[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE TRANSFER OF NATIONAL NANOTECHNOLOGY
INITIATIVE RESEARCH OUTCOMES FOR
COMMERCIAL AND PUBLIC BENEFIT
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HEARING
BEFORE THE
SUBCOMMITTEE ON RESEARCH AND
SCIENCE EDUCATION
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MARCH 11, 2008
__________
Serial No. 110-82
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.house.gov/science
U.S. GOVERNMENT PRINTING OFFICE
41-064 PDF WASHINGTON DC: 2008
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______
COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
MARK UDALL, Colorado LAMAR S. SMITH, Texas
DAVID WU, Oregon DANA ROHRABACHER, California
BRIAN BAIRD, Washington ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona W. TODD AKIN, Missouri
JERRY MCNERNEY, California JO BONNER, Alabama
LAURA RICHARDSON, California TOM FEENEY, Florida
PAUL KANJORSKI, Pennsylvania RANDY NEUGEBAUER, Texas
DARLENE HOOLEY, Oregon BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey DAVID G. REICHERT, Washington
JIM MATHESON, Utah MICHAEL T. MCCAUL, Texas
MIKE ROSS, Arkansas MARIO DIAZ-BALART, Florida
BEN CHANDLER, Kentucky PHIL GINGREY, Georgia
RUSS CARNAHAN, Missouri BRIAN P. BILBRAY, California
CHARLIE MELANCON, Louisiana ADRIAN SMITH, Nebraska
BARON P. HILL, Indiana PAUL C. BROUN, Georgia
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
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Subcommittee on Research and Science Education
HON. BRIAN BAIRD, Washington, Chairman
EDDIE BERNICE JOHNSON, Texas VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois ROSCOE G. BARTLETT, Maryland
JERRY MCNERNEY, California RANDY NEUGEBAUER, Texas
DARLENE HOOLEY, Oregon DAVID G. REICHERT, Washington
RUSS CARNAHAN, Missouri BRIAN P. BILBRAY, California
BARON P. HILL, Indiana
BART GORDON, Tennessee RALPH M. HALL, Texas
JIM WILSON Subcommittee Staff Director
DAHLIA SOKOLOV Democratic Professional Staff Member
MELE WILLIAMS Republican Professional Staff Member
MEGHAN HOUSEWRIGHT Research Assistant
C O N T E N T S
March 11, 2008
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Brian Baird, Chairman, Subcommittee
on Research and Science Education, Committee on Science and
Technology, U.S. House of Representatives...................... 8
Written Statement............................................ 9
Statement by Representative Vernon J. Ehlers, Ranking Minority
Member, Subcommittee on Research and Science Education,
Committee on Science and Technology, U.S. House of
Representatives................................................ 9
Written Statement............................................ 10
Prepared Statement by Representative Eddie Bernice Johnson,
Member, Subcommittee on Research and Science Education,
Committee on Science and Technology, U.S. House of
Representatives................................................ 10
Witnesses:
Mr. Robert D. ``Skip'' Rung, President and Executive Director,
Oregon Nanoscience and Microtechnologies Institute (ONAMI)
Oral Statement............................................... 11
Written Statement............................................ 14
Biography.................................................... 21
Dr. Julie Chen, Professor of Mechanical Engineering; Co-Director,
Nanomanufacturing Center of Excellence, University of
Massachusetts Lowell
Oral Statement............................................... 22
Written Statement............................................ 24
Biography.................................................... 29
Dr. Jeffrey Welser, Director, Nanoelectronics Research Initiative
Oral Statement............................................... 30
Written Statement............................................ 32
Biography.................................................... 40
Mr. William P. Moffitt, Chief Executive Officer, Nanosphere,
Incorporated
Oral Statement............................................... 41
Written Statement............................................ 43
Biography.................................................... 47
Dr. C. Mark Melliar-Smith, Chief Executive Officer, Molecular
Imprints, Austin, Texas
Oral Statement............................................... 48
Written Statement............................................ 50
Biography.................................................... 61
Discussion....................................................... 62
Appendix: Answers to Post-Hearing Questions
Mr. Robert D. ``Skip'' Rung, President and Executive Director,
Oregon Nanoscience and Microtechnologies Institute (ONAMI)..... 80
Dr. Julie Chen, Professor of Mechanical Engineering; Co-Director,
Nanomanufacturing Center of Excellence, University of
Massachusetts Lowell........................................... 83
Dr. Jeffrey Welser, Director, Nanoelectronics Research Initiative 85
Mr. William P. Moffitt, Chief Executive Officer, Nanosphere,
Incorporated................................................... 89
Dr. C. Mark Melliar-Smith, Chief Executive Officer, Molecular
Imprints, Austin, Texas........................................ 92
THE TRANSFER OF NATIONAL NANOTECHNOLOGY INITIATIVE RESEARCH OUTCOMES
FOR COMMERCIAL AND PUBLIC BENEFIT
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TUESDAY, MARCH 11, 2008
House of Representatives,
Subcommittee on Research and Science Education,
Committee on Science and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:05 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Brian
Baird [Chairman of the Subcommittee] presiding.
hearing charter
SUBCOMMITTEE ON RESEARCH AND SCIENCE EDUCATION
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
The Transfer of National Nanotechnology
Initiative Research Outcomes for
Commercial and Public Benefit
tuesday, march 11, 2008
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
1. Purpose
As part of the reauthorization process for the National
Nanotechnology Initiative (NNI), on Tuesday, March 11, 2008, the
Subcommittee on Research and Science Education will hold a hearing to
review the activities of the NNI in fostering the transfer of
nanotechnology research outcomes to commercially viable products,
devices, and processes. In addition the hearing will review the current
federal efforts related to support of research on nanomanufacturing.
2. Witnesses
Mr. Skip Rung, President and Executive Director, Oregon Nanoscience and
Microtechnologies Institute (ONAMI)
ONAMI is a cooperative venture between government, academic
institutions and industry in the Pacific Northwest and provides open
user facilities, research expertise, industry connection to academic
research, and gap-funding.
Dr. Julie Chen, Co-Director, Nanomanufacturing Center of Excellence,
University of Massachusetts Lowell
The University of Massachusetts Lowell Nanomanufacturing Center of
Excellence includes the Center for High Rate Nanomanufacturing, an NSF
funded user facility that focuses research on manufacturing technology
for nanoproducts.
