Japan's Nanotech Players: Thinking Big

The bizarre properties of ultrasmall structures could turn today's tech scene upside down. Japan's nanotech players, predictably, are on the cutting edge.

We're distributed even in nanospace! Kidding.

Nanotech got a lift last year when former US president Bill Clinton signed off on the National Nanotechnology Initiative (NNI), a research program to be funded with $500 million annually starting this year, and seen as the next strategic focus after IT and biotechnology. Some view the NNI as America's counter to Japan's lead in publicly funded nanotech research. The former Ministry of International Trade and Industry (MITI) organized the Atom Technology Project in 1992 to promote research in materials science based on the manipulation of atoms. The 10-year research program was funded at a total of ¥25 billion with a final evaluation due in fiscal 2001. The Japanese government plans to earmark over ¥50 billion in the fiscal 2001 budget for nanotech research. Also in fiscal 2001, the Education, Science, and Technology Ministry (encompassing the former Science and Technology Agency) plans to establish a nanotech research center in Tsukuba, Ibaraki prefecture (already home to much of Japan's nanotech research). Unlike the Atom Technology Project, which focused on research of basic technologies, the new center will focus on developing higher-density system chips and more efficient solar cells.

To date, nanotech research has largely been just that -- research. Practical applications are still years or decades away. But with the potential to manipulate the very stuff of matter, nanotechnology has implications for a variety of disciplines, including medicine, energy, computers, materials, and environmental science.

Perhaps because of Japan's competence in manufacturing, Japanese nanotech efforts have focused more on nanomaterials and nanoelectronics than nanobiotechnology, i.e. the inorganic rather than the organic side of nanotech. The US, on the other hand, with its superiority in biomedicine and genomics, has focused more on nanotech's biotech implications. At this embryonic stage of nanotechnology, however, the Library of Congress chip appears more within reach than the cancer-busting nanorobot. At some point, Moore's Law (which observes that integrated circuit microchip capacity doubles roughly every 18 months) will reach its physical limitations with current silicon materials. But if circuits one atom wide can be created, processors could reach speeds clocked not in megahertz (as they are now) but in terahertz (millions of megahertz). Some view nanocomputing not as a new technology but as simply a natural progression of the existing trend from the micron (one-millionth of a meter) scale toward the nanometer scale.

NANOTECH INDUSTRY PLAYERS
Japan's universities and public research institutes play a prominent role in nanotech research. Because of this country's focus on nanotech applications for computing, industry participants consist mainly of the semiconductor giants. In 1991, Dr. Sumio Iijima of NEC (6701 or NIPNY) discovered a new form of carbon with unique properties called carbon nanotubes. The carbon nanotubes, hollow cylinders 1.4 nanometers in diameter (approximately 1/10,000th the size of a human hair), are bendable, yet 100 times stronger than steel, can be filled with other molecules, and can conduct heat and electricity. Nanotubes were the first major find since the discovery in 1985 of "buckminsterfullerenes" (also called "fullerenes" or "buckyballs"), soccer ball--shaped carbon molecules consisting of 60 atoms. It is hoped that carbon nanotubes can be used as ultrasmall electronic circuits and electrodes, vehicles for delivering drugs, storage for hydrogen in fuel cells, construction material for microelectromechanical systems (MEMS), and raw material to replace steel.

The discovery of the carbon nanotubes gave nanotech research a foundation and may create a whole new industry. Nanotubes are being used as the tinker toys in attempts to build new nanometer-scale devices. Currently, carbon nanotubes are very expensive to produce, and their varying electronic, thermal, and structural properties are difficult to pin down. NEC and Seiko Instruments, together with the Himeji Institute of Technology, have managed recently to create the world's smallest wine glass from carbon. The experimental 3D manufacturing technique uses nanometer-scale ion beams, and it is hoped that the technique can be used eventually to build more complex and useful objects.

Fujitsu (6702 or FJTSY) opened its Nanotechnology Research Center last December with a staff of 10, whose goal is to develop ultrafast computers. It aims to find new semiconductor materials using carbon nanotubes to replace silicon and to develop molecular computers with unimagined computing speed.

Along with NEC, Fujitsu, and other companies, Hitachi (6501 or HIT) is also a member of the Atom Technology Project. Hitachi researchers are developing memory and logic circuits out of single-atom wires.

Besides the electronics giants, other domestic companies exploring nanotube production include Toray Industries (3402), Showa Denko (4004), Harima Chemicals (4410), Ise Electronics, and Ulvac.

Venture capital is beginning to validate nanotech as an area worthy of commercial pursuit. Trading house Mitsubishi Corp. (8058) plans to establish an investment fund in April 2001 targeting startups developing new materials, IT equipment, and medical technology based on nanotechnology. Mitsubishi Research Institute estimates that the domestic market for nanotech products will reach ´yen;19 trillion in 2010. Last year Mitsubishi formed a joint venture called Fullerene International Corp. with US-based Research Corporation Technologies, which holds the patents on fullerenes, to commercialize the industrial production of fullerenes and nanotubes.

The world's first nanotech startup, privately funded Zyvex in the US, aims to build "assemblers," molecular machines that can manufacture objects atom by atom. While it has been possible to pick up atoms using scanning probe microscopes, arranging them in any precise manner has remained elusive.

We have yet to see the investment boom (and bust) in nanotech ventures. But as nanotech research leaves the lab and finds its way into commercial applications, we can be sure that Japanese companies will be among the leaders.

Note: "Nano" means one-billionth, and a nanometer (one-billionth of a meter) is the unit of measurement used to describe atoms and molecules. Nanotechnology is the science of manipulating matter on the atomic and molecular level.

Augie Tam is the founder of GaijinInvestor.com. He can be reached at augietam@gaijininvestor.com.