to have access to extra capacity with strategic partners. Several other major companies with internal MEMS manufacturing are following the same model.

Japanese Mems Markets The Micromachine Center (MMC) has published during the Micromachine exhibition its evaluation of the MEMS markets in Japan. MMC estimated MEMS market volume in 2002 and in 2010 expectations in Japan. According to MMC, the MEMS market in 2005 was 420 billion yen, or approximately 2.9 billion euro. The large volume applications were the following:



a. Information processing and communication equipment, for 150 billion yen (or 1 billion euro): the main applications are linked to the hard disk drive industry and mobile phones b. Automotive, for 135 billion yen (or 900 million euro): it is mainly sensors for the automotive industry c. Precision equipment, for 91 billion yen (or 600 million euro): this part includes sensors for industrial applications but also small metal and plastic parts

Those different fields are strong industry in Japan. The market size estimated by MMC is larger than the estimation done by YOLE Développement. It is mainly a matter of definition. The YOLE Développement figures only include MEMS silicon and quartz devices (we are reviewing the metal and polymer parts in different ways) compared to the MMC estimation, which includes all type of microdevices. According the MMC, the next fields where the growth will be important are biotechnology, medical/social services, and society and culture. Those fields represent attractive markets expected to be high growth markets in response to future changes in society. MMC estimated that the market volume will be 1.36 trillion yen in 2010, or roughly 9 billion euro. According to their analysis, the large volume sectors (in the range of 200–400 billion yen) will be information and communications equipment, automotive applications, and culture (including sports). The MEMS market in these areas will expand and grow steadily. Development of low-cost MEMS sensors and RF MEMS enables significant growth in the society and culture sector because MEMS devices will be adopted in large numbers both in information-enabled home appliances and amusement products. The new game console WII from Nintendo is a good example of this trend. New markets for MEMS (in the 100 billion yen range) are new energy/energy saving, medical and social services, biotechnology, and aerospace. For realizing those applications, both new functions, enhanced precision and reliability will be

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1,600

($16B)

MEMS Market in Japan Agriculture, forestry, and fisheries

1360B yen

1,400

Urban environment and infrastructure Society and culture Aerospace

1,200

Billion Yen

Automotive

1,000

($10B)

Environment Energy

800 600 400

Biotechnology Medical and social services and facilities

426B yen

Maintenance Microfactories Measurement equipment

200 0

Precision equipment

2002

2010

Information processing and communication equipment

Figure 6.13  Evolution of the MEMS markets in Japan (source: MMC).

required. The key to the development of these markets will be the development of MEMS technologies based on new materials and new structures. Figure 6.13 shows the Japanese MEMS market trends according to MMC. Figure 6.14 presents the analysis of the evolution of the MEMS applications in Japan, according to MMC. The MEMS technologies and markets have been established in Japan as an industrial market since the mid-80s with the availability of silicon pressure sensors for medical, industrial, and automotive applications. Several Japanese companies have been involved in the MEMS fields since almost the beginning — Matsushita Electric Works (pressure sensors in the mid90s), Denso (pressure and acceleration sensors), and Mitshibishi Electric (pressure sensors), just to mention a few. Today MEMS activities in Japan are very strong: Yole Développement has identified more than 70 Japanese companies involved in MEMS development and manufacturing, with their own clean rooms and production facilities. The Japanese MEMS industry is characterized by a very strong presence of fab integrated in a system manufacturer (like Olympus, Canon, or Fujikura) or device manufacturers (like MEW, Oki, etc.). On the other hand, there are very few design houses and fabless companies: this function in the industrial food chain is mainly realized by R&D organizations and universities. The foundries have been established for 2 years in a network of ten industrial and R&D organizations, under the management of the MicroMachine Centre. These different companies are proposing several services, from full development and production to CAD tools and engineering services. This initiative (including Oki Electric, Omron, Olympus Optical, Hitachi, Fujikura, Matsushita Electric Works, Fuji Research Institute Corp., Nano Device and System Research Institute, ULVAC, and Nihon Unisys Excelutions) is important

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Commercializing Micro-Nanotechnology Products MEMS Industrialization Strategy & Scenario 1.36 Trillion Yen, ‘10 (Domestic Market) Others Ecology Medical Home

Evolution of MEMS

The evolution of MEMS enables us to solve various kind of social needs 2nd Stage: Multifunction devices -Miniaturization -High Performance -High Reliability

Eco Energy

Automobile IT Security

Information Technology Automobile

430 billion Yen, ‘02 1st Stage:

Medical Care

Evolution of MEMS by Three Dimensional Fabrication Technology Combined with Nano-related Functions

e

ur

at

em

Pr

Now MEMS devices being developed Single-function MEMS devices: by utilizing micromachining Pressure Sensor, Accelerometer, and semiconductor process Scanner, Inkjet Head Bulk-micro machining, Surface micromachining 2005

2010

2015

2020

Figure 6.14  Scenario analysis of the MEMS markets (source: MMC).

in order to bridge the gap of MEMS development and manufacturing for companies having specific needs and no ability to make their own development. What is missing at the moment in Japan is mainly contact manufacturers, i.e., companies able to develop specific process and manufacture devices on this process. It will certainly happen in the next two to three years. Another very important point is the presence in Japan of capital equipment and material manufacturers, with strong involvement in MEMS. Some of the leading ones include the following:

a. Capital equipment manufacturer: Sumitomo Precision Products, TEL, Samco, Ushio, Ulvac, Hitachi b. Materials manufacturer: Shin Etsu, Nippon Steel c. Packaging: Kyocera (strong leadership for MEMS packages) The Japanese companies are very active in all areas: • Automotive applications: Denso, Silicon Sensing Systems (joint venture between SPP and BAe), Mitsubishi Electric, etc. • Ink-jet head manufacturers: Canon, Seiko, Epson, etc. • Biochip and microfluidics: Olympus, Enplas, Takara Bio, etc. • Instrumentation in industrial and medical applications: Omron, Terumo, Yokogawa, etc.

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• New innovative devices: Sony (micro mirror arrays), Olympus (AFM tips), Nippon Signal (bare code reader), etc. The Japanese companies are less involved in new areas like RF MEMS, tire pressure monitoring, silicon microphones, IR image sensors, etc., but the industrial involvement in key devices for consumer applications is very impressive with the growing position of Oki, Hitachi Metals, and MEW. Several Japanese companies, such as Silicon Sensing Systems for gyroscopes and Epson and Canon for ink-jet heads, are world leaders in their activities. In the top 30 world MEMS manufacturers, 7 companies are involved in the ranking. Foreign companies like Freescale (former Motorola Semiconductor) also have manufacturing facilities in Japan. Tohoku Semiconductor, for example, is manufacturing the entire silicon acceleration sensor for Freescale and is on the way to industrializing a new product based on SOI. All the ingredients are present in Japan in order to make available the key MEMS devices for system manufacturers. This R&D and industrial infrastructure is used and will be key for the development of innovative modules and systems. The evaluation of the MMC is just showing the healthy MEMS activities in Japan.

The Market for Equipment and Materials for the Development of Mems Devices. Analysis of the MEMS Equipment Market The MEMS equipment market was $631 million worldwide in 2005 and is expected to expand to $758 million in 2008 and $861 million in 2010. The 5-year CAGR forecast for MEMS equipment is 6%. MEMS materials can be divided into substrates and chemicals and other materials. Together these markets totalled $385 million in 2005 and are forecast to be $771 million in 2010. MEMS materials are expected to grow at a five-year CAGR of 15% through 2010. The total worldwide MEMS equipment market is estimated at $631 million in 2005, of which $332 million is equipment used in front-end processing (52%), $199 million for back-end processing (assembly, packaging, and testing) (32%) and about $100 million is R&D tools (16%). The front-end equipment segment is expected to grow to more than $450 million by 2010, with a five-year CAGR of nearly 7%. This category of MEMS equipment will represent about 58% of the total equipment market at the end of the forecast period. Assembly/Packaging and test equipment is forecast to reach more than $275 million in 2010, which is about one third of the total equipment market. The assembly/ packaging and test tool segment will grow at about a 7% CAGR through 2010. The global market for MEMS R&D tools is expected to reach $125 million in 2010, with a CAGR of 5% over the forecast period. At that time, R&D tools will represent about one seventh of the total MEMS equipment market. Within the front-end tool category, nearly one quarter of global sales are for etching equipment, including deep etching techniques (DRIE). Etching is a key

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R&D equipment Test Assembly & Packaging Other front-end Wafer cleaning Inspection & Meas. Thermal processing Bonding Deep etching Etching Lithography Deposition

800

Market in $M

700 600 500 400 300 200 100 0

2005

2006

2007

2008

2009

2010

Figure 6.15  MEMS equipment markets.

process technology for forming/releasing mechanical structures in MEMS devices. A detailed analysis of the DRIE market is provided later in this chapter. Another rapidly growing MEMS tool segment is wafer bonding. The bonding equipment market is forecast to experience 10% CAGR, growing from $26 million in 2005 to $43 million in 2010. The development of advanced WLP technology is driving this market. As new MEMS devices are becoming more sophisticated in their design, the equipment used to test, assemble, and package those devices also becomes more sophisticated. Back-end equipment for MEMS applications is expected to grow at about 7% CAGR through 2010. Proliferation of MEMS devices — and therefore increasing unit sales — is another key driver of the back-end equipment market. Relative to the MEMS device market, which is expected to grow at a CAGR of about 14% through 2010, and the MEMS materials market, which is expected to enjoy a five-year CAGR of 15%, the MEMS equipment market is forecast to grow more slowly, with a CAGR of 6% through 2010. There is a strong market for retrofitted or refurbished equipment in the MEMS space; about 30% of the equipment market is for used equipment. We now focus our analysis on the deep reactive ion etching applications (DRIE), which provide a key example of the introduction of MEMS production equipment on the market.

DRIE: A Key Process for MEMS Manufacturing — and IC Manufacturing An Overview In 2010, equipment for MEMS manufacturing will be an $860 million market. Although this market is large enough to be shared by well-established players (STS, Alcatel MMS, EVG, Suss microTEC, etc.), the specific requirements of some MEMS process steps (deep etching, thick coatings, sacrificial release, wafer bonding, etc.) could open opportunities for newcomers. This article reviews the technologies and market trends for specific MEMS front-end equipment, deep reactive ion etching (DRIE).

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Market Analysis and Growth for Micro-Nano Products Chemical Dry Etching (CDE) Isotropic (non-directional) Lack of dimensional control

131

Deep Reactive Ion Etching (DRIE) Anisotropic (directional) Improved dimensional control

Fully Isotropic Etching

Anisotropic Etching

Figure 6.16  Comparison of DRIE process and wet processes.

Deep reactive ion etching was developed more than 14 years ago. The process was invented at Bosch in 1992 by F. Laermer. The first company that bought the process license from Bosch was STS in 1994. The first equipment release occurred in 1995 with the introduction of the Anisotopic Silicon Etching (ASE) process. DRIE is an anisotropic (directional) process, replacing the wet chemical process and enabling etching independent of crystal orientation structure, vertical etched structures and high aspect ratio structures. Figure 6.16 presents a comparison between wet etching and DRIE. Figure 6.17 shows a typical device made with DRIE equipment. According to YOLE Développement analysis, the installed base of DRIE equipment worldwide was about 700 at the end of 2006. Deep Etching Mostly Used for Inertial MEMS Devices and Silicon Microphones The main market today for deep etching equipment for MEMS is for inertial MEMS devices. Figure 6.18 shows the main applications for DRIE in MEMS but also in other areas of the semiconductor industry, including advanced packaging. We can identify two interests in the use of DRIE for MEMS manufacturing: • High accuracy etching for accelerometers, gyroscopes, RF MEMS, micromirrors, etc. • A high etch rate for microphones, ink-jet heads Today 70% of total accelerometer production is comb-drive accelerometers (which represented more than 170 million units in 2005). Some of the companies manufacturing comb-drive accelerometers are Delphi, Denso, Bosch, Analog Devices, Motorola, Panasonic, and Tronic’s Microsystems. For gyroscopes, we

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Figure 6.17  Typical structures made with DRIE (source: Alcatel MMS).

estimate that more than 60% are silicon or quartz surface micromachined. The users of such equipment include Bosch and Panasonic. There are two competing DRIE process technologies: the Bosch process and the cryo process. A summary of both processes can be seen in Table 6.4. Although the cryo process has slightly better selectivity, it requires lower temperature baking. The Bosch process is the most widely used worldwide, and Bosch has licensed its process to the major equipment manufacturers. Figure 6.19 presents the evolution of the DRIE process at STS in MEMS manufacturing, with a visible evolution of the etch rate. The cryo process is well suited to large wafer sizes: this process helps provide better uniformity. The challenge here is to have temperature uniformity on the wafer

% of DRIE Use

>85%

Si µ-Phones

>70%

Accelerometers

~50%

Gyroscopes

RF-MEMS

<20% <5%

P Sensors

MOEMS

Inkjet Heads <2003

Advanced Packaging

2006

>2008

Time to market for large scale production

Figure 6.18  DRIE applications (source Yole Developpement).

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Table 6.4 Comparison between Bosch and Cryo Processes Bosch

Cryo

Etch process in small steps, followed by a cleaning step. During etching, a polymer is formed on the sidewalls.

Substrate cooled down –100°C to –150°C. Formation of SiOxFy on the sidewall, preventing sideways etching.

Evolution of the DRIE Process for MEMS Manufacturing:

Pegasus - 4th generation 25 µm/min “Improved” ASEHRM* 18.7 µm/min

ASEHRM - 3rd generation 14.6 µm/min

ASEHR - 2nd generation 5.6 µm/min

ASESR - 1st generation 3.3 µm/min

Figure 6.19  Continuous improvement of DRIE process (source: STS).

surface. As to the companies involved in the DRIE market, the Japanese and the rest of the world market are quite different. Outside the Japanese markets, the key players are STS, Alcatel MMS, Lam Research, Oxford Instruments, Aviza Technologies, and Oerlikon Balzers (formerly Unaxis). STS was the first company to license the Bosch process in 1994 and has developed four different generations of equipment since that time (see Figure 6.20). STS has also announced the development of a new 300 mm platform for the pure semiconductor business. Figure 6.21 presents the evolution of the Alcatel equipment family. In the Japanese market, the companies involved are Sumitomo Precision Products (SPP, mother company of STS), Samco, Tokyo Electron, Shinko Seiki, Panasonic, and Ulvac. Non-Japanese companies involved in the Japanese market are mainly Alcatel MMS, working with Canon. The total worldwide market for DRIE for MEMS manufacturing and development includes around 30 pieces of equipment in 2005 and will jump to more than

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50 units in 2010. The world leader is STS, followed by Alcatel MMS. According to YOLE Développement analysis, in 2005 these two companies together had worldwide more than a 75% market share. In addition to MEMS sales, DRIE has been increasingly adopted by semiconductor companies for applications in advanced packaging, power devices etc., which are building more sales for MEMS-related use of DRIE equipment.

Industrial Validation: Microspect Project

ASE HRM Improvements

Performance

ASE-HRM SOI Etch Parameter Ramping ASE-HR System SOI etch Increased Passivation 2 Step Approach ASE Process ASE-SR System Bosch Licence

94

95

96

97

ASE-SR 1st Generation

98

99

00

ASE-HR 2nd Generation

01

02

03

04

ASE-HRM 3rd Generation

05 Year Pegasus 4th Generation

Figure 6.20  Equipment and process roadmap (source: STS).

Patented ICP plasma source for Si etching 1994

A 601E : System for R&D and Pilot Production 1996

Bosch Process License Agreement 1998

I-Speeder project AMS 200 “I-SPEEDER”

2002

2006 I-Productivity project AMS 200 “I-PRODUCTIVITY”

Figure 6.21  Alcatel equipment roadmap (source: Alcatel MMS).

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The growth of the DRIE business can be analyzed in the following way: • 1991-1994: process and equipment development at Bosch and STS. • 1994-1997: first sales made to the R&D market. • 1997: beginning of DRIE use for high-volume production; inertial sensors were the first application. • 1997-2005: development of volume production with different generations of equipment, etch rate improvement, and adaptation of the equipment for volume manufacturing (development of cluster tools, implementation of production software, development of etch monitoring equipment). • After 2006: DRIE will target the mainstream semiconductor industry, with development of 300 mm tools and equipment that will implement SEMI standards. In parallel to business growth, the process has also been further developed, with a very significant increase in the etch rate. Figure 6.22 presents the evolution of the etch speed (in proportion to the open area) with Alcatel MMS equipment. Figure 6.23 provides a look at the evolution of the sales of DRIE equipment since 1994, based on YOLE Développement estimates. YOLE’s model in detail can be used and adapted for new processes in the MEMS industry, like wafer bonding and double-side mask aligners as well as for new processes under development like supercritical gas cleaning and xenon difluoride etching. This model was built by YOLE Développement, and we are using it in our strategic and market analysis for equipment manufacturers. Sales in 2000 and 2001 were very high due to the optical MEMS bubble (which was linked to the optical telecommunication bubble). In 2002, 2003, and 2004, the equipment market was adversely affected by the supply of secondhand equipment, 60

2007

40 30

2006

20 10

2002 100

80

60

40

20

Etch Rate (um/min)

50

0

0

Open Area (%)

Figure 6.22  Etch rate function of open area in 2002, 2006, and 2007 (source: Alcatel).

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140

R&D and production equipment for non MEMS applications

120 100

Production equipment for MEMS

80

R&D equipment for MEMS

60 40 20 20 04

20 02

20 00

19 98

19 96

19 94

0

Figure 6.23  Evolution of DRIE sales (source: YOLE Développement).

which according to our analysis accounted for more than 30% of the total market (in addition to the data mentioned in Figure 6.23). Since 2005, this secondhand market business has stood at below 20% of the annual market. Several trends are influencing this market. The production of MEMS is moving into high volume. Thus, different suppliers must provide robust high-volume manufacturing equipment. STS, SPP, Alcatel, Lam Research, etc., are now proposing such equipment, which consists mainly of a cluster tool with several chambers. Up to 2005, the equipment was mono-chamber. The second trend is that new markets are reusing the DRIE process: companies involved in power devices (for deep trench etching for integrated power modules), 3D stacking of IC devices (for via etching for memory stacking, for example), and advanced packaging are all at the moment testing DRIE as a key new process for future development. These applications are being tested by the existing suppliers, but they will need full production equipment that implements SEMI standards that are still under development. As a consequence of these two trends, equipment manufacturers with strong involvement in etching business and those who come from the mainstream semiconductor fields (like Lam Research, Tokyo Electron, and Applied Materials) are all either developing or proposing such equipment, targeting the volume markets. This trend is reinforced by the interest of semiconductor companies in MEMS. All the top 50 semiconductor companies worldwide (including Intel, Samsung, Freescale, Infineon, STMicroelectronics, and Renesas) are either manufacturing MEMS devices or developing such processes. They all need DRIE equipment, and they are generally working with large equipment manufacturers. The added value of the companies involved in this field for years is the engineering capability and the long experience in process development and adaptation to specific needs. The “MEMS law” (for each device you need a specific manufacturing process, different from device to device) has been a key enabler of the engineering capabilities of such companies as STS, SPP, and Alcatel. New product offerings are appearing from semiconductor equipment vendors with a strong background in volume production (like Lam Research). System

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Nanotechnologies

Nanomaterials

Nanoobjects & Nanocomposites

Nanotubes Nanoparticles

Figure 6.24  Range of Nanomaterials technology.

reliability, process repeatability, process performance across the wafer, and strong customer support are the key focuses for the semiconductor equipment companies and are as important as the increase of etch rate in order to increase the yield and maximize the wafer output. With a different price structure, the semiconductor equipment manufacturers are proposing equipment that includes all the lessons learned from the semiconductor industry. These trends may change radically the way the market is established today. The market growth is significant, and the reuse of MEMS processes for other devices will certainly change the way the industry is organized.

Analysis of the Nanomaterials Markets The nanotechnology fields have been investigated in R&D for many years, and a large part of the business potential linked to nanotechnologies is still to come. First several definitions: The nanotechnology fields are covering a great variety of topics, from chemistry to drug discovery and surface treatment. The nano materials specifically relate to the development and production of new materials made using nano particles and nanotubes. We focus our analysis on nano materials because the production business is there and is very active. As a matter of fact, the industrial business of nanotechnologies today is exclusively linked to nanomaterials like carbon nanotubes, colloidal silica, and nanoclay. We have three types of applications of these nano materials: • Integration of the nano materials in liquid matrix in order to make chemical mechanical processing (CMP) in the semiconductor business or cosmetic products

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• Integration of nano composites in bulky plastic or composites matrix in order to have materials containing nano particles • Integration of nano particles in coating applications A common way to obtain a nanomaterial is to add nano objects into a matrix. When this matrix is a polymer, the material is called a nano composite. Most innovative nano objects with a large availability are: • Nanoparticles: nanoclays, colloidal silica, and other inorganic nanoparticles (alumina, zinc oxide, etc.). These products have been commercialized sometimes for more than 10 years now. • Carbon nanotubes: these more recent products discovered in 1991 will have an important commercial potential based on the very specific properties they bring, such as high mechanical strength and high conductivity. Figure 6.25 shows these three applications. The industry organization is rather different compared to the MEMS business. The nanoparticles manufacturers are generally small companies, mainly start-ups, which have a limited impact in the industry. The key added value is linked to the integration of these nanoparticles in industrial process. This is the key aspect of the nano materials business: being able to produce kg or tons of carbon nanotubes is complex but does not generate that much added value. The key knowledge is the integration of this material in matrix, solutions, complex compounds, etc., in order to be integrated in existing chemical process.

There are 3 main applications fields depending on the matrix surrounding the nano-objects: Nanocomposites Bulk Plastics or Composites Applications

Coating Applications

Sport Goods Packaging

Automotive Body Coat

Examples

Liquid Matrix Applications

CMP (Chemical Mechanical Planarization)

Cosmetics

Figure 6.25  Nano particles application fields.

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Integrators

Final Users:

Liquid Matrix Nano-objects Manufacturers

Automotive, Aeronautics,

Bulk Plastics

Coatings

Resin Manufacturers

Polymers Manufacturers

Peripheric Players

Additives Manufacturers

Solid Polymer Matrix = Nanocomposites

Construction, Consumer Goods...

Figure 6.26  Added chain value of nanomaterials.

No chemist or industrial company will change its manufacturing process in order to use nanomaterials. The nanomaterials manufacturer or the integrator has to do the adaptation work in order to propose a product that can be used directly in a factory. Figure 6.26 presents this added value chain.

Applications of the Nanomaterials Nano objects’ specific properties can improve existing functions (scratch resistance, reinforcement, etc.) or even make new functions possible (such as antimicrobial, easy to clean) by their integration into a final material. The main advantage of this integration is the combination of several functions that sometimes were previously incompatible: ESD (electrostatic discharge) effect and a relative transparency, hardness and flexibility … These functions can generally be obtained with a very low concentration of nano objects (about 5%). This low concentration balances the relative high cost of the particles that ranges from $5 to $1000 /kg and even higher for some carbon nanotubes. There is already a wide range of commercial applications that can be segmented in three fields, depending on the final surrounding matrix of the nano objects: • Liquid matrix: sunscreen, slurries for wafer polishing, medical dyes, etc. • Bulk plastics or composites: automotive plastic parts, tennis balls and rackets, cables, beverage packaging, etc. • Organic coatings: automotive body coats, wood flooring, outdoor wood coatings, etc. Figure 6.27 presents the different functions that are available for the three types of nano materials: scratch resistance, reinforcement, and barrier coatings.

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Market Penetration

Polishing

Large Volume Applications

Polishing

Ex: CMP Ex: CMP

Scratch Resistance Several Niches Applications

Ex : Wood Flooring

Ex: Automotive Parts

Scratch Resistance

Barrier

Ex : Wood Flooring

UV Protection

Ex : Wood Coating

Easy to Clean Ex : Textile

Easy to Clean Ex : Textile

Few Early Stages Niches

Anti Microbial

Ex : HVAC Coating

Corrosion Protection Ex : Outdoor Metals

Self Cleaning

R&D

Reinforcement

Ex : Architectural Coating

Refractive Index

Ex: Sunscreens

Ex: Packaging

Conductivity - ESD Ex: Auto Electrostatic painted parts

Anti Microbial Ex: White Goods

Reinforcement

Ex: Sportive Goods

Catalyst

Ex: Automotive Fuel

Rheological Agent

Ex: Toothpaste Thickener

Fire Retardant

Ex: Cables & Wires

Field Emission

Bulk Plastics

Liquid Matrix

Ex : Display

Coating

UV Protection

Ex: Display

Figure 6.27  Main functions and applications of nanomaterials.

Today volume applications are linked to the CMP business. Apart from this application, a lot of niche markets are now using nanomaterials, like the reinforcement of sports goods and antimicrobial protection for HVAC, but each of these niche applications is using only kilogram of materials every year. Figure 6.28 presents the evaluation of the nanomaterials markets. We at YOLE Développement estimate that the nanomaterials markets reached $1.1 billion in 2006, mainly linked to CMP applications, and we expect a market of $2.6 billion in 2010. An overall 23% growth rate per year is expected, with market segment (like carbon nanotube) growing by more than 60% per year. The business opportunities linked to nanomaterials are clearly very important and could change the way of working for various industries.

Business with Nano Materials New nanomaterials increase their market penetration thanks to their wide range of possible functions, easier integration, and more affordable pricing. And this is just the beginning. Nano objects manufacturing is today the most dynamic and emerging activity directly linked to nanomaterials: more than 150 start-up companies have been formed worldwide in the past ten years. Nanogate, a German company, is one of the most famous and well developed in Europe. Large chemical companies are arriving

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Markets for new nanoparticles and CNT

Forecasted Annual Sales (M$)

3000 2500 SWCNT 2000

MWCNT Other Inorganic Nanoparticles (Al2O3, TiO2, Ag, ZnO…) Nanoparticles Colloidal Silica

1500 1000

CNT

Nanoparticles

Nanoclays

500 0

2005

2006

2007

2008

2009

2010

Years CAGR of 23% is expected for both materials. CNT is the most growing nano-object with 60% growth in volume expected. Nanoparticles are forecast to exhibit a growth of 24%.

Figure 6.28  Nanomaterials and market evaluation.

on the market (Bayer, Arkema, and Rhodia, for example), which is also a sign that this sector is becoming really attractive. Integrators (i.e., polymer and coating manufacturers) are arriving more and more in the field with nanocomposites offers (PPG, Honeywell, PolyOne, Basell, Becker Acroma, etc.). It is expected that those integrators will be increasingly involved in nanomaterials as the nano objects integration is becoming simpler than in the past. Finally, final users in automotive, construction, sports, and textiles realize the potential differentiation that could be brought by nanomaterials to their final products. As already explained, world market demand for nanoparticles and carbon nanotubes is estimated to be higher than $1 billion in 2006. Nanomaterials diffusion was up to now limited to high-value niche markets: a lot of new applications will emerge and be developed in the coming years thanks to the price reduction of the nano objects. It is therefore expected that the nanomaterial market will grow about 30% each year.

Long-Term Vision What could happen in the MEMS industry? What are the key business trends? We at YOLE Développement believe that the market will move in the following ways: 2005 markets: • The market is very fragmented, and its value has reached $5.1 billion. More than 400 companies are developing or producing MEMS devices. • Few products have reached high volume: accelerometers, gyroscopes, optical MEMS, pressure sensors.

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• New products have been introduced, like RF switches and silicon microphones, which are starting to impact the market. • The top 30 MEMS manufacturers are together producing more than 70% of the MEMS devices. • The production infrastructure is in place, and all the new companies are fabless organizations, using the existing MEMS foundries or the ASIC foundries. The main evolutions we are forecasting for the next ten years are the following: 2010 markets: • $9.7 billion worldwide. • MEMS foundries and contract manufacturers are representing at least 8% of the world market, and several are public companies. • More than 50% of current systems companies with integrated fab will be using external manufacturers. • Several large integrated companies have created independent MEMS spin-offs. • IC manufacturers will be deeply involved in MEMS manufacturing. 2015 markets: • The market could be as big as $18 billion worldwide. • We can forecast that the majority of the system manufacturers with internal manufacturing facilities will be using external foundries, perhaps all of them. • 70% of the total market will be in the hands of semiconductor manufacturers; that means $7 billion will still be in the hands of specific MEMS manufacturers for sensor applications (automotive, medical, instrumentation, etc.). The semiconductor companies will be using MEMS devices and technologies for consumer applications mainly. These long-term trends are open for discussion, but the key signs of the evolution of the MEMS markets are here. The future will certainly show strong evolution of the MEMS markets, both in the industry infrastructure and also in the development of the MEMS markets and applications.

Reference

1. All market evaluation from Yole Développement is based on the first level packaged sensor. For example, for the evaluation of the ink-jet head business, we are including only the packaged head, instead of counting the complete cartridge (including housing and ink). It clearly decreases the total volume of the market but provides a more realistic vision of the component-based systems. Figure 6.1 includes only silicon-based devices. An important part of the MEMS markets is related to polymers. Key European players like Microparts in Germany are involved in the development and manufacturing of polymer microdevices. This part of the MEMS market is not analyzed in this chapter.

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Plc: 7 Oxonica A Leading U.K. Nanotechnology Business Kevin Matthews Contents Building the Company from a University Spin-Out and Developing a Market..... 143 Origins Pre–1999.................................................................................................... 145 Spinning Out — In the Wrong Direction — 1999–2000....................................... 145 A Change at the Helm (2000–2001)....................................................................... 148 Raising VC Money 2001–2002............................................................................... 151 Go to Market 2002-2005........................................................................................ 153 Business Model............................................................................................ 153 Partnerships and Intellectual Property........................................................ 154 Envirox Fuel Borne Catalyst for Greater Fuel Efficiency....................................... 155 Optisol™ Photostable UV Absorber...................................................................... 157 Corporate Development 2002–2004....................................................................... 159 Floating On Aim..................................................................................................... 160 Pipeline Development............................................................................................. 161 Nanoplex Technology............................................................................................. 161 Other Pipeline Technology..................................................................................... 163 Solacor™ UV protection for plastics and coatings..................................... 163 Security Markers......................................................................................... 163 The Total Pipeline................................................................................................... 163 The Nanotechnology Debate.................................................................................. 164 The Future............................................................................................................... 165 A Personal Perspective........................................................................................... 165

Building the Company from a University Spin-Out and Developing a Market By agreeing to write this short history of Oxonica, I hope to share the real story of a technology start-up, the trials and tribulations and the successes, with other entre-

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preneurs who may either be actively engaged in a similar challenge or contemplating taking the plunge.

Figure 7.1  Professor Peter Dobson.

Figure 7.2  Dr. Gareth Wakefield.

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Origins Pre–1999 The company originated in the University of Oxford’s Engineering School or, more specifically, the Department of Materials Science. The academic founders were Professor Peter Dobson, who was Professor of Engineering, and Dr. Gareth Wakefield, a Post-Doctoral Research Fellow working with Dobson. Professor Dobson’s background had included industrial research at Phillips, and in the 1990s this had evolved into a specific interest in nanomaterials, including phosphors, metal oxides, quantum dots, and the optical properties of such materials. Gareth Wakefield’s Ph.D. was in electron microscopy, and this interest developed into the preparation of nanomaterials, driven by the need to secure good samples to study under the microscope. Nanomaterials are advanced materials that are engineered at the nanoscale (i.e., less than 100 nanometers (nm) that have size-specific chemical or physical properties). For instance, as particles are decreased in size, the surface area to volume ratio increases dramatically, with a commensurate increase in chemical or catalytic activity. Nanomaterials are typically fabricated by reacting molecules together in a carefully controlled process to yield the particular size and composition required. There is a popular perception that nanoscience is about making things smaller; in fact, most of the chemicals we use in our daily lives (e.g., detergents, drugs, and cosmetics) are single molecules with a size of around 1–2 nm. Nanoscience is about assembling these single molecules to give a new material form. I liken this to children’s construction toys; the individual pieces are the building blocks (molecules), and when children tip them out of a box, they form a natural random mound of pieces. However, with careful assembly, these can be converted into cars, cranes, houses — it is the equivalent careful construction of molecules that results in advanced functional or even multifunctional nanomaterials. Together Peter Dobson and Gareth Wakefield formed the creative force that developed the ideas and technology that Isis Innovation subsequently patented and elected to commercialize through the formation of a spin-out company. At Oxford, the university owns the technology developed by its academics and researchers, and Isis Innovation, Ltd. is the technology transfer arm of the university specifically charged with commercializing this intellectual property. In 1998, Dr. Wakefield was asked if he would found and join the fledgling organization and rapidly became immersed in filing patents and dealing with the administrative challenges of setting up a company. A marketing study was completed, and the business plan was set with the main focus on nanoparticle phosphors that could be used for low voltage field emission displays. The company was established in 1998 and was spun out from the university on August 15, 1999, as Nanox Limited.