Dr. Jeffrey Welser, Director, Nanoelectronics Research Initiative (NRI)
The NRI is a consortium of companies in the Semiconductor Industry
Association which funds research to demonstrate novel computing devices
with critical dimensions below 10 nanometers.
Mr. William Moffitt, CEO, Nanosphere, Inc. and representing the
NanoBusiness Alliance
Dr. Mark Melliar-Smith, CEO, Molecular Imprints, Inc.
3. Overarching Questions
What are the barriers to commercialization of
nanotechnologies? How can the NNI enhance technology transfer
and help promote the commercialization of nanotechnology?
Is the current investment in basic research for
nanomanufacturing under the NNI adequate? Are the research
areas supported under NNI relevant to the needs of industry?
How can the Nation's focus on manufacturing techniques position
us for global leadership in specific technologies?
Are user facilities supported under the NNI effective
in assisting with the transfer of research results to usable
products that benefit the public? Are the current user
facilities adequate to meet the needs of the user community in
terms of number of facilities and types of instrumentation and
equipment available? Are there impediments to the use of
federally funded nanotechnology user facilities for industry,
such as intellectual property issues or administrative burdens
that discourage their use?
Is there a need for a research and development
program under NNI focused on specific problems of national
importance?
Are mechanisms available for industry to influence
the research priorities of the NNI?
4. Background
NNI Organization and Funding
The National Nanotechnology Initiative was authorized by the 21st
Century Nanotechnology Research and Development Act of 2003 (P.L. 108-
153). In accordance with the Act, the National Science and Technology
Council (NSTC) through the Nanoscale Science, Engineering, and
Technology (NSET) Subcommittee plans and coordinates the NNI. The Act
authorized the National Nanotechnology Coordination Office (NNCO) to
provide technical and administrative support to the NSET for this
coordination. There are currently twenty-six federal agencies that
participate in the National Nanotechnology Initiative, with 13 of those
agencies reporting a research and development budget. The total
estimated NNI budget for FY 2008 was $1.49 billion. Total funding for
the NNI in FY 2007 was $1.42 billion.\1\ More information on the NNI
program content and budget can be found at http://www.nano.gov/
NNI-FY09-budget-summary.pdf and http:/
/www.nano.gov/NNI-08Budget.pdf. Research related to the NNI
is organized into eight program component areas including: Fundamental
phenomena and processes; nanomaterials; nanoscale devices and systems;
instrumental research, metrology, and standards; nanomanufacturing;
major research facilities and instrument acquisition; environment,
health, and safety; and education and societal dimensions.
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\1\ Summary of the FY 2009 National Nanotechnology Initiative
Budget, February 2008. Available at http://www.nano.gov/.
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The FY 2008 estimated budget for nanomanufacturing research (a
component that is closely tied to bridging the gap between basic
research and the development of commercial products) was $50.2 million
dollars which is 3.3 percent of the total budget. The NNI planned
investment in nanomanufacturing research for FY 2009 is $62.1 million,
a 23 percent increase. This amount is four percent of the total FY 2009
proposed budget. A working group for Nanomanufacturing, Industry
Liaison, and Innovation (NILI) was formed by the NSET to facilitate
innovation and improve technology transfer for nanotechnology. NILI has
helped to facilitate industry liaison activities for the electronics,
construction, chemical, and forest and paper products industries.
User Facilities
The NNI funding agencies support nanotechnology user facilities to
assist researchers (academic, government, and industry) in fabricating
and studying nanoscale materials and devices. The facilities may also
be used by companies for developing ideas into prototypes and
investigating proof of concept. The National Science Foundation
supports 17 facilities under its National Nanotechnology Infrastructure
Network (NNIN), four of which are focused on nanomanufacturing. The
Department of Energy maintains five Nanoscale Science Research Centers,
each focused on and specific to a different area of nanoscale research.
The National Institutes of Health has a Nanotechnology Characterization
Laboratory in Frederick, MD and the National Institute of Standards and
Technology maintains a user facility in Gaithersburg, MD. The
application processes for each facility varies; however, all are open
to academic, government, or industry users. In addition to the user
facilities, the NNI is carried out in over 70 centers and institutes\2\
throughout the country mostly on university campuses, many of which
have user facilities that are open to all applicants.
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\2\ Information of NNI related user facilities and centers and
institutes can be found at www.nano.gov
SBIR/STTR Programs
P.L. 108-153 encourages support for nanotechnology related projects
through the Small Business Innovation Research (SBIR) and Small
Business Technology Transfer Research (STTR) programs by requiring the
National Science and Technology Council to ``develop a plan to utilize
federal programs, such as the Small Business Innovation Research
Program and the Small Business Technology Transfer Research Program, in
support of the [NNI activities]. . .''. Despite the lack of a formal
plan, the SBIR and STTR programs have been used as a vehicle to bring
nanotechnology research developed by small business concerns closer to
commercialization. The total SBIR and STTR program spending in all
technology areas in FY 2006 was nearly $2.2 billion, of that budget
$79.7 million was identified as nanotechnology related research.\3\
This was 3.7 percent of the total SBIR/STTR spending in FY 2006 and
included nine federal agencies. SBIR/STTR funding is allowable for
development of technologies from concept to prototype; however, funding
of scale-up to manufacturing does not fall within the SBIR/STTR scope
of funding.
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\3\ The National Nanotechnology Initiative Supplement to the
President's FY 2008 Budget. July 2007, p. 24.
Commercialization Issues
Federal Government spending in nanotechnology research and
development since 2001 exceeds $5 billion. Global revenues from
nanotechnology products are estimated at $50 billion annually, and are
expected to reach $2.6 trillion by 2014.\4\ Federal R&D funding
vehicles traditionally limit funding to basic research through
prototype development, leaving private sector funding to bring these
emerging technologies to commercialization. A recent report by the U.S.
Department of Commerce's Technology Administration cites ``funding
which favors research over development and commercialization. . .'' as
one of the most significant barriers to growth in the nanotechnology
industry.\5\ To bridge this gap, some states are developing gap-funding
programs or tax incentives. Globally, countries such as New Zealand and
Israel have developed incubator and granting programs that attempt to
provide funding for commercial development past the prototype stage.
These programs are privately and/or government funded. In addition to
federal, State, and local efforts to bring products beyond prototype,
industry liaison efforts such as the Nanotechnology Research
Initiative\6\ of the Semiconductor Research Corporation, and the Agenda
2020 Technology Alliance\7\ are bringing scientists and industry
partners together.
