The ultra small is ultra big
One billionth of a metre is mighty small.
One billionth of a metre is mighty small.
The nanometre, unobservable by the naked eye, is easily overlooked in a day’s business, but quietly and quickly, the importance of the nanometer is overshadowing the development, manufacture and application of products now and for the future. Nanotechnology is revolutionizing both specialized and everyday products, making them harder, stronger, more reactive, more resilient, more waterproof, lighter, whiter and brighter. From cosmetics to solar cells, including clean drinking water, renewable energy and treatments for life-threatening diseases such as cancer and diabetes, nanotechnology is the substance that is driving product innovation.
Despite the economic gloom of the Western world in the past three years, there have been dramatic increases in GDP for many emerging markets – some with extra-large populations. With this new wealth comes heightened appetite: for fossil fuels that will pollute, for unhealthy Western-style diets that will sicken, and for consumer goods that will eventually end up in landfills. Governments and corporations across the globe are faced with balancing the need for increasing the wealth of its people, while protecting a fragile environment, and generating new products that are more compact, more efficient and more cost-effective.
Nanotechnology research and the ultimate commercialization of the ideas is the key. Essentially, nanotechnology will have a transformative effect on more or less all aspects of our lives. Since there is so much traction on this road, this result is inevitable. The National Nanotechnology Initiative, funded by the US government, sums it up well: “… applications of nanotechnology are delivering both expected and unexpected ways on nanotechnology’s promise to benefit society.”
The research phase has been lengthy and lucrative. Governments and companies have invested heavily, creating strong scientific and technological foundations. The barriers to entry in this market are undoubtedly considerable in both material costs and in intellectual property. Some estimates put the total research investment into nanotechnology over the last six years by the US federal government at more than USD9 billion. In the US, the budget for research and development committed to nanotechnology has increased by over 260 percent since 2001. China has more than tripled its nanotechnology research and development spending in the last five years. India has announced the opening of its first nano-park for 2011. Singapore and Israel have joined forces to develop new nano-materials for the enhancement of existing energy and water management technologies, and Saudi Arabia has announced the opening of the King Abdullah Institute for Nanotechnology.
Now, this work is paying off and the commercialization phase of nanotechnology is in full swing. In the last month alone, scores of announcements have been made about new products or breakthroughs. For example, a glance at a small number of the companies included on the Cedrus Nanotechnology Index – Pure (CNIP) (http://www.cedrusinvestments.com/reports.html) provides a good sampling of this trend. ASML Holding NV (ASML), a provider of lithography systems for the semiconductor industry reported the release of new technology that will enable chipmakers to manufacture smaller, faster chips in a more cost-effective manner. Thermo Fisher Scientific (TMO), in collaboration with the Health Protection Agency in the UK, has been able to map the proteome of the organism responsible for the E-coli outbreak in Europe. GT Advanced Technologies (GTAT), a provider of polysilicon production technology and other systems and materials for the solar, LED and other specialty markets, has just announced an USD81.7 million in new orders from two new customers in Asia.
This industry based on the ultra small is burgeoning into something ultra big.
In the investment world, nanotechnology is still viewed as being in the spring of its life cycle, and early adopters are those making investment commitments. The imagination and foresight of these investors are poised to deliver handsome returns as nanotechnology is revolutionizing a collection of indisputable high-growth industry segments: environmental science, homeland security, food safety, medicine and transportation amongst others. But, for those investors keen on alpha generation, this segment is important to watch. High growth and volatility, obvious market pricing inefficiencies, a low correlation to the S&P 500 and significant IPO exposure – these tea leaves are not hard to read.