Spinning Out — In the Wrong Direction — 1999–2000 When Nanox was spun out of the university, the company raised a total of about £750,000 from the private investor (now of Dragon’s Den fame) Richard Farleigh and a private investment company, Seighford Investment, led by Charles Eld. The shareholdings were 20% for each of the founding investors, 30% for the University of Oxford, and 15% each for the two academic founders.

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Figure 7.3  Source of Innovation; The University of Oxford.

Figure 7.4  Richard Farleigh.

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Figure 7.5  Charles Eld.

The original employees of Nanox were a mix of experience and young blood. Dr. Wakefield joined the company to lead the research. The ex-head of R&D of a large corporate was hired as part-time CEO and Chairman. In addition, Oxonica hired a business development director, process manager, and administrator. Nanox funded a post-doctoral worker at the University of Oxford to continue to develop field emission display technology. The new company had five employees. The board consisted of the two founding investors, with Charles Eld acting as finance director, a representative from Isis, the two academic founders, CEO and business development director. This appears to be a fairly typical board composition of an early stage spin-out, which also tends to be very operationally focused. In the early days, this focus on operations is paramount in ensuring that the basic tasks of setting up and running a business are managed. Nanox was founded with an exclusive licence to two areas of intellectual property: nanoparticle phosphors and doped metal oxides for improved UV absorbers. The small spin-out team focused on the development and marketing of the phosphor technology for field emission displays to allow the use of lower voltages. The key challenges facing the team were: • Developing a reproducible manufacturing process to scale up production • Demonstrating the application — low voltage performance of the phosphors across larger screens • Improving the formulation/dispersion of the materials • Securing commercial partners

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These themes became the common challenges for all the subsequent projects undertaken by Nanox/Oxonica, with the only difference being the application. After about 12 months, commercial realities became clear. The phosphor market was largely controlled in the Far East, and the displays market had too many competing technologies. Field emission display had significant technical challenges and was not the leading technology. Indeed, no company’s field emission systems are being marketed at present. The board reviewed its options and concluded that there was a need to diversify the product potentials and initiated a period of research activity to achieve this.

A Change at the Helm (2000–2001) As part of the strategic review, the board concluded that a full-time CEO was required to focus the business on new commercial opportunities and to drive rapidly the execution of these opportunities. The part-time CEO was asked to step into this expanded role. At the same time, he was also being asked to increase his commitment to another company in his portfolio, which had established revenues and profits and hence a greater degree of security. After careful consideration, the CEO elected to step down from an executive role at Nanox, although he stayed on the board as a nonexecutive director. This was a critical time for Nanox, with no clear direction, no day-to-day leader, and the company beginning to run short of cash. Despite this background, the board persuaded Edward (Ted) Mott to join as Chairman of Nanox, with the clear remit of refocusing the company and hiring some commercially-oriented executive management. Mott came to the company with a strong background in finance and the development of business as well as considerable experience of Asia. Mott faced a major task to begin the transition from a research culture to a product-focused business. The key challenges were to secure additional funding to keep the company alive while a clear business plan was pulled together and a management team was hired. He successfully raised around £200k in angel financing by October 2000, including an investment from his own fledgling fund, Oxford Capital Partners. Mott started to change the company culture, shifting out of the comfort zone and investing a lot of time in trying to identify and analyze the opportunities. This was a difficult time for the company and many of the individuals. In December 2000, he hired Dr. Barry Park (currently Oxonica’s Chief Operating Officer) to commercialize the sunscreen technology in-licensed from the University of Oxford and brought in a finance person to strengthen the business planning and financial controls. In January 2001, Mott hired me as full-time CEO. Soon afterward, Mott left the board to focus more on building a leading Oxfordbased venture fund in Oxford Capital Partners. He has subsequently remained close to the company as an investor and supporter. At the same time, the company sold the Nanox name to Elementis plc (a U.K. Specialty Chemical company) and renamed itself Oxonica. This name change coincided with my joining the company in April 2001 and the subsequent crystallization of the model and focus that has carried Oxonica through to being a leading

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Figure 7.6  Dr. Kevin Matthews, CEO, focused on new materials.

Figure 7.7  Oxonica Logo.

international, publicly listed nanotechnology company. I believe this period was an important landmark for the company and the culture. My background had allowed me to build a range of operational experience that subsequently proved critical in my role at Oxonica. I had studied chemistry at Oxford, gaining a D.Phil. in organic chemistry, and had then moved into the chemical industry, working for ICI, Albright & Wilson, and Rhodia S.A., where I held management roles in technical, financial, and business areas. My role prior to joining Oxonica was as a global business director for a fast-growing, innovation-led specialty chemicals business. One of the product areas within this business was based on surface technologies, where I had my first exposure to nanotechnology. I started to appreciate the technology and commercial opportunities that a greater understanding of how materials function at the nanoscale could provide. As a direct consequence of this,

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I began to seek opportunities more specifically in the nanotechnology space that would also bring with them the additional experience of financing growing businesses, and I found Oxonica. My immediate priorities as the new CEO were to build and expand on the reform started by Mott. The key actions facing me were to change: • An operational board into a strategic body focused on ensuring the company remained funded, with a clear direction and with the appropriate policies and reporting in place • A business with patents and research skills into a commercial productfocused operation that was responsive to customer need • A business with eight weeks’ money left in the bank into a properly funded operation with the capital resources to achieve its vision It is worth highlighting the key contribution that Charles Eld made at this time. Eld is one of the original angel investors and characterizes many of the key attributes that an angel can bring to the table to help an early-stage company develop. He is a pragmatic, hands-on investor — I am sure a proportion of the executives reading this will groan at the statement. Another interfering busybody investor who rings me up everyday to check on “progress”? Wrong! Eld was acting finance director, and when Mott resigned, he stepped into the role of chairman. He actively engaged and pushed forward the preparation of a draft business plan and initiated a number of investor meetings to take place on my arrival. On the day I joined, Eld made it clear to me that I was the CEO and that he would not interfere and undermine my authority but would be available if I needed advice and would help whenever requested. He then handed over the reins of Oxonica. He stuck by this philosophy, even when times were difficult. In addition, he backed the business with cash, which helped to build confidence with other investors when it was hard to secure funding in early 2001 and allowed us to raise £480k in the summer of 2001. From my own experience, I conclude that early-stage technology companies have specific challenges: • Finding suitable “investors with balls” who will back the management and the vision even when ultimate success looks difficult. There are few companies that drive forward at the edge of technology innovation that do not have setbacks or delays. Therefore, it is important for early-stage companies to find investors who recognize the risks and are investing in the fundamentals. The focus can migrate to the business plan, revenues, profits, etc., as the business development stage matures. • Persuading individuals who have relevant business experience to join the board and the management team. This issue often comes down to the credibility of the start-up — will it survive? The fact is that many of the most desirable individuals for such a company are in secure, well-paid roles with major multinationals. Luring them into a high-risk venture with no market presence, little support infrastructure, and a questionable cash position is nontrivial but critical to success.

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• Not spending enough time on marketing. This is especially true I believe for science-based companies where the natural desire is to sort out the technology before engaging the market. • Securing the first deals. Start-ups have no history and no brand value and hence very little credibility (even if originated from a university with a brand respected all over the world). Therefore, customers are extremely skeptical of the products, the company, the benefits being offered, the ability to supply, etc. The onus is on the start-up to be even more professional than the blue-chip, to deliver above expectations on every interaction, and to be open about issues in order to overcome the “not invented here” syndrome. • Managing the evolution of the board and the senior management team in line with the growth and development of the business. My immediate focus was to define what Oxonica was trying to be. This translated into an intense activity on the strategic plan to define the mission and target markets. This resulted in a business plan underpinned by a clear portfolio rationale that was focused on risk, reward, and resource. The business was early stage and had a number of opportunities it could pursue. The pipeline analysis clearly highlighted the need for the immediate focus to be on shorter time-to-market opportunities, which would be both attractive to investors and build capability within the company to commercialize products and become self-sustaining. Hence product development was focused on a fuel-saving technology for diesel vehicles and a UV absorber technology for cosmetics. The opportunity pipeline was maintained with a minimal investment in clinical diagnostics and externally funded early-stage research in the areas of solar cells and security labels. The projects were managed through a gate process that is represented in Figure 7.8. Analysis of the pipeline at the time clearly demonstrated that all the projects were early stage but with some significant market opportunities. Therefore, the next challenge was funding. It was clear that to be successful the company needed to raise a significant amount of money to move from having concepts to introducing tangible products that could be commercialized. The assessment was that we would require £4 m. It seemed unlikely that the company could sensibly raise this amount of money from private individuals in 2001. The cracks in the dotcom boom were starting to emerge, so we focused on securing enough financing to carry us through to a venture capital (VC) funding round targeted for the end of 2001. So, from having eight weeks’ money when I joined the company in April, we closed a private investors round that raised £480,000 in July/August. Our burn rate at that time was about £80,000 per month, and we calculated that we would end the year with £40,000 in the bank.

Raising VC Money 2001–2002 During the summer of 2001, Oxonica raised sufficient funds from high net worth individuals to allow the company to begin to develop its core products. To be successful in the longer term, however, the company still needed to raise significant funds from the venture capital market. We recognized that we had little expertise

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Phase 0 Idea

Phase 1 Feasibility

Photovoltaics For Solar Cells

Phase 2 Proof of Concept

Phase 3 Scale-up

Phase 4 Pre-commercial

Phase 5 Commercial

Sunscreen

Clinical Diagnostics Fuel Emission Catalyst Security Labels

Figure 7.8  Oxonica pipeline in 2001.

in securing VC money within the organization and appointed First Capital as our corporate finance advisers. We prepared the business plan and investor presentation and launched a new venture capital financing round on September 9, 2001, two days before the tragic terrorist attacks in the U.S. In response to these events and the uncertainty around the world about the potential impact of terrorism, the financial markets immediately turned extremely risk-averse. We realized some funds would withdraw from financing early-stage technology companies but were not clear which these would be. We therefore felt compelled to launch a broad approach. About 90 venture capital groups reviewed our business plan. We drew a broad geographic range of interest in the U.S. and Europe as well as the U.K. I had face-to-face meetings with some 55 VC’s, 36 of which proceeded to follow-on meetings. This was a very demanding period, with the cash position yet again becoming a concern, up to eight intensive meetings a day, and the business to run. It reminded me of a trait that a previous mentor had said was a pre-requisite to be successful in business — stamina. It was exhausting! All of this activity resulted in only a single term sheet: despite all the interest from venture capital groups, only one had the risk appetite to lead our financing — Foresight VCT. The Foresight term sheet arrived in late November, and it took until February 2002 to agree to the terms and construct a syndicated investment. Our forecast had been that we would finish 2001 with £40,000 in the bank, and we did. Our burn rate was still £80,000 a month, but we had already taken steps to generate cash, which enabled us to continue until June 2002 without further capital-raising. This was not without some ingenuity. Each month we started without enough cash to finish the month, but despite that, we never missed a salary run. We got a government R&D

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tax credit, did contract work, and took a loan underwritten by the DTI — in fact, anything reasonable and legal to bring in cash. This was a business stage when both hard work and grim determination were required. The Oxonica board recognized that the company could only continue to trade if it believed substantive financing was possible in a realistic timeframe. Without that belief, the company would have been technically insolvent. The reputations and credibility of all the directors were at stake, but we kept going and were able to close the venture capital round. We had been selective over who came into the investment round and had attracted companies such as the venture arm of the multinational German chemical giant BASF; two top-performing U.K. VCT funds, Foresight VCT and Trivest VCT; Northern Venture Managers; Generics Asset Management; and NGen Partners (a California based fund) — overall a solid group of investors, with capacity to support the company in further financing rounds. The fundraising was a difficult time for many people in Oxonica because we kept changing priorities. If something else could generate immediate cash, we switched to doing it. Yet we did not lose a single employee of the 12 we then employed through the whole of that difficult year. We closed the financing in June 2002, and only then could we really drive things forward. That 2002 VC (venture capital) round brought in £4.2 million. The company won an award for the deal based on the fact that only 40 similar stage companies had received VC financing in H1 2002 across the whole of Europe. Looking back, I do not think we would have been so confident at the board table staring insolvency in the face had we known the odds we were playing against. The harsh reality is that there were probably other companies with an investment-worthy business plan that did not survive — you are reading Oxonica’s story now partly because we were able to raise money in a difficult financial market. At the same time as closing the VC round, the board composition was changed to reflect the new challenges and ownership of the company. Farleigh, Dobson, Wakefield, the previous CEO, and the business development director all stepped down. Representatives from Foresight and NGen joined the board, with Charles Eld continuing as chairman. Personally, I had achieved the three objectives I had formulated on joining Oxonica. The strategy was set, the business was funded, and the focus was now on execution. We subsequently raised two further rounds of venture financing to support development of the business. The first rights issue at the beginning of 2004 raised another £4 million, the majority of which came from the existing investors. The second rights issue in Q1 2005 raised £2.6 million.

Go to Market 2002-2005 Business Model Oxonica’s mission statement is to develop innovative commercial solutions for international markets using the group’s expertise in the design and application of nanomaterials. The business model Oxonica has chosen focuses on the group’s strength in identifying market opportunities, securing intellectual property, and introducing new technology to the market. The group’s operational strategy is to introduce

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End User OXONICA Identify Market Opportunities Develop Commercial Solutions

Strategic Partnerships

Outsource Manufacturers

Figure 7.9  Oxonica has a highly leveraged model.

products to large end user markets to establish the customer value proposition, create customer demand, and outsource manufacturing. The group then seeks to form strategic partnerships with recognized industry leaders to accelerate and maximize market reach. The focus on market opportunity has resulted in the application of Oxonica’s broad based technology in a number of different industry sectors. This creates some unique challenges in terms of managing the complexity of the business. The operational strategy the business has developed to address this complexity consists of two main themes.

Partnerships and Intellectual Property Oxonica focuses on product definition and application but outsources manufacturing. In addition, Oxonica demonstrates market acceptance and price points through focused niche or lead customer sales. To access the volume market, Oxonica seeks to form strategic partnerships with organizations that already have the sales channel, market interface, and brand recognition in place. The model is exemplified in Figure 7.9. Oxonica is structured corporately around market-focused operational divisions. The Oxonica Group currently has four divisions: energy, healthcare, security, and materials. As projects move through the pipeline and cross over from proof of concept to scale-up, the risk profile is judged to be sufficiently lowered to allow the recruitment of industry or domain specialists. Hence each division with products on the “go-to-market” track is headed by a senior industry professional. The other area of core focus for the group is intellectual property (IP), including patents, trade names, and know-how. Ultimately, IP is Oxonica’s core asset and is actively managed. Oxonica’s COO has considerable experience in prosecuting patents and initially had the principal role in liaising with the company’s patent attorneys. However, as the portfolio grew and the activity dealing with the prosecution increased, the company employed an experienced IP manager to manage the patent portfolio on a day-to-day basis. The portfolio is reviewed regularly by the senior team in order to both manage internal IP and maintain and develop knowledge of external IP, always working to optimize an IP position that can be exploited as part

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of Oxonica’s commercial strategy. Oxonica currently maintains a portfolio of ca. 50 patent families, with around 210 national applications. Oxonica’s activities in nanotechnology are specifically in the area of nanomaterials. These products are specifically designed and engineered at the nanoscale to have novel properties. The team has expertise in solid state physics, chemistry, engineering, and biochemistry and uses a multidisciplinary approach. Oxonica has been able to design and develop inorganic-based materials that deliver specific functional benefits, often combining them with organic or biochemical systems. One of the key challenges in the manufacture of nanomaterials is keeping them “nano,” stopping them from forming larger particles in the product application. This often requires the development of specific coating technology. The key generic advantages of the Company’s products are: • Stability and robustness to both heat and light and transparency • Significantly increased surface area as a percentage of total material — thereby increasing chemical reactivity • Functionality that is either novel or significantly enhanced relative to existing solutions Two of Oxonica’s products, Envirox™ fuel borne catalyst and Optisol™ UV absorber for cosmetics, may be considered in order to exemplify the generic features. Envirox™ combines the heat stability of an inorganic material with the significantly enhanced surface area characteristic of small particles. This has led to a product that improves the combustion of diesel fuel. Regarding Optisol, the UV light stability and efficient UV absorbance of inorganic materials (titanium dioxide or zinc oxide) is combined with a chemical additive that results in the undesirable UV radiation from sunlight being converted into small amounts of heat, leading to a product technology with significant performance advantages in UV protection.

Envirox Fuel Borne Catalyst for Greater Fuel Efficiency Envirox is a fuel borne catalyst shown to yield significant improvements in diesel fuel combustion with resulting benefits in fuel consumption and emissions reduction. The product was launched in 2003, and fleet trials to date have demonstrated fuel savings from 5% up to 11%. In addition, separate studies have shown a reduction in particulate emissions by up to 15%. Envirox also contributes to the reduction of the greenhouse gas carbon dioxide (CO2). For every tonne of fuel saved, about three tonnes less CO2 is produced and released into the atmosphere. Envirox is marketed based on the economic advantages of saving fuel and additional benefits to the environment. Envirox is typically sold with 1 liter of concentrate treating 4000 liters of diesel. No engine modifications are required to use Envirox. Referring to the business model discussed previously, Oxonica’s initial focus was on gaining a lead customer. The niche identified was transport and specifically buses. This was driven purely on pragmatic grounds; buses operate from depots that have their own fuel storage tanks, hence simplifying the fuel addition process.

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Figure 7.10  Particle size determination for Envirox.

The lead customer identified was Stagecoach Group plc, a leading U.K.-based bus operator. Following a successful 12-month trial, Stagecoach agreed in November 2004 to adopt Envirox for use across its entire U.K. bus fleet. The trial conducted with Stagecoach involved 1500 buses in two regions of the U.K., 12 depots, and 15 bus/engine combinations. The headline results from the trial indicated a fuel savings of greater than 5%. Having secured a lead customer for Envirox, the marketing focus switched to identifying potential channel partners to access the volume market and specifically the non-depot based passenger vehicle and truck market. In the case of Envirox, the obvious partners were fuel companies. The issue was how to position the product. Clearly, when selling to a fleet, the message is simple: save fuel — save money. The oil company sale was more complex: save fuel — reduce turnover does not work. The answer is that the sale of fuel to consumers takes place in a competitive market with relatively few differentiators: brand — national or international, price or performance. Therefore, Oxonica is selling a claim set to the fuel companies supported by laboratory and field test data allowing them to differentiate their diesel fuel with Envirox. The fuel company can then either charge a premium for the fuel or increase market share, or it can do both. In August 2006, Oxonica announced its first major oil company deal with Petrol Ofisi A.®, the Turkish national oil company. This represented the first major use of Envirox in the consumer market and was a significant step for both Envirox and Oxonica. The size of the global market, estimated by considering Envirox is used in all diesel fuel consumed in transport and off-road uses, results in an addressable market of approximately $3 billion. From a personal perspective, I believe that Envirox also offers a real and tangible way of reducing carbon dioxide emissions. A great deal of effort is being invested by many companies globally in trying to find the breakthrough, game-changing,

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Figure 7.11  Petrol Ofisi forecourt with performance diesel fuel.

technical solution to the carbon dioxide emission problem, but in all cases it appears that these are some ways off. There are many technologies and products sold today that can give immediate and cost-effective benefits in terms of energy efficiency and hence emission reductions. More priority and support should be given to these “quick wins” to slow down the generation of greenhouse gases. In the case of Envirox, a 5% fuel saving in the fuel supplied by Petrol Ofisi translates into 200,000 metric tonnes of carbon dioxide saved annually.

Optisol™ Photostable UV Absorber Optisol photostable UV absorber was launched to the suncare/cosmetics market in April 2004. UV absorbers are active ingredients typically found in sunscreen products. The performance of these ingredients essentially supports the performance claims on the product packaging, e.g., sun protection factor (SPF) 30. As such, Optisol is an ingredient sold into a consumer market in much the same way as Envirox. However, the cosmetics and sunscreen market is a market that is much more complex than retail fuel sales, with many more performance claims made for products and ingredients, much more sophisticated claim language, and many more brand choices. The major trends within the skincare market are continuing strong growth in the overall suncare market being driven by public concern about the effects on health of exposure to sunlight: • Increasing use of anti-aging products • Increasing incorporation of UV absorbing ingredients into everyday products • Increasing use of products containing sensitive components such as vitamins and natural products

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Commercializing Micro-Nanotechnology Products Leading brand V

Leading brand X

Leading brand Z

Leading brand W

Leading brand Y

OptisolTM formulation

Mean UVA:UVB Ratio Per Unit Wavelength

1.2 1 0.8 0.6 0.4 0.2 0

0

1

2

3 4 5 Time Solar Exposure (hours)

6

7

8

Figure 7.12  UVA/UVB ratio measurement demonstrates the relative photostability of a sunscreen formulation containing Optisol.

The total materials market for UV absorbers was estimated to be between $250 million and $350 million in 2004. In tests, when compared with a wide range of commercial sunscreens, a formulation containing Optisol can achieve the highest ratings, with a sustained level of protection against UV that is stable for more than eight hours. All other products tested showed significantly inferior performance over the same period. Optisol has been proven to reduce the production of free radicals, highly reactive chemical species produced from exposure to the sun that contribute to long-term skin damage and premature aging. Optisol has also been shown to be highly effective in stabilizing other high-cost, photosensitive components in a cosmetic formulation such as vitamins C and E and kinetin. Adopting the same approach as used for Envirox, Oxonica marketed Optisol to branded cosmetic companies to secure niche access and lead customers. A key milestone was the decision by Boots, who have a leading U.K. sunscreen brand, to formulate Optisol initially into a facial product for the 2005 season as part of their Soltan range. Initial sales to Boots were made in February 2005, and subsequently in 2006, Boots extended the use of Optisol into a once-a-day application product called Soltan Once. Optisol enables an antiaging claim for the facial product. For Soltan Once, the claims are high performance UVA protection with a Boots 5-Star UVA Rating and a photostable (does not breakdown in sunlight) product with performance maintained for up to six hours for a variety of SPF levels.

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Adhering to the business model, Oxonica outsourced the manufacture of Optisol to Umicore, a Belgian-listed multinational. Consumer marketing is based on established brands, and it is therefore important that Oxonica is successful with brands and category leaders to establish Optisol as a key technology. The producers of sunscreen products and antiaging cosmetics include many leading cosmetics and personal care companies such as L’Oreal, Beiersdorf, Johnson & Johnson, Schering Plough, and Estee Lauder. In order to upscale significantly the direct interface with the key brands and formulators, Oxonica concluded an exclusive partnership in December 2005 with Croda International, a U.K. Specialty Chemicals company with a major focus on personal care, to distribute Optisol.

Corporate Development 2002–2004 The key aspect of the corporate development of the organization from 2002 to 2004 was managing the shareholder base. As a result of the VC investment in 2002, a discontinuity was created between the original investors and the VCs due to performance clauses in the investment agreement. Over the course of two years, this led to an investment agreement with three classes of preference share, a complex catch-up mechanism that was formulaic and was dependent on the original share price paid by the investor. Overall, the agreement was fair to all the investor parties but was difficult to understand and in effect made an investment from a new investor almost impossible. Despite these constraints, the board of Oxonica understood that to be successful we needed to continue to secure investment and probably to list on a public market in due course. In early 2004, it was clear that we needed to take two key actions: strengthen the board and simplify the capital structure. In Q1 2004, the directors recruited Christopher Moore as chairman, who brought a strong track record in corporate finance and venture capital, and in Q2 Richard Clarke as finance director, bringing experience of public markets. This also simplified the CEO role as intended and allowed me to have a greater focus on the commercial and operational aspects of the business.

Figure 7.13  Diagram of Boots Soltan Facial Sun Defense Cream.

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In the second half of 2004, the strengthened board focused on negotiating the simplification of the capital structure with the various parties. In January 2005, this culminated in the completion of a rights issue, raising £2.6 million. Oxonica had now created a simplified capital structure with one share class, no preferential rights for any group, and was therefore ready for a listing on a public market.

Floating On Aim In the summer of 2004, Oxonica began to consider the feasibility of a public listing. We met with a number of advisors and decided to appoint Panmure Gordon as our corporate finance advisor. We changed our accounting firm to KPMG and our corporate lawyers to Hammonds. The fundamental reasoning for these changes was that as a company we had significant aspirations, and we felt that aligning the company with high-caliber advisors would support the positioning of Oxonica as a leader in the nanotechnology field. Immediately following the rights issue in January 2005, we began to prepare for going public, working on audit reports, the prospectus, patent attorney reports, and an independent technical market report. We were making good progress on preparations for floatation when, around April, it became apparent that £7 million in capital was already available from a combination of current investors and other parties such as Stagecoach plc, who wanted to make an investment following its successful trial of Envirox in 2004 and its decision to adopt the product. Our plan had been to raise only around £8 – £10 million at the Initial Public Offering (IPO). Thus, we were faced with a dilemma: If we carried out a full-blown listing, with an institutional road show, we would almost certainly risk having to cut various parties back on their preferred level of investment, thus disappointing either our current investors or the incoming institutions. We decided to do a private round, raising £8 million, followed by admission onto the London Stock Exchange AIM (Alternative Investment Market). The potential benefits of admission were an important aspect of the fundraising. Firstly, we felt we needed to be public to improve corporate credibility and visibility. Secondly, we wanted to be on the market so that we could begin to build relationships with institutions and potentially respond rapidly to favorable market conditions if we wished to raise further funds. Thirdly, it would make it possible to use our paper in acquisitions. The downsides were also clearly understood: higher reporting and corporate governance requirements. Also, the admission did not create an exit event, nor did it create significant liquidity. On admission to AIM, the intention was to carry out either a future fundraising of primary capital or to organize a structured secondary offer to facilitate the transfer of ownership from the private shareholders to institutions such that the free float approached 20% or more and allowed a normal market in the company’s shares. Limited liquidity or a low trading volume can mean that the share price is very susceptible to individual trades, which can result in either the share price moving too high or too low and not tracking the company performance. Oxonica was very lucky with its founder investors. Richard Farleigh started out with 20% of Oxonica’s shareholding and has generally maintained his position through the various rounds, now owning around 17%. He has achieved this

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by following his money at key stages of the company’s development, including an investment of £3 million on admission to AIM in 2005. Farleigh was on the board in the early days. From my experience of him over the last five years, I have developed a great deal of respect for him. He is a very smart investor with a lot of experience of financing structures, and he invests on the basis of the fundamentals: big markets with clear macro-drivers; innovative technology that could be a winner; strong management teams. He is also willing to be patient, recognizing that real and substantial value takes time to build. Farleigh’s recent involvement in the BBC’s highly successful television series Dragon’s Den has significantly increased his public exposure. Because of this, he is probably not only Oxonica’s biggest investor but also the most well-known investor by the man on the street.

Pipeline Development I have already spoken about the commercial products that Oxonica has developed and launched. In addition, the group has a technology and commercial pipeline that it is continuing to bring forward. The development of the Nanoplex™ technology is a specific example of Oxonica’s market focus.

Nanoplex Technology Back in 2001 when we were deciding on the market areas to prioritize, diagnostics was highlighted as having significant potential. A key fundamental driver for change in the clinical diagnostics industry is the need to reduce treatment costs and improve medical outcomes. There is a growing recognition by the health services, the pharmaceutical and the diagnostics industries of the potential to improve healthcare by a closer integration of treatment and diagnostics. Diagnostics have the potential to impact throughout the medical process via developments in genetic profiling being used to identify a latent health risk; improvements in the level of information from conventional diagnostics (e.g., subtype of disease, stage of development of disease); more rapid diagnostics to inform medical treatment in a timely fashion; the opportunity for instantly available personalized medicine, with a better match between a drug and a patient (thereby reducing adverse drug reaction, which currently costs the U.S. healthcare industry $130 billion per annum); and increasingly accurate monitoring of treatment and progress (theranostics). The establishment of a new generation of diagnostic testing technology that would allow faster, more precise, and lower cost diagnostic testing is a key technical requirement to facilitate the required industry changes. Oxonica’s original activities in this space were focused on quantum dots, which are semiconductor materials with a light emission frequency (color) determined by the specific nanoparticle size of the material. However, these semiconductor materials are typically based on toxic elements, and the amount of possible simultaneous detection of multiple colors or multiplexing is limited. Also, the sensitivity improvements do not appear to provide significant improvements over incumbent technology. So we looked at the feasibility of making tags based on complex inorganic materials called polyoxometallates. This approach required a very specific synthesis

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of a different material for each color. We abandoned this approach after about six months as we realized that it was not possible to build a sufficiently large palette of differently colored materials. This work, however, began to crystallize the technology requirements: a convergent synthetic route leading to many unique or fingerprint labels; significant improvement in absolute sensitivity; and good signal to noise ratio relative to the background, which in this case would be biological fluids. In early 2003, we identified a technology based on a technique known as Surface Enhanced Raman Spectroscopy. Oxonica in-licensed this technology from the University of Strathclyde and began to invest in developing the science into a commercial product. Oxonica successfully secured a £450,000 DTI exceptional SMART award over two years starting in January 2004, which contributed towards the costs of demonstrating the marker technology. In late 2004, we became aware of a patent belonging to Nanoplex Technologies Inc., a company based in Mountain View, California. It was immediately clear that these technologies were complementary. We recognized the potential to act to consolidate and strengthen the intellectual property position through an acquisition or joint venture. Nanoplex Inc. had a strong technology team, led by Dr. Michael Natan, and needed to recruit commercial experience. Oxonica had a strong commercial team led by David Browning, who headed up the healthcare activities. Oxonica had considerable commercial experience in the clinical diagnostics market but needed to upscale its technology development activities. Thus the business needs were complementary, and the negotiations to acquire Nanoplex Technologies Inc. began in earnest in September 2005. We completed the acquisition of Nanoplex in February 2006, making the acquisition for stock enabled by the fact that Oxonica went public in July 2005. The acquisition allows the Nanoplex shareholders to participate in the growth of the combined entity or to secure an exit. The technology is currently being developed into a prototype with comparative testing against current detection systems and assay formats. A prototype multiplexed lateral flow device (LFI) to test for Flu A, Flu B, and Respiratory Syncytial Virus (RSV) all together was showcased shortly after the acquisition was completed. This simple device requires only a spot of saliva from the patient and can be easily read and understood in minutes. The markers for these infections are visualized using currently available commercial equipment and tailored software. The LFI format already has commercial application in point of care devices, including over-the-counter applications for pregnancy testing, but these are normally limited to yes/no single disease detection. In a few cases, limited multiplexing has been achieved through spatial separation on the test device. We believe that our showcased device where multiplexing has been achieved without using spatial resolution offers a route to assays that are easy to use and that provide significantly more information in one test. Despite a number of potential end markets for this technology, including clinical diagnostics, life sciences, veterinary, food testing, and bioterrorism, Oxonica’s initial focus has been on point of care applications that are easy to use. Oxonica has carried out a detailed market analysis to assess the large number of product applications possible and to establish which markets we need to partner to secure skills, market access, or intellectual property. The analysis also sought to discover which markets have sufficiently low entry barriers for Oxonica to consider developing its own

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Figure 7.14  Rapid simultaneous measurement of disease.

products aimed at such markets. Oxonica’s first major deal in the in vitro clinical diagnostics space was concluded in August 2006 with Becton Dickinson, a leading U.S. medical solutions company.