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\4\ Sizing Nanotechnology's Value Chain, Lux Research, 2004.
\5\ Barriers to Nanotechnology Commercialization, U.S. Department
of Commerce, September 2007, p. 11.
\6\ The NRI is a consortium of companies in the Semiconductor
Industry Association which funds research to demonstrate novel
computing devices with critical dimensions below 10 nanometers that
will have application beyond the potential of the current circuit
technology (CMOS).
\7\ The Agenda 2020 Technology alliance is a project of the
American Forest & Paper Association and supports and directs research
efforts in nanotechnology to benefit the forest and paper products
industry.
Nanomanufacturing
Commercialization of nanotechnology is dependent on the development
of nanomanufacturing techniques and processes.\8\ There are
difficulties with scale-up methods for nanotechnology that are unique
to nanomanufacturing. Nanomanufacturing processes are difficult to
control and can sometimes require more expensive instrumentation for
the large scale manufacture of nanomaterials and products. In addition,
manufacturing defects that would not affect reliability or performance
of macro-technologies can and do render nanotechnologies unusable.
Because of these unique challenges, manufacturers can often produce
prototypes but the rates to scale-up are slow, and the hurdles for
commercialization are often prohibitive. Products that rely on
nanoscale building blocks (e.g., carbon nanotubes and nanoparticles)
need better manufacturing methods to control variability and better
high throughput characterization methods to measure that control.
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\8\ Chemical Industry R&D Roadmap for Nanomaterials by Design: From
Fundamentals to Function. December 2003, p. 83-91.
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There is a need for instrumentation for measurement and inspection
of nanomanufactured products on-line or at the very least, measurement
at a higher rate. Current technologies for device measurement and
inspection such as scanning electron microscopy (SEM), transmission
electron microscopy (TEM), and atomic force microscopy (AFM) require
time and instrumentation expertise and slow manufacturing processes
when employed.
5. Witness Questions
All of the witnesses were asked to provide their views on the
effectiveness, scope, and content of the current efforts under the NNI
to foster transfer of technology and any recommendations they have on
ways to improve the process by which nanotechnology is commercialized
including, but not limited to, development of prototypes, use of
federally funded user facilities, and nanomanufacturing practices and
processes. In addition, the following specific questions were asked of
each witness:
Mr. Skip Rung
What are the significant hurdles for companies trying
to commercialize nanotechnology? What examples of successful
activities to overcome these hurdles has ONAMI seen? What
recommendations for federal policy can you make based on the
success of the companies affiliated with ONAMI?
How can policies for access to facilities supported
under NNI be structured to provide for increased use by
industry and increased transfer of technology and knowledge
from federally funded research?
Are there ways that the NNI could be more effective
in assisting the transition of research results to prototype
development and full commercialization?
What kinds of federal programs or activities can help
bridge the ``valley of death'' successfully? How effective have
the SBIR/STTR and ATP programs been in this regard?
Are there any barriers to commercialization imposed
by current intellectual property policies at NNI-supported user
facilities, and if so, what are your recommendations for
mitigating these barriers?
Dr. Julie Chen
Please review the findings of the 2006 Small Times
Survey of U.S. Nanotechnology Executives and comment on the
results regarding companies' attitudes and views regarding
federal support in nanotechnology research and development and
needs regarding user facilities.
What is the current state of nanomanufacturing basic
research? What are the basic research needs to provide industry
with the tools necessary to move towards high-rate
nanomanufacturing?
How does your center interact with industry in
setting research direction?
Do the companies that interact with your center make
use of other facilities available through the NNI? Are current
policies under the NNI supportive of such use?
Dr. Jeffrey Welser
How does the electronics industry interact with NNI
supported research activities?
What is the role of industry in setting research
directions through the NRI?
What role should the NNI play in helping to foster
commercialization of nanotechnology?
Are federally funded user facilities meeting the
needs of industry? Are there impediments to their use? How can
user facilities be most effective in helping to bring NNI
funded research to commercialization?
Mr. William Moffitt
What are the hurdles to the commercialization of
nanotechnology?
What kinds of federal programs or activities can help
bridge the ``valley of death'' successfully? How effective have
the SBIR/STTR and ATP programs been in this regard?
Are there areas of focus for commercialization that
will position the Nation for leadership in that technology?
Are there any barriers to commercialization imposed
by current intellectual property policies at NNI-supported user
facilities, and if so, what are your recommendations for
mitigating these barriers?
Dr. Mark Melliar-Smith
Please describe your company's experience with
federally funded user facilities (DOE, NSF, etc.)? Are user
facilities easily accessible to small and medium businesses? If
not, why not, and how would you recommend making improvements?
How can user facilities be most effective in helping to bring
NNI-funded research to commercialization?
Is the research now being supported under the
nanomanufacturing component of the NNI meeting the needs of
industry? Do you believe industry has a voice in determining
research priorities for these activities?
Was your company successful in attracting venture
capital? If so, at what stage in your products' development did
you obtain VC funding? Are there any federal policies or agency
directives that have impacted your ability to obtain VC
funding, either positively or negatively?
Are there ways that the NNI could be more effective
in assisting the transition of research results to prototype
development and full commercialization?
Chairman Baird. Good morning to everyone here in the room
and particularly our witnesses today. Our hearing today is
entitled The Transfer of National Nanotechnology Initiative
Research Outcomes for Commercial and Public Benefit. I would
like to welcome everyone today on the hearing designed to
assess how to ensure that research outcomes from the National
Nanotechnology Initiative are transitioned for commercial and
public benefit. And I would like to thank all of our witnesses
for being here.
The hearing is the third in a series to review various
aspects of the National Nanotechnology Initiative, or as we
call it the NNI. These hearing will help guide our development
of legislation to reauthorize the NNI during the current
session of the Congress. In a past hearing, we received
testimony on the importance of developing a prioritized
research plan and implementation strategy to address the
environment, health and safety implications of nanotechnology.
In another hearing, we heard about the need to educate students
at all levels of education about nanotechnology in order to
ensure a workforce for this rapidly growing field.
Today, the Subcommittee will review how well the NNI is
supporting activities to make sure that the results of
nanotechnology research are translated into commercial products
and processes. We will also look at whether the research being
supported by NNI in such areas as nanomanufacturing is relevant
to the needs of industry.
