GETI/GLOCOM Platform Joint Seminar

Accelerating the Nanotechnology Revolution: Zyvex's Market Driven Strategies

Summary by GETI Staff

"Nanotechnology will make us healthy and wealthy though not necessarily wise," wrote Ralph C. Merkle in an essay for the IEEE (Institute of Electrical and Electronic Engineers) Spectrum Online publication. He was formerly a researcher at Xerox's Palo Alto Research Center and won the 1998 Feynman Prize for Nanotechnology Theory. According to Merkle, nanotechnology is a manufacturing technology that "will let us inexpensively arrange atoms and molecules in most of the ways permitted by physical law." Since nanotechnology is expected to enable radically new applications that are simply not possible with conventional methods, government funding agencies and companies all over the world are pumping billions of dollars annually into its development in order to harvest the potential benefits of this emerging technology. The perceived impact is thought to be so promising, that the number of nanotechnology-related conferences and market studies has skyrocketed in the past several years. However, the enthusiasm has also naturally created a great deal of confusion and has fueled speculation about nanotechnology as well. For example, people are not sure what type of business models would apply to nanotechnology and what type of economic benefits will be harvested.

Zyvex Corporation, based in Richardson, Texas, is the "world's first molecular nanotechnology company." Zyvex was founded in 1997 by James Von Ehr II, a millionaire who made a fortune after inventing a type of creative illustration software. The company was founded years before President Clinton announced the now famous U.S. National Nanotechnology Initiative (NNI) and well before venture capitalists began considering investing in nanotechnology start-up companies. Zyvex's mission is "to be the leading worldwide supplier of tools, products, and services that enable adaptable, affordable, and molecularly precise manufacturing," said Mr. Ted Khoury, Director of Product Development at Zyvex, at the most recent GETI/GLOCOM technology seminar held in Tokyo. The company currently employs 51 people, including 18 PhDs. The company has a 44,000 sq. ft. facility, Class 100 clean room, several fully-equipped laboratories, and a CNC-equipped machine shop.

Zyvex spent $100,000 on an exhaustive market study in order to identify priority areas for its product development efforts. Interestingly enough, the estimates relating to potential market size Zyvex utilized from the market study are considerably smaller than several other published market studies. The results of the study led the company to place a high priority on three market areas: aerospace & defense, health care & medical, and electronics & telecommunications. Electronics & telecommunications is the largest market group among the three, and is expected to show a CAGR (compound annual growth rate) of over 100% from $425m in 2003 to $6.8b in 2007.

Zyvex has adopted two main development strategies in order to try and capitalize on the potential market opportunities. One is new product development, the other is licensing. Zyvex's services to customers include technical consulting, design services, fabrication, and contract research and development. Zyvex is a recipient of a 5-year, $25m contract from NIST's (National Institute of Standard and Technology) ATP (Advanced Technology Program). Under this matching-fund contract, Zyvex and its partners will develop low-cost, computer controlled, microscale assemblers that operate in parallel to assemble 3D, micro-scale components. This technology will be utilized for the development and commercialization of nano-scale assemblers. In regard to licensing, the company will offer a comprehensive IP (intellectual property) transfer package service in order to ensure a mutually beneficial relationship between Zyvex and licensees. The IP transfer package encompasses from the rights of exclusivity to sell, manufacture, or distribute, to trademarks, post-transfer technical support and extends even to supplier and customer lists.

Mr. Khoury detailed Zyvex's technology, products and capabilities in materials, tools, and structures. The Carbon nanotubes (CNT) is one of the most promising nanotechnology materials. However, CNT is still too expensive to produce in volume and still difficult to integrate into host materials. For some applications such as storage and field emission display integration, it is cost-effective to increase CNT open-ends by cutting CNTs into shorter pieces. In response, Zyvex developed a CNT soft-cutting process. Compared to the competing acid-cutting process, the soft-cutting process doesn't lead to chemical damage and produces a high carbon yield, according to Khoury. In the tools business, Zyvex has developed a nanotechnology research tool that can be installed into existing analysis tools such as SEMs (scanning electron microscopes) and TEMs (tunneling electron microscopes). The S100 System is a palmtop-sized substrate on which four manipulators are integrated such that the tip of each manipulator points to the center stage on the substrate. Each manipulator can be computer-controlled in X, Y, and Z directions at nanometer-scale resolution. A micro or nanostructure is placed on top of the center stage for physical strength and electrical property testing. Zyvex develops various types of microstructure and nanoelectronics sample carrier chips that enable nanotechnology research. The total S100 Nanomanipulation System is priced at $145,000. In the structures business, Zyvex has developed microassembly and micromolding capabilities. Using the aforemented core competencies, the company has also developed several kinds of micro grippers and a MEMS tunable capacitor. Microassembly and micromolding capabilities are available for licensing, product development, and services offering.

In conclusion, Mr. Khoury stressed that the transition from technology-push to market-pull was beginning and that now was the time to invest in commercialization. Global outsourcing will become necessary. Mr. Khoury also believes that it is important to secure license relationships now, because it may be too late for exclusive partner relationships next year. Finally, Mr. Khoury mentioned that it was important to find good research partners, good development partners, and seek national funding that would help offset R&D costs during down-turns in the economy.