Other Pipeline Technology Solacor™ UV protection for plastics and coatings Initial data have demonstrated that Oxonica’s Materials UV protection technology, based on manganese-doped titanium dioxide or manganese-doped zinc oxide, can provide benefits in stabilizing plastics and coatings from UV-induced damage. Polymers, plastics, coatings, and textiles are all degraded by UV, which affects appearance, mechanical properties, and performance. Oxonica is currently working to identify a manufacturing partner who can make high volume material at relatively low cost.

Security Markers Losses from counterfeit goods are estimated to exceed £400 billion per annum. The marker technology being developed for the clinical diagnostics program may also have the potential to lead to commercial applications in security markets. Oxonica is in earlystage discussions to consider developing a product for anti-counterfeiting requirements.

The Total Pipeline Oxonica’s pipeline now looks very different from the one from 2001. Several of the programs are now either commercial or precommercial. The focus will remain for the foreseeable future on ensuring the products already developed are marketed into the volume markets. Estimates of the size of the markets that are being targeted add up to more than $10 billion. So the challenge is not chasing bigger markets but now executing on the marketing strategy and gaining market share.

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Phase 0 Idea

Phase 1 Feasibility

Phase 2 Proof of Concept

Phase 3 Scale-up

Phase 4 Pre-commercial

SolacorTM

Security Labels

NanoplexTM

Phase 5 Commercial

OptisolTM

EnviroxTM

Figure 7.15  Oxonica pipeline in 2006.

The Nanotechnology Debate The Oxonica Group’s approach to the safety and risk assessment of all its products is based on a duty of responsible care throughout the product lifecycle. Currently, the natural background levels of nanoparticulates mainly comprise emissions from traffic, energy production, and mechanical abrasion processes rather than being due to emissions from developing technologies and products associated with industrial nanoparticulate materials production. “Natural” aerosols, since the Stone Age use of fire, have contained significant amount of nanoparticles, and humans appear to have developed considerable tolerance to this form of materials. However, there is also clear evidence that prolonged or elevated exposure to certain particulate materials increases risk of adverse health effects, and this is particularly true for certain forms of nanoparticulate, e.g., asbestos. Oxonica’s position on its products is therefore to carry out appropriate health, safety, and environmental studies during the product development process to enable a thorough risk assessment. These typically go beyond what is required for regulatory requirements. At the same time, Oxonica aims to work with agencies to try to establish best practices and to encourage the introduction of proportionate regulations. There is another aspect of nanotechnology, however, and that is perceived risk. The perceived risk is often driven by scare stories classifying all nanotechnology and nanomaterials together. This could be seen as similar to classifying all medicine alongside thalidomide. Oxonica has undertaken public engagement activities and works towards encouraging a balanced debate — including the recognition that some materials may carry risk and require appropriate testing and that certain products, among them products being developed by Oxonica, can deliver health and environmental benefits.

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Oxonica secures expertise in this area through a virtual team of independent experts engaged to provide advice on the whole range of regulatory, safety, health, and environmental requirements. Oxonica’s work in this area will continue as we bring more products to market. The company takes this aspect of the development of nanoparticles seriously and is represented on a number of panels and international bodies to continue to promote best practices in the Industry, including being a founder member of the Nanotechnology Industry Association in the U.K. and Nanosafe, an EUfunded project specifically set up to consider the risks associated with nanomaterials.

The Future Oxonica has now moved into a new phase in its development. The strategic plan laid out in 2001 has been executed, and the company has a portfolio of product opportunities. The level of revenue generation from these products has resulted in the company having significantly more flexibility and control with regards to its financing activities. Looking to the future the key challenges facing the business are to: • • • • •

Consolidate its commercial positions Grow market share in the commercialized products Drive the pipeline to launch new products Build out the global organisation to deliver the first three points Continue to develop the shareholder base and drive enterprise value

A Personal Perspective Money-raising can create anxiety and self-doubt, but, provided you believe in the future of the company, the employees, the IP, and the unique products or expertise of the company, you must give it your best shot. Trying to drive through a new technology to market is extremely difficult, whether in a large or a small company. The resilience and determination of the management team and the investor base are both key to the successful growth of a young business. One of my biggest challenges when I joined Oxonica was to get the organization to accept the need to look outside and to be more inventive in its application of the technology. I wanted to focus everyone on being driven by satisfying a market need, even to the point that if any in-house technology, usually developed at great expense and with much pride and excitement, fails to meet a market need, then ruthlessly abandon it and seek another technology. Building a public company from a university spin-out is all about giving people the opportunity to influence their own future and to be part of a high-performing team working on exciting projects that can make a real difference to our everyday lives and producing profits for the shareholders.

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8 Providing Nanotechnology Zyvex Corporation Solutions — Today™ James R. Von Ehr II Contents A Nanotechnology Vision — Author’s Note.......................................................... 167 The Zyvex Vision.................................................................................................... 170 Market Pull or Technology Push?........................................................................... 171 Funding Research................................................................................................... 173 Engineering to Development.................................................................................. 176 Just Add Marketing................................................................................................. 176 Listening to the Customer....................................................................................... 177 Importance of the Lead Customer.......................................................................... 180 Focus 183 Processes................................................................................................................. 183 Broadening the Product Line.................................................................................. 184 Partnering............................................................................................................... 185 Final Thoughts........................................................................................................ 186 References............................................................................................................... 187

A Nanotechnology Vision — Author’s Note I started Zyvex in 1997 to develop a new manufacturing technology that, if successful, would change the world more profoundly than the industrial revolution did with its power machinery, interchangeable parts, and factories. We call this Atomically Precise Manufacturing, or APM. APM will give us the tools and techniques to ­­build objects — potentially very large objects — with atomic precision. Using chemistry to provide low-cost “parts” and advanced engineering to provide flexible manufacturing systems, APM will allow us to make such varied products as advanced materials, supercomputers, and astonishing medical devices. It will revolutionize fields as diverse as energy, transportation, and construction. Zyvex’s mission is to commercialize this technology. Famed physicist Richard Feynman imagined such a technology in his 1959 speech “There’s Plenty of Room at the Bottom.” At least as early as 1983, Japa167 © 2008 by Taylor & Francis Group, LLC

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nese Professor Norio Taniguchi predicted that atomically precise precision machining tolerances were coming and forecasted that we would achieve that milestone by 2015. Eric Drexler articulated a nanotechnology vision more clearly in the late 1980s, calling it “molecular nanotechnology” or “productive nanosystems.” Drexler’s vision was fundamentally different from Feynman’s and Taniguchi’s in that he realized that additive manufacturing (putting atoms where we wanted them) rather than subtractive machining (grinding atoms away from where we don’t want them) would support an environmentally clean manufacturing process and much higher value-add in manufacturing. We like clean, flexible, high value-add manufacturing. Such a bold and dynamic vision of course has its skeptics. Skepticism about new things has been around since the first cave dweller learned how to keep a fire. Take this quote from The New York Times (October 9, 1903) commenting on the prospects of heavier-than-air flight: It might be assumed that the flying machine which will really fly might be evolved by the combined and continuous efforts of mathematicians and mechanicians in from one million to ten million years — provided, of course, we can meanwhile eliminate such little drawbacks and embarrassments as the existing relation between weight and strength in inorganic materials.

Just 2 months later, on December 17, 1903, at Kitty Hawk, North Carolina, the Wright Flyer became the first powered, heavier-than-air machine to achieve controlled, sustained flight with a pilot aboard. So much for the predictions of the pundits. Civilization advances by the actions of risk takers who are willing to ignore the conventional wisdom of the masses that follow the critics. This is true in all areas of human endeavor, not just technology. I recently met Mart Laar, former Prime Minister of Estonia and winner of the Milton Friedman Prize for Advancing Liberty in 2006 for his brave reshaping of Estonia after the fall of the U.S.S.R. When forming a new government, he received heaps of advice from the “advice professionals” on how to tax and regulate this newly independent country. He chose instead to follow a different path, against all the conventional wisdom and tested approaches, embracing deregulation, low taxation, and trusting individuals. Ignoring the “wise men” of the international development elite allowed Estonia to become the most economically free country in Europe in just a few years. Conventional wisdom is usually not wise. Entrepreneurs must be skillful at listening for gems of wisdom in advice from the crowd, and from old experts, but be willing to ignore most of it to follow their own approach. The market will be our judge, not the skeptics and pundits. Against a backdrop of skepticism, I launched Zyvex because I thought nobody else was doing nanotechnology right. This is a risky endeavor. There are a million ways to go wrong. However, there are also a million ways to succeed. We need to avoid going too wrong for too long but only need to hit one right pathway to succeed. We have the “big idea” and now must execute it. Michael Porter, the well-known professor from the Harvard Business School, says there are two basic ways to be a leader in business: either by being a “low cost producer” or a “high differentiator.” APM will allow us to be both simultaneously.

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APM will be low cost, because the APM “factory” will be made with the same technology as its products, driving the cost of the factory down as we get better at manufacturing products in that factory. Nature works this way. A tree is an example of natural Atomic Precision Manufacturing — clean and green, making wood out of air, water, and soil, powered by sunlight, and generating the oxygen we breathe as a waste byproduct. And like a tree, APM should also be a clean manufacturing technology, building things by rearranging the atoms in its feedstock materials rather than processing vast quantities of materials while generating even larger quantities of waste. Consider the amount of dirt that must be moved to make the steel in a single automobile — tons of iron ore, tons of coal to refine it, and tons of CO2 blown into the air in the process. The machining of that steel generates even more scrap as we use expensive precision machine tools to scrape away everything that isn’t the shape of the finished part. APM will allow us to manufacture in a better way, ultimately working from liquid or gaseous feedstock, and producing little or no waste. Of course, early implementations are unlikely to be so clever and efficient, but just as improvements in silicon technology affect all new integrated circuits from that point forward, improvements in APM will affect all new products made with those systems. With APM, we will also be able to customize products during manufacturing, leading to high differentiation. The heart of our planned APM system is a programmable nanomanipulator able to direct chemical reactions to take place precisely where they are desired — building objects one molecular fragment at a time. Massive parallelism will simultaneously manufacture huge numbers of structured building blocks, which can then be assembled into larger and more complex assemblies. Treating matter as digital information in this fashion will allow the economics of software to apply to physical objects. Designing atomically precise structures will be as complex and expensive as designing a modern integrated circuit, but building huge quantities of those structures will be as cheap — or cheaper — than manufacturing integrated circuits. This is because we apply the economics of digitization to matter, and this digital approach will let us do for manufacturing what digitization has done for computation, control, and communications. Precise, digital manufacturing will also allow us to control errors and tolerances, which will allow us to make systems orders of magnitude more complex than today’s most complex manufactured object, the jumbo jet, with as much control over the quality of the final product as we care to design. Nanotechnology promises to be both a disruptive and an enabling technology. A disruptive and enabling technology is something that is so unique and extensive in its capabilities that it creates a market pull. There have been such technologies throughout history, but a recent example is the integrated circuit. Consider the impact that the integrated circuit has had on our lives, not only here in the United States but all over the world. Most business people believe that nanotechnology has that same potential — on an even larger scale. The integrated circuit industry is similar to APM in certain ways. An integrated circuit factory, known as a wafer fab, can make an unlimited variety of different integrated circuits, determined by the software that makes the optical masks used to define the integrated circuit features. By changing the geometries of the mask, but using essentially the same processing steps, the products of that factory can be

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changed minute to minute as different silicon wafers flow through the wafer fab. APM will deliver similar capabilities with a wider variety of products. Why are more companies not working on APM? Because it is a hard problem, and the time to success could be very long if brute-force approaches are used. Conventional chemistry will require many, many decades at its current pace to even come close to these capabilities and will never deliver the flexibility to manufacture different products in a common factory, nor the error control necessary to controllably make complex systems. Chemists who imagine the solution-based chemistry they were trained to do suddenly enabling the manufacture of complex atomically precise objects are right to be skeptical — conventional chemistry won’t work. Success in APM will require an interdisciplinary approach, bringing together chemistry, engineering, and software-based system design. That is the vision of Zyvex.

The Zyvex Vision Zyvex’s vision is to be the leading worldwide supplier of tools, products, and services that enable adaptable, affordable, and molecularly precise manufacturing. We are taking an assembly-based approach to integrating across all length scales from macro to micro to nano. This was, and is, a bold vision, but in 1997, one that was so far out of the mainstream that people said it would be unachievable for at least 100 years. Some people even laughed at the very concept of using positional assembly to make atomically precise structures in volume, at low cost. Funding for long-term research projects is usually difficult, but in the late-90s era of fast-money Internet startups, asking investors to make a major long-term commitment into a pioneering company building a technology instead of a product was unlikely to be successful. Thanks to the great success of my first company, I was able to self-fund Zyvex using some of the proceeds from selling that company. We started in a little 400square-foot office tucked away in a suburban office-tech building in Richardson, Texas. No major government grants or newsworthy venture capital investments funded us at the beginning. We hired employees one by one, steadily building to the 68 employees we currently employ. The early days of Zyvex violated my first rule of business: spend less than you make. I decided the opportunity warranted a large, long-term investment, without spending too much time bootstrapping our way up to critical mass. I was a former software entrepreneur with a long-term vision of how such a manufacturing technology could work, but I had no detailed roadmap to get there. We hired young scientists who had never built anything people would pay money for. There was no technology base from which to develop products. We had no customers for things we envisioned building. Some theoreticians claimed it was possible, and they used computer modeling programs to draw fantastic pictures of imaginary molecular-scale devices. Other older, establishment scientists dismissed the whole area as a field for crackpots, claiming this approach would never work. Amusingly, some of them are still skeptics, even with today’s published and peer-reviewed papers showing atomically precise structures made one atom at a time by directly manipulating atoms.

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We began by building a world-class lab, with electron microscopes, scanning probe microscopes, ultra-high vacuum systems, chemistry labs, more lasers than I want to write checks for ever again, and a well-equipped machine shop. We literally had to make our own tools to do this research. We hired the best scientists and engineers we could entice to come to work for such a radical company, constantly striving to hire the best people as our reputation grew. Most other businesses would have started by hiring experienced managers to build the team, but there weren’t any managers experienced in building molecular nanotechnology companies or products. In hindsight, we should have hired energetic and experienced managers with open minds who could learn nanotechnology. One lesson I had to relearn at Zyvex is that managing creative researchers is often harder than creating breakthrough technologies. A few years after I sloughed off the laughter of the skeptics and started Zyvex, President Clinton announced the National Nanotechnology Initiative (NNI), which directed a few hundred million dollars per year toward this technology. Most of the skeptics stopped laughing and started writing grant proposals. The U.S. NNI stimulated similar programs worldwide, and suddenly nanotechnology was respectable. Yves had to grow faster than the industry if we wanted to be successful. It was time to move from research to development. We selected two technologies from our research portfolio, suspended or killed most of the other projects we had been working on, and began productizing those two technologies for the new applications that were now paying attention to nanotechnology: name them here? We had long been working on a dual pathway to APM: top down and bottom up. Top down is how we do the system architecture and control for APM. Bottom up is how we do the chemistry that enables clean and low-cost manufacturing. Top down is required for making an easily controlled factory and basically means building controllable machines that build smaller machines that build still smaller machines. If we want to easily control the types of products we make, we need to communicate with the smallest machines directing the molecules, and top down is a good way to structure this communication from the macroscopic world to the molecular. Bottom up is required for getting product costs down and consists of controlling chemistry so desired reactions can take place only at the locations and times we want those reactions to happen. With bottom-up control, we can move away from today’s chemistry of bulk reactions towards the types of precision reactions done by living systems: atomically precise, structurally complex, and extremely diverse. We need this bottom-up chemistry to get our costs down to where we want them. Integrated circuits are cheap on a per-transistor basis, but those costs are a poor comparison to the cost of the atomically precise molecules coming from the bottom up reactions taking place in a petroleum refinery or drug manufacturer’s reaction vessel. Chemistry makes things cheaply. Engineering makes complex things in a repeatable and controllable manner. Both of these working together will transform manufacturing.

Market Pull or Technology Push? Entrepreneurs work in different ways. Merchants see an opportunity to buy something, then transport it, change its form somehow, or combine it with other things

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to make a composite product or service. They then sell it to people who will pay more than it cost the merchant to bring it to the customer. This is the classic business person responding to a visible market. Creators invent a new thing that has never before existed, hoping to make something other people will find valuable enough to buy. These entrepreneurs take more risk but can achieve great rewards if they correctly develop a product people want and can market that new product successfully. If people initially do not laugh at their new idea, the idea probably is not bold enough to be successful at creating a new market. It might fill a niche in an existing market but won’t become a disruptive innovation. My favorite technological innovation of the last 50 years is the Apple personal computer. Invented by a couple of engineers who had worked at Hewlett Packard, the apocryphal story told about it is that Steve Jobs was in his boss’ office pitching the concept, and his boss declined to get HP into that business, saying it was a cool idea but that the only two people in the world who would buy it were those two engineering geeks. Jobs quit HP to pursue his vision, and thanks to the correctness of that vision, the superb engineering of his partner Steve Wozniak, good business advice and adequate funding, and the (eventual) pragmatism to adjust the vision to market realities, the personal computer became a huge, society-transforming success. The original Apple computer was also an excellent example of a product where all the pieces were available individually but had never been put together in the right way to make a breakthrough product. How many other new categories of valuable products are waiting for clever entrepreneurs to invent them? MBAs study the differences between technology push companies and market pull companies. Sales are easier for a market pull company — the products solve an existing problem, and customers can easily understand why they want to buy a product that solves their problem. On the other hand, technology push companies have to educate their customers and teach them why they need the product. Sales growth is slow for companies that have to educate their customers, because educating people is expensive and time consuming. Technology push companies may not even hit the correct market on their first try and may simply educate the market for a market pull competitor to come to market later and grab all the volume sales. “Everyone knows” that companies should be developing products with market pull instead of technology push. I believe the best strategy for a pioneering technology company is actually push-pull. Breakthrough product creation cannot be done via a formula, because a lot of the act of creation is unquantifiable — it takes an entrepreneur’s instinct, and luck, to succeed. By luck, I don’t mean blind luck, like winning the lottery, but the kind of luck that comes from being prepared and being in the right place at the right time for success. So here is my push-pull strategy for innovative product development: push the technology envelope to create a product with market pull. The market pulls products, not technology. If you’re just selling technology, you’re going to have to work too hard to achieve success. Use the technology inside the product to differentiate that product, but don’t try to sell the technology for its own sake. Push the technological envelope to develop a prototype of something the product creator has a passion for, and an understanding that there is a big market for (OK,

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this is harder than it sounds — if it was easy and obvious, everyone would be able to do it). No market survey will turn up a major demand for a product that people can’t imagine, but if people can see a prototype that meets at least some of their needs, they can almost always articulate how to make that prototype better. Now find a lead customer who can represent the product user for a broad base of users, and then use that customer’s feedback to develop a final product that will be pulled into the market. If you can’t find such a lead customer in three tries or less, or they can’t inspire you with ways to attack a bigger market, you probably didn’t have the right product idea or understanding of the market. Give up that product and show your creativity by developing another one. Push the technology envelope; don’t push products. Success requires the right instincts to get close to something a customer wants with the first product, good marketing in picking the lead customers to work with to refine the prototype, good listening skills in teasing out how to improve the product, and good execution skills in developing the final product. I don’t think it’s possible to do this with a “success formula,” but it also isn’t something that takes genius to accomplish. It took me many years to learn to trust instinct — as a rationalist, I denied the validity of a process I couldn’t analyze. I finally came to a rational explanation; what we call instinct is a nonconscious type of information processing that connects things we aren’t consciously able to analyze. There is nothing wrong with trusting instinct, if you verify that trust with reality. If you doubt this, think analytically about how you choose words when you speak (and if you can analyze how you speak, immediately write that algorithm into a computer program, because you’ve just come up with a very valuable artificial intelligence program.)

Funding Research Venture Capitalists. We’ve heard them called bad names, and entrepreneurs frequently like to talk about our bad experiences with them, but be careful — some of my good friends are venture capitalists. I just don’t ask them to invest in my company. Venture capitalists are usually the funding source people think about first, but raising VC money to build a company should be approached with open eyes and awareness. Never forget that they get involved to make money, and the most successful ones don’t care about you or your technology except for how it helps them deliver a great return to their funding sources, the limited partners. VCs have an aversion to funding research, due to a natural desire to reduce needless risk, the short timeframes they operate on, and ready availability of other, less risky deals. Beyond aversion, they actively spurn “science projects,” and rarely want to be the first and only investor into a new technology. And if they do participate, they take a large percentage of the company in return for their funding. This isn’t always bad, since the company may be more valuable due to their presence in the deal, but they’re more likely than any other class of investors to shut the company down or sell it prematurely if it disappoints them. VC money is prestigious, but expensive. Most entrepreneurs will be fired and/or cashed out of the company before it becomes successful, so go into these deals expecting such an outcome. Another funding source often used by entrepreneurs is known as FFF: friends, family, and fools. This is a great source of funds for start-ups but often leads to a bad

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capital structure, with too many tiny shareholders and all too often some restrictive covenants or antidilution provisions. I have seen companies with such a bungled stock ownership structure that they were unable to raise money without making some very difficult changes to their ownership and, in one case, enduring an expensive lawsuit from a disgruntled early shareholder. I was going to question why lawyers don’t warn more strongly against companies bringing in large numbers of small owners, but the last clause of the preceding sentence (“expensive lawsuit”) really answers the question. Accepting shareholders who individually invest less than 1–2% of the capital to be raised will eventually hurt you more than the money will help you. Large corporations pulled back from funding their own basic research as it became less affordable, and activist shareholders and analysts encouraged them to focus on quarterly earnings instead of long-term and risky development efforts. Increasingly, large public corporations fill their product and technology pipelines with technology and products purchased from small companies. They might fund a small company to tailor an existing product for a special purpose but would rarely fund a new product development program. Corporate venture capital arms fund quite a bit of research but these days rarely lead funding rounds, preferring to ride along with larger VC firms. Corporate capital can be good, or it can be bad. The good part comes in getting to know a big company that might buy your products, or even your company, in the future. The bad part comes in restrictive covenants about who you can sell products to (not their competitors!). All in all, I think corporate money for development is a good thing. Large corporations need small, innovative companies to keep their product pipelines full. Contracts will probably feature a tough negotiation over intellectual property, but large corporations can be great partners. Funding an early prototype with savings or government research money will usually result in the best deal for the company and entrepreneur. In my previous software company, I was able to significantly raise the terms of a licensing deal by bringing the prototype closer to reality — in the time between discussing a rough prototype with those potential licensees and showing them a nearly releasable prototype. If you can’t show a prototype, any deal you might get with a customer, partner, or acquirer will be a fraction of the deal you’ll get with a demonstrable prototype. Speed of execution for delivering the prototype is incredibly important. Use government R&D money if you can, because it doesn’t dilute your ownership of the company or complicate your capital structure. Just don’t fall into the trap of thinking the government is your customer, unless you’ve set out specifically to sell things to the government. Any government money comes with strings — you’ll be reporting, accounting, justifying, changing how you run your business so it is more easily monitored, and reporting more on every dollar. There is a lot of red tape involved with government funding, so it is important to get out to the real market as soon as possible. Our initial research was funded directly by my investment into Zyvex and led to some early scientific papers that helped establish our reputation. Figure 8.1 shows the first ever picture of a carbon nanotube being pulled apart in a Scanning Electron

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A

B

2 µm

10 µm C

D

200 nm

500 nm

Figure 8.1  First Zyvex carbon nanotube manipulation image.

Microscope using our first nanomanipulator, built in 1998. This led to a publication in the prestigious journal Science. As we grew, we decided to apply for government funding for a risky research program we needed to make our top-down approach work. On the recommendation of a program manager in the National Institute of Standards and Technology — Advanced Technology Program (NIST–ATP), we partnered with three universities and another company and submitted a proposal for a $25 million/5-year cost-shared program (Zyvex paid 50% of the costs) entitled “Assemblers for Nanotechnology Applications and Manufacturing: Enabling the Nanotechnology Era.” In 2001, we won this award to develop systems that provide highly parallel microassembly and nanoassembly for real-world, high-volume applications. That program allowed us to develop a risky — and otherwise unfundable — microassembly technology that has spawned a number of technologies and product prototypes, including: • Micro-tweezers able to pick up objects the size of a red blood cell • A rotary micro-motor that would fit into one of the letters on a United States penny • A miniature Scanning Electron Microscope lens assembly that will allow an electron microscope to be shrunk to the size of a briefcase • 3D assembly technology capable of complex 3D assemblies of dozens of components ranging in size from microns to millimeters • A miniature Mass Spectrometer able to shrink what is currently a backpack-sized existing product into a handheld unit • Miniaturized assembly robots less than 1 cm on a side • Core technology leading to a whole line of nanomanipulation systems The goal of research for any company should be to get a product out. Research for its own sake is great for universities and government labs, but any for-profit business

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needs to get past the research stage and onto a product as soon as it can. It doesn’t have to be a finished product but does need to show off most of the essential features.

Engineering to Development Once I made the decision to move Zyvex from research to development, we chose nanomanipulation as our top-down product technology and nanomaterials as our bottom-up product technology. We then developed specific products in each of those technology areas, which will be discussed later. We continued to work on our NISTATP contract, but that technology development was still too far away form market to deliver any immediate products, so it remained an R&D program. We built our first nanomanipulator system in 1998 to pull apart nanotubes in a Scanning Electron Microscope, as already described. We looked into marketing that system in 2000, but a brief market study showed that the market was too small to be worth the engineering costs of developing a nanomanipulator as a product. After the National Nanotechnology Initiative was launched, we took another look and decided the market had become large enough to sustain the product development effort, thanks to NNI money funding directed nanotechnology-related research in universities and government labs. We decided to commercialize our prototype nanomanipulator so it was manufacturable and supportable and take it to market quickly. This decision not to launch too early was important. Just because we had something that was “cool” and which did a novel task was not a reason to develop it as a product and push it to market. Too many technology companies fall in love with their technology and fail to ask the hard question of who will really buy that product. We built this product because we needed it for our own research but used market research to demonstrate that we were too early and waited until the market caught up with us. Once we determined that the market was ready, we aggressively moved into the development phase. We hired a director of product development and several engineers and turned our lab prototype into a commercial product in less than a year. Since we had used this tool to do our own work, we could serve as our own main customer, which meant we knew the pitfalls and possibilities of such a nanomanipulator. A picture of the released version of prototype nanomanipulator can be seen in Figure 8.2. Like most small companies, we were able to launch this product without a heavy dose of processes and procedures because the product development team was small and tightly coordinated and had previous product development experience. Like most survivors of that approach, we wanted to do better in the future, so we adopted a product development process that I’ll discuss later.

Just Add Marketing A few months after the launch of our nanomanipulator, we hired a chief marketing officer (who later became president), and he developed a crisp strategy supporting tools, materials, and structures, as shown in Figure 8.4. Building on our established base of physics, chemistry, and engineering, we had already developed skills in tools,

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Figure 8.2  Zyvex Nanomanipulator – released version.

materials, and structures that provided our technology base to build products for the market segments of aerospace and defense, healthcare and medical, and Semiconductors and electronics. An engineering company can develop fantastic products, but without marketing, nobody will know about them, and nobody will know about the company. Our CMO established worldwide distribution, organized a sales force focused on application sales engineering, and focused the entire organization on execution. During this time, our nanomaterials business was starting to develop, thanks to our development of some proprietary technology to process carbon nanotubes. After some exploratory product introductions, we found a real lead customer, Easton Sports, which we learned how to satisfy with products that led us to many more materials markets. I’ll have even more to say on the materials business when I describe how we launched our tools business.

Listening to the Customer Before starting my software company, I used to work for an engineering company that prided itself on knowing the customer’s needs better than the customer. Its sales force could tell the customer why he needed a blue widget when he was asking for a green gadget. The company’s engineers thought the customer didn’t understand his own requirements, while the customer thought the company was just selling what they had, instead of what he needed. Treating its customers like they didn’t know what they wanted didn’t work as well as the company expected, and a lot of business moved to other vendors. The company is still successful but might have done even more if it listened. Companies need to listen more than they tell and especially need to engage in active listening by understanding what the customer is saying explicitly, understanding what the customer is meaning implicitly, and helping the customer to articulate his or her true needs. Good marketing people do not try to impress the customer with

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Health Care & Medical

Semiconductor & Electronics

Zyvex Technology Base Materials

Tools

Structures

Synthetic Supramolecular, Positional

Modeling, Metrology

Micro & Nano Manipulation, Assembly

Chemistry

Physics

Engineering

Figure 8.3  Zyvex Technology Base and its interaction with targeted markets.

how clever their company is — they spend their time helping the customer to understand how the company product solves customer problems. Engineers often, and scientists almost always, try to impress people by explaining the complex technology and the engineer’s or scientist’s part in creating that technology. Remember, customers don’t buy technology — they buy products that meet a need. Stay paranoid, and don’t fall in love with your technology. We met customers by taking a mockup of our nanomanipulator to trade shows, where we could meet several potential customers at once. Picking the right trade show is worth a chapter in its own right, but I’ll just say there are a lot of shows, and not all of them are equally worthwhile. It is beneficial to measure prospect and lead generation from every show, and drop those that don’t measure up. At one show, a major semiconductor manufacturer came to our booth and asked if we could probe their integrated circuits, which at that time had geometries less than 90 nanometers in size and couldn’t be probed with any other tool. In a textbook case of listening to our customers (or customers-to-be), we told them we would try, if they would send us a chip. Several weeks of development later, we had successfully solved several key problems of probing and showed them the results of probing their chip in our electron microscope. They were impressed enough to want to probe more chips, so we rented them time on our prober system while they got comfortable with the system. Word got around, and most of the semiconductor manufacturers started renting time on our system, and all submitted purchase orders to buy their own system. See Figure 8.4 for a sample illustration showing three probes on an integrated circuit. The round dots on the surface are contacts, and they are about the size of a virus.

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Figure 8.4  Probing a CMOS transistor with the Zyvex KZ100.

Figure 8.5  (See color insert following page 16.) Zyvex nProber with positioners aligned 250 microns apart from each other, just a few millimeters above the center stage.

Our new nProber,™ in Figure 8.5, can now land up to eight probes in an area less than one quarter the size of this image, which works out to about one wavelength of light. That’s small, in case you were wondering. Following up on this one inquiry led us to a major market in the semiconductor industry, which is now by far our largest customer segment. Add-on products such as extremely sharp probes and other types of probing and sample preparation tools will likely mean the semiconductor industry will continue to be our largest market, dwarfing the original research tools market. This success came about because we listened and adapted to the market need.

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We are beginning to use the MEMS components from our NIST-ATP in the tools business, which has now broadened into the instrumentation business thanks to our success in both tools and MEMS. From micro-tweezers to miniature mass spectrometers, these businesses are converging to provide an unparalleled ability to build miniaturized analytical instruments. We will continue to follow our prototype, test, refine, sell sequence for these future products.