It is clear to me and this committee that nanotechnology
can offer this nation and the world unimaginable benefits in a
wide range of fields, including health care, energy efficiency,
electronics and water remediation. Like many areas, a federal
investment in basic research is critical to nanotechnology's
development, but this investment will be squandered if we do
not cultivate the technology to usable products or processes.
The NNI now supports user facilities and basic research in
nanomanufacturing. Also, the agencies participating in the NNI
administer SBIR programs that fund projects to advance emerging
concepts to commercialization.
Certainly, the commercialization of nanotechnology, like
any developing technology, is complex. However, nanotechnology
has some unique challenges. The development of nanomaterials
and devices most often requires highly specialized and
expensive instruments. In addition, the scale-up of nanotech
requires unique processes that have very low error rates.
Furthermore, quality control in nanomanufacturing requires
lengthy evaluations and expensive equipment.
As I mentioned earlier, this morning I hope to assess
whether the current investment aimed at technology transfer and
commercialization under the NNI are adequate and reflect the
most critical priorities. I also want to look at whether the
research is relevant to the industry, and in addition I am
interested in the views of our witnesses on whether the
equipment and instruments available at NNI-supported facilities
are adequate and accessible. Finally, I invite any
recommendations our witnesses may have on how the NNI could be
more effective in helping to bridge the gap between concept and
commercialization.
I thank our distinguished witnesses for being here today. I
look forward to your testimony.
And before introducing the panel, I would now recognize my
good friend, the Ranking Member of the Subcommittee, Dr.
Ehlers, for an opening statement.
[The prepared statement of Chairman Baird follows:]
Prepared Statement of Chairman Brian Baird
Good morning. I'd like to welcome everyone to today's hearing on
how to ensure that research outcomes from the National Nanotechnology
Initiative are transitioned for commercial and public benefit, and I'd
like to thank our witnesses for being here.
This hearing is the third in a series to review various aspects of
the National Nanotechnology Initiative, or the NNI. These hearings will
help guide our development of legislation to reauthorize the NNI during
the current session of Congress.
In a past hearing, we received testimony on the importance of
developing a prioritized research plan and implementation strategy to
address the environment, health, and safety implications of
nanotechnology. In another, we heard about the need to educate students
at all levels of education about nanotechnology in order to ensure a
workforce for this rapidly growing field.
Today, the Subcommittee will review how well the NNI is supporting
activities to make sure that the results of nanotechnology research are
translated into commercial products and processes. We also will look at
whether the research being supported by NNI in such areas as
nanomanufacturing is relevant to the needs of industry.
It is clear to me and this committee that nanotechnology can offer
this nation and the world unimaginable benefits in a wide range of
fields, including health care, energy efficiency, electronics, and
water remediation.
Like many areas, the federal investment in basic research is
critical to nanotechnology's development. But this investment will be
squandered if we do not cultivate the technological advancement to
usable products or processes.
The NNI now supports user facilities and basic research in
nanomanufacturing. Also, the agencies participating in the NNI
administer SBIR programs that fund projects to advance emerging
concepts toward commercialization.
Certainly, the commercialization of nanotechnology, like any
developing technology, is complex. However, nanotechnology has some
unique challenges. The development of nanomaterials and devices most
often requires highly specialized and expensive instruments. In
addition, the scale-up of nanotechnology requires unique processes that
have very low error rates. Furthermore, quality control in
nanomanufacturing requires lengthy evaluations and expensive equipment.
As I mentioned earlier, this morning I hope to assess whether the
current investments aimed at technology transfer and commercialization
activities under the NNI are adequate and reflect the most critical
priorities. I also want to look at whether the research is relevant to
the industry. In addition, I am interested in the views of our
witnesses on whether the equipment and instruments available at NNI-
supported facilities are adequate and accessible. Finally, I invite any
recommendations our witnesses may have on how the NNI could be more
effective in helping to bridge the gap between concept and
commercialization.
I thank our distinguished witnesses from being here today. I look
forward to your testimony. Before introducing our panel, I now
recognize the Ranking Member of the Subcommittee, Dr. Ehlers, for an
opening statement.
Mr. Ehlers. Thank you, Mr. Chairman, and in appreciation of
the fact that we are having a nanotechnology hearing, I decided
to offer a nano-opening statement so that we can quickly get
into the hearing.
Chairman Baird. So moved. I will now introduce the
witnesses. (laughter)
Mr. Ehlers. The authorization of the NNI is a prime
opportunity for the Science and Technology Committee to
continue to craft policies that encourage U.S. innovation and
maintain our global competitiveness. We have invested more than
$8 billion federal dollars into the NNI since it was initiated
in 2003. The reauthorization measure will be a very important
piece of legislation and deserves the full attention of this
subcommittee and the full Science Committee.
There is still much to learn about perfecting
nanotechnology manufacturing processes. For those working in
nanotechnology, it is evident that there are many challenges
unique to the nanomanufacturing supply chain. The conventional
balance of basic and applied research and development may not
be a good fit for nanomanufacturing because of the high capital
investments and substantial fundamental research necessary to
overcome obstacles to commercialization.
As we advance the reauthorization of the National
Nanotechnology Initiative, this question of appropriate balance
must be carefully considered. I look forward to hearing from
our witnesses about their recommendations for investment
priorities in the reauthorization process.
Thank you, Mr. Chairman. I yield back.
[The prepared statement of Mr. Ehlers follows:]
Prepared Statement of Representative Vernon J. Ehlers
Reauthorization of the National Nanotechnology Initiative (NNI) is
a prime opportunity for the Science and Technology Committee to
continue to craft policies that encourage U.S. innovation and maintain
our global competitiveness. We have invested more than eight billion
federal dollars into the NNI since it was initiated in 2003. The
reauthorization measure will be a very important piece of legislation,
and deserves the full attention of this Subcommittee and Full
Committee.
There is still much to learn about perfecting nanomanufacturing
processes. To those working in nanotechnology it is evident that there
are many challenges unique to the nanomanufacturing supply chain. The
conventional balance of basic and applied research and development may
not be a good fit for nanomanufacturing because of the high capital
investments and substantial fundamental research necessary to overcome
obstacles to commercialization.
As we advance the reauthorization of the National Nanotechnology
Initiative this question of appropriate balance must be carefully
considered. I look forward to hearing from our witnesses about their
recommendations for investment priorities in the reauthorization
process.