Importance of the Lead Customer Our materials business provides a good example of the importance of getting a prototype into the market and making an early connection with a lead customer. Carbon nanotubes (CNTs) were discovered in the early 1990s almost simultaneously by researchers at NEC and IBM. At the atomic scale, these look like tiny cylinders of rolled-up sheets of graphite — graphite itself being a particularly strong form of carbon normally found as flat sheets of atoms bonded to one another in a hexagonal arrangement. Different varieties of CNTs range from less than one up to forty billionths of a meter in diameter and are frequently 10,000 times longer than their diameter. Due to the strong molecular bonds of these tubes, and their nearperfect structure, CNTs are perhaps the strongest materials that will ever be made. CNTs are almost 20 times stronger than steel; they are the best-known electrical conductor and the best-known thermal conductor. The desirable properties of CNTs also lead to problems in using them. Low-cost manufacturing techniques produce tangled bundles of tubes, which are extremely difficult to process. Most attempts to disperse these CNTs in solvents or host polymers result in either getting a terrible dispersion, or the techniques are so aggressive and rough that they damage the CNTs and destroy the desirable properties. The outer surface of the CNTs is also very slippery, so it is hard to get them to adhere to a host polymer matrix to strengthen the polymer when you just add them to a polymer and stir them up. Our NanoSolve® technology resulted from a breakthrough we developed while doing applied research using CNTs as a building block. NanoSolve allows us to unbundle the CNTs, disperse them in solvents or polymers, and adhere them to the host polymer matrix, all without damaging the CNTs in the process. NanoSolve thus provides our customers with the best processing capabilities for CNTs available in the industry. We hold the NanoSolve technology as a combination of patents and trade secrets. We patented the molecules and molecular systems that our chemists engineer to interface with both the customer’s polymers and the sidewalls of the CNTs. The molecular systems themselves are trademarked under the name Kentera.™ Our chemists molecularly engineer different types of Kentera to solve the unbundling, dispersion, and adhesion problems for whatever host polymers our customers need. We also keep a number of processing steps as trade secrets rather than patents in order to further protect our business. The mix of patents and trade secrets gives us a level of protection against both large and small competitors. Since patents require full disclosure of the technology, they provide a roadmap for competitors to develop similar (or even identical) technologies. Patents protect against direct copying only

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by the long and expensive process of lawsuits, which can take years and millions of dollars to conclude. Trade secrets protect the key processing steps so long as they remain secret but once divulged offer no protection whatever. A combination of the two is a powerful safeguard for proprietary technology. Early on, we made the decision that our strength was in processing, not manufacturing CNTs. This has proven to be a good decision — there are currently more than 50 CNT companies worldwide, so becoming the cost, volume, or quality leader would be stunningly expensive. As we investigated some of those companies, we found a widely variable range of quality and repeatability in manufacturing CNTs. This led us to develop a CNT certification program, where we ran a number of tests on CNT samples to find the companies with the best quality control. We certified several companies and developed a close relationship with a few key partners, including Paris, France, based Arkema — a seven billion euro per year chemical giant. Arkema became our prime supplier for the most cost-effective form of nanotubes called multi-walled nanotubes. With our processing technology, our chemists do molecular engineering of a certain class of molecules in order to design just the right molecules that can interact with the CNTs and get a good dispersion in some host polymer that we can then process further. This is not quite the bottom-up nanotechnology we need for APM but is a good example of a mixed-scale system containing a structured interface from the size of molecules up to the size of microns. The dispersion-enabling molecules live in the molecular world. The CNTs live in the molecular, nano, and micro worlds simultaneously. When put into the right host material, CNTs can be embedded into macro-scale objects and deliver increases in performance at the human size scale or bigger. We had invented the processing technology but weren’t sure in what form customers might want the CNTs — powders, dispersions in solvents, or dispersions in host polymers. We offered all of those for sale on our Web Site and took several forms to trade shows to meet potential customers. Early orders did not show any pronounced trends for one form over another, since all the customers were still in testing mode. We continued to improve our processing capabilities as we collected data about how much improvement in materials properties was achievable with properly processed CNTs. Before long, Easton Sports became our lead customer for nanomaterials, based on meeting us at a trade show. Easton is a midsized, highly entrepreneurial company that is a leader in several kinds of sports equipment such as baseball and softball bats, hockey equipment, and high-performance bicycle parts. They were looking for a way to improve their equipment by using nanotechnology. We showed them some early data on how to improve the properties of polymers such as epoxy by adding CNTs, and they decided to give this a try in their carbon fiber composites. Today’s highest strength materials use sheets of carbon fibers laminated together with high-strength epoxy to make composite panels or structures. These carbon fiber composites are extremely strong and light but suffer catastrophic failure when stressed beyond their limits. The failure mechanism is usually delamination of the carbon fiber sheets due to inadequate strength of the epoxy holding them together. Funded by a NASA research program to build the world’s highest strength-toweight ratio material, we were developing a unique composite-in-composite for high

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Figure 8.6  (See color insert following page 16.) This Easton road bike, created using Zyvex’s NanoSolve materials, was given to President George W. Bush in June 2006.

strength materials. Our approach puts CNTs into the epoxy that binds the carbon fiber sheets together, strengthening the epoxy, and thus strengthening the entire structure. CNTs not only fill and strengthen the spaces between the carbon fibers that would otherwise consist of only resin, but the long, high-strength strands help hold the structure together by stopping cracks. Easton became our first commercial-scale materials customer, working with us to develop a reliable process for making carbon fiber composites using CNT-reinforced epoxy. In a remarkably short nine months, they were able to release the first CNT-reinforced bicycle parts, which delivered 10–20% performance improvement in material toughness. The result is a full-size, 20-speed road bike that weighs less than 16 pounds, yet is stronger and stiffer than most bikes available on the market today (see Figure 8.6). Easton then introduced CNT-reinforced hockey sticks and a baseball bat that has bigger sweet spots and maximum performance along the entire length of the barrel (see Figure 8.7). Once Easton had made some actual CNT composite components and we had performance data showing the efficacy of CNT material, our next tradeshows were more fruitful, with numerous companies coming by our booth to learn how to use our NanoSolve material in their products. Easton’s role as lead customer was to help us understand the most useful form of NanoSolve material — CNTs in epoxy — and to demonstrate real products made with this material, delivering real performance gains by the use of nanotechnology. Our current NanoSolve business is growing at more than 50% per year and likely to accelerate as our customers learn more about processing nanomaterials and increase their adoption.

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Figure 8.7  (See color insert following page 16.) Easton Stealth/Synergy line of baseball bats.

Focus Some people have said we are unfocused because we are trying to do too many things at once. Conventional wisdom says to do one thing, and do it well, so all the company’s attention is focused. That is great advice for most companies in most established fields. In my software company days, we were focused on desktop publishing as a market and sold two sequentially developed products as our key products. But conventional wisdom also says most new companies fail. Maybe as an entrepreneur it doesn’t pay to listen to conventional wisdom. Businesses involved in nanotechnology tend to be more diverse in their products than most other companies. They have a wider variety of products, sold to a wider variety of customers, than a typical start-up. This may be due to the limited size of markets consuming nanotechnology-enhanced products — a one-product company probably will not have enough sales of that one product to sustain itself as the market grows. It is just not prudent, at this stage of nanotechnology’s development, to go after a single niche market. And, it is too early to say what the real market potentials are. We have developed a set of heuristics, including the accessibility of the market, the size of a given market, our core competencies, alignment with our overall goals, and others. We look at various applications and market segments that we believe we can impact. We target only those applications where we believe we can be a leader.

Processes Some managers think their processes drive companies to greatness, but people’s creativity and judgment are what really does it. Processes should be employed to support people by making sure we don’t forget things or make the same mistakes twice. They are not replacements for good judgment or talent.

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Do not fall in love with a process — it should be there to support you, not control you. We use a formal new product development process to manage our product releases. Generically, this looks like a stage-gate process, where we move along a checklist that has certain requirements that must be met at each stage before moving through the gate to the next stage of the product development cycle. This process helps us assure that we have performed all the steps necessary to develop a product that can succeed but is no substitute for managerial and technical skill and judgment along the product development path. It is possible to meet all the criteria of such a process, even including market studies and customer identification, and still make a product that does not succeed. We know — it has happened to us. We strive to use this process as a craftsman uses a tool, not as a bureaucratic obstacle to progress. We treat this new product development process as a living document and continue to modify it frequently as we develop better ways to do things. We also have a number of processes relating to our quality program. We became ISO 9001:2000 certified in late 2005, because we wanted to demonstrate our commitment to quality. Very few nanotechnology companies have bothered to earn ISO certification, but we pursued that because we believe that documenting our processes, and being committed to improving those processes over time, is an important part of our future. We sought official certification, rather than using an informal approach, because we want to be measured and want to be sure our customers know we have a commitment to quality.

Broadening the Product Line I am not constrained by conventional wisdom but like to pay attention to it when it works. Once an innovative product has become successful, the innovation changes to a sustaining model, and classic marketing and product development applies. I talked earlier about pushing technology to create a new kind of product, testing it with a lead customer, then modifying it based on what you learn to develop market pull for the final product. That is a good way to develop a new class of product for which you can’t do a market survey to find customer pull, because the customers can’t imagine such a product to know to ask for it. However, once you enter a new market, there are classic ways to grow as a company, and broadening the product line is probably the best. There are two ways to broaden your product line: sell more things to your existing customers, or sell to more customers in your market segment. It is classic marketing to sell more products to your existing customers. Finding a good customer is expensive, and once you have one, you should find more things you can do for them and sell to them. Product add-ons, related products, or substitute products for things they are buying from your competitors are all obvious things to do to be more successful. For example, some of our nanoprobing customers needed a heated and cooled sample stage. This was developed as an extra-cost option for those who needed it. We had to learn to make extremely sharp probes to probe nanoscale objects, and those probes have become a recurring purchase, since they wear out during use. We have seen opportunities to develop next-generation products for these customers and are designing future generations of systems.

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Psub

Gate

S/D

S/D 1 µm

EHT = 2.00 kV MAG = 11.61 KX

File Name = 165_203_?? Date: 20 Feb 2004

Signal A = SE2 Focus = 8 mm

Figure 8.8 

Selling to more customers in your market segment can happen either because your marketing works and more people have heard about you or because you learned from existing customers and added some key features the new customer needed that were not in the original product. Basic marketing, but it works.

Partnering People often ask us what enabled Zyvex to so rapidly develop products and applications and penetrate the markets we targeted. Hiring smart and talented people is a given, and stressing execution keeps us focused, but there is one more important piece — the great partnerships we developed with others. From day one, we decided we wouldn’t suffer from NIH (Not Invented Here) syndrome — and that we wouldn’t be all things to all people. In a business, you have to decide what not to do just as much as what to do. There are so many potential opportunities to target with nanotechnology that it would be easy to lose focus. We want to be broad enough not to miss great opportunities, yet at the same time, we can’t do everything. We can’t dilute our resources on loser projects or programs. If you know of a gap in your technology or in the implementation of your marketing strategy, partners can be a wonderful asset — as long as they result in a win/win relationship.

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It is worth discussing some real-world examples of two of our partnerships. We recently announced a relationship with Arkema, a €7.5 billion ($10 billion) chemical company with its corporate headquarters in France and a worldwide presence. In addition to their chemical business, Arkema is a leading manufacturer of CNTs and is our primary vendor for multiwalled CNTs (MWNTs). Zyvex has a portfolio of patented and trade secret protected technologies for processing MWNTs in polymers. This technology is very useful for Arkema — and for their end users. Together, our processing technology and their applications experience allow us to develop new markets worldwide. Arkema’s global credibility helps get us in the door with new customers, and our ability to move quickly and leverage our NanoSolve technology helps them get to market faster. For Zyvex, it is like having a big brother who has all the financial, marketing, and production capability that a customer might question if they were just dealing with Zyvex. It is a great example of a win/win partnership. For a second example, several years ago, when we started working on MEMS, we developed a software tool for modeling, which we called the MEMulator.® This software allows us to model the successive material deposition and etching processes used to make MEMS (depositing a layer, patterning it, etching the patterned or unpatterned part, then repeating). We had looked at existing software packages to help us with this modeling but never found anything that was accurate enough to get a useful answer, nor stable enough to handle the large and complex components we developed. We developed the MEMulator to meet our needs but realized it was a great tool for anyone doing complex MEMS. We wanted to be able to sell this great tool but did not want to distract ourselves from our primary APM goal by entering the software business. Partnership was the obvious solution. We chose Coventor, Inc., the leading MEMS design software vendor, as our partner, and negotiated an exclusive contract where they can sell MEMulator and we get royalties to fund continued development. This winning partnership also means a lot more users get the productivity benefits of running the MEMulator to model their MEMS devices. Current releases of the program even model semiconductor process steps, changing its name to SEMulator,™ and creating benefits for customers in markets beyond our original plans. The original MEMulator development was supported by our NIST-ATP R&D program and is a good example of a commercial success coming from ATP funding.

Final Thoughts Nanotechnology is exciting, but we still must manage it as a business. We need to make products that customers want, so we can make a profit. We want to keep our eye on the long-term goals of the company, so we know where we’re going, while executing to our plan in the short run, so we can see how we’re doing on getting there. There are lots of other things that we do, and have done, that time and space limitations preclude mentioning. Suffice it to say that the way we run the company helps us perform like a much larger company than we are. Our executives have all worked in larger companies, so the processes we have in place are there to prepare us for high-quality, sustainable growth. We have accomplished a lot since starting out in that first little office, but we still have the largest part of our journey ahead of

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us. It is exciting to see what we’ve accomplished and envision what we will do. It is frightening to see how much more remains to be done. Most of all, it’s interesting. I have only told you a little of Zyvex’s story — a few anecdotes from the journey, with a few tidbits of lessons learned. I encourage you to watch us at www.zyvex.com.

References Zyvex, the Zyvex logo, MEMulator, NanoEffector, NanoSolve, and NanoWorks are registered trademarks, and Kentera is a trademark of Zyvex Corporation. SEMulator is a trademark of Coventor, Inc.

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9 The History of the

microParts GmbH Development of a Successful German MicrosystemsBased Business Reiner Wechsung

Contents Introduction............................................................................................................. 189 Origin of the LIGA-Technology............................................................................. 190 Foundation of microParts GmbH — First Steps into Business.............................. 193 Products.................................................................................................................. 201 Nebulizer for Drug Delivery.......................................................................202 TRUSPRAY.................................................................................................206 Microfluidics................................................................................................207 Microspectrometer....................................................................................... 214 Technology.............................................................................................................. 216 Intellectual Property............................................................................................... 220 Commercial Results (Sales, EbiT).......................................................................... 221 Human Resources and Organization...................................................................... 223 Conclusion............................................................................................................... 225

Introduction microParts GmbH was founded in 1990 by STEAG AG with the mission to commercialize applications of the newly invented LIGA-technique. STEAG-microParts is an example of how a research-driven project became a commercially successful, market oriented, profitable business.

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By showing drawings and a few samples that had been produced in the research laboratory, several visionaries convinced the management of STEAG, together with four additional shareholders, of the market opportunities for microtechnology-based products. The task for microParts, therefore, was to identify products that could form the basis for a profitable business and develop the appropriate production processes to take these products from a laboratory scale up to industrial mass production. The expertise of microParts lay in its understanding of the technology, so the best way of building a business was to find customers who could apply the unique features afforded by this new technology into their development programs so as to improve existing products or produce new ones. Examples include improvements to spinnerets nozzles and the development of noninvasive blood analyzers. The company’s objective was to work with customers who were prepared to enter into a longterm business relationship. In this chapter, the business development of microParts is described from its inception, with all the complexities of a start-up company, through to a strategically focused, profitable operation.

Origin of the LIGA-Technology The LIGA-technique was developed by the Nuclear Research Centre Karlsruhe in conjunction with STEAG AG for a project entitled “Micronozzle for Uranium Enrichment.” The goal was to develop an alternative to the ultra-centrifuge method of uranium enrichment that could be applied for nonmilitary use. The principle of the micro-nozzle is shown in Figure 9.1. Gaseous uranium hexafluorine flows through the nozzle, and because of the mass dependent centrifugal forces that are developed, isotopes are separated. The characteristic features of the micro-nozzle are:

Figure 9.1  Micronozzle for uranium enrichment.

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• • • •

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Lateral dimensions in the micron range Structure height of 300 micron (aspect ratio > 100) Material used is nickel or other metal alloys Possibilities for mass production at low cost

Achievement of the above required the development of a new production process: the LIGA-technique. This was the only motivation for the Nuclear Research Centre Karlsruhe and the power company STEAG to develop the LIGA-process. The LIGA-technique combines x-ray lithography to produce master units, Electroforming processes (Galvanoforming) to create the production tools, and plastic molding (Abformung) to replicate high aspect ratio microstructures in a high throughput production process. As in lithographic methods for microelectronic engineering, the design of the microstructure is first defined in a CAD system, and then the corresponding x-ray mask is produced by optical or electron beam lithography. An important feature of this step is the almost complete design freedom. The mask consists of a thin membrane made from a highly transparent material such as titanium or beryllium and of absorbent structures made from gold. In a further process sequence typical for the LIGA-technique, a layer of x-ray resist material with a thickness up to several hundred microns, which has been fixed on a stable metal ground plate, is irradiated through the x-ray mask by synchrotron radiation. The irradiated areas of the resist are removed by a suitable solvent, creating the primary microstructure. In the next process step, metal is deposited on the ground plate by electroplating, and a metal structure is formed within the cavities of the resist structure. This process continues until a thick layer of metal has firmly overgrown the resist structure. After removal of ground plate and resist, a complementary structure is obtained, which is used as a mold insert for subsequent micromolding processes. The multiple use of the mold insert is the key for low-cost mass production, even though it is a rather costly production process. The principle of the LIGAtechnique is illustrated in Figure 9.2 (a–b). If the product material is a polymer, the samples from the injection molding can be used directly. If the product material is a metal, the mass-produced polymer samples are used as molds for a second electroforming step in which the final product is plated in metal or a metal alloy. The teams from STEAG and the Nuclear Research Centre Karlsruhe realized the potential for wider applications of the LIGA-technique during the 1980s, but they concentrated their efforts strictly on the development project Micro-Nozzle for Uranium Enrichment. Only at the end of this technically successful program, which was discontinued for economic and political reasons, did the teams demonstrate and publish the general features and potentials of the technique as an important microtechnology. It was necessary to facilitate the transfer of the technology to German industry so that a return on the large investments made could be realized. Some examples are given below that show the precision of the LIGA-technique. Figure 9.3 (a–b) shows a resist structure 400 micron high and 7 micron wide with a deviation of only + 0.1 micron over the whole structure height. The spinnerets nozzle was chosen as an example of a product where this technique could be employed to advantage. In

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X-ray Deep-etch Lithography and 1st Electroforming Synchrotron Radiation Irradiation

Mask Membrane Absorber Structure Resist Substrate

Developing

Resist Structure

1st Electroforming

Removal of the Resist Structure

Metal

Metal Structure

Final Product

Mould Insert

(a) figure 9.2  (a–b) Principle of the LIGA-technique.

Figure 9.4 (a), the ground plate with resist columns is shown, and in Figure 9.4 (b), the corresponding nozzle after plating with nickel can be seen. The performance of the LIGA-technique was described in acquisition material as follows: • Height: 20–500 µm • Maximum dimension:

20–60 mm

• Minimum dimension:

2 µm

• Smallest structure detail:

0.5 µm

• Materials: nickel, nickel/cobalt, copper, gold, PMMA, POM ZrO

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Plastic Moulding and 2nd. Electroforming/Casting Slip

Mould Cavity

Mould Insert

Plastic

Mould Filling

Electrically Conductive Substrate Mould Removal Plastic Structure as Lost Mould or Final Product

Metal/Ceramic

2nd. Electroforming

Metal or Ceramic Structure

Final Product

(b) figure 9.2 (Continued).

The research teams also demonstrated the potential for low-cost mass production, which could be realized by German industry under licensing agreements and supported with technology transfers from the research laboratory.

Foundation of microParts GmbH — First Steps into Business With completion of the development project “Micronozzle for Uranium Enrichment,” the Nuclear Research Centre Karlsruhe and STEAG recognized the large potential for commercializing the LIGA-technology and, therefore, the Institute for Nuclear Process Technology was transformed into the Institute for Microtechnology, and the STEAG team was spun off as the start-up company microParts GmbH. In 1990 by means of a detailed licensing agreement, STEAG secured the rights to use the basic patents of the LIGA-technology and also those of the existing product ideas. The license agreement was supported by an additional cooperation agreement,

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Structure Height (µm)

400

300

200

100

0 7.0



(a)

7.2 7.4 Structure Width b (µm)

7.6

(b)

Figure 9.3   (a–b) Resist structure of height 400 μm, 7 μm wide with a deviation of 0.1 μm.

which was important and very useful because of the requirement for the transfer of a substantial amount of know-how to microParts, thus allowing it to initially use the research center’s equipment. Together with Hoesch AG, Huels AG, VEW AG and Rheinmetall GmbH, STEAG founded microParts GmbH in 1990. This new company was relocated from Karlsruhe to rented offices in Dortmund from January 1, 1994. It contributed to the structural change of the German Ruhr area from coal- and steel-based industries to new high technology; it therefore received support from the government of Northrhine Westphalia and the European Commission. The shareholders of microParts, who had been convinced by the visionaries from the research group of the extraordinary business potential of the LIGA-technology, were ready to invest in a new business with expectations of a good return on their investment and the securing of profits within five years. The first LIGA-brochure prepared by the STEAG team during the foundation period of microParts, shown in Figure 9.5, described a large variety of product ideas in the following list of categories:

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100 µm

(a)

10 µm

(b) Figure 9.4  (a–b) Spinneret nozzle resist structure, 5 μm nozzle after plating.

• • • • • • • •

Sensor components Microactuators/Micromotors Fluid components Components for microelectronics Components for microoptics and integrated optics Micromechanical components Microfiltration components Microstructured layers

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Figure 9.5  The LIGA brochure.

The development teams of STEAG and the Institute for Microstructure Technology produced some demonstrator samples for what they expected would be typical LIGA-products, shown in Figure 9.6 (a-g). With these promotional materials, on the potential of the technology together with functional models, a broad marketing program was started with sales literature, exhibitions, and presentations at conferences. The initial enthusiasm of the research-oriented teams soon turned into skepticism because the expected orders were not realized, and the goodwill of the few interested customers turned into disappointment with the realization that the technological proposals took too long to produce. With the foundation of microParts, the shareholders realized that excellence in R&D is not sufficient to build up a profitable business. They therefore hired an experienced business manager with the necessary technical expertise. This was the start of the process of developing microParts into a professional business enterprise. The first step was to reexamine the technology in order to define achievable specifications that could be met without further development efforts. As a result,

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ceramics were removed from the acquisition list. The broad list of potential products and applications was compiled into a priority ranking using the following criteria: • Technical specifications require the application of LIGA with a low risk of substitution by alternate technologies. • microParts is chosen as a partner for development and future production of the microproducts. • Application is in an attractive growing market. • Customer is a strong enterprise with capabilities for substantial investments. • Customer has a strong competitive position in the planned product program. • Customer is willing to make financial commitments. • Plan for scale up of the production allows for realistic time schedules.

200 µm

(a)

50 µm

(b) Figure 9.6  (a–g) LIGA product proposals. © 2008 by Taylor & Francis Group, LLC

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200 µm

(c)

50 µm

50 µm



(d)

(e)

Figure 9.6 (Continued)

As a consequence of this strategic check, projects proposed by start-ups with interesting product ideas but no business experience or financial backing were no longer pursued. There were many requests for cooperation with the promise for excellent future business but requiring funding of the development programs by microParts. Other classes of projects were rejected for very different reasons. In some cases, it turned out that large companies with strong in-house production capabilities wanted microParts only to perform development projects with the transfer of knowhow to enable the customer to take over production.

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100 µm

(f)

100 µm

(g) Figure 9.6 (Continued)

Examples are: • A request for the development of a fuel-injection nozzle for the automotive industry, where it turned out that the customer definitely wanted to undertake the production. • The request for the development of an electrical micro-connector, seen in Figure 9.6, for a Japanese electronic company, which demanded the delivery of a detailed description of the microtechnology process parameters be contained within the quotation for a development program. From the many product ideas that were presented by the initial research team, only two projects fit into the newly defined strategy — an optical coupler and a

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200 µm

Figure 9.7  Optical coupler.

microspectrometer. Here the plan was for microParts to present a product development proposal that included final production. The commercialization of the product would be undertaken by a strong customer who is already operating in the respective business area. The LIGA-produced coupler for optical fibers, offering as an advantage a very low surface roughness, in the order of 20–30 nm, which results in low scattering losses and the possibility of molding with optically compatible polymers such as PMMA and PCs. Such an optical coupler is shown in Figure 9.7. Good initial interest was shown by large players in the U.S. and Japan, which indicated some promising business opportunities. It turned out that telecommunications had a large potential, but a real breakthrough was still remote. Therefore, in the mid 1990s, microParts decided not to target the telecommunications business. As a result, the microspectrometer remained the only product to be developed and marketed by microParts and is described later in this chapter. A very promising project was started for microParts to develop an ink-jet head for a medium-sized company that was established in the ink business. The project was of strategic importance to the customer, who was committed to investing in the new business and needed microParts for the development and future production of the product. As a result, a very efficient development project — a nozzle plate for a 300 dpi ink-jet head — was developed, as shown in Figure 9.8. During the course of the program, microParts took over the development of the complete ink-jet head. Within two years, serial production of a few thousand ink-jet heads with excellent performance was completed. Unfortunately, during the negotiations to finance the scale-up of the production, it became impossible for the customer to obtain a manufacturing license for the patent protected ink-jet head. This was a big surprise for microParts, which had assumed that a customer who was making million-dollar investment decisions would have ensured their rights to produce the product. During the negotiations with the big players in the ink-jet business, microParts realized that in order to protect its core competence, it had to refuse to cooperate with small suppliers, even if they could offer some technological advantages. Although microParts

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50 µm

(a)

20 µm

(b) Figure 9.8  (a–b) Ink-jet nozzle plate.

had not lost money on the ink-jet project, it tied up resources without the prospect of developing a new business. Nevertheless, microParts had strengthened its technology portfolio in microtechnology with the valuable know-how it had gained from its work in microfluidics.

Products As a result of the intensified marketing and acquisition activities focused toward the criteria described earlier, a few customer projects were acquired that offered the

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(54) Atomising Devices and Methods (57) A metered dose inhaler comprises a piston (3) which is mounted in a cavity (2) within a body (1), 22 and is urged by a pre-loaded spring (6) into a reduced cross-section pressure chamber (4). The 5 piston (3) may be loaded by means of an actuating 3 rod (31) having a handle (32), and may be latched in a loaded position by a latching means (33). A liquid drug (e.g. in aqueous solution) is contained in a collapsible bag (10). Metered quantities of the 40 drug are successively presented in the pressure chamber (4), and then subjected to a sudden and 6 great increase in pressure, to eject the liquid drug 2 through an atomising head (22), to reduce it to a fine atomised spray of small mean particle size–for example, less than 30 micrometers. Non-return 33 valves (13 and 23) control the flow of liquid through the device. The sudden pressure pulse is caused by releasing the spring loaded piston (3), upon depressing an actuating button (35) connected to the latching means (33).

23

25 21

4

1 13 11 12 16 10 15 34 31

GB 2 256 805 A

35

32

Figure 9.9  Patent Respimat.

potential to build up a steady new business after the successful completion of all the phases of a well-defined development program: • • • • •

Development of a functional model to provide proof of concept Engineering of a serial product and of the corresponding production process Fabrication of tools and small batch production Scale up of production Serial production (million parts per year)

Both parties had the option to terminate the cooperation if the well-defined criteria of any phase could not be achieved. Parallel to the ink-jet head and optical coupler projects, microParts had started a few customer projects that fulfilled all above mentioned requirements and that successfully completed all phases from feasibility tests to large-scale production.

Nebulizer for Drug Delivery Using the experience and skills of the company, a new Respimat aerosol inhaler was developed for Boehringer Ingelheim, a leading manufacturer of metered aerosols. Respiratory and lung diseases are on the increase the world over, urgently necessitating new kinds of therapy completely free of CFCs and other propellant gases. In order to meet these future requirements, Boehringer Ingelheim had purchased a patent in which a soft mist inhaler utilizes the pressure of a released tensioned spring instead of propellant gas (see Figure 9.9). A micromechanical pump forces the medical solution through a micro-nozzle, generating a soft spray.

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(a)

5 µm

(b) Figure 9.10  (a–d) Micronozzles for Respimat.

In the early stages of the project, the role of microParts was to develop micronozzles with 5µm holes in different shapes in order to generate a spray with an aerosol droplet size of 5 µm. Examples are shown in Figure 9.10 (a–d). microParts’ development task was expanded into the development of a nozzle unit in combination with a filter structure to deliver the specified spray characteristics. Employing a semi-empirical approach, different nozzle principles were investigated, ultimately resulting in the uniblock (shown in Figure 9.11). The uniblock consists of a filter structure including two micron-sized outlet channels built onto a silicon wafer. The drug solution is forced through the channels,

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5 µm

(c)

5 µm

(d) Figure 9.10 (Continued)

producing two fine jets of liquid that converge at a carefully controlled angle. The impact of these two jets generates the slow-moving soft mist. The generation of the soft mist lasts for more than a second, compared to about 0.2 seconds for the clouds generated with a propellant gas, and this facilitates the coordination of actuation and inhalation. Depending upon the formulation, between 66 and 81% of the droplets of the Respimat fall into the fine particle fraction (less than 5.8 µm), compared with less than 40% for the majority of metered dose inhalers. With completion of the uniblock, a device for a drug delivery system, including a pressure-generating system for the micro-nozzle, had to be developed. Boehringer

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Figure 9.11  Uniblock Respimat brochure.

Ingelheim contracted that task to medical device manufacturers who were well established in that field. Very soon it became obvious that a substantial competence in microstructure technology was required for this to be successful. In order to avoid a complete failure of the project, microParts proposed a design of the complete nebulizer system and built a working prototype. This was accepted by Boehringer Ingelheim, which then contracted a supply agreement with microParts for the complete nebulizer. Figure 9.12 shows a schematic diagram of the Respimat with its unique delivery mechanism that utilizes the energy from a tensioned spring to generate a soft mist. A simple 180° twist of the inhaler’s base compresses the spring and draws a predefined, metered volume of solution through the capillary tube and into a dosing chamber. When the dose-release button is pressed, the energy released forces the solution through the uniblock to form a soft mist of fine aerosol particles. During the development program, all the required specifications were met, and microParts also took responsibility for the design of an attractive, easy-to-use product (see Figure 9.13). When the prototype was completed and a frozen design had been agreed, microParts was contracted to develop the production processes according to medical GMP rules (Good Manufacturing Practice) and to scale up the production to a capacity of 10 million devices per year. Whereas the development costs for the prototype were just above $10 million, the budget for production scale up exceeded $100 million. This is explained by the complexity of the workload involved in this task. In most cases, this is underestimated by start-up companies. The microstructure technologies applied to Respimat production combine silicon micromachining, micro-injection molding, mechanical micromachining, and specific mounting and assembling procedures. A robotic system for mounting and assembling was specially developed and proven for the assembly of 40 Respimat per minute, shown in Figure 9.14 (a-d). In addition to the long development and production scale-up times, the obligatory clinical tests determined the timing of the first market introduction, which became possible in January 2004. With new drugs under development for delivery

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Figure 9.12  (See color insert following page 16.) Schematic diagram Respimat brochure.

via the Respimat, this unique product looks forward to a prosperous growth over the coming years.

TRUSPRAY With completion of the Respimat development and production program, a systematic search was started to apply this competence in micro-nebulizer technology to nonpharmaceutical applications in order to ensure further growth of the microParts business. It soon was recognized that the Respimat principle, with its limitation

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of released dose of a few microliters per single shot, was not applicable to mass markets like perfume, deodorants, or hairspray. In a systematic search, microParts investigated other nebulizer applications in order to find a unique opportunity for microParts core competence in microtechnology and one that would offer functional improvements to the large aerosol markets. The final choice was an innovative aerosol particle generator based upon capillary atomization as shown in Figure 9.15. The use of capillary tubes instead of swirl chamber nozzles makes it possible, for the first time, to spray highly viscous products at optimum flow. Due to low flow rates, capillary atomization does not need highly diluted formulations. The result is a significant reduction of solvents and propellants (VOCs) compared with existing products. Products can be sprayed much more effectively, reducing amounts of solvents and propellant gases down to 20% of conventional aerosol systems, and thus offering an environment-friendly alternative. In addition, higher viscosity products such as concentrates, lotions, gels, and even waxes can be delivered as an aerosol spray. Lowering the proportions of propellant and solvent enables the size of the aerosol cans to be reduced, which is an additional advantage in function and cost. Together with the German tube manufacturer Tubex, a leading supplier of aerosol cans, a new innovative shaped can was developed in order to establish TRUSPRAY as a unique registered trademark (shown in Figure 9.16). The high recognition oval shape makes the product attractive and user friendly. Since mass production and sales of aerosol products are not in the area of microParts’ core competence, a business model was developed based upon the establishment of licensing agreements with a network of leading European suppliers, each having a core competency within the aerosol business: • LINDAL group System production, marketing and sales • TUBEX group Can production • ColepCCL Filling microParts supports this network with further microtechnology and by investigating new applications. As with many other innovations, the market introduction turned out to be much more difficult than expected. The large European players in the aerosol business were more concerned about the risks and customer reaction to the products than they were about capitalizing on the multiple new opportunities. A breakthrough was the successful introduction of a TRUSPRAY version of a deodorant by Sara Lee, which sold more than 10 million devices in the first year. Another example was the successful introduction of an aerosol version of a ski wachs by the Austrian company TOGO, which also demonstrates the innovative potential of this invention.

Microfluidics The advances in ink-jet printing technologies achieved by applying microstructure technologies have demonstrated new ways of handling fluids within micron-sized

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(a)

(b) Figure 9.13  (a–c) Design studies for Respimat.

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(c) Figure 9.13 (Continued)

structures. These have been used by many teams in research institutes and industrial organizations aiming for innovative solutions in biomedical diagnostics. Microstructures permit precise fluid handling of very small volumes (microliters to picoliters) in a minimum available space. Sophisticated microfluidic designs enable the integration of fluidic functions such as dosing, mixing, resuspension of dried chemicals, triggering, and valve functions. In the micron-sized channels and cavities, capillarity can be utilized as a simple and robust fluid propulsion mechanism. All this can be combined to build platforms (lab-on-a-chip) for complete chemical reactions. Typical applications are: • In vitro diagnostics (point of care) • High throughput screening for drug discovery • Analytical instrumentation microParts’ core competence in microstructure technology, especially with polymers, offering low-cost mass production for polymer chips, positioned it as a competent partner for a life science industry already in the early stages of this new field of application. The miniaturized microtiterplate Lilliput seen in Figure 9.17 (a-d) — developed together with Merlin Diagnostika (Bornheim, Germany) — is an example of such a lab-on-a-chip system, produced in polymers by injection molding. The microtiterplate integrates 96 reaction wells, 4 sample reservoirs, and 5 additional chemical ports on an area that is smaller than a thumb. The wells are preloaded, e.g., with various antibiotics. Microchannels link the wells with the sample reservoirs, allowing capillarity to propel the sample cell suspensions into the reaction wells. The cell growth rate in the different wells is optically monitored during incubation by using the microParts microspectrometer, which is described in the next paragraph.

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(a)

(b) Figure 9.14  (a–d) (See color insert following page 16.) Robotic system for mounting and assembling Respimat.

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(d) Figure 9.14 (Continued)

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Figure 9.15  TRUSPRAY principle brochure.

Figure 9.16  TRUSPRAY can brochure.

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(c) Figure 9.17  (a–d) Microtiterplate LILLIPUT brochure.

The key properties of the Lilliput diagnostic chip for clinical microbiology are: • • • • •

Low consumption of reagents Short analysis times Easy handling Automated test procedures Savings in costs and time

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(d) Figure 9.17 (Continued)

Other examples of the successful developments of bio-chips are a DNA chip for Exicon (Denmark) and several chips for home-care tests, which are currently in the market introduction phase. The demands in analytical instrumentation for high speed, low sample consumption, and low cost can be met with the application of microstructure technology. A typical example is the introduction of a micro-degasser for High-Performance-Liquid-Chromatography (HPLC) by Agilent, which was developed and manufactured by microParts. A large 18-inch box with a long tube system for degassing eluents for HPLC is replaced by a micro-system consisting of an ultra-thin PTFE permeable membrane supported by a micro-structured PEEK inlay of 1.2 million columns as shown in Figures. 9.18 and 9.19. The advantages are not only smaller size and lower cost but, even more importantly, a reduction of the processing time for degassing the samples under investigation from 4 hours to 15 minutes. Patents for the product design are owned by Agilent, whereas the production processes are protected and owned by microParts. Another microstructure product that is very well suited for analytical instrumentation is an optical microspectrometer, which is described in the following paragraph.

Microspectrometer An optical microspectrometer was one of many product ideas that was investigated by the inventors of the LIGA-technique in 1987:

European patent EPO242574 A 2 1987 – 10 – 28

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Figure 9.18  Micro Degasser product sheet.

0.2 mm

Figure 9.19  Microstructured inlay microdegasser product sheet.

“Procedure of the manufacture of an optical component having one or more echelette-gratings and device thereby obtained.” This product proposal was the only one that passed the evaluation criteria described in Chapter 3, and therefore an appropriate budget was allocated for the development of a monolithic miniaturized grating spectrometer incorporating all the functional elements onto a single chip. After discussions with many potential customers, it was decided to develop a product with one basic design verified in two versions for different wavelength ranges as shown: • Visible enhanced • Near infrared

300–1000 nm 1000–1800 nm

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Figure 9.20  Microspectrometer principle.

A schematic of the LIGA–microspectrometer is shown in Figure 9.20. An optical fiber images the sample onto the entrance slit of the device. The light is then propagated onto the self-focusing Echellette grating. The diffracted light is deflected onto a detector array, which reads out the optical spectrum as an electrical signal. The lateral dimension of the microspectrometer is 20 × 13 mm. The small size, low power consumption, and robust design with no movable parts make the microspectrometer ideally suited for incorporation into handheld and tabletop instruments. A spectacular application is the Bilichek instrument, which was introduced by the U.S. company Spectrx for the noninvasive measurement of the blood parameter bilirubin as a means of detecting jaundice in newborn babies. The BiliChek focuses white light on the baby’s skin and analyzes the spectrum of the backscattered light to determine the bilirubin concentration in the blood. For the first time, it offers a mobile, noninvasive method for the diagnosis of neonatal jaundice. Results are instant, while the need for blood samples and the resulting risks of infection and pain trauma are eliminated. The BiliChek instrument has received FDA approval and today is successfully sold throughout the world by the company Respironics (see Figure..9.21). Other typical examples of instruments that incorporate the microspectrometer are in dental and cosmetic applications. The IdentaColor II by Identa A/S Denmark is a small portable tooth color measuring instrument (see Figure. 9.22). It allows dentists to determine the individual tooth shades and to select from a set of color shades the optimum match of the new ceramic insert. Without the device, this is sometimes a difficult task because the color appearance of teeth depends largely on environmental conditions. Today there are roughly 150 different applications using the microspectrometer; the most important ones are in the field of point-of-care diagnostics, biomedical and clinical analyzers, quantitative determination of ingredients in food and agricultural products, color sensors, and classical analytical instrumentation.

Technology As described in the first chapters, microParts was founded with the mission to commercialize the newly invented LIGA-technology. Therefore, in the early phase, all

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Figure 9.21  BiliChek.

Figure 9.22  IdentaColor.

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Microstructuring Techniques X-ray-, E-beam-, UV-Lithography

Excimer-Laser Machining

Reative Ion Etching

Mechanical Microfabrication

Fabrication of Mold Insert by Electroforming

Series Production Micro Injection Molding (hot embossing) Surface Modification

Assembly/System Integration

Figure 9.23  Microstructure technologies μfluidic brochure.

efforts were taken to validate the numerous process steps and to transfer the technology from a laboratory scale to industrial mass production. With the small series production of demonstrator samples, it became already obvious that the production processes required special adaptation and optimization for each individual product, and since a product is assembled from different components, it typically requires the application of a broad spectrum of different microtechnologies. The basic idea of the LIGA-invention is the production of a master — using sophisticated microtechnologies — and reproducing from this master in large quantities utilizing injection molding. This principle was followed, and the original master-fabrication by deep x-ray synchrotron lithography was augmented by other microstructure processes (as shown in Figure. 9.23) such as x-ray lithography, UV-photolithography, silicon dry etching, electro-discharge micromachining, and

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Figure 9.24  (See color insert following page 16.) Respimat production line.

mechanical micromachining. All combinations of these techniques are used to produce the required microstructure. In contrast to microelectronics, these rather complicated and costly processes are applied only once to create a master structure, which is copied into a metal tool by electroforming. By using this tool in a micro-injectionmolding process, exact replications of this master are produced in large quantities. In addition to microtechnology capabilities, microParts had to develop competences in surface modifications like hydrophilization or metallization and surface fictionalization, e.g., for the coupling of biomolecules. In order to fabricate a working microsystem out of the different components, it is essential to use bonding methods like ultrasonic bonding or laser beam welding. Mounting and assembling processes have to be developed for every single microproduct. The development of the Respimat assembly line (see Figure. 9.24) took more than two years, with costs in excess of $20 million. Clean room conditions A, B, and C, as with microelectronics, are required for contamination-free microlithography and also to meet hygiene requirements for pharmaceutical products in accordance with FDA/GMP guidelines. microParts manufacturing processes take place in accordance with DIN EN ISO 9001 and EN ISO 13485. These complex and costly technologies require a strong financial commitment by the customer in order for microParts to make the investments required for the

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scale up of production following successful product development. This factor is often underestimated by start-up companies.

Intellectual Property The value of a high-tech company strongly depends on its intellectual property. A strong patent portfolio serves two main objectives: • It secures a unique selling position and defends against competition. • It secures the freedom to operate. At the beginning of all business activities, a careful search must ensure the “freedom to operate.” This means there are no patents, which could prohibit the new enterprise to act in its field of competence and to execute its business plan. In a pioneering industry like microsystems technologies, broadly claimed patents are an important step in staking territorial claims. Once microParts had defined its core business, an active patent strategy was implied to secure this territory with patents. There are three categories of patents for microParts’ business: • Production processes • Design elements for µ-fluidics and µ-optics, which can be combined for innovative products (see Figure 9.25) • Product patents Design Elements (IP@BImP)

Dosing Mixing

Resuspension

Separation Platforms

Time Gate

(IP@BImP and 3rd parties)

Products (IP@3rd parties) Cardiac Marker Chip

LabCD96

Mikrospektrometer

Figure 9.25  Microfluidic design elements.

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Filing a patent is an efficient way to find out if an invention has a pioneer character (no other publication found in patent search) or if it infringes on previously issued claims. Filing of a worldwide patent incurs a substantial investment in finance and workload. Therefore, microParts reviewed the possible implications of every new patent application on microParts business: • Economic use was uncertain; application only in Germany (defensive patent to secure freedom to operate). • Economic use planned in future; application in Europe, United States, and Japan. • Economic use planned in core business; worldwide application. microParts has issued approximately 30 patents and has many new inventions under consideration. When the broad search phase was finished as described, patent activities were focused, and patents not related to the core business were sold, generating a good income. A strong patent portfolio not only serves to secure the company’s business, it is also important to obtaining good profit margins. microParts’ development and delivery contracts typically include a license agreement for using intellectual property. In general, the customer receives exclusive rights in his application, which have to be defined and very carefully described in the contract. In order to pursue all relevant aspects of patent issues, an interdisciplinary team was established that made the necessary decisions during regular twice-monthly meetings. Throughout the lifespan of microParts, there have been no claims or discussions with regard to patent infringement.

Commercial Results (Sales, EbiT) With the foundation of microParts GmbH, its shareholders — STEAG AG, HOESCH AG, HUELS AG, VEW AG, and Rheinmetall GmbH — committed to finance the start-up phase and agreed in their shareholder contract to accept responsibility for any losses. The prognosis for the business plan was that break even would be reached in five years. For launching the LIGA-technology, the operating expenses were estimated at €6 million per annum, mainly for developing a reliable process technology and demonstrator samples, which would be used to convince potential customers of the viability of the technology. The first income was generated from development contracts and two years later with the first small series production contracts. At a board meeting in 1993, the projected growth of revenue and operating expenses was presented as shown in Figure 9.26. The numbers until 1998 were agreed as the valid business plan. The following projection was only a general estimate. The blue dots for year 2004 are the actual numbers for revenue and total operating expenses. The actual numbers for revenue and EbiT from start to year 2004 are shown in Figure 9.27. Investments increased from 2 million euros in 1997 to 8 million euros in 2004. A positive cash flow was generated from year 1998. Public support with development contracts from the German government and the European Commission strengthened the R&D budget but were below €1 million

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microParts will mit der derzeitigen Fokussierung der Aktivitäten so schnell wie möglich die Produkt- und die Marktphase erreichen Umsätze/ Kosten p.a. (Mio.DM)

Phase II Selektion und Fokussierung Projekte. Anpassung Kostenstruktur

Aufbau- und Such-Phase

Fokussierungsphase

Phase IV Finden Tätigkeitstelder, Identifizierung Märkte, Herstellung Deckung Tätigkeitstelder/Märkte

Phase III Ertolgreiche Projekte Produktdefinitionen

Produktphase

Marktphase

100

Umsatz Kosten

50

0

2000 Vergangenheit 1990–1992

Gegenwart 1993–1994

Figure 9.26  Business plan from 1993. 10/23/07 10:23:40 AM

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Mittelfristige Zukunft 1995–1998

2000

2004 2004 Langfristige Zukunft ab 1998

Umsätze/ Kosten p.a. (Mio.DM)

Commercializing Micro-Nanotechnology Products

150

Phase I Grundung, Start, Suche

223

microParts GmbH 50.0

45.5

Turnover (MIO €) EbiT (MIO €)

40.0 30.0

26.0 19.8

20.0 8.6

10.0 0.0 –10.0

37.1

35.9

0.4

0.7

0.9

1.8

2.6

–4.6

11.0

12.4

14.5

4.7

–2.0

0.2

0.4

0.2

0.4

0.4

0.8

1.6

3.3

2.5

–6.3 –6.6 –7.1 –6.4 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure 9.27  Revenues and EbiT actual data.

per annum. The city of Dortmund made a substantial investment in the technical buildings rented by microParts. Different from conventional businesses, the largest part of the budget (approximately 70%) was personnel costs. This reflects again the importance of excellent human resources management.

Human Resources and Organization When a venture capitalist is asked what are the most important criteria in identifying the value of a start-up company, the answer will be product — plan — people. Where intellectual property is the dominant value and material costs are negligible, for MNT, in the seed phase the answer should be people — people — people. During the challenging LIGA-research project, only the best young scientists were selected by FZK and the STEAG project team. With the foundation of microParts, additional selection criteria were applied, choosing only those employees who showed, in addition to their technical expertise, talent and motivation for the commercialization of the new technology. In the start-up phase, microParts was supported by its parent company STEAG with the provision of the general functions of human resources, legal subjects, IP, and control, all of which were assumed by microParts in the subsequent years. The initial R&D oriented staff were trained in special management adaptation programs such as project management, time management, decision analysis by Kepner Tregoe, and controlling for engineers. This included the total participation of the entire management team. Training for specialized functions was provided on an individual basis, e.g., marketing, key customer relationship management, and accounting rules for small enterprises. A determined effort was taken to educate personnel from all management levels in leadership skills. This important personnel development support

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program was contracted to the specialized consultant group Impuls, Ltd., Bonn. The program offered practice-oriented training with subsequent individual coaching and regular counselling to review the leadership skills of individuals. Together with the consultants, a team of microParts personnel from all levels of management developed the following nine dimensions of individual leadership principles: • • • • • • • • •

Trust and respect Cooperation Role model Motivation and support Delegation of responsibility Transparency and flow of information Target agreements Feedback and appraisal Advancement and further education

An illustrated brochure describes the leadership principles together with detailed descriptions as to how a microParts executive should ideally behave when interacting with his or her colleagues or with customers or the general public. As a part of 360-degree feedback, all employees have the opportunity to anonymously appraise their supervisors regarding the accomplishment of the leadership principles by taking part in an annual online survey. The level of participation was always close to 90%. The results of the survey are then discussed between the assessed executive and his supervisor during the annual performance evaluations. Top management participated in all the microParts’ in-house seminars and used these seminars as opportunities to communicate information regarding the mission, culture, purpose of the organization, and the actual budget situation. Information on these subjects was also communicated to all employees during periodic meetings. This open and unrestricted flow of all relevant information concerning the business of microParts helped all individuals to identify with the goal of microParts and convince them that the values that had been created for microParts also were valuable in their individual careers. The increase in personnel over the years is shown in Figure 9.28. Parallel to the increase in personnel and the foundation of the business, an organizational structure was continually developed. The initial functional organization was established as follows: • • • •

Marketing Product development Production processes development Administration

This was developed into a hybrid divisional organization (shown in Figure 9.29), according to the principle “structure follows strategy.” In this evolutionary process, the principles of the learning organisation were applied:

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Actual value

Planning

514

500

471 401

400 300 200

553

251 148

159

1999

2000

284

305

340

195

100 0

2001

2002

2003

2004

2005

2006

2007

2008

2009

Figure 9.28  Personnel increase over years.

• We are a small part of a rapidly changing system. • There is no absolute truth. • There is always a better way of doing things.

Conclusion The business development of microParts demonstrates the chances and risks of a start-up business that is based upon an innovative technology requiring the determination of new applications and products. The transfer of the newly invented microtechnology from the laboratory scale to an industrial platform took much longer and required much more financing than was anticipated and promised to the investors by the scientists. The new features of the LIGA-technology offered improvements to existing products like ink-jet heads and opened up the possibilities for completely new applications such as noninvasive biomedical diagnostics. In all cases, in order to win the business of prospective customers, there had to be the potential to realize a functional improvement in their devices as well as a cost saving. Whereas microtechnology could demonstrate the feasibility of a new product idea that could be realized at low cost, the development of tools and processes for low-cost mass production required a much larger effort on behalf of microParts and a strong financial commitment of the customer. Since components with micron-sized structures offer value only when mounted into a functioning system that is usable in the macro world, processes and equipment for mounting and assembling have to be developed for every single microproduct, a factor that is underestimated by many newcomers to the field. The introduction of an innovation or even a disruptive technology requires leadership skills that typically exist only in small- and medium-sized enterprises, whereas, on the other hand, in many cases, large-scale financing is critical to success. To

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General Management Nebulizer Technology Marketing & Sales Development Engineering Mounting & Assembly

Microfluidics

Microoptics

Marketing & Sales Development Engineering Mounting & Assembly

Marketing & Sales Development Engineering Mounting & Assembly

Production Clean Room Processes Injection Molding Micromechanics Quality Management

Administration & Controlling

Figure 9.29  Organization diagram microParts.

introduce an innovation within a large company operating in an established market requires a product champion with a strong influence within the organization. Middle management in R&D or product management alone will fail to overcome the resistance of the establishment. In the case of the middle management of large corporations, it seems to be more important to avoid risks than to explore new opportunities. To manage a successful business in microtechnology, a clear focus is required in technologies, fields of applications, and the needs of key customers. This must be balanced by the day-by-day top management decisions as to whether or not to step into new opportunities. Too many small businesses will defocus with a resulting decrease in efficiency. A business should not be too dependent on a small number of customers. By far the most important success factor for a high-tech start-up is excellence in management. The high level of complexity involved in building a new business requires know-how in business management, products and markets, production technologies, and leadership and motivation of people. Management of innovations requires different skill sets, often in one position:

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• analytical • focused concentration • discipline

versus versus versus

visionary thinking open mindedness creative chaos

A new enterprise should not follow successful predecessors — benchmarking makes all businesses equal — and should not accept the established rules of market leaders but should instead develop its own rules. To follow a vision needs courage; it is a journey into an undiscovered area with many challenges and risks but also many fascinating surprises that are rewarding to true pioneers.

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9 The History of the

microParts GmbH Development of a Successful German MicrosystemsBased Business Reiner Wechsung

Contents Introduction............................................................................................................. 189 Origin of the LIGA-Technology............................................................................. 190 Foundation of microParts GmbH — First Steps into Business.............................. 193 Products.................................................................................................................. 201 Nebulizer for Drug Delivery.......................................................................202 TRUSPRAY.................................................................................................206 Microfluidics................................................................................................207 Microspectrometer....................................................................................... 214 Technology.............................................................................................................. 216 Intellectual Property............................................................................................... 220 Commercial Results (Sales, EbiT).......................................................................... 221 Human Resources and Organization...................................................................... 223 Conclusion............................................................................................................... 225

Introduction microParts GmbH was founded in 1990 by STEAG AG with the mission to commercialize applications of the newly invented LIGA-technique. STEAG-microParts is an example of how a research-driven project became a commercially successful, market oriented, profitable business.

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By showing drawings and a few samples that had been produced in the research laboratory, several visionaries convinced the management of STEAG, together with four additional shareholders, of the market opportunities for microtechnology-based products. The task for microParts, therefore, was to identify products that could form the basis for a profitable business and develop the appropriate production processes to take these products from a laboratory scale up to industrial mass production. The expertise of microParts lay in its understanding of the technology, so the best way of building a business was to find customers who could apply the unique features afforded by this new technology into their development programs so as to improve existing products or produce new ones. Examples include improvements to spinnerets nozzles and the development of noninvasive blood analyzers. The company’s objective was to work with customers who were prepared to enter into a longterm business relationship. In this chapter, the business development of microParts is described from its inception, with all the complexities of a start-up company, through to a strategically focused, profitable operation.

Origin of the LIGA-Technology The LIGA-technique was developed by the Nuclear Research Centre Karlsruhe in conjunction with STEAG AG for a project entitled “Micronozzle for Uranium Enrichment.” The goal was to develop an alternative to the ultra-centrifuge method of uranium enrichment that could be applied for nonmilitary use. The principle of the micro-nozzle is shown in Figure 9.1. Gaseous uranium hexafluorine flows through the nozzle, and because of the mass dependent centrifugal forces that are developed, isotopes are separated. The characteristic features of the micro-nozzle are:

Figure 9.1  Micronozzle for uranium enrichment.

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• • • •

191

Lateral dimensions in the micron range Structure height of 300 micron (aspect ratio > 100) Material used is nickel or other metal alloys Possibilities for mass production at low cost

Achievement of the above required the development of a new production process: the LIGA-technique. This was the only motivation for the Nuclear Research Centre Karlsruhe and the power company STEAG to develop the LIGA-process. The LIGA-technique combines x-ray lithography to produce master units, Electroforming processes (Galvanoforming) to create the production tools, and plastic molding (Abformung) to replicate high aspect ratio microstructures in a high throughput production process. As in lithographic methods for microelectronic engineering, the design of the microstructure is first defined in a CAD system, and then the corresponding x-ray mask is produced by optical or electron beam lithography. An important feature of this step is the almost complete design freedom. The mask consists of a thin membrane made from a highly transparent material such as titanium or beryllium and of absorbent structures made from gold. In a further process sequence typical for the LIGA-technique, a layer of x-ray resist material with a thickness up to several hundred microns, which has been fixed on a stable metal ground plate, is irradiated through the x-ray mask by synchrotron radiation. The irradiated areas of the resist are removed by a suitable solvent, creating the primary microstructure. In the next process step, metal is deposited on the ground plate by electroplating, and a metal structure is formed within the cavities of the resist structure. This process continues until a thick layer of metal has firmly overgrown the resist structure. After removal of ground plate and resist, a complementary structure is obtained, which is used as a mold insert for subsequent micromolding processes. The multiple use of the mold insert is the key for low-cost mass production, even though it is a rather costly production process. The principle of the LIGAtechnique is illustrated in Figure 9.2 (a–b). If the product material is a polymer, the samples from the injection molding can be used directly. If the product material is a metal, the mass-produced polymer samples are used as molds for a second electroforming step in which the final product is plated in metal or a metal alloy. The teams from STEAG and the Nuclear Research Centre Karlsruhe realized the potential for wider applications of the LIGA-technique during the 1980s, but they concentrated their efforts strictly on the development project Micro-Nozzle for Uranium Enrichment. Only at the end of this technically successful program, which was discontinued for economic and political reasons, did the teams demonstrate and publish the general features and potentials of the technique as an important microtechnology. It was necessary to facilitate the transfer of the technology to German industry so that a return on the large investments made could be realized. Some examples are given below that show the precision of the LIGA-technique. Figure 9.3 (a–b) shows a resist structure 400 micron high and 7 micron wide with a deviation of only + 0.1 micron over the whole structure height. The spinnerets nozzle was chosen as an example of a product where this technique could be employed to advantage. In

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X-ray Deep-etch Lithography and 1st Electroforming Synchrotron Radiation Irradiation

Mask Membrane Absorber Structure Resist Substrate

Developing

Resist Structure

1st Electroforming

Removal of the Resist Structure

Metal

Metal Structure

Final Product

Mould Insert

(a) figure 9.2  (a–b) Principle of the LIGA-technique.

Figure 9.4 (a), the ground plate with resist columns is shown, and in Figure 9.4 (b), the corresponding nozzle after plating with nickel can be seen. The performance of the LIGA-technique was described in acquisition material as follows: • Height: 20–500 µm • Maximum dimension:

20–60 mm

• Minimum dimension:

2 µm

• Smallest structure detail:

0.5 µm

• Materials: nickel, nickel/cobalt, copper, gold, PMMA, POM ZrO

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Plastic Moulding and 2nd. Electroforming/Casting Slip

Mould Cavity

Mould Insert

Plastic

Mould Filling

Electrically Conductive Substrate Mould Removal Plastic Structure as Lost Mould or Final Product

Metal/Ceramic

2nd. Electroforming

Metal or Ceramic Structure

Final Product

(b) figure 9.2 (Continued).

The research teams also demonstrated the potential for low-cost mass production, which could be realized by German industry under licensing agreements and supported with technology transfers from the research laboratory.

Foundation of microParts GmbH — First Steps into Business With completion of the development project “Micronozzle for Uranium Enrichment,” the Nuclear Research Centre Karlsruhe and STEAG recognized the large potential for commercializing the LIGA-technology and, therefore, the Institute for Nuclear Process Technology was transformed into the Institute for Microtechnology, and the STEAG team was spun off as the start-up company microParts GmbH. In 1990 by means of a detailed licensing agreement, STEAG secured the rights to use the basic patents of the LIGA-technology and also those of the existing product ideas. The license agreement was supported by an additional cooperation agreement,

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Structure Height (µm)

400

300

200

100

0 7.0



(a)

7.2 7.4 Structure Width b (µm)

7.6

(b)

Figure 9.3   (a–b) Resist structure of height 400 μm, 7 μm wide with a deviation of 0.1 μm.

which was important and very useful because of the requirement for the transfer of a substantial amount of know-how to microParts, thus allowing it to initially use the research center’s equipment. Together with Hoesch AG, Huels AG, VEW AG and Rheinmetall GmbH, STEAG founded microParts GmbH in 1990. This new company was relocated from Karlsruhe to rented offices in Dortmund from January 1, 1994. It contributed to the structural change of the German Ruhr area from coal- and steel-based industries to new high technology; it therefore received support from the government of Northrhine Westphalia and the European Commission. The shareholders of microParts, who had been convinced by the visionaries from the research group of the extraordinary business potential of the LIGA-technology, were ready to invest in a new business with expectations of a good return on their investment and the securing of profits within five years. The first LIGA-brochure prepared by the STEAG team during the foundation period of microParts, shown in Figure 9.5, described a large variety of product ideas in the following list of categories:

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100 µm

(a)

10 µm

(b) Figure 9.4  (a–b) Spinneret nozzle resist structure, 5 μm nozzle after plating.

• • • • • • • •

Sensor components Microactuators/Micromotors Fluid components Components for microelectronics Components for microoptics and integrated optics Micromechanical components Microfiltration components Microstructured layers

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Figure 9.5  The LIGA brochure.

The development teams of STEAG and the Institute for Microstructure Technology produced some demonstrator samples for what they expected would be typical LIGA-products, shown in Figure 9.6 (a-g). With these promotional materials, on the potential of the technology together with functional models, a broad marketing program was started with sales literature, exhibitions, and presentations at conferences. The initial enthusiasm of the research-oriented teams soon turned into skepticism because the expected orders were not realized, and the goodwill of the few interested customers turned into disappointment with the realization that the technological proposals took too long to produce. With the foundation of microParts, the shareholders realized that excellence in R&D is not sufficient to build up a profitable business. They therefore hired an experienced business manager with the necessary technical expertise. This was the start of the process of developing microParts into a professional business enterprise. The first step was to reexamine the technology in order to define achievable specifications that could be met without further development efforts. As a result,

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ceramics were removed from the acquisition list. The broad list of potential products and applications was compiled into a priority ranking using the following criteria: • Technical specifications require the application of LIGA with a low risk of substitution by alternate technologies. • microParts is chosen as a partner for development and future production of the microproducts. • Application is in an attractive growing market. • Customer is a strong enterprise with capabilities for substantial investments. • Customer has a strong competitive position in the planned product program. • Customer is willing to make financial commitments. • Plan for scale up of the production allows for realistic time schedules.

200 µm

(a)

50 µm

(b) Figure 9.6  (a–g) LIGA product proposals. © 2008 by Taylor & Francis Group, LLC

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200 µm

(c)

50 µm

50 µm



(d)

(e)

Figure 9.6 (Continued)

As a consequence of this strategic check, projects proposed by start-ups with interesting product ideas but no business experience or financial backing were no longer pursued. There were many requests for cooperation with the promise for excellent future business but requiring funding of the development programs by microParts. Other classes of projects were rejected for very different reasons. In some cases, it turned out that large companies with strong in-house production capabilities wanted microParts only to perform development projects with the transfer of knowhow to enable the customer to take over production.

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100 µm

(f)

100 µm

(g) Figure 9.6 (Continued)

Examples are: • A request for the development of a fuel-injection nozzle for the automotive industry, where it turned out that the customer definitely wanted to undertake the production. • The request for the development of an electrical micro-connector, seen in Figure 9.6, for a Japanese electronic company, which demanded the delivery of a detailed description of the microtechnology process parameters be contained within the quotation for a development program. From the many product ideas that were presented by the initial research team, only two projects fit into the newly defined strategy — an optical coupler and a

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200 µm

Figure 9.7  Optical coupler.

microspectrometer. Here the plan was for microParts to present a product development proposal that included final production. The commercialization of the product would be undertaken by a strong customer who is already operating in the respective business area. The LIGA-produced coupler for optical fibers, offering as an advantage a very low surface roughness, in the order of 20–30 nm, which results in low scattering losses and the possibility of molding with optically compatible polymers such as PMMA and PCs. Such an optical coupler is shown in Figure 9.7. Good initial interest was shown by large players in the U.S. and Japan, which indicated some promising business opportunities. It turned out that telecommunications had a large potential, but a real breakthrough was still remote. Therefore, in the mid 1990s, microParts decided not to target the telecommunications business. As a result, the microspectrometer remained the only product to be developed and marketed by microParts and is described later in this chapter. A very promising project was started for microParts to develop an ink-jet head for a medium-sized company that was established in the ink business. The project was of strategic importance to the customer, who was committed to investing in the new business and needed microParts for the development and future production of the product. As a result, a very efficient development project — a nozzle plate for a 300 dpi ink-jet head — was developed, as shown in Figure 9.8. During the course of the program, microParts took over the development of the complete ink-jet head. Within two years, serial production of a few thousand ink-jet heads with excellent performance was completed. Unfortunately, during the negotiations to finance the scale-up of the production, it became impossible for the customer to obtain a manufacturing license for the patent protected ink-jet head. This was a big surprise for microParts, which had assumed that a customer who was making million-dollar investment decisions would have ensured their rights to produce the product. During the negotiations with the big players in the ink-jet business, microParts realized that in order to protect its core competence, it had to refuse to cooperate with small suppliers, even if they could offer some technological advantages. Although microParts

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50 µm

(a)

20 µm

(b) Figure 9.8  (a–b) Ink-jet nozzle plate.

had not lost money on the ink-jet project, it tied up resources without the prospect of developing a new business. Nevertheless, microParts had strengthened its technology portfolio in microtechnology with the valuable know-how it had gained from its work in microfluidics.