Chairman Baird. I thank the Ranking Member. And if there
are other Members who arrive, as they tend to do, during the
course of the hearing who wish to submit additional opening
statement, their records will be added.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Representative Eddie Bernice Johnson
Good afternoon. Thank you, Mr. Chairman, for holding today's
hearing on nanotechnology, and the needs of the community as Congress
prepares to reauthorize the National Nanotechnology Initiative.
I especially want to welcome Mr. Mark Melliar-Smith, CEO of
Molecular Imprints, a Texas-based nanotech company that uses an optical
technique to project and print nanoscale patterns.
Texas is an international leader in nanotechnology research and
development. I know that the state has made a strong investment in
nanotechnology.
University research, spin-off companies, and other small start-ups
have been greatly assisted by the pro-research culture in our state.
This subcommittee will be interested to know how to best support
the nanotechnology research community.
We want to know if the current funding for research is strong
enough, or if some of the money should instead be utilized for user
facilities.
In addition, the Committee would like feedback on the barriers to
commercialization of nanotechnology products, and whether a greater
portion of the total investment should be directed toward that
function.
Today's witness panel covers the spectrum, from small company
start-ups, to the academic environment, to organizations representing a
consortium of businesses.
All bring valuable perspectives to the issue at hand: how federal
investments can best support and allow nanotechnology in the United
States to succeed and flourish.
Thank you, Mr. Chairman. I yield back the balance of my time.
Chairman Baird. At this point, it is a privilege to
introduce the witnesses. Mr. Skip Rung is the President and
Executive Director of the Oregon Nanoscience and
Microtechnologies Institute, who flew a red-eye flight here.
Mr. Rung, welcome. I am sometimes referred to as the
representative from the Third District of Washington or the
Sixth District of Oregon, owing to how many people cross the
river each day to work. We welcome you, particularly, here as
well. Dr. Julie Chen is a Professor of Engineering at the
University of Massachusetts Lowell, and Co-Director of their
Manufacturing Center of Excellence. Dr. Chen, welcome. Dr.
Jeffrey Welser is on assignment from the IBM Corporation to
serve as the Director of Nanoelectronics Research Initiative,
NRI, a subsidiary of the Semiconductor Research Corporation.
Welcome, Dr. Welser. Dr. William Moffitt is the Chief Executive
Officer of Nanosphere, Incorporated, and is also representing
the NanoBusiness Alliance. Dr. Moffitt, welcome. And Dr. Mark
Melliar-Smith is the Chief Executive Officer of Molecular
Imprints, Incorporated. So we have folks from the academic/
research sector and the applied-industry/business sector.
As our witnesses should know, spoken testimony is limited
to five minutes each, after which Members of the Committee will
have five minutes each to ask questions. And as I mentioned
earlier, this is a friendly, bipartisan committee, and we
really welcome your discussion. We will offer an exchange of
questions. Always feel that if there is something critical we
have yet to ask, that you can offer insights into that as well.
We will begin our comments from Mr. Rung. Thank you for
being here.
STATEMENT OF MR. ROBERT D. ``SKIP'' RUNG, PRESIDENT AND
EXECUTIVE DIRECTOR, OREGON NANOSCIENCE AND MICROTECHNOLOGIES
INSTITUTE (ONAMI)
Mr. Rung. Chairman Baird, and Members of the Committee, I
am honored by the opportunity to speak with you today on a
subject of great importance for the continued economic and
social health of our nation. Winning at science-based
innovation is critical for U.S. economic competitiveness, for
the supply of jobs with productivity sufficient for the wage
levels Americans have come to expect and for the prosperity
that pays for all of the social goods, such as health and
education, we would like to leave in tact for future
generations. Reauthorization of the Nanotechnology Research and
Development Act presents the opportunity both to re-up on a
vital investment, and at the same time, be more intentional
about social and economic returns.
Oregon Nanoscience and Microtechnologies Institute,
Oregon's first signature research center has so far received
$37 million from the Oregon Innovation Council because they
know that success and the global competition for jobs and
prosperity completely depends on a sector that wins through
innovation, fueled by research and entrepreneurship. And so
that is the dual mission of ONAMI: growth in scientific
research and growth at Oregon employers commercializing that
research.
I think we are an interesting case. We are a small state,
but arguably, we have the world's most powerful collection of
industrial nanotech R&D assets, Intel and HP's top research
site, FEI Company, among others. But we have no wealthy private
university, and we are not a traditional venture capital hot
spot. Still, we know for certain that our research is
competitive, and therefore should be able to grow our
entrepreneurial sector.
So therefore, one of ONAMI's core activities is a
commercialization fund that provides grants to bridge the very
real gap between what research agencies pay for and what
pencils out for investors. We have so far enabled three very
promising microtechnology companies, and four nanotechnology
spin-out companies. Time permitting, at the end of my remarks--
and I probably won't--I will say a little bit about our nano
group. For now, I will simply note that the support we provide
is absolutely critical for these technologies to ever reach
customers and create jobs.
Before addressing directly the questions asked by the
Committee, I will state my overarching point. Intentional
federal investment in, and accountability measures for,
entrepreneurial startup-company-driven commercialization of NNI
research are just as necessary and important as the research
itself, and therefore should be a prominent consideration in
the reauthorization. It is interesting that today, in contrast
to 30 years ago, most high-risk and disruptive innovation takes
place in small companies, many of them venture-backed startups.
Venture money originating in pension funds and endowments turns
out to be more patient and risk-tolerant than corporate cash,
and large companies increasingly innovate by acquisition and
open-technology sourcing from small companies. This is why
there needs to be intense focus on making U.S. nanotechnology
entrepreneurs successful, understanding and addressing the
myriad hurdles that they face.
So then, what are those hurdles? They are the greater
expense and time required for proof of concept demonstration,
comparatively high capital requirements, the need for
convenient access to specialized facilities and expertise, and
often very complicated technology licensing situations. And
this is not to mention the growing burden of regulatory
compliance and related uncertainty. Investors see these things
as risks, and they act accordingly. For all of these reasons,
the appetite of venture capital for nanotechnology has turned
out to be less than many hoped and expected. This may not
necessarily be the case overseas as hungry global competitors,
such as China, place a higher value on economic development.
To address these hurdles, the Bayh-Doyle Act has enabled
universities to own and out-license federal research results
and in that process provide an incentive to faculty inventors.
The NNIN has established 13 user facilities at universities,
though with no recent additions, and the national labs have
various access mechanisms. SBIR and STTR are vital programs and
a lifeline for many small businesses, including our own
nanotechnology spin-out, Crystal Clear Technologies. The new
TIP program looks very promising for companies past the seed
stage.
All of these things are very good and should, if anything,
be expanded, but they don't take as much advantage as they
could of America's many local business and investor
communities, so company and job creation still favor the
already successful technology communities around the major
centers. I would like to suggest to you two concepts based on
our experience with shared-user facilities and our gap fund
that I believe could increase the commercialization return on
the NNIN investment.
The first is to broaden the NNIN concept into what we call
the ``high-tech extension'' service, the modern analog of the
invaluable land-grant concept of 150 years ago. We started too
late to be part of the NNIN, but boot-strapped private and
federal equipment grants with university and State funds to
create a network of shared user facilities, which consolidate
major equipment and instrument assets in well-utilized and
maintained facilities, open to all academic users from any
campus on equal terms. They are also open for industry
collaborations, and we can provide leased experimental and
office space to both large and small company partners. All
seven of our current gap-fund companies make critical use of
these facilities. Since Oregon is a rural state, and the
distance between our sites is up to 110 miles, we have also
implemented high-quality webcam and virtual network connections
on major tools to enable a very satisfying remote user
experience. This also works well cross-country, so we have
clients as far away as Florida.
But the key points here are that there are measurable
objectives and business models tied to facility utilization by
industry, that we share and coordinate acquisitions, statewide
to maximize unique capability, and that this approach does not
need to be limited to the few NNIN sites, which are too far
away for our companies to use on a regular basis. Our concept
could conceivably go viral, so to speak, if other State and
federal funding policies encouraged it.
We are very proud to have opened our newest facility at the
University of Oregon on February 19. It is a 30,000 square-foot
underground lab, with about the best vibration performance
anywhere in the world, and therefore, the best location
possible for the latest in nanotech tools. We are installing,
for example, the first of two FEI Titan transmission electron
microscopes. We would love for our nanoscience user facilities
to be part of the National Network and database of nanoscience
assets, with or without NNI funding.
The second concept is dedicated funding for
commercialization tied to research centers. As far as we know,
we are the only state-funded research centered to have its own
dedicated gap fund. This has been running for about 15 months,
and if we are sure of anything at this point, it is that the
response to this incentive from academics and entrepreneurs has
exceeded our expectations and changed the culture and
conversation around commercialization. This fund is actively
advised by the leading venture-capital partners investing in
Oregon, including both small and large funds. The advisors get
a heads-up look at potential deal flow and our inventors and
entrepreneurs get early time with the best possible investor
audience. We ask the advisors one question: if we fund this
project, and it meets its technical objectives, can the partner
company raise capital within 12 to 18 months and go on to build
a successful business in Oregon? We get more insightful answers
to this question than we could come up with ourselves and have
always followed the advice.
The gap fund has one success metric that the state measures
us on: private capital dollars invested in our gap-fund
companies. This is a very unforgiving metric and one that is
impossible to fudge. Our four nanocompanies are very early
stage and have a----
Chairman Baird. Mr. Rung, I am going to ask you to
summarize here at this point.
Mr. Rung. Okay, so the gap fund, we think, is a great
process to institutionalize with the National Nanotechnology
Initiative. And thank you very much.
[The prepared statement of Mr. Rung follows:]
Prepared Statement of Robert D. ``Skip'' Rung
Chairman Baird and Members of the Committee, I am honored by the
opportunity to speak with you today on a subject of great passion for
me and also, I believe, of great importance for the continued economic
and social health of our nation.
Success at science-based innovation--the current cutting edge of
which just happens to be called nanotechnology--is critical for U.S.
economic competitiveness, for the supply of jobs with sufficiently high
productivity to offer wage levels Americans have come to expect, and
for the prosperity that pays for all the social goods, such as health
and education, we would like to keep intact for future generations.
Reauthorization of the Nanotechnology Research and Development Act
presents the opportunity both to re-up on a vital investment, and at
the same time be more intentional about reaping social and economic
returns.
Oregon Nanoscience and Microtechnologies Institute, Oregon's first
Signature Research Center, has so far received $37M from the Oregon
Innovation Council because they know that success in the global
competition for jobs and prosperity completely depends on a traded
sector that wins through innovation--fueled by research and
entrepreneurship. And that is the dual mission of ONAMI--growth in
scientific research by means of deep inter-institutional and industry
collaborations, and job growth at Oregon employers commercializing that
research. I think we're an interesting case. We are a small state, but
have arguably the world's most powerful collection of industrial
``small tech'' R&D assets--Intel and HP's top research sites, FEI,
Invitrogen--Molecular Probes. But we have no wealthy private university
and are not a traditional venture capital hot spot. Still, we know for
certain that our research quality and creative ideas are competitive
with anyone's, and therefore we should be able to grow our
entrepreneurial sector.
Thus, one of ONAMI's core activities--coupled with our own set of
user facilities--is a commercialization fund that makes grants to
bridge the very real gap between what research agencies pay for and
what ``pencils out'' for investors. We have so far enabled three very
promising microtechnology spin-out companies and four nanotechnology
spin-out companies. Time permitting at the end of my remarks, I'll say
a little bit about our nano group. For now, I will just note that this
support is absolutely critical for these technologies to ever reach
customers and create jobs. Whether it is going to be enough to get us
to success remains to be seen.
Before addressing in detail the questions asked by the Committee, I
will state my overarching point: Intentional federal investment in, and
accountability measures for entrepreneurial startup company-driven
commercialization of NNI research are just as necessary and important
as the research itself, and therefore should be a prominent
consideration in the re-authorization.
It is interesting that today, in contrast to 30 years ago, most
high-risk and disruptive innovation--not just technology research, but
getting to market--takes place in small companies, many of them
venture-backed startups. Venture money originating in pension funds,
university endowments and the bank accounts of high net worth
individuals turns out to be more patient and risk-tolerant than
corporate cash, and large companies increasingly innovate by
acquisition and open technology sourcing--from small companies. This is
why there needs to be intense focus on making U.S. nanotechnology
entrepreneurs successful; understanding and addressing the myriad
hurdles and challenges they face. A $2M regulatory compliance cost that
is easily absorbed by a Fortune 500 company is a deal killer for the
entrepreneur who's inventing our future.