Products As a result of the intensified marketing and acquisition activities focused toward the criteria described earlier, a few customer projects were acquired that offered the

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(54) Atomising Devices and Methods (57) A metered dose inhaler comprises a piston (3) which is mounted in a cavity (2) within a body (1), 22 and is urged by a pre-loaded spring (6) into a reduced cross-section pressure chamber (4). The 5 piston (3) may be loaded by means of an actuating 3 rod (31) having a handle (32), and may be latched in a loaded position by a latching means (33). A liquid drug (e.g. in aqueous solution) is contained in a collapsible bag (10). Metered quantities of the 40 drug are successively presented in the pressure chamber (4), and then subjected to a sudden and 6 great increase in pressure, to eject the liquid drug 2 through an atomising head (22), to reduce it to a fine atomised spray of small mean particle size–for example, less than 30 micrometers. Non-return 33 valves (13 and 23) control the flow of liquid through the device. The sudden pressure pulse is caused by releasing the spring loaded piston (3), upon depressing an actuating button (35) connected to the latching means (33).

23

25 21

4

1 13 11 12 16 10 15 34 31

GB 2 256 805 A

35

32

Figure 9.9  Patent Respimat.

potential to build up a steady new business after the successful completion of all the phases of a well-defined development program: • • • • •

Development of a functional model to provide proof of concept Engineering of a serial product and of the corresponding production process Fabrication of tools and small batch production Scale up of production Serial production (million parts per year)

Both parties had the option to terminate the cooperation if the well-defined criteria of any phase could not be achieved. Parallel to the ink-jet head and optical coupler projects, microParts had started a few customer projects that fulfilled all above mentioned requirements and that successfully completed all phases from feasibility tests to large-scale production.

Nebulizer for Drug Delivery Using the experience and skills of the company, a new Respimat aerosol inhaler was developed for Boehringer Ingelheim, a leading manufacturer of metered aerosols. Respiratory and lung diseases are on the increase the world over, urgently necessitating new kinds of therapy completely free of CFCs and other propellant gases. In order to meet these future requirements, Boehringer Ingelheim had purchased a patent in which a soft mist inhaler utilizes the pressure of a released tensioned spring instead of propellant gas (see Figure 9.9). A micromechanical pump forces the medical solution through a micro-nozzle, generating a soft spray.

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5 µm

(a)

5 µm

(b) Figure 9.10  (a–d) Micronozzles for Respimat.

In the early stages of the project, the role of microParts was to develop micronozzles with 5µm holes in different shapes in order to generate a spray with an aerosol droplet size of 5 µm. Examples are shown in Figure 9.10 (a–d). microParts’ development task was expanded into the development of a nozzle unit in combination with a filter structure to deliver the specified spray characteristics. Employing a semi-empirical approach, different nozzle principles were investigated, ultimately resulting in the uniblock (shown in Figure 9.11). The uniblock consists of a filter structure including two micron-sized outlet channels built onto a silicon wafer. The drug solution is forced through the channels,

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5 µm

(c)

5 µm

(d) Figure 9.10 (Continued)

producing two fine jets of liquid that converge at a carefully controlled angle. The impact of these two jets generates the slow-moving soft mist. The generation of the soft mist lasts for more than a second, compared to about 0.2 seconds for the clouds generated with a propellant gas, and this facilitates the coordination of actuation and inhalation. Depending upon the formulation, between 66 and 81% of the droplets of the Respimat fall into the fine particle fraction (less than 5.8 µm), compared with less than 40% for the majority of metered dose inhalers. With completion of the uniblock, a device for a drug delivery system, including a pressure-generating system for the micro-nozzle, had to be developed. Boehringer

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Figure 9.11  Uniblock Respimat brochure.

Ingelheim contracted that task to medical device manufacturers who were well established in that field. Very soon it became obvious that a substantial competence in microstructure technology was required for this to be successful. In order to avoid a complete failure of the project, microParts proposed a design of the complete nebulizer system and built a working prototype. This was accepted by Boehringer Ingelheim, which then contracted a supply agreement with microParts for the complete nebulizer. Figure 9.12 shows a schematic diagram of the Respimat with its unique delivery mechanism that utilizes the energy from a tensioned spring to generate a soft mist. A simple 180° twist of the inhaler’s base compresses the spring and draws a predefined, metered volume of solution through the capillary tube and into a dosing chamber. When the dose-release button is pressed, the energy released forces the solution through the uniblock to form a soft mist of fine aerosol particles. During the development program, all the required specifications were met, and microParts also took responsibility for the design of an attractive, easy-to-use product (see Figure 9.13). When the prototype was completed and a frozen design had been agreed, microParts was contracted to develop the production processes according to medical GMP rules (Good Manufacturing Practice) and to scale up the production to a capacity of 10 million devices per year. Whereas the development costs for the prototype were just above $10 million, the budget for production scale up exceeded $100 million. This is explained by the complexity of the workload involved in this task. In most cases, this is underestimated by start-up companies. The microstructure technologies applied to Respimat production combine silicon micromachining, micro-injection molding, mechanical micromachining, and specific mounting and assembling procedures. A robotic system for mounting and assembling was specially developed and proven for the assembly of 40 Respimat per minute, shown in Figure 9.14 (a-d). In addition to the long development and production scale-up times, the obligatory clinical tests determined the timing of the first market introduction, which became possible in January 2004. With new drugs under development for delivery

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Figure 9.12  (See color insert following page 16.) Schematic diagram Respimat brochure.

via the Respimat, this unique product looks forward to a prosperous growth over the coming years.

TRUSPRAY With completion of the Respimat development and production program, a systematic search was started to apply this competence in micro-nebulizer technology to nonpharmaceutical applications in order to ensure further growth of the microParts business. It soon was recognized that the Respimat principle, with its limitation

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207

of released dose of a few microliters per single shot, was not applicable to mass markets like perfume, deodorants, or hairspray. In a systematic search, microParts investigated other nebulizer applications in order to find a unique opportunity for microParts core competence in microtechnology and one that would offer functional improvements to the large aerosol markets. The final choice was an innovative aerosol particle generator based upon capillary atomization as shown in Figure 9.15. The use of capillary tubes instead of swirl chamber nozzles makes it possible, for the first time, to spray highly viscous products at optimum flow. Due to low flow rates, capillary atomization does not need highly diluted formulations. The result is a significant reduction of solvents and propellants (VOCs) compared with existing products. Products can be sprayed much more effectively, reducing amounts of solvents and propellant gases down to 20% of conventional aerosol systems, and thus offering an environment-friendly alternative. In addition, higher viscosity products such as concentrates, lotions, gels, and even waxes can be delivered as an aerosol spray. Lowering the proportions of propellant and solvent enables the size of the aerosol cans to be reduced, which is an additional advantage in function and cost. Together with the German tube manufacturer Tubex, a leading supplier of aerosol cans, a new innovative shaped can was developed in order to establish TRUSPRAY as a unique registered trademark (shown in Figure 9.16). The high recognition oval shape makes the product attractive and user friendly. Since mass production and sales of aerosol products are not in the area of microParts’ core competence, a business model was developed based upon the establishment of licensing agreements with a network of leading European suppliers, each having a core competency within the aerosol business: • LINDAL group System production, marketing and sales • TUBEX group Can production • ColepCCL Filling microParts supports this network with further microtechnology and by investigating new applications. As with many other innovations, the market introduction turned out to be much more difficult than expected. The large European players in the aerosol business were more concerned about the risks and customer reaction to the products than they were about capitalizing on the multiple new opportunities. A breakthrough was the successful introduction of a TRUSPRAY version of a deodorant by Sara Lee, which sold more than 10 million devices in the first year. Another example was the successful introduction of an aerosol version of a ski wachs by the Austrian company TOGO, which also demonstrates the innovative potential of this invention.

Microfluidics The advances in ink-jet printing technologies achieved by applying microstructure technologies have demonstrated new ways of handling fluids within micron-sized

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(a)

(b) Figure 9.13  (a–c) Design studies for Respimat.

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(c) Figure 9.13 (Continued)

structures. These have been used by many teams in research institutes and industrial organizations aiming for innovative solutions in biomedical diagnostics. Microstructures permit precise fluid handling of very small volumes (microliters to picoliters) in a minimum available space. Sophisticated microfluidic designs enable the integration of fluidic functions such as dosing, mixing, resuspension of dried chemicals, triggering, and valve functions. In the micron-sized channels and cavities, capillarity can be utilized as a simple and robust fluid propulsion mechanism. All this can be combined to build platforms (lab-on-a-chip) for complete chemical reactions. Typical applications are: • In vitro diagnostics (point of care) • High throughput screening for drug discovery • Analytical instrumentation microParts’ core competence in microstructure technology, especially with polymers, offering low-cost mass production for polymer chips, positioned it as a competent partner for a life science industry already in the early stages of this new field of application. The miniaturized microtiterplate Lilliput seen in Figure 9.17 (a-d) — developed together with Merlin Diagnostika (Bornheim, Germany) — is an example of such a lab-on-a-chip system, produced in polymers by injection molding. The microtiterplate integrates 96 reaction wells, 4 sample reservoirs, and 5 additional chemical ports on an area that is smaller than a thumb. The wells are preloaded, e.g., with various antibiotics. Microchannels link the wells with the sample reservoirs, allowing capillarity to propel the sample cell suspensions into the reaction wells. The cell growth rate in the different wells is optically monitored during incubation by using the microParts microspectrometer, which is described in the next paragraph.

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(a)

(b) Figure 9.14  (a–d) (See color insert following page 16.) Robotic system for mounting and assembling Respimat.

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(c)

(d) Figure 9.14 (Continued)

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Figure 9.15  TRUSPRAY principle brochure.

Figure 9.16  TRUSPRAY can brochure.

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(a)

(b)

(c) Figure 9.17  (a–d) Microtiterplate LILLIPUT brochure.

The key properties of the Lilliput diagnostic chip for clinical microbiology are: • • • • •

Low consumption of reagents Short analysis times Easy handling Automated test procedures Savings in costs and time

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(d) Figure 9.17 (Continued)

Other examples of the successful developments of bio-chips are a DNA chip for Exicon (Denmark) and several chips for home-care tests, which are currently in the market introduction phase. The demands in analytical instrumentation for high speed, low sample consumption, and low cost can be met with the application of microstructure technology. A typical example is the introduction of a micro-degasser for High-Performance-Liquid-Chromatography (HPLC) by Agilent, which was developed and manufactured by microParts. A large 18-inch box with a long tube system for degassing eluents for HPLC is replaced by a micro-system consisting of an ultra-thin PTFE permeable membrane supported by a micro-structured PEEK inlay of 1.2 million columns as shown in Figures. 9.18 and 9.19. The advantages are not only smaller size and lower cost but, even more importantly, a reduction of the processing time for degassing the samples under investigation from 4 hours to 15 minutes. Patents for the product design are owned by Agilent, whereas the production processes are protected and owned by microParts. Another microstructure product that is very well suited for analytical instrumentation is an optical microspectrometer, which is described in the following paragraph.

Microspectrometer An optical microspectrometer was one of many product ideas that was investigated by the inventors of the LIGA-technique in 1987:

European patent EPO242574 A 2 1987 – 10 – 28

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Figure 9.18  Micro Degasser product sheet.

0.2 mm

Figure 9.19  Microstructured inlay microdegasser product sheet.

“Procedure of the manufacture of an optical component having one or more echelette-gratings and device thereby obtained.” This product proposal was the only one that passed the evaluation criteria described in Chapter 3, and therefore an appropriate budget was allocated for the development of a monolithic miniaturized grating spectrometer incorporating all the functional elements onto a single chip. After discussions with many potential customers, it was decided to develop a product with one basic design verified in two versions for different wavelength ranges as shown: • Visible enhanced • Near infrared

300–1000 nm 1000–1800 nm

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Figure 9.20  Microspectrometer principle.

A schematic of the LIGA–microspectrometer is shown in Figure 9.20. An optical fiber images the sample onto the entrance slit of the device. The light is then propagated onto the self-focusing Echellette grating. The diffracted light is deflected onto a detector array, which reads out the optical spectrum as an electrical signal. The lateral dimension of the microspectrometer is 20 × 13 mm. The small size, low power consumption, and robust design with no movable parts make the microspectrometer ideally suited for incorporation into handheld and tabletop instruments. A spectacular application is the Bilichek instrument, which was introduced by the U.S. company Spectrx for the noninvasive measurement of the blood parameter bilirubin as a means of detecting jaundice in newborn babies. The BiliChek focuses white light on the baby’s skin and analyzes the spectrum of the backscattered light to determine the bilirubin concentration in the blood. For the first time, it offers a mobile, noninvasive method for the diagnosis of neonatal jaundice. Results are instant, while the need for blood samples and the resulting risks of infection and pain trauma are eliminated. The BiliChek instrument has received FDA approval and today is successfully sold throughout the world by the company Respironics (see Figure..9.21). Other typical examples of instruments that incorporate the microspectrometer are in dental and cosmetic applications. The IdentaColor II by Identa A/S Denmark is a small portable tooth color measuring instrument (see Figure. 9.22). It allows dentists to determine the individual tooth shades and to select from a set of color shades the optimum match of the new ceramic insert. Without the device, this is sometimes a difficult task because the color appearance of teeth depends largely on environmental conditions. Today there are roughly 150 different applications using the microspectrometer; the most important ones are in the field of point-of-care diagnostics, biomedical and clinical analyzers, quantitative determination of ingredients in food and agricultural products, color sensors, and classical analytical instrumentation.

Technology As described in the first chapters, microParts was founded with the mission to commercialize the newly invented LIGA-technology. Therefore, in the early phase, all

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Figure 9.21  BiliChek.

Figure 9.22  IdentaColor.

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Microstructuring Techniques X-ray-, E-beam-, UV-Lithography

Excimer-Laser Machining

Reative Ion Etching

Mechanical Microfabrication

Fabrication of Mold Insert by Electroforming

Series Production Micro Injection Molding (hot embossing) Surface Modification

Assembly/System Integration

Figure 9.23  Microstructure technologies μfluidic brochure.

efforts were taken to validate the numerous process steps and to transfer the technology from a laboratory scale to industrial mass production. With the small series production of demonstrator samples, it became already obvious that the production processes required special adaptation and optimization for each individual product, and since a product is assembled from different components, it typically requires the application of a broad spectrum of different microtechnologies. The basic idea of the LIGA-invention is the production of a master — using sophisticated microtechnologies — and reproducing from this master in large quantities utilizing injection molding. This principle was followed, and the original master-fabrication by deep x-ray synchrotron lithography was augmented by other microstructure processes (as shown in Figure. 9.23) such as x-ray lithography, UV-photolithography, silicon dry etching, electro-discharge micromachining, and

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Figure 9.24  (See color insert following page 16.) Respimat production line.

mechanical micromachining. All combinations of these techniques are used to produce the required microstructure. In contrast to microelectronics, these rather complicated and costly processes are applied only once to create a master structure, which is copied into a metal tool by electroforming. By using this tool in a micro-injectionmolding process, exact replications of this master are produced in large quantities. In addition to microtechnology capabilities, microParts had to develop competences in surface modifications like hydrophilization or metallization and surface fictionalization, e.g., for the coupling of biomolecules. In order to fabricate a working microsystem out of the different components, it is essential to use bonding methods like ultrasonic bonding or laser beam welding. Mounting and assembling processes have to be developed for every single microproduct. The development of the Respimat assembly line (see Figure. 9.24) took more than two years, with costs in excess of $20 million. Clean room conditions A, B, and C, as with microelectronics, are required for contamination-free microlithography and also to meet hygiene requirements for pharmaceutical products in accordance with FDA/GMP guidelines. microParts manufacturing processes take place in accordance with DIN EN ISO 9001 and EN ISO 13485. These complex and costly technologies require a strong financial commitment by the customer in order for microParts to make the investments required for the

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scale up of production following successful product development. This factor is often underestimated by start-up companies.

Intellectual Property The value of a high-tech company strongly depends on its intellectual property. A strong patent portfolio serves two main objectives: • It secures a unique selling position and defends against competition. • It secures the freedom to operate. At the beginning of all business activities, a careful search must ensure the “freedom to operate.” This means there are no patents, which could prohibit the new enterprise to act in its field of competence and to execute its business plan. In a pioneering industry like microsystems technologies, broadly claimed patents are an important step in staking territorial claims. Once microParts had defined its core business, an active patent strategy was implied to secure this territory with patents. There are three categories of patents for microParts’ business: • Production processes • Design elements for µ-fluidics and µ-optics, which can be combined for innovative products (see Figure 9.25) • Product patents Design Elements (IP@BImP)

Dosing Mixing

Resuspension

Separation Platforms

Time Gate

(IP@BImP and 3rd parties)

Products (IP@3rd parties) Cardiac Marker Chip

LabCD96

Mikrospektrometer

Figure 9.25  Microfluidic design elements.

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Filing a patent is an efficient way to find out if an invention has a pioneer character (no other publication found in patent search) or if it infringes on previously issued claims. Filing of a worldwide patent incurs a substantial investment in finance and workload. Therefore, microParts reviewed the possible implications of every new patent application on microParts business: • Economic use was uncertain; application only in Germany (defensive patent to secure freedom to operate). • Economic use planned in future; application in Europe, United States, and Japan. • Economic use planned in core business; worldwide application. microParts has issued approximately 30 patents and has many new inventions under consideration. When the broad search phase was finished as described, patent activities were focused, and patents not related to the core business were sold, generating a good income. A strong patent portfolio not only serves to secure the company’s business, it is also important to obtaining good profit margins. microParts’ development and delivery contracts typically include a license agreement for using intellectual property. In general, the customer receives exclusive rights in his application, which have to be defined and very carefully described in the contract. In order to pursue all relevant aspects of patent issues, an interdisciplinary team was established that made the necessary decisions during regular twice-monthly meetings. Throughout the lifespan of microParts, there have been no claims or discussions with regard to patent infringement.

Commercial Results (Sales, EbiT) With the foundation of microParts GmbH, its shareholders — STEAG AG, HOESCH AG, HUELS AG, VEW AG, and Rheinmetall GmbH — committed to finance the start-up phase and agreed in their shareholder contract to accept responsibility for any losses. The prognosis for the business plan was that break even would be reached in five years. For launching the LIGA-technology, the operating expenses were estimated at €6 million per annum, mainly for developing a reliable process technology and demonstrator samples, which would be used to convince potential customers of the viability of the technology. The first income was generated from development contracts and two years later with the first small series production contracts. At a board meeting in 1993, the projected growth of revenue and operating expenses was presented as shown in Figure 9.26. The numbers until 1998 were agreed as the valid business plan. The following projection was only a general estimate. The blue dots for year 2004 are the actual numbers for revenue and total operating expenses. The actual numbers for revenue and EbiT from start to year 2004 are shown in Figure 9.27. Investments increased from 2 million euros in 1997 to 8 million euros in 2004. A positive cash flow was generated from year 1998. Public support with development contracts from the German government and the European Commission strengthened the R&D budget but were below €1 million

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microParts will mit der derzeitigen Fokussierung der Aktivitäten so schnell wie möglich die Produkt- und die Marktphase erreichen Umsätze/ Kosten p.a. (Mio.DM)

Phase II Selektion und Fokussierung Projekte. Anpassung Kostenstruktur

Aufbau- und Such-Phase

Fokussierungsphase

Phase IV Finden Tätigkeitstelder, Identifizierung Märkte, Herstellung Deckung Tätigkeitstelder/Märkte

Phase III Ertolgreiche Projekte Produktdefinitionen

Produktphase

Marktphase

100

Umsatz Kosten

50

0

2000 Vergangenheit 1990–1992

Gegenwart 1993–1994

Figure 9.26  Business plan from 1993. 10/23/07 10:23:40 AM

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Mittelfristige Zukunft 1995–1998

2000

2004 2004 Langfristige Zukunft ab 1998

Umsätze/ Kosten p.a. (Mio.DM)

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150

Phase I Grundung, Start, Suche

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45.5

Turnover (MIO €) EbiT (MIO €)

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–6.3 –6.6 –7.1 –6.4 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure 9.27  Revenues and EbiT actual data.

per annum. The city of Dortmund made a substantial investment in the technical buildings rented by microParts. Different from conventional businesses, the largest part of the budget (approximately 70%) was personnel costs. This reflects again the importance of excellent human resources management.

Human Resources and Organization When a venture capitalist is asked what are the most important criteria in identifying the value of a start-up company, the answer will be product — plan — people. Where intellectual property is the dominant value and material costs are negligible, for MNT, in the seed phase the answer should be people — people — people. During the challenging LIGA-research project, only the best young scientists were selected by FZK and the STEAG project team. With the foundation of microParts, additional selection criteria were applied, choosing only those employees who showed, in addition to their technical expertise, talent and motivation for the commercialization of the new technology. In the start-up phase, microParts was supported by its parent company STEAG with the provision of the general functions of human resources, legal subjects, IP, and control, all of which were assumed by microParts in the subsequent years. The initial R&D oriented staff were trained in special management adaptation programs such as project management, time management, decision analysis by Kepner Tregoe, and controlling for engineers. This included the total participation of the entire management team. Training for specialized functions was provided on an individual basis, e.g., marketing, key customer relationship management, and accounting rules for small enterprises. A determined effort was taken to educate personnel from all management levels in leadership skills. This important personnel development support

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program was contracted to the specialized consultant group Impuls, Ltd., Bonn. The program offered practice-oriented training with subsequent individual coaching and regular counselling to review the leadership skills of individuals. Together with the consultants, a team of microParts personnel from all levels of management developed the following nine dimensions of individual leadership principles: • • • • • • • • •

Trust and respect Cooperation Role model Motivation and support Delegation of responsibility Transparency and flow of information Target agreements Feedback and appraisal Advancement and further education

An illustrated brochure describes the leadership principles together with detailed descriptions as to how a microParts executive should ideally behave when interacting with his or her colleagues or with customers or the general public. As a part of 360-degree feedback, all employees have the opportunity to anonymously appraise their supervisors regarding the accomplishment of the leadership principles by taking part in an annual online survey. The level of participation was always close to 90%. The results of the survey are then discussed between the assessed executive and his supervisor during the annual performance evaluations. Top management participated in all the microParts’ in-house seminars and used these seminars as opportunities to communicate information regarding the mission, culture, purpose of the organization, and the actual budget situation. Information on these subjects was also communicated to all employees during periodic meetings. This open and unrestricted flow of all relevant information concerning the business of microParts helped all individuals to identify with the goal of microParts and convince them that the values that had been created for microParts also were valuable in their individual careers. The increase in personnel over the years is shown in Figure 9.28. Parallel to the increase in personnel and the foundation of the business, an organizational structure was continually developed. The initial functional organization was established as follows: • • • •

Marketing Product development Production processes development Administration

This was developed into a hybrid divisional organization (shown in Figure 9.29), according to the principle “structure follows strategy.” In this evolutionary process, the principles of the learning organisation were applied:

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Actual value

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251 148

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1999

2000

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100 0

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2009

Figure 9.28  Personnel increase over years.

• We are a small part of a rapidly changing system. • There is no absolute truth. • There is always a better way of doing things.

Conclusion The business development of microParts demonstrates the chances and risks of a start-up business that is based upon an innovative technology requiring the determination of new applications and products. The transfer of the newly invented microtechnology from the laboratory scale to an industrial platform took much longer and required much more financing than was anticipated and promised to the investors by the scientists. The new features of the LIGA-technology offered improvements to existing products like ink-jet heads and opened up the possibilities for completely new applications such as noninvasive biomedical diagnostics. In all cases, in order to win the business of prospective customers, there had to be the potential to realize a functional improvement in their devices as well as a cost saving. Whereas microtechnology could demonstrate the feasibility of a new product idea that could be realized at low cost, the development of tools and processes for low-cost mass production required a much larger effort on behalf of microParts and a strong financial commitment of the customer. Since components with micron-sized structures offer value only when mounted into a functioning system that is usable in the macro world, processes and equipment for mounting and assembling have to be developed for every single microproduct, a factor that is underestimated by many newcomers to the field. The introduction of an innovation or even a disruptive technology requires leadership skills that typically exist only in small- and medium-sized enterprises, whereas, on the other hand, in many cases, large-scale financing is critical to success. To

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General Management Nebulizer Technology Marketing & Sales Development Engineering Mounting & Assembly

Microfluidics

Microoptics

Marketing & Sales Development Engineering Mounting & Assembly

Marketing & Sales Development Engineering Mounting & Assembly

Production Clean Room Processes Injection Molding Micromechanics Quality Management

Administration & Controlling

Figure 9.29  Organization diagram microParts.

introduce an innovation within a large company operating in an established market requires a product champion with a strong influence within the organization. Middle management in R&D or product management alone will fail to overcome the resistance of the establishment. In the case of the middle management of large corporations, it seems to be more important to avoid risks than to explore new opportunities. To manage a successful business in microtechnology, a clear focus is required in technologies, fields of applications, and the needs of key customers. This must be balanced by the day-by-day top management decisions as to whether or not to step into new opportunities. Too many small businesses will defocus with a resulting decrease in efficiency. A business should not be too dependent on a small number of customers. By far the most important success factor for a high-tech start-up is excellence in management. The high level of complexity involved in building a new business requires know-how in business management, products and markets, production technologies, and leadership and motivation of people. Management of innovations requires different skill sets, often in one position:

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• analytical • focused concentration • discipline

versus versus versus

visionary thinking open mindedness creative chaos

A new enterprise should not follow successful predecessors — benchmarking makes all businesses equal — and should not accept the established rules of market leaders but should instead develop its own rules. To follow a vision needs courage; it is a journey into an undiscovered area with many challenges and risks but also many fascinating surprises that are rewarding to true pioneers.

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10

Shaping the Future David Tolfree

Contents Introduction............................................................................................................. 229 From the Past to the Future......................................................................... 229 The Future of Health and Medicine....................................................................... 232 Nanomedicine.............................................................................................. 233 Current Developments................................................................................. 234 Future Developments................................................................................... 235 Stem Cells for the Future14.......................................................................... 236 Materials — Products — Applications................................................................... 236 Nanoparticles, Nanomaterials, and Nanomanufacturing............................ 236 Carbon Nanotube Composites..................................................................... 238 Microchips and Nanoelectronics................................................................. 239 Biochips.......................................................................................................240 Supplier Companies.....................................................................................240 Existing MNT Products and Components.............................................................. 241 Emerging New Products and Systems.................................................................... 242 Nano Food Products.................................................................................... 243 Smart Packaging for Food...........................................................................244 Fuel and Transportation Systems................................................................ 245 Detection and Analysis................................................................................246 2030 and Beyond.................................................................................................... 247 References............................................................................................................... 251

Introduction From the Past to the Future The nineteenth century heralded the first industrial revolution based on steam power. It created a manufacturing industry that provided new wealth and social change. The twentieth century was the age of scientific discovery: electrical power replaced steam; and new disciplines such as electronic engineering, nuclear physics, genomics, and computer technology were born. The atom was split, nuclear power became a reality, transistors and microchips were developed, computers were built, and the DNA molecule was decoded, leading to the map of the human genome. Governments 229 © 2008 by Taylor & Francis Group, LLC

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funded research, and the stock of human knowledge rapidly exceeded the ability to exploit it. At the dawn of the twenty-first century, the World Wide Web (the Internet) came into common use for the communication and exchange of information. The twenty-first century is the age of knowledge and communication; intellectual capital is its currency. Now in the first decade of the new century, we look out onto an ocean of unparalleled opportunities when, for the first time, we can begin to see how to manipulate matter at the molecular level. The capability of manipulating atoms and molecules was first hypothesized by Richard Feynman and others in the late 1950s. In his lecture to the American Physical Society, “There’s Plenty of Room at the Bottom,”1 in 1959, American Nobelist Richard P. Feynman presented his audience with a vision of what could be done with extreme miniaturization. He proved simply that the entire 24 volumes of the Encyclopædia Britannica could be written digitally on the head of a pin. That well-quoted statement started people thinking about how nanoscale science could become nanotechnology. In his books Engines of Creation,2 first published in 1986, and Nanosystems: Molecular Machinery, Manufacturing, and Computation,3 published in 1992, Eric Drexler examined the enormous implications of developments in nanotechnology for medicine, the economy, and the environment and made astounding yet well-founded projections for the future. We are now able to understand the possible realities of those predictions. Zyvex, one of the first U.S. nanomanufacturing companies (see Chapter 8), has developed Atomically Precise Manufacturing (APM) to make the tools to manufacture objects — potentially very large objects — with atomic precision. Using chemistry and advanced engineering, this technique will enable advanced materials with unique properties to be made and used in the manufacture of many new products. For example, low-cost, lightweight golf clubs, baseball bats, and tennis rackets have been manufactured with increased strength using carbon nanotubes. The next leap forward may not be from scientific or technological breakthroughs but from unifying science and the convergence of technologies. Success in achieving this will initiate a new renaissance in manufacturing. This has already started with many new products becoming available in sectors such as communications, textiles, and medicine. The establishment of high bandwidth carrier technology means that voice, data, picture, and other interactive multimedia can be transported together over fiber-optic cables or satellites. This is an example of an innovation that has advanced communications technology. The satellite helps facilitate communication irrespective of geographic location. Any person can communicate with anyone at any time, anywhere on earth, if the right equipment is available. The economic and social power of mobile telephones and personal handheld computers is already having an impact on the way people live and work. Converging information technologies with computer technologies, the Internet being an example, has already brought benefits that were not conceived of two decades ago. Communication media are combined into one service and available on a computer screen. At the touch of a key, people and companies can trade goods and services. It brings buyers and sellers together, allowing the rapid transfer of information and finance. This can be carried out at any time and at any place convenient to

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the user. Google, the most used software search engine, is replacing reference libraries to give users almost instant access to unlimited information. The convergence of nanoscience and nanotechnology; biotechnology, biomedicine, and genetics; information technology, computing, and communications; and cognitive science and neuroscience will facilitate advances in science and technology, improve human abilities, and enhance human performance. The synergistic combination of these sciences and technologies is referred to as NBIC.4 Geographic boundaries are no longer barriers to communication. Nations are coming together into regional groups, creating the “global village” concept. The technological and economic developments that took place in the latter part of the twentieth century and led to the concept of the global economy are now a reality. This will inevitably lead toward a globalized society and eventually political convergence. If this can be achieved, then most of the world’s current problems would be solvable. The future destiny of nations, governments, companies, and individuals is inextricably linked to decisions made today. Such decisions have to be based on available information and a reliable prediction of the future. An accurate prediction of the future enables governments to produce economic strategies and policies, companies to make meaningful business plans, and individuals to plan their lives. Sometimes roadmaps or foresight documents are available to forecast trends in technological development, economic progress, and market intelligence. Predictions based on extrapolation from current trends can be made with a high degree of accuracy, but the rapid pace of innovation makes long-term forecasting beyond 25 years much more difficult. As can be seen from the earlier chapters in this book, disruptive technologies can produce discontinuous innovations that lead to unexpected changes and new areas of development. Any futurist must consider such possibilities when predicting the future. Predicting the future has become a business. Governments and companies often have their own foresight programs and “think-tanks” with specialist staff to advise on future developments and trends. A number of specialist companies and institutes have been set up to trade advice, carry out vision surveys, and write reports on areas of topical interest. Their names can be found by searching the Internet. Some examples of the more prominent ones are listed later. Ian Pearson, a futurist at British Telecom’s Research labs, in his book Business 2010: Mapping the New Commerical Landscape5 states that “within a generation, we will grow computers from biological cultures that are faster than those we use today.” The ability one day to make conscious computers with an intelligence that exceeds humans will provide a challenge to our present society. The development and consequences of artificial intelligence were explored by futurist Ray Kurzweil in his book The Age of Spiritual Machines.6 This was followed by The Singularity is Near,7 which explores the evolution of the union of humans and intelligent machines. In his book The Extreme Future,8 James Canton, who runs the Institute for Global Futures in the U.S., gives a compelling extrapolation from our current knowledge to the next 40 years. He outlines eight fundamental innovations that will shape the future taken from an American perspective: biomimetrics, photonics, nano-biotech, targeted genomics, bio-detection, neuro-devices, nano-energy, and quantum encryption.