Specific to nanotechnology, then, what are the hurdles? They
include the greater expense and time required for proof-of-concept
demonstration, comparatively high capital requirements, the need for
convenient access to specialized facilities and expertise, and often
very complicated technology licensing situations. And this is not to
mention the growing burden of regulatory compliance and related
uncertainty. Investors see these things as risks and act accordingly.
For all these reasons, the appetite of venture capital for
nanotechnology has turned out to be less than many hoped and expected.
This may not necessarily be the case overseas as hungry global
competitors such as China place a higher relative value on economic
development.
To address these hurdles, the Bayh-Dole Act has enabled
universities to own and out-license federally funded research results,
and in the process provide an incentive to faculty inventors. The NNI
has established 13 user facilities at universities--with no recent
additions, and the national labs have various access mechanisms, though
they are mostly geared for publishable research and expensive for
business to use. SBIR and STTR are vital programs and a lifeline for
many innovative small businesses, including for our own lead
nanotechnology spin-out, Crystal Clear Technologies. The new TIP
program is very promising for companies past the seed stage.
All of these things are very good and should continue--if anything,
they should be expanded. But they don't take as much advantage as they
could of America's many local business and investor communities, so
company and job creation still favor the already-successful technology
communities around the major centers. I'd like to suggest two concepts,
based on our experience with shared-user facilities and our gap fund,
that I believe could increase the commercialization return on the NNI
investment around the Nation.
The first is to broaden the NNIN concept into what we call the
``high tech extension service''--the logical modern analog of the
invaluable land grant concept of 150 years ago. Starting too late to be
part of the NNIN, Oregon boot-strapped federal and private equipment
grants with university and State funds to create a network of shared
user facilities--the Northwest NanoNet--which consolidate major
instrument and equipment assets in well-utilized and maintained
facilities open to all academic users from any campus on equal cost and
access terms. They are also open for industry collaborations, and can
provide leased experimental and office space to both large and small
company partners. All seven of our current gap companies make critical
use of these facilities. Since Oregon is a rural state, and the
distance between our sites is up to 110 miles, we have also implemented
high-quality web cam and virtual network connections on major tools to
enable a very satisfying remote user experience. This also works well
cross-country, so we have clients as far away as Florida. But the key
points here are that there are measurable objectives and business
models tied to facility utilization by industry, that we share and
coordinate acquisitions statewide to maximize unique capability, and
that this approach does not need to be limited to the few NNIN sites,
which are too far away for our companies to use on a regular basis. Our
concept could conceivably ``go viral'' if other State and federal
funding policies encouraged it.
We are very proud, by the way, to have opened our newest facility
at the University of Oregon, on February 13. It is a 30,000 square foot
underground facility with just about the best vibration performance in
the world, and therefore ideal for the latest SEM, microprobe, XRD,
SIMS, FIB and TEM tools. And yes, we are bringing up the first of two
FEI Titans! We'd love for our nanoscience user facilities to be part of
the national network and database of nanoscience assets, with or
without NNIN funding.
The second concept is dedicated funding for commercialization tied
to research centers. As far as we know, we are the only State-funded
research center with specific technology themes to have its own
dedicated gap fund. This has been running for about 15 months, and if
we are sure of anything at this point, it is that the response to this
incentive from academics and entrepreneurs has exceeded our
expectations and changed the culture and conversation around
commercialization. The fund is actively advised by the leading venture
capital partners actively investing in Oregon--including both large and
small funds. The advisors get a well-screened (by ONAMI staff) heads-up
look at potential deal flow, and our inventors and entrepreneurs get
early time with the best possible investor audience. We ask the
advisors one question: ``If we fund this project and it meets its
technical objectives, can the partner company raise capital within 12-
18 months and go on to build a successful business in Oregon?'' We get
more insightful answers to this question than we could have come up
with ourselves, and have always followed the advice. The gap fund has
one success metric that the state measures us on: private capital $$
invested in our gap fund companies. This is a very unforgiving metric,
and one that is impossible to fudge. Our four nano companies are very
early stage and have excellent prospects, and we should have first
results on our metric this year. I can assure you that it keeps me and
our gap fund manager, Jay Lindquist, intensely focused.
So the suggested concept here is to have some portion of NNI
funds--perhaps in association with large multi-year awards--tied to
commercialization, perhaps in the form of a gap fund, with a short-term
outcome measure of leveraged private capital investment.
As I mentioned at the beginning, we've so far funded seven gap
projects, of which four are nanotechnologies. These are:
1. A bi-functional-ligand nanocoating technology for low-cost
drinking water purification in collaboration with Crystal Clear
Technologies. CCT is an NSF Phase II SBIR awardee and also
$100K California Clean Tech Open winner. They are sampling
major corporate partners with breakthrough material that we
hope will result in large orders and a very fundable company.
2. Dune Sciences is another outgrowth of our well-recognized
green nanotechnology program. They are already supplying--to
NIST and other customers--unique TEM analysis grids that are
ideal for nanoparticle analysis, which helps to fund strategic
development of their unique nanoparticle linking technology.
Confidential partnerships addressing large markets are being
set up.
3. NanoBits is yet another green nano company, this time from
the point of view of highly efficient production of precision
nanomaterials in low-cost, flexible microreactors. This is very
early-to-market technology, so it is fortunate that there are
also some opportunities to improve the efficiency and safety of
specialty chemical manufacture for the pharmaceutical industry,
among others.
4. Lastly, newly formed startup Inpria is our
commercialization partner for breakthrough inorganic solution-
processed nanomaterials for printed and transparent
electronics. We think this could be big, and that is all the
detail we can share at this time.
In summary, I believe that intentional focus--with targeted funds
and incentives--on commercialization of National Nanotechnology
Initiative research, can and should be a prominent feature of the
second five years of the Nanotechnology Research and Development Act. A
broader national network of shared user facilities and federally-
assisted gap funds that leverage the business and investor communities
across the Nation--all managed according to the principle ``what gets
measured gets done''--are my key recommendations for maximizing NNI's
social and economic returns.
Thank you again for the opportunity to speak with you today. I am
submitting some additional written material that amplifies some of
these points, and will also try to be as helpful as I can in answering
any questions you may have.