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Perhaps the most compelling is biomimetrics — mimicking nature’s mechanisms to make new products. The living world is a manifest of innovative design. It has evolved over the Earth’s history to adapt to its particular environment. We can understand such designs only by examining them at the micro and nanoscale, i.e., at the cell biology level. The natural world uses bio-nanotechnology to create nanostructures and nanomachines. Studying these structures and analyzing the materials from which they are made gives insight about the processes used. Some of these processes are explored in Richard Jones’ book Soft Machines.9 Intense studies are being made of plants and insects to understand how they produce the materials that give them unique abilities to develop and survive in their environment. Accurate and sensitive analytical instruments are now available to make observations and measurements at the nanoscale. Many natural phenomena exist that require explaining — why is the inner shell of the abalone twice as tough as modern high-tech ceramics? why can spiders spin a flexible web five times stronger than steel? why can adhesive mussels stick to rocks, ships, etc., under salt water quite efficiently? why can certain bacterial cells utilize sunlight at 95% efficiency? and why can many insects regenerate lost limbs? Attempts to copy these natural phenomena have so far not succeeded, but studies continue. The results of the studies should help technologists in their quest for making new materials. Our ability to design molecules and biological systems will be dependent on advanced computer modelling that has yet to fully develop. The complex biochemical processes that take place in living cells are being actively studied. This is a priority area for research and development because of its huge importance to medicine and the understanding of life and its origins.

The Future of Health and Medicine Expenditure on world healthcare is now over $3 trillion, which makes it the world’s largest industry. The governments of most countries give health and medicine a high priority. Actual statistics relating to what each nation spends on these can be found on the Internet. With increasing world population, and in some countries a larger aging population, the demand for healthcare is placing impossible burdens on governments. Technological advances in every field of medicine are raising expectations and pushing up demand for services. In democratic countries, politicians and governments have to respond positively to this demand to secure support of the people they represent. They are turning increasingly to science and technology for solutions. The areas where nanotechnology is most likely to enhance the quality of life for human beings will be in the fields of medical diagnostics, drug delivery, and customized therapy. The availability of low-cost, easy-to-use, portable devices and measurement systems will empower people to make their own decisions and plan their own treatment schedules. The Institute for Alternative Futures (IFAF)10 sees in the next 25 years the development of a Health Advocate Avatar. This is a knowledge interface that can mediate interactions between individuals and medical knowledge. It would provide an information platform for organizing and integrating personal medical information to the newest advances in biomedical developments, thus enabling individuals to make

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informed choices about their own healthcare. It is predicted that before 2030 this will become an accepted practice, making healthcare fully personalized. In the next decade, medical practitioners and health specialists will have enough data on genetics and proteomics from patient records to replace diagnostics with prognostic systems. The mapping of an individual’s DNA and linking that knowledge to his or her health profile will determine vulnerability to a wide range of diseases. This will advance predictive medicine and will enable drugs to be targeted to an individual’s specific needs. Wearable computers will record and analyze data from body monitors containing biomarkers that track disease in people at risk. These computers can be securely connected to health monitoring centers. In this way, the human population would contribute data directly to a central database for storage and analysis. Clinical diagnosis can then be validated by accessing a central library of biomarkers, thus identifying disease at its early onset. The continuing development of imaging systems permits visualization of internal organs and body processes, including brain functions. Within the next two decades, this will advance our understanding of the relationship between body and mind and lead to a “predict and prevent” approach to medicine. Eventually these health measures will result in life extension. Antioxidant and hormone replacement therapies will further aid reduction of the aging process. Future markets will be shaped by anti-ageing and health-enhancement products. Longevity medicine will become an established practice. It is estimated that within the next two decades human life expectancy for healthy people could approach 100 years. Longevity medicine will retard the aging process and promote better health and quality of life; but it will have profound political, economic, and cultural consequences for society. Here we can see how.bio-nanotechnology.through.advances.in.medicine.and.medical.practice.will. change society beyond anything that has gone before. This leads us to the field of nanomedicine.

Nanomedicine Biomedicine and biology are currently undergoing an information revolution. Huge amounts of data are being generated from DNA sequencing, molecular structures, and macromolecular structures (proteins, RNA, DNA); and from modelling and visualizing biological pathways (metabolic, signalling, genetic control). Nanomedicine is a subset of biomedicine. It can be loosely defined as the preservation and improvement of human health using molecular tools and knowledge of the human body’s biochemistry. Nano-sized tools are used for the diagnosis, prevention, and treatment of disease. They help to gain increased understanding of the complex underlying physiology of disease. Nanomedicine will shape the future direction of medicine. For a complete coverage of the subject, the reader is referred to Robert Freitas’s excellent Nanomedicine Book Site.11 On this site, which is exclusively devoted to nanomedicine, can be found four volumes of information covering all aspects of the field. Each volume is available as a hardback book. With the author’s permission, I have taken the following definition from the Nanomedicine Book Web Site.

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Molecular nanotechnology has been defined as the three-dimensional positional control of molecular structure to create materials and devices to molecular precision. The human body is comprised of molecules; hence the availability of molecular nanotechnology will permit dramatic progress in human medical services. More than just an extension of ‘molecular medicine,’ nanomedicine will employ molecular machine systems to address medical problems, and will use molecular knowledge to maintain and improve human health at the molecular scale. Nanomedicine will have extraordinary and far-reaching implications for the medical profession, for the definition of disease, for the diagnosis and treatment of medical conditions including ageing, and ultimately for the improvement and extension of natural human biologica.

In 2005, the European Science Foundation produced a report looking at the future of nanomedicine12 and identifying Europe’s strengths and weaknesses. The work for this foresight study report was carried out by a group of 35 experts from academia and industry at workshops held in Amsterdam in 2004. One of the main conclusions was the urgent need to raise awareness and improve communication of the economic and social benefits of nanomedicine to stakeholders and to the wider public.

Current Developments According to the findings of the IFAF 2029 Project,10 work is in progress in the following six areas as outlined on the Web Site. These will provide the foundations for the future of nanomedicine. • Antimicrobial Properties: An investigation is being carried out on nanomaterials with strong antimicrobial properties such as nanocrystalline silver. This is already being used by some medical centers for wound treatment by coating bandages. • Biopharmaceutics: Efforts are focused on drug delivery applications using nanomaterial coatings to encapsulate drugs and to serve as functional carriers. Nanomaterial encapsulation could improve the diffusion, degradation, and targeting of a drug. • Implantable Materials: Work is centered on using nanomaterials to repair and replace damaged or diseased tissues. Nanomaterial implant coatings could increase the adhesion, durability, and lifespan of implants, and nanostructure scaffolds could provide a framework for improved tissue regeneration. • Implantable Devices: Efforts are concentrated on implanting small devices to serve as sensors, fluid injection systems, drug dispensers, pumps and reservoirs, and aids to restore vision and hearing functions. Devices with nanoscale components could monitor environmental conditions, detect specific properties, and deliver appropriate physical, chemical, or pharmaceutical responses. In the longer term, the development of nanoelectronic systems that can detect and process information could lead to nanodevices that serve as retina implants by acting as photoreceptors, and cochlear implants by improving nerve stimulation. • Diagnostic Tools: Lab-on-a-chip devices are being used to perform DNA analysis and drug discovery research by reducing the required sample

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sizes and accelerating the chemical reaction process. Devices could promote early detection and diagnosis of disease. Research is in progress using nanoscale devices and materials to learn more about how biological systems self-assemble, self-regulate, and self-destroy at the molecular level. Wyeth and Merck, Pfizer, GSK, Astra Zeneca, and Genentech are using nanotechnologies for drug formulation and drug screening, employing the technique of quantum dot analysis.13 • Molecular Imaging Systems: Advances in nanomedicine will depend on developments in molecular imaging systems. Molecular imaging is the noninvasive visualization in space and time of normal as well as abnormal cellular processes at a molecular or genetic level of function. It is used to provide characterization and measurement of biological processes in humans (in vivo). Current noninvasive imaging developments fall into three categories: • Radionuclide Imaging Devices visualize very low concentrations of radionuclide probes in real time and provide quantitative information but with low image resolution. They can be used for whole body imaging. − The PET (Positron Emission Tomography) scan visualizes probes labelled with positron emitting radioisotopes; it is increasingly popular for both research and clinical medicine. It can reveal the presence of lymphoma cancer cells in specific areas of the body earlier and more accurately than previous diagnostic methods. − The SPECT (Single Photon Emission Computed Tomography) uses probes labelled with radioactive isotopes, which emit gamma rays detected by a gamma camera to create the scan. − Quantitative Autoradiography is a technique used in the laboratory to visualize radioactively labelled molecules in substances. − Radionucleotide Imaging combined with a computed tomography (CT) or a nuclear resonance imaging (NRI) scan provides high anatomic definition along with functional imaging for precise location of the selected molecular activity. • Magnetic Resonance Imaging (MRI) uses paramagnetic-labelled probes and produces high imaging resolution, but a large concentration of the probe must be given, which can overwhelm the system being investigated. • Optical Imaging uses fluorescent and bioluminescent probes that emit radiation in the visible or near-infrared wavelengths, which can be scanned by optical cameras. Since light can travel only a few millimeters through tissue, it is limited to skin, breast, small animals, and endoscopic procedures — not deep tissues.

Future Developments In the future, scanners will become so small and inexpensive that they could be used directly by people in their own homes. They will be able to illuminate a large number of biomarkers that identify disease processes. Beyond disease, some experts see that molecular imaging could prove even more important for revealing healthy biological processes as well. Brain scans already show neurological changes that energize

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areas of the brain associated with human emotions. Molecular markers can be used to highlight other parameters such as stress levels, immune function, balance, and energy flow. Molecular imaging will become more important as genomics and proteomics expand the number of relevant molecules to visualize human behavior.

Stem Cells for the Future14 In the coming decades, adult stem cells, if taken from a patient’s own body, could hold the key to a renewable source of replacement cells and tissues to treat diseases like Parkinson’s and Alzheimer’s, spinal cord injury, stroke, burns, heart disease, diabetes, osteoarthritis, and rheumatoid arthritis. They could even be used to grow entire organs such as hearts, livers, and kidneys. Although much work has to be done, it is likely that the promise of novel cell-based therapies for such pervasive and debilitating diseases will be realized in the future. One of the hurdles to overcome is the need to be able to easily and reproducibly manipulate stem cells so that they possess the necessary characteristics for successful differentiation and transplantation. It is expected that within the coming decade research will produce a better understanding of how genetic and molecular controls operate within cells, such as the signals that turn specific genes on and off to influence the differentiation of the stem cell. This is important in the use of human stem cells to test new drugs.

Materials — Products — Applications Nanoparticles, Nanomaterials, and Nanomanufacturing Many future products will be manufactured from nanomaterials or composites of such materials. Nanomaterials15 (nanocrystalline materials) are materials possessing grain sizes on the order of a billionth of a meter (10 -9) m. A nanocrystalline material has grains on the order of 1–100 nm. Depending on atomic radii and others parameters, about 5 atoms would occupy a space of about 1 nm. Nanocrystalline materials are exceptionally strong, hard, ductile at high temperatures, wear resistant, erosion resistant, corrosion resistant, and chemically very active. They have unique properties that can be exploited for a variety of structural and nonstructural applications. In the future, the industries where most applications will occur are chemicals, textiles, and electronics. Nanoparticles can be defined as free particles with diameters less than 100 nm. They have different properties compared with larger particles of the same material and exist naturally as products of combustion and photochemical activity. For example, titanium oxide and zinc oxide at the nanoscale are able to absorb and reflect ultraviolet light but are transparent to visible light, which makes them ideal for use as sunscreens. Many such products are now available on the market. Nanoparticles of certain semiconductors have optical properties that enable them to change color with size; these are known as quantum dots. They are used as fluorescent biomarkers in medicine and in solar cells, but many other potential applications exist. At present there are wide public concerns about nanoparticles that need to be addressed. Fortunately, most scientists and governments agree on the issues that relate to the different properties of matter in the form of free nanoparticles to matter

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where nanoparticles are chemically locked into the material. Nanoparticles already exist in the environment as products of combustion. They are small enough to pass directly into the body through the skin and the cell walls, being less than 100 nm wide, less than the size of a virus. This is of particular concern to manufacturers of nutraceuticals who use them as food supplements. It is claimed they will enter directly into tissues and cells. Other examples of food products that carry a nanoparticle label are nano-tea that is claimed to increase the amount of selenium that can be absorbed from green tea through capsules that bypass the stomach and enter the lower gut directly, and cooking oil that will stop cholesterol entering the blood stream. In the U.S., there are more than 30 food products listed with nanoparticle ingredients. The effect of nanoparticles on health is a subject of study in many countries. Much of the fear is engendered by the known toxicological effects of asbestos. This is a naturally occurring nanoscale material extensively used in the twentieth century because it was a cheap building material. Its use was banned in Europe in 1998. The danger came from dust liberated during manufacture, resulting in many deaths from lung cancer. This was largely due to ignorance about the structure and nature of the material at a time when coal was also burnt on fires. The smoke from these produced even worse pollution and deaths from respiratory diseases. Carbon nanotubes resemble asbestos in structure, but little is known about whether they constitute a similar health hazard. Therefore, there is an understandable public concern about new materials of which little was known. Some similarities in the structure of asbestos fibers to carbon nanotubes have been noted by the public. In 2004 the U.K. government set up an expert committee to review the toxicology and other safety issues associated with nanotechnology and after extensive consultations with people from industry and academia produced a comprehensive report.16 The report concluded that the very small quantities of nanoparticles being manufactured in uncontrolled environments compared with the natural release of such particles did not constitute a serious risk to health. Humans inhale millions of pollutant nanoparticles per breath produced as products of combustion. Nanoparticles of chemicals like titanium dioxide, used in cosmetics and sunscreens, show no evidence of harm to the skin or the organs beneath it. In fact, their enhanced protective properties have proved to be very beneficial to health and may substantially reduce skin cancers by reducing exposure to harmful solar ultraviolet radiation. The need for more toxicological research on nanoparticles was emphasized in the report. This report has helped to reestablish public confidence and give manufacturers guidance on what measures should be taken in nanomanufacturing. The public concern about nanomanufactured products and the health issues associated with genetically modified organisms resulted from a lack of knowledge, misunderstanding, and misinformation put out by the media. However, the scientific community must share some of the responsibility for not explaining the issues in an understandable way to the lay public. The need for better public understanding was also highlighted in the report. Nanomanufacturing based on nanoparticulate technology has created improvements to many existing products. These include improved cosmetics, stain-resistant fabrics, composite materials for vehicles and sports equipment, medical devices and diagnostics, drug delivery systems, and fire and water resistant coatings and materials for fuel cells. These products and others are currently being developed and in

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some cases are already on the market. In the foreseeable future, there is the promise of many more products. It is only when such products can be purchased by the public in high street shops at affordable prices that the full commercial cycle is complete. There are five widely known methods to produce nanomaterials: • • • • •

Sol-gel synthesis Inert gas condensation Mechanical alloying or high-energy ball milling Plasma synthesis Electrodeposition

All these processes synthesize nanomaterials to varying degrees of commercially viable quantities. Very few companies have the expertise and equipment needed for processing. As the demand for new nano-based products increases and new industries develop, process equipment suppliers will rise to meet that demand. This is likely to accelerate in the next decade. The issues of future nanomanufacturing are outlined by Jackson,17 who concludes that nanomanufacturing processes need to be applied to known engineering materials such as metal alloys and ceramics. Public acceptance of nano-based products is pivotal for many of the issues that have been discussed and highlighted in this book. Any strategy for commercializing micro-nanotechnology products must take into account the public acceptance of the technology and the end product. Customers determine the level of sales and ultimately the market success. Any scares brought about by news that a product is harmful immediately destroy its market credibility. This is particularly so for food or health products.

Carbon Nanotube Composites Carbon nanotubes (CNTs), approximately 10,000 times thinner than human hair, are examples of a new nanomaterial that is already starting to replace or complement carbon fibers in a range of sports equipment such as tennis rackets and golf clubs. They offer stronger, lighter alternatives at potentially lower cost. If proven to give a real competitive advantage to sportsmen, as did lightweight composites for racing cycles, then such materials will be universally adopted. The exceptional high-tensile strength and the physical, mechanical, and electronic properties of CNTs make them potentially suitable for use as sensors, probes, actuators, nanoelectronic devices, and drug delivery systems within biomedical applications. A comprehensive review study has been carried out by Sinha and Yeow,18 who concluded that it is only the unknown toxicology issues and acceptance by the human immune system that at present prevent their use as implants. Carbon nanotubes are being mass produced by the Mitsubishi Chemical Corp. of Japan at an annual rate of 300 tons. In 2007, a larger commercial plant currently under construction will have an annual production capacity of 1500 tons. This indicates the expected market growth for a very successful nanomanufactured product.

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Microchips and Nanoelectronics Nanotechnology has generated the subfield of nanoelectronics. Like its predecessor, microelectronics, it will revolutionize the electronics industry. We are entering a new era when miniaturization is taking a giant leap forward. In fact, personal computers made in the past few years have microchips manufactured with nanometer-scale features so they could be considered to be nanochips. For example, it is now possible to accommodate 800 million transistors on a chip the size of a postage stamp (the transistor is the basic electronic switch). Within the next decade, silicon chip features will shrink down to the molecular scale. The operating limit of the transistor will be reached at about 10 nm or about 30 atoms long. Molecular electronics will then be needed to take us further down in size. New handling techniques adapted from the semiconductor industry are enabling nanomanufacturing processes to be applied to the production of the new microchips and biochips. There is an urgent need to increase the storage capacity and functionality of memory chips for the next generation of computers and consumer products. In addition, the huge demand for devices such as cell phones, smart cards, ID cards, bank cards and sensors, etc., adds to the growing market. Memory chips based on nanotechnology processes will lead the next generation of nanoelectronics with multibillion dollar markets. Murawski19 foresees that current computer disk storage will increase from 80 GB to 1600 GB in the first generation of nanoelectronics and to 80,00 GB in the second generation. This advance will take us into molecular and quantum computing — a distant shore on the horizon. The urgency in moving to molecular electronics is partly driven by the recognition that conventional technologies, despite significant advances, will not be able to sustain Moore’s Law,20 which projects a doubling of computing power about every 2 years. According to the International Technology Roadmap for Semiconductors (ITRS),21 EUV lithography (wavelength 13.5 nm), which is a projection optical lithographic process, will start displacing existing 193 nm lithography techniques before the end of the decade for production of leading-edge semiconductor chips with critical dimensions of 32 nm or smaller. A significant milestone in developing next-generation chip manufacturing technology has been achieved by the silicon chip maker Intel, which has announced that it will start manufacturing processors using transistors just 45 nm wide on 300 mm silicon wafers. Shrinking the basic building blocks of microchips will make them faster and more efficient. The transistors are small enough to fit 100 inside the diameter of a human red blood cell, or 400 million transistors will fit onto a chip half the size of a postage stamp. The Intel dual-core processors have more than 400 million transistors. In addition, the technology includes several innovative performance-enhancing and power-saving features that will provide a basis for future developments. Tze-chiang Chen of IBM22 has also signalled that IBM will start production of these new microchips. He quotes: “The development means the fundamental ‘law’ that underpins the development of all microchips, known as Moore’s Law, remains intact. After more than 10 years of effort, we now have a way forward.”

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New products that will use these chips are already at the design stage. For example, a new handheld computer with integrated wireless connectivity that will have more computing power than current desktop models could be on the market within a few years. The manufacturers claim that they will be able to run all day on battery power. The complete transition to nanotechnology techniques could occur by 2015, when chip makers will have exhausted their ability to shrink further the wires and switches that make up the modern processors and memory storage devices, central to computers, communications, and consumer electronics. Manufacturers are looking to the future when they can make electronic switches from single molecules. Molecular electronics is an emerging field that will soon be out of the laboratory and into manufacturing. The development of miniaturized scanning tunneling microscopes (STMs) and atomic force microscopes (AFM) that facilitate the manipulation of single molecules has brought the realization of constructing bottom-up structures. Initial products in molecular electronics will be hybrid silicon-molecular devices. Combined with nanotubes, the possibilities of making very sensitive biological and chemical sensors for use in medical diagnostics and environmental monitoring are unlimited. Chemists at Liverpool University in the U.K. recently reported success in forming a bond between a gold atom and a single organic molecule called a Pentacine.23 This bond between a metal atom and an organic molecule is a step toward connecting electronic components to organic molecules, essential for progressing molecular electronics.

Biochips The big development within the next decade will be smart biochips, i.e., molecularscale devices with intelligent multifunctionality. A biochip is a collection of miniaturized test sites (microarrays) arranged on a solid substrate that permits many tests to be performed in parallel in order to achieve faster and higher throughput. Typically, a biochip’s surface area is about the size of a key on a computer keyboard. Biochips will revolutionize medicine in the same way that microchips revolutionized electronic devices. A biochip can perform thousands of biological reactions, such as decoding genes, in a few seconds. It enabled the rapid identification of the estimated 80,000 genes in human DNA. One important application area is in the detection of biomolecules in samples, thus allowing inexpensive rapid detection of toxins and viruses such as avian flu. Pharma companies are particularly interested in using biochips and microfluidic devices to screen tissues for genetic differences so that they can design genetically targeted drugs. This will greatly improve treatment and reduce drug costs by removing the “try and see if it works” principle that dominates current practice. Targeted drug delivery will be the future.

Supplier Companies Biochips are complex devices requiring many different technologies for their construction. The first commercial biochips were introduced by the U.S. company Affymetrix,24 the world’s leading manufacturer of DNA microarrays, in 1994. Since

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then, Affymetrix GeneChip (R) technology has become the industry standard in molecular biology research and is pointing the way to the future. The German company Siemens is planning to use the “laboratory on a chip” concept in a smart card similar to conventional check cards. The aim is to provide a low-cost, easy-to-use general-purpose, mass-market analytical product similar to existing smart cards. These could be used in doctors’ surgeries and clinical laboratories. The card would be inserted into a desktop or laptop computer where data would be analysed and a readout of results provided. This instant analysis will reduce patient waiting times and reduce the burdens on hospital laboratories. In a similar way to Siemens, the company Infineon is also working on a system to incorporate electronic DNA biochips in powerful desktop devices for diagnostics applications. This will enable complex DNA analyses to be carried out in medical practices, hospitals, and other medical institutions faster and more cost effectively than can be done at present. Impressive work is in progress at many research centers around the world. For example, the Optical Biochip Project at Cardiff University25 aims to develop more sophisticated analytical methodologies that will increase the success rate of drug discovery, in genomics research, in the routine diagnosis of disease. These companies and institutes are pioneering the future direction of analytical diagnostics, which eventually will have a beneficial effect on our lives. Biochips that can perform the basic bio-analysis functions (genomic, proteomic, biosimulation, and microfluidics) at a low cost will transform biological analysis and production in a very similar fashion as the microprocessor did for data. Implanted biochips and microchips can be used for a variety of applications, including identification and tracking of individuals and continuous monitoring of body functions and behaviour. This subject has been featured in many science fiction books and films and has become very controversial. A number of people working in the field have tested the viability of such implants in their bodies. On 24 August 1998, Professor Kevin Warwick,26 director of cybernetics at the University of Reading in the U.K., became the first human to have a microchip implanted in his body. During a 20-min medical procedure described as “a routine silicon-chip implant” by Dr. George Boulos, who led the operation, doctors inserted into Warwick’s arm a glass capsule not much bigger than a pearl. The capsule held several microprocessors that were able to transmit to the outside world. He was able to demonstrate the ease of the operation and its potential value in medical applications, particularly for paraplegics where embedded chips could be used to control motor-drive systems to move limbs. The implant was removed from his arm after nine days without any problems. In response, Charles Ostman, a senior fellow at the Institute for Global Futures, says that “Neuroprosthetics are inevitable” and that “biochip implants may eventually become part of a routine medical procedure.” There is still much work to be done, but the possibilities are unlimited.

Existing MNT Products and Components During the last decade, there has been an upsurge in new applications for miniaturized products, some with nano-sized components and features. Today, these are dominated by the following sectors: IT peripherals, biomedical, automotive, household,

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and telecommunications. The products manufactured for these were microsystem devices operating with integration of optics, fluidics, thermal, mechanical, and electronic functions. Because many of these and the processes used to develop and manufacture them have already been covered in previous chapters, I have listed some of the more recognizable products and components under the sector headings: • Industrial: Industrial pressure sensors, injection nozzles, flow sensors, industrial micromotors, microbolometers, thermopile, automotive • Automotive: HVAC suspension, airbag accelerometers, fuel injectors, satellite navigators (GPS), rollover, gearbox, fuel monitoring, ABS, tire pressure • Communications: Integrated optics, RF switches, high resolution display panels, resonators, optical attenuators • Chemical Analysis: Gas sensors, microspectrometers, electronic noses, lab-on-a-chip, chemical sensors, valves and pumps • Biomedical Technology: Heart pacemakers, blood pressure monitors, blood analyzers, glucose monitors, nebulizers, tunable hearing aids, spray injectors, biochips (genechips), DNA analyzers • Information Technology: Hard disk drive heads (HDD), large format print heads, magneto optical heads, consumer print heads, digital mirror devices

Emerging New Products and Systems Micro-nanotechnologies are enabling the production of new products and systems and enhancing many of the existing ones listed above. In the near future, these will include RF switches, fuel cells, RF ID tags, and drug delivery systems. The unique properties of nanomaterials will produce new manufacturing paradigms. Nanomaterials like carbon nanotubes could be significant in the development of new hydrogen storage fuel cells to provide automotive power. Advances in optics and magnetics may give rise to new sources of power. Computers and communication systems will make huge advances as new nanochips and biochips become available. Computing technology will enable DNA sequencing to be performed more rapidly and will advance nanomedicine and bionanotechnology into new domains of knowledge beyond anything we can imagine, greatly enhancing human capabilities. Quantum computers could become a reality in the next decade. Research on these is being supported by a number of governments and agencies owing to their potential for civilian and military use. Ultrasensitive 3D motion sensors are being used to detect and measure minute vibrations and movement, including freefall and high-g motion. They will find applications in everything that is capable of movement and can be used to protect sensitive objects that are disturbed by motion. Chemical analysis will become ultraprecision and even more sensitive, able to detect, mix, and separate individual molecules using labelling and lab-on-the chip techniques. The following are some of the application areas where the greatest impact is most likely to be seen.

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Nano Food Products Food is the most important product for humans. According to Helmut Kaiser,27 “Designing and producing food by shaping molecules and atoms is the future of the food industries worldwide.” Their latest study report shows that more than 400 companies worldwide are active in research and development and production using nanotechnologies and molecular science in food, food processing, and packaging. The U.S. is the leader, followed by Japan and China. The nanofood market, currently valued at about $5 billion, is expected to reach about $20 billion in 2010, with packaging being $3.7 billion. There are now more than 300 nanofood products available on the market worldwide. This is expected to grow as more knowledge is gained when the health and safety issues are resolved. Many countries in the European Union (EU) have strict regulations in place for nanofood products and are examining new materials and processes to determine if new rules are required. The U.K. government is working closely with its Institute of Food Science and Technology (IFST) and has agreed to consult with its EU partners on regulatory issues as they arise. This provides a healthy situation and gives confidence to consumers. In contrast, the U.S. Food and Drug Adminstration (FDA) takes a slightly different approach, stressing that new materials and products are within its area of regulation rather than food processing. In a recent scientific status summary report by the IFST and by Weiss et al.28 on the application of nanotechnology in the food industry, it was stated that the most cost-effective development areas for the industry were development of functional materials, micro- and nanoscale processing, product development methods, and instrumentation to improve food safety and biosecurity. The areas of commercial importance would be functional ingredients, drugs, vitamins, antimicrobials, antioxidants, flavorings, colorants, and preservatives. These are also of great interest to pharmaceutical and cosmetic companies. But such companies are very aware of the public concern issues and carefully study government guidelines and regulations. Nanotechnology is linked to genetics, and the deep public concern and controversy over genetically modified (GM) food crops has led to many scientists and politicians calling for a moratorium on the development of the technology. It is being cast alongside similar issues raised by nuclear power and nuclear weapons in the 1960s. Public opinion is easily turned toward negatives, particularly when misinformation is given out by the media and vested interests. “Frankenstein Food” and “Nanbots” are terms being used to describe the consequences of nanotechnology. It is generally accepted that we are entering areas where new knowledge is required, so European governments took the cautionary approach and banned the use of GM crops, while other countries, notably the U.S., continue to apply the technology. It accounts for more than two thirds of all the crops grown worldwide. In addition, South America, Canada, and China are among other leading countries growing crops because they need to produce food economically. In the U.S., the three main GM crops under cultivation are varieties of corn, soya beans, and cotton. These vital foods are exported to underdeveloped countries where they provide huge benefits. The “genie is out of the bottle,” and technology has altered the natural gene pool in a very short time compared to the time it would have taken the natural

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selection process. So far no observable deleterious effects or problems have been observed, but a deep-rooted concern still exists. The technology, however, has radically changed the way food can be grown. By the middle of the century, it is likely that all food will be produced artificially in controlled conditions with less reliance on pesticides and climate. GM foods are a fact, and more types of plants will be treated in the same way. The use of nanotechnology on future food production, processing, and intelligent packaging will dominate all other methods. This will be of huge value in feeding populations of the underdeveloped world where poor climate and other factors make sustainable food production impossible. Estimates vary, but it can be expected that by 2020 more than 50% of the food industry worldwide will turn to nanotechnology, with thousands of companies benefiting. This is an example of an incremental change rather than a disruptive change, but it will happen.

Smart Packaging for Food The word “smart” is used to convey an intelligent function of the containment or packaging of a product or component. Packaging is an essential stage in the manufacture and commercialization of micro-nanoproducts and can represent 80% of the production cost. It is fundamental to product functionality. Serving the purpose of interconnection and product protection, it provides an interface to the macro world and effectively facilitates human interaction in the working environment. Smart packaging can provide many different functions. They can be mechanically, chemically, electrically, or electronically driven functions that enhance the usability or effectiveness of the product in some way. For example, in food this might in the wrapping or labelling that tracks condition or quality against temperature and time. One such indicator available on the market employs enzymatic color indicators to show the amount of temperature exposure of a stored or shipped temperaturesensitive commodity such as a perishable food product. The indicator is activated at the beginning of the monitoring period by pressure on the plastic bubble strip, which allows the two initial liquids to mix and form the indicating solution. Electronic noses sense the odor-causing chemicals that are emitted when food starts to deteriorate and bacteria produces gases; they provide signals to color change indicators. These will be standard on all food packaging in the future when international agreements are reached on standards. Antimicrobial agents coated on the inside layer of the package, which is in contact with the surface of the food, can release an agent to keep food fresh for longer periods. As the technology develops, less emphasis will need to be placed on freezing, thus reducing costs and easing transportation. It was recently reported that in Denmark and in the U.S., low-cost, battery-free Radio Frequency Identification Device (RFID) tags are being developed to become integrated into packaging.29 They consist of a silicon microprocessor, and some form of radio antenna-conductive carbon ink is replacing the more expensive metal coils used on current tags. This radio antenna functions as both input/output channel and power source. Electricity is generated in the antenna by either a magnetic field or a radio signal; the tag responds by sending out a radio signal. This reply signal

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contains data stored on the chip, typically an ID number. With the help of RFID readers in our cell phones, in supermarket freezers and check-outs, in our private refrigerators, etc., we will be able to retrieve information about a particular item based on its ID number. RFID is not a new technology, but advances in micro-nanotechnology will empower the consumer over the product supplier, thus improving safety and reliability. We have entered the age of biohazards that could come from the natural spread of disease through contaminated food or induced by bioterrorism. Smart tagging will provide a greater protection to consumers. Smart packaging is estimated to be a $100 billion plus business in the United States. More people work in packaging and packaging operations than any other business area in that country. Although exact figures are not available, it must be an important growth area worldwide.

Fuel and Transportation Systems Our civilization is built on the need for abundant and accessible sources of energy for transportation and driving machinery. I am not going to dwell here on the impending crisis of climate change associated with the burning of carbon-based fossil fuels, since many articles, reports, and books have been written on that subject (and as we move into the future, no doubt the number will increase). Miniaturization technologies have an important role to play in the future as we accelerate the need to find alternative fuels and means of transport. Hydrogen is the most likely power source for transport systems of the future and is providing the greatest challenge to the automotive industry. The global economy is exerting pressure on developing nations and increasing their demands for cheaper and more readily available sources of energy. Energy is at the core of tensions between nations that have sources and ones that do not. Every scientifically advanced nation is investing in research and development in this area. Energy is the defining issue of the twenty-first century. Many studies and surveys have been carried out, and all conclude that by 2050 there will not be enough economically accessible fossil fuel sources to supply the world’s needs. So a crisis is looming that may be much greater than climate change. This makes the assumption that all the renewable energy sources — nuclear, solar, hydroelectric, wind, and wave power — taken together and based on current known technology will not be able to meet that demand. The basic problem is the world needs about 20 terawatts of energy to solve all its needs. Constantly about 165,000 terawatts of solar energy from the sun hit the Earth, but most of it cannot be collected instantly, only indirectly over a period of time from biosources. Richard Smalley30 suggested that the problem could be solved if sufficient energy storage cells for electricity could be made. Then, instead of transporting energy sources like fossil fuels around the world, a global network of interconnected electrical grids could supply those who need it on demand. Local storage sources could be used to provide energy when it was needed. All renewable power sources — solar, wind, hydroelectric, and wave power — could be fed into the grid. Lead-acid storage batteries are commonly used for cars and in houses for shortterm energy supply, but they cannot store enough power unless they are very large,

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which makes them uneconomical. Through revolutionary advances in nanotechnology, it may be possible to make efficient storage systems the size of a washing machine and drop the cost to less than $1000. Most importantly, it permits some or all of the primary electrical power on the grid to come from variable renewable sources like solar and wind. The key is not only an energy source but also energy storage and energy transport. Storing energy in batteries, capacitors, fuel cells, and some chemical systems like hydrogen depends on nanoscale interactions. The next generation of storage devices will be optimized by nanoengineered advances and the use of nanoscale catalyst particles. Fuel cells are most likely to be the energy sources of the future for vehicles, local off-grid power supply, and power sources for small and handheld electronic devices. Nanomaterials will be important as catalysts and key components of hydrogen storage systems. The use of carbon nanotubes for hydrogen storage is the subject of research at many centers as the mechanism for adsorption is not understood, but it is likely that in the future these structures will have a significant role to play. In the transitional period, hydrogen-powered fuel cell vehicles will be hybrids that also have batteries and electric motors. The immediate challenge is to develop a battery that can store enough energy for a long-range drive and have a short recharging time. Future transport scenarios are being studied, but they tend to be based on social and economic needs, with the environment and carbon pollution now at the top of the agenda.

Detection and Analysis Government agencies worldwide are increasingly looking at miniaturization technologies to provide solutions to combat crime and give their citizens a greater sense of security. Fast DNA analysis is now an established practice and will continue to develop as equipment becomes more portable and analysis faster. Microspectrometry and microfluidic systems enable even smaller samples to be analyzed. The growing threat of global terrorism has accelerated the need for improved detection and surveillance methods. The greatly improved optical resolution of space-orbiting satellites and airborne cameras on pilotless drones are examples of some of these developments. Recently the Japanese company Hitachi announced its latest development in RFID tags: smart dust or powder. It is to date the world’s smallest and thinnest tag, measuring 0.05 × 0.05 millimeters, many times smaller than a human hair.31 The chips have a 128-bit ROM for storing a unique 38-digit number. Data can be written on the chip substrate with an electron beam. There are many applications for such devices in detecting people or objects at short range. They can be embedded in paper bank notes or documents for identification and tracking purposes. Future developments will be made to increase their operational range. This is approaching the ultimate bug, and maybe in the far future they could become intelligent bugs.

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2030 and Beyond The future belongs to new products, new processes, and new systems. These will result from continuing innovation and the exploitation of knowledge. They will radically change our way of life and fuel the global economy. The world in 2030 and beyond will be united by a common purpose: all nations will want to have a safer, healthier, and more prosperous world for their citizens. National, ideological, and religious differences will remain, but overriding these will be a common need to achieve these goals. It was the overwhelming desire of people to reach these goals that was mainly responsible for the collapse of Communism in Europe and the break up of the Soviet Union in the 1990s. They are now the goals driving the emerging giant economies of Asia and India. The new technologies of the twenty-first century are playing a pivotal role in helping all nations to develop their economies and hence improve the standard of living for their people. Predicting the future with any degree of accuracy beyond 2030 will be informed speculation. It is the realm of the science fiction writers and filmmakers; they can produce a whole range of plausible entertaining scenarios without being seriously challenged. However, there is value in speculation when it is based on observable data. Climate change is an example where improved methods of data collection and analysis have enabled predictive modelling to be more accurate and credible. Observations and measurements of changes in the atmosphere have been taken around the world for many years. They have shown an upward trend in average temperatures of about 0.4oC during the last 20 years. The average global temperature is predicted to rise between 0.5–1.00C in the next 20 years. Beyond 2030 and toward 2100, models become less accurate as they predict an average temperature rise in the range 1.4–5.80C. Despite these uncertainties, models show that a warming of the Earth is taking place. It is concluded that human industrial activity since the Industrial Revolution has contributed significantly to this through the release of carbon dioxide and other pollutants into the atmosphere. In the various predictive models used, assumptions were made about possible future scenarios. These had to include natural processes such as the effect of solar disturbances, volcanic eruptions, earthquakes, flooding, and even large meteorite collisions. In addition to these are the economic and social factors. The uncertainty of their severity and therefore their contribution to atmospheric pollution and global warming makes predictive modelling very difficult. Natural processes have shaped the Earth’s geological history and have always had a dominant effect on its climate; this will continue in an unpredictable way in the future. The sun, the origin of all energy sources, is the most dominant force for climate change. Observations made of solar activity such as magnetic storms or solar flares over a long time show a close correlation with severe changes in the Earth’s climate. The reason why the most recent predictions on climate change have been given greater credibility and are now on the agenda of many international conferences is because powerful computers with massive parallel processing capability have been available and have been used to analyze data and test the models. Predicting the future is therefore inextricably linked to utilising such computers. Natural occurrences can be disruptive, and therefore their outcomes cannot be accurately

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modelled. Like all disruptive technologies, expected paths and directions can be instantaneously changed. The current concern about global warming and how science might deal with it has spurned many innovative ideas and extreme solutions; and even created the foundation for new industries. It would have been difficult, if not impossible, for any futurist living in the eighteenth or nineteenth centuries to have predicted life in the twenty-first century because of the lack of available knowledge at those times. Today our knowledge is increasing rapidly, although our ability to use it effectively lags behind. The Internet has given free access to almost all knowledge. Eventually, search engines like Google will supersede libraries as a place for seeking information. Innovation is the driver of change and gives companies a competitive advantage. Nations that develop an innovation-based economy will be winners, but their governments have to create the right environment for it to flourish. This enevitably means change, and people are generally averse to change and react to it naively, thus slowing down technological advance and delaying the social and economic benefits it could bring. This is reflected in government planning and decision making when a cautionary approach is taken. Sometimes this is necessary, but it can produce a state of unpreparedness when a dire threat emerges. For example, the threat of a bird flu pandemic or a massive earthquake on an unprepared world could be disastrous. The problems facing humans are therefore more associated with acceptance of social change than technological change, although the latter produces the need for that change. Nanotechnology has faced unfavorable reactions from people who are traditionally ignorant of the science and its opportunities. Education and greater awareness is the key to the understanding and public acceptance of such technologies. Earlier in the chapter, the future benefits of nanomedicine to healthcare were outlined. A sensible balance between risk and benefit will always have to be made. In the future, risks will be minimized by improved diagnostics and monitoring of patients. The ability to manipulate and control the genetics of humans, animals, and plants, the availability of new drugs to target disease, the growth and regeneration of human organs from stems cells, the application of remotely controlled robotic operators, continuous body monitoring with internal and external sensors, and the complete understanding of the functions of the human brain are some of the developments that will be realized. In 2030 most food production and its distribution to the consumer is likely to be automated and not involve humans. Animal products will be treated differently from vegetables and fruit owing to the methods of production. Battery farming and hothouse products are already highly automated and involve less human intervention. Arrays of sensors connected to machines and computers will continuously monitor and check all parts of the production process to ensure that quality is maintained. At the retail end of the chain, shops will become distribution centers, allowing customers to freely choose and take what they need without going through timeconsuming checkouts. Individuals and the products will be identified and monitored with payment being automatically debited from their online accounts. This will not necessarily prevent or change some forms of shopping where people like to browse, but it will alter the nature of traditional shopping.

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As stated earlier, breakthroughs in NBIC-related areas will drive developments for the next 50 years and beyond. These will undoubtedly include transport systems (aeronautics and space flight), intelligent environments — (robotics and smart buildings), food, and farming (monitoring and genetic modification). However, biomedicine (nanomedicine and implant surgery) is likely to have the greatest impact on society. Computer technology, both hardware and software, is advancing so rapidly that making predictions on how this will develop beyond 2030 will be speculation. Even before that time, computers will become virtually invisible — woven into clothing, embedded into homes, controlling every household function, and implanted in the body to aid dysfunction. Blindness, deafness, and probably memory loss will be eradicated along with many diseases that inflict the human condition. Developments in computers have depended on making smaller, faster, and highcapacity microchips to move and store data. Nanochips (i.e., molecular electronics) will replace microchips, and quantum computers will most likely be established. One aspect of these is based on the principle of electron spin. Unlike charge, the spin can change without an electron moving. It can flip and change direction. Also unlike charge, once flipped it stays in that state. This quantum spin, as it is known, can therefore be used to store and move data. It is this spin property of electrons that is responsible for magnetism, the property currently exploited in magnetic data storage as used by tapes. Interest in the spin properties of nuclei rather than electrons would open up greater opportunities to design super quantum computers that could carry out very complex calculations currently impossible to do with existing machines. In 2030 computers will control every aspect of life. Intelligent homes will have built-in computer control systems carrying out every function, with robots doing the more arduous tasks. In home entertainment, computerized television with 3-D flat panel sets may be replaced with holographic moving image projectors. Personal micro cameras and microphones will enable images to be projected onto eyeglasses and sounds into the ear from signals received from satellite communicators. People will be able to observe objects and scenes remote from their positions — like seeing around corners or inside buildings. Satellite navigation has been established for many years, but it will become more powerful and sophisticated. Examples of the smart and intelligent systems that integrate with humans in the second half of the twenty-first century were shown in Steven Spielberg’s science fiction films Minority Report and AI. These could possibly become a reality after 2030. New revolutionary technologies-based scientific discoveries yet to be made could radically change transport systems. Japan and Germany are developing train systems based on electromagnetic levitation, known as Maglev. These trains are not in contact with the rails, so with the absence of friction, they can achieve speeds of more than 550 km/h. Their operational costs will be high, so their use could be limited. However, cheap electromagnetic propulsion systems could be developed if superconductivity could be realized at normal temperatures. A superconductor is a material that has no resistance to electric current flow below a certain critical temperature. In a closed circuit with a perfect superconductor, current will flow forever. This would mean no energy loss, hence low power costs. Could nanotechnology solve the problem by making new superconducting materials that would operate at

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room temperature? Most of the chemical compounds used so far only superconduct at liquid gas temperatures, which limits their use owing to the practicalities and economics of employing cryogenic systems. Molecular superconductors, including carbon nanotubes, are being studied, but at present they also only work at cryogenic temperatures. This single development would revolutionize transportation. Instead of highways filled with cars, silent, levitated hover-trains would glide around cities, and electrically driven personal carriers and walkways would transport people and goods economically anywhere. It would alter the design and landscape of cities and communities, making them look more like how science fiction has always portrayed the future. Similarly, aerospace will benefit from new discoveries as new propulsion systems and materials are developed. Nanotechnology will have to be used in the development of materials for body and engine parts and for fuels. NASA, the U.S. National Aeronautics and Space Administration, is currently developing a reusable replacement for the Space Shuttle. By 2030 this new space vehicle would have been in operation for some years, along with other commercial designs. A new type of space station will probably be in orbit to accommodate both scientific personnel and tourists. This station will also be needed to construct new space vehicles for deeper space exploration as the existing International Space Station (ISS) is not suitable for this purpose. Space exploration and space tourism will become a commercial business. An example where science fiction could become a reality is in the construction of a space elevator. A space elevator is essentially a long cable or tower extending from the Earth’s surface into space with its center of mass at geostationary Earth orbit (GEO), at an altitude of 35,000 km directly above the equator. Electromagnetic vehicles travelling along the cable could serve as a mass transportation system for moving people, payloads, and power between Earth and space. This concept was highlighted by Arthur C. Clark in 1978 in his book The Fountains of Paradise.32 At the time, this idea was dismissed as there was no technology available that could make the engineering possible. Now in the twenty-first century, developments in nanomaterials, like carbon nanotubes, increase the possibility of making such a project a reality. Robert Cassanova, director of the NASA Institute for Advanced Concepts, stated that “it’s scientifically sound and technically feasible.32” A conceptual design has been done by NASA, which is now seriously considering space elevators as a mass-transit system in the late twenty-first century or before. It will be a major international undertaking, perhaps surpassing anything that has gone before. Developments in aerospace will make “Space Planes” a reality; they will be able to take people to the space station or fly around the Earth in hours rather than days. If, as is planned by 2020, a permanent base on the moon is established, then later, maybe by 2030, travel to Mars could become a reality. Space projects such as these will advance all types of transportation systems, and a giant leap forward will be made, fulfilling many human desires and aspirations. Kurzwell6-7 believes that within the next 50 years humans and computers will combine to produce superintelligent entities. These machine-enhanced humans could be a million times more intelligent and operate a million times faster than we can today, so the unimaginable could be achieved. Alternatively, the rate of development of computer technology will produce interacting robots with high levels of artificial

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intelligence (AI). These could develop a level of human consciousness — thinking robots — that could exceed the abilities of their creators. In his science fiction story Prey,34 Michael Crichton further opened up the debate about manmade nanoparticles becoming an uncontrollable lifeforce that preys on their human creators. He uses the power of the convergence of nanotechnologhy, biotechnology, and computer technology to produce the story’s scenario. In the twenty-first century, it is just possible that artificial self-reproducing life will be created. Then we enter a new world with unknown horizons. New knowledge is helping us to understand more about life and its origins. Nanoscience is unravelling the complexity of the molecular machines that control cell division. We are close to being able to develop the technology to mimic this process then create life artificially. Before 2030 we shall be able to make new organs and repair damaged ones using stem cells and genetic engineering techniques. But the basic questions still remain to be answered. Where did we come from? Did life result from intelligent design or from the pure chance coming together of organic molecules to form molecular machines, which then replicated themselves with great precision and evolved to larger more complex machines? Will we be able to create artificial intelligence and self-replication organisms? We continue to search for the truth. Meanwhile, there is an urgent need to harness and use our knowledge to deliver a new world where everyone has hope for a better future. In this last chapter of the book, I have tried to give a realistic perspective of the near future and have taken a visionary look at some of the developments that might take place after 2030. As I stated earlier, prediction beyond 2030 becomes tainted with speculation, but it is intellectually and spiritually rewarding to speculate. If it stimulates my readers to think more about the future and what they can do to help make the good things happen, then I would have succeeded.

References

1. Feynman, R.P., There is plenty of room at the bottom, in The Pleasure of Finding Things Out, Helix Books, Cambridge, Massachusetts, 1999, pp. 117–140. 2. Drexler, E., Engines of Creation, Anchor Books, New York, 1986 and website: www. e-drexler.com. 3. Drexler, E., Nanosystems: Molecular Machinery, Manufacturing, and Computation, John Wiley & Sons, 1992, 4. Bainbridge, W.S. and Roco, M.C., Reality of Rapid Convergence, Annals of the New York Academy of Sciences 1093 (1), ix–xiv, 2006. 5. Pearson, I., Business 2010: Mapping the New Commercial Landscape, Spiro Press, 24 Aug 2005. 6. Kurzweil, Ray, The Age of Intelligent Machines, Viking, Penguin, 2004. 7. Kurzweil, Ray, The Singularity is Near, Viking, Penguin, 2005. 8. Canton, James, The Extreme Future, Penguin Books, 2006. 9. Jones, R. Soft Machines, Oxford University Press, 2004. 10. Institute of Alternative Futures (www.altfutures.com), The 2029 Project: Achieving an Ethical Future for Biomedical R&D, 2005. 11. Freitas, R., Nanomedicine Book Site, 2003, http://www.nanomedicine.com/. 12. European Science Foundation Report, Scientific Forward Look at Nanomedicine, February 2005, www.esf.org/publication/196/ESPB23.

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13. Nanotechnology — Product News, Country Doctor, July 19, 2004, http://www.countrydoctor.co.uk/education/. 14. Stem Cell Research, http://stemcells.nih.gov/info/basics/. 15. Nanomaterials, http://www.nanomat.com. 16. UK Royal Society and Royal Academy of Engineering, Report on nanoscience and nanotechnologies: opportunities and uncertainties, 2004. 17. Jackson, Mark, "The future of micro- and nanomanufacturing," in Microfabrication and Nanomanufacturing, Jackson, Mark, Ed., CRC Press, Boca Raton, pp. 367–387, 2006. 18. Sinha, N., Carbon nanotubes for biomedical applications, IEEE Trans on Nanobioscience 4 (2), June 2005, www.nanotec.org.uk. 19. Murawski, F., The market for nanoelectronics, Nanotechnology Law & Business, 1 (4), 2004. 20. Moore, G., Cramming more components onto integrated circuits, Electronics Magazine, 19 April 1965. (Moore’s Law is the empirical observation made in 1965 that the number of transistors on an integrated circuit for minimum component cost doubles every 24 months.) 21. International Technology Roadmap for Semiconductors (ITRS), 2005, provided by Semiconductor Industry Association. 22. Tze-chiang Chen, Message from the vice president, science and technology, IBM research division, IBM Journal of Research and Development, Advanced Silicon Technology, 50 (4/5), 2006. 23. Research Intelligence, University of Liverpool, Business Gateway, Issue 29, August 2006, www.liverpool.ac.uk/research intelligence. 24. http://www.affymetrix.com/index.affx. 25. Smith, P., The Optical Biochip Project, Pathology Basic Technology Research Programme, Cardiff University, 2003-2007. 26. http://www.cnn.com (widely publized in the press), Jan. 1999. 27. Helmert Kaiser Consulting; Nanotechnology in Food and Food Processing Industry Worldwide, 2003–2006–2010–2015, http://www.hkc22.com/nanofood.htm. 28. IFST Report on Food Nanotechnology, 60 (11), November, 2006. 29. Weiss, J., Takhistove, P. and McClements, D., Scientific Status Summary — Materials in food nanotechnology, Journal of Food Science 71, 2006. 30. Future Global Propserity — The Terrawatt Challenge, Richard Smalley, www.mrs. org/publications/bulletin. 31. http://www.technovelgy.com/ct/science-fiction-news. 32. Clark, Arthur C., The Fountains of Paradise, Ballantine, 1978. 33. http://science.nasa.gov/headlines/y2000/ast 07sep_1.htm. 34. Crichton, M., Prey, Harper Collins, New York, 2002.

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Glossary

A complete alphabetical glossary covering micro-nanotechnology can be found on the MANCEF website at http://www.mancef.org/glossary.htm. We present here some terms associated with the subject of this book.

Terms Microtechnology:  Technology dealing with matter on the size scale of microns (1 millionth of a meter). Microtechnology is a broad term and can refer to microelectronics, MEMS, or any technology that manipulates matter on a micron scale. Micro Electro Mechanical System (MEMS):  Term primarily used in the United States for a micro-sized device with both electrical and mechanical functionality. Microsystem:  A microscale device that combines some of the following functions: mechanical, optical, chemical, thermal, magnetic, biological, and fluidic, generally integrated with electronics. A microsystem is a packaged assembly where all the connections are in place to interface with the macro world and is usable by the consumer. MicroSystem Technology (MST):  The term MST is preferred in Europe and Japan in place of MEMS as it is the methods and techniques used to fabricate microsystems. Micromachines:  Mechanical devices with microscopic dimensions. This term is preferred in Japan and is used interchangeably with MEMS and MST. Micropackaging:  The processes used to make the connections/interconnections, encapsulate, and protect the MEMS/micro device or nano device or subsystem so that it is ready to be microassembled into a product usable in the macro world. Micromanufacturing:  The production of microsystems products using microfabrication, packaging, microassembly, and other technologies associated with microelectronics and microsystems. Microelectronics:  This technology includes techniques used to manufacture ICs, discrete microelectronic devices, MEMS devices such as sensors and actuators, and various electro-optic devices. Micro Electro-Optical Mechanical Systems:  MEMS devices that have applications in optical telecommunications. Also known as optical MEMS. Microfluidics:  The science of designing, manufacturing, and formulating devices and processes that deal with nanoliter or picoliter volumes of fluids (i.e., 10 -9 or 10 -12 liters). Microfluidic studies include nozzles, pumps, reservoirs, mixers, valves, etc., that can be used for a variety of applications, 253 © 2008 by Taylor & Francis Group, LLC

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including drug dispensing, ink-jet printing, and general transport of liquids, gases, and their mixtures. Microfabrication:  A manufacturing technology for making microscopic devices, such as integrated circuits or MEMS. Nanotechnology:  Technology dealing with matter on a molecular-size scale, on the order of nanometers (1 billionth of a meter). Nanosystem:  A nanoscale device, constructed atom by atom, that combines or simulates some of the following functions: mechanical, optical, chemical, thermal, magnetic, fluidic, and/or electronics. Molecular Nanoscience:  An emerging interdisciplinary field that combines the study of molecular/ biomolecular systems with the science and technology of nanoscale structures. Nanometer (nm):  A unit of measurement equal to one billionth of a meter. Nanomanufacturing:  The production of nanosystems products using nanofabrication, packaging, nanoassembly, and other technologies associated with nanoelectronics and nanosystems. Nanomachines:  Biomacromolecules, which are nanoengines acting both as thermal engines and as informational engines like the so-called “assemblers” (cf. Molecular nanotechnology). The latter are not self- programmed like nanobiomachines. Nanoparticles: Both synthetic (bottom-up) and transformative (top-down) fabrication rely on the availability of building-block materials and artifacts such as quantum dots, nanotubes and nanofibers, ultrathin films, and nanocrystals. Top-Down Nanosystems:  These systems utilize metaphors such as “chip” (large scale integrated nanosystems) or a “cell” (small complex nanosystems that function in larger quantities) that are revolutionary in nature and require a much longer term to develop. They utilize MEMS-based manufacturing technologies. Top-Down Nanotechnology:  Engineers taking existing devices, such as transistors, and making them smaller using microtechnology techniques Innovation:  The commercial exploitation of new ideas to develop novel products, processes, services, or business models. Invention:  The creation of a new idea or concept. Interconnection:  A series of connections and interconnections is required in moving from the nano-size domain to the macro-size domain where humans communicate with and use products. Integration:  Bringing parts together to make a unified whole. BioMEMS:  Biological MicroElectro Mechanical Systems are MEMS systems with applications for the biological/analytical chemistry market. Biomimetics:  The study relating to the adoption of good designs seen in living beings. Bionanotechnology:  Molecular motors, biomaterials, single-molecule manipulation technologies, biochip technologies, etc. Bulk Micromachining:  The tailoring of structures by machining a wafer’s interior using wet chemical techniques and differential etching rates of different crystallographic planes.

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Carbon Nanotubes:  Tiny tubes about 10,000 times thinner than a human hair and consisting of rolled up sheets of carbon hexagons. Charge-Coupled Device:  A device utilizing a technique in which information is stored and transported by means of packets of minute electrical charges. Chemical Vapor Deposition:  The growth of thin solid films on a substrate as the result of thermochemical vapor-phase reactions. Creative Destruction:  Creative destruction occurs in an industry when a new technology or product paradigm replaces the old. The industry becomes redefined and uses a new technology trajectory. This has occurred in microsystems when MEMS-based accelerometers eclipsed the mini-electro-mechanical systems developed for airbag exploders in passenger cars. Deoxyribonueleic acid:  A nucleic acid that carries genetic information in the cell. DNA consists of two long chains of nucleotides warped into a double helix and coupled by hydrogen bonds. The sequence of nucleotides in the DNA determines individual hereditary characteristics. DNA is responsible for all protein synthesis and handling of genetic information in living beings. Design Rules:  Rules for design of a device, established by repeated part fabrication, or materials testing, and includes minimum feature widths, minimum feature spacing, feature overlap dimensions, etch release hole spacing, material characteristics, etc. Design For Manufacturability:  Statistical information on manufacturing process characteristics used to ensure that the device design falls within the parameters of normal manufacturing variances for each process element. Discontinuous Innovation:  Fundamental and far-reaching product changes that require the users or producers to change. Disruptive Technology:  Those technologies that have redefined the technology/ product paradigm in an existing application area and have created the basis for a new industry. Deep Reactive Ion Etching:  An etching technique that uses plasma to obtain high-aspect-ratio structures or deep features. Reactive Ion Etching:  Dry etching by plasma having chemically active gas ions. Fab:  The informal name for a chip manufacturer’s fabrication plant where ICs or MEMS devices are made. SEMICON industry term for a foundry. Finite-Element Analysis:  A simulation procedure for analyzing multiphysics behavior. Smart Sensor:  The electronics associated with a sensor that processes the output and are partially or completely integrated on a single chip. Fuzzy Logic:  A method to mathematically represent uncertainty and ambiguity and provide formalized tools to deal with data whose boundaries are not sharply defined (i.e., are fuzzy). Some PalmTops use fuzzy logic to recognize handwriting. High Aspect Ratio Micromachining:  Micromachining techniques for manufacturing microstructures of aspect ratios. Moore’s Law:  The number of transistors the industry would be able to place on an IC chip would double every 18 months. The IC industry has been able

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to keep pace with this law to date and strives to achieve the same in the future. Named after the cofounder of Intel, Gordon Moore. Technology/Product Paradigm:  The technology a company utilizes to form a “core product” that acts as a platform from which many application-specific products can be developed. It is a matrix describing the relationship between the various technologies and products of a company.

Acronyms APM AFM CCD CCLRC CVC CAD CNID CMOS DFM DNA RAM DRAM DRIE DFM RIE GM EC EU EPSRC ESF FP FEA EBM HARMST ISS IT IP ISO LIGA PC NASA

Atomically Precise Manufacturing Atomic Force Microscope Charge-Coupled Device Council for the Central Laboratory of the Research Councils Chemical Vapour Deposition Computer aided design Centre for Nanoscience Innovation and Defence Complimentary Metal Oxide Semiconductor Design For Manufacturability Deoxyribonueleic Acid Random Access Memory Dynamic Random Access Memory Deep Reactive Ion Etching Design for Manufacturing Reactive Ion Etching Genetically Modified European Commission European Union Engineering and Physical Research Council European Science Foundation European Framework Programme for Research and Development Finite-Element Analysis Element Boundary Method High Aspect Ratio MicroSystems Technology Intelligent Simulation Systems Information Technology Intellectual Property International Organization for Standardization A German acronym for Lithographie, Galvanoformung, Abformung Lithography, Electroforming Micromolding Personal Computer National Aeronautics and Space Administration

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GB NPL NSF DARPA DTI INEX IVAM IBM IEEE MNT MANCEF MIG MOEMS MMC NEXUS NEMS NIST NBIC NNI NSET PATENT-(DfMM) RAE RS SEMI SBIR

Giga byte National Physical Laboratory National Science Foundation Defence Advanced Research Projects Agency U.K. Dept. of Trade and Industry Nanotechnology Exploitation European Microtechnology Network International Business Machines Institute of Electrical and Electronic Engineers Micro-nanotechnology Micro and Nanotechnology Commercialization Education Foundation MEMS Industry Group Micro electro-optical mechanical systems Micromachine Center (Japan) Network of Excellence in Multifunctional Microsystems Nano Electro-Mechanical Systems National Institute of Standards and the Technology Nanoscience, Biotechnology, Information Technology and Cognitive Science National Nanotechnology Initiative Nanoscale Science, Engineering, and Technology Design for Micro-Nano Manufacture Royal Academy of Engineering Royal Society Semiconductor Equipment and Materials International Small Business Innovation Research Program

Relevant Websites nanotechweb.org www.mancef.org www.mntnetwork.com www.nanoforum.org www.nano.org.uk www.nanomat.com www.purplegoldmedia.com www.ournanoworld.com www.nanowerk.com www.nanomagnetics.com/ www.nano.gov www.nanomedicine.com www. physorg.com http://nanoparticles.org/

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www.imm.org www.nano-net.org/ www.hkc.com/nanomarkets www.patent-dfmm.org www.nanophase.com/ www.nanofactory.com www.quantum-pi.com www.forbes.com www.castleink.com www.inex.org.uk/ www.semi.org/standards www.ieee.org/standards www.abbottpointofcare.com/istat/products/analzsers.htm www.affymetrix.com/index.affx www. science.nasa.gov/headlines www.e-drexler.com www.inex.org.uk www.nano.washington.edu www.enablingMNT.com http://www.osha.gov http://www.cdc.gov/niosh/ http://www.epa.gov http://www.niehs.nih.gov http://www.fda.gov http://www.nano.gov/NNI_Strategic_Plan_2004.pdf http://www.nnin.org http://www.ncn.purdue.edu/ http://www.cpsc.gov http://www.nanomanufacturing.eu Search Engines The following are useful search engines and sources of information for micro and naotechnology. Apart from the free search engines and useful tools such as Google scholar and Google Desktop, there are several more dedicated commercial services: • ISI — Web of Science Database contains peer-reviewed journals, their references and citations. It also has very useful tools such as “find related papers” that search for papers sharing the same references as the entry you are looking at. This is the database behind the compilation of the journal citation factors. • Knovel — Online Handbook Collection and Database is an extensive collection of handbooks and tables. • PROLA — the Physical Review Online Archive searches Physical Review journals.

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• Rubber Bible Online is a physical chemistry handbook which contains tables of physical and chemical data. • Spin AIP Scitation searches related journals. • Web of Science by ISI generates the impact factors (see journals below). • Virtual Journal of Nanotechnlogy collects nanotech-related papers from non-nano specialized journals. • Derwent Patent database.

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