Attachment
21st Century Nanotechnology Research and
Development Act 2.0
Protecting and Delivering on the Promise of
the U.S. Investment in Nanotechnology
Oregon Nanoscience and Microtechnologies Institute, which has
developed an increasingly successful model for growing collaborative
research, industrial partnerships and technology commercialization in
both existing companies and new startups, is pleased to offer the
following perspectives and recommendations as Congress considers
reauthorization of P.L. 108-153.
First, it should be noted that while the concepts of nanoscience
and nanotechnology are no longer new (or as mysterious as they were at
first) to a substantial and growing fraction of the U.S. population,
the following things remain true:
1. Nanoscale science and engineering represent the cutting
edge of a majority of endeavors in the applied chemical,
physical and biomolecular sciences.
2. No ``next new thing'' has emerged to replace ``nano'' on
this cutting edge.
3. Innovation based on advances in materials science is,
increasingly, the only means by which high-wage (relative to
emerging industrialized nations) jobs in the U.S. manufacturing
sector can be retained--or, perhaps more accurately, kept fresh
by earliest adoption of the most advanced technologies for
product performance and operational productivity.
4. Americans are generally positive and optimistic about
nanotechnology (in spite of various attempts to persuade them
otherwise). But they may not remain so if it appears that a
great deal of money is being spent with little result, or if
any major (real or perceived) adverse EHS incident should
occur.
Thus, there is simply no imaginable alternative to pressing on with
the U.S. investment in nanotechnology, unless we are prepared to
sacrifice our high relative standard of living and the social goods
(education, health care, security) that it renders affordable.
Together, this lack of newness and the ever more pressing global
competitiveness issue call for a ``refresh'' of the NNI and NNCO
mandates, with the following key objectives and considerations
uppermost in mind;
1. Commercialization: Harvesting the fruits of past years of
basic research by understanding and addressing the cultural,
financial and legal hurdles to commercialization of technology
developed under federal funding. While the commitment to basic
research, particularly in universities, must continue, it is
important to increase the translational (social and economic)
benefits of this investment.
2. Green Nanotechnology and NanoHealth: Addressing the ``EHS''
issue in a proactive and comprehensive manner that results in
increasingly powerful methods for achieving desired
nanomaterial and nanostructure performance--while optimizing
manufacturing efficiency and minimizing potential health
hazards, occupational risks, and long-term environmental
impact.
3. Collaboration and Resource Leverage: Recognizing that
achieving either of the two above objectives in today's fast-
paced and competitive world requires agile and adaptive
collaborations among similar and different institutions, and
that the era of ``stove-piped'' approaches to major initiatives
is over.
These three themes and illustrative examples, including ONAMI's own
experience and accomplishments, are briefly discussed below.
Amplification is available upon request.
Commercialization: Harvesting the fruits of research by overcoming
hurdles
It is a good generalization to say that breakthrough technology
development usually occurs in two ways: (1) Evolutionary: an
established company or industry consortium with significant internal
resources invents ``on demand'' to satisfy customer demand for improved
products (e.g., semiconductors in 2007), and (2) Revolutionary/
disruptive: a new idea/new market niche that finds no fit with large
company strategies is pioneered by an entrepreneurial startup/spin-out
company. Most such efforts fall short of revolutionary expectations,
but the few that succeed in a large way (e.g., semiconductors in 1957)
make all the difference in the long run.
Both of these modes are relevant to nanotechnology, but a number of
hurdles also exist, some of which are new and some of which are
perennial:
1. Break-through materials/process technology can take 5-20
years before deployment in mass production or mission-critical
situations.
2. Specialized and expensive human expertise and
characterization equipment is required, with the latter in
particular being out of reach for all but the largest companies
to own.
3. Federal and non-commercial private research funding is
oriented toward first-time discovery and publication, not
product development and ``go-to-market,'' which take much
longer and cost much more.
4. Academic, national laboratory, and other non-commercial
research institution cultures and reward systems respond to
funders' purposes (see above) and further emphasize individual
(or at most, small group) careers and accomplishments rather
than organizational achievements.
5. Commercial and research institution approaches to publicity
and intellectual property are different in many ways--as would
be expected due to differences in their fundamental purposes
(return to shareholders vs. dissemination of knowledge and
training).
6. Venture funds must show a superior return to their limited
partners (which include the retirement plans of many, if not
most, Americans), and this is very difficult to do without a
clear proof-of-concept for a product (not research result) that
is not more than five years from (a) profitable commercial
sales in the $10M/year or more, or (b) a high-multiple
acquisition by a large company.
The above conditions together mean that the ``gap'' or ``valley of
death'' is particularly wide for nanotechnology (and at a time when tax
and regulatory policies are increasingly unfavorable toward
entrepreneurship in the U.S.).
ONAMI experience and accomplishments: Strongly urged by our Board
of Directors, we have put significant funds and management resources to
work for our commercialization program. We have deployed $3.5M
(including interest) in an expert-managed and VC-advised (partners in
5-6 funds plus one Battelle consultant) gap fund--with the explicit
goal of enabling companies to raise private capital funds. We have so
far funded seven university-startup projects (three ``micro'' and four
``nano'' all of which use the ONAMI shared-user facilities). We expect
that our lead nanotechnology company will be a very attractive
candidate for a multi-$M A-round investment and will have substantial
POs from major customers following acceptance of initial units. Many
other proposals are pending. In addition, it has been essential that
ONAMI partner institutions work closely together on IP matters. In
fact, the Oregon research universities have just announced a common
Innovation Portal featuring technologies from four campuses.
Green Nanotechnology and NanoHealth: Proactively addressing the EHS
issues and enabling application at the same time
This ``problem'' is actually an outstanding opportunity, and the
ONAMI Green Nanotechnology approach, embodied in our Safer
Nanomaterials and Nanomanufacturing Initiative with AFRL is a
recommended model. The essential tenets are:
1. ``Application'' and ``implication'' work must be
coordinated--just as they are in the industry-funded world of
commerce. Application without attention to implications harbors
unacceptable risk, and implications without applications will
be a waste of effort--only what actually goes on to marketplace
demand and high volume manufacturing is going to matter.
2. The long-term goal is rational, ``right the first time''
design of nanomaterials that are high in performance, low in
hazard, and efficient to manufacture (e.g., ``E-factor'':
minimized material and energy consumption in manufacturing).
This is a complex and multifaceted undertaking and so requires
judicious and insightful planning to coordinate:
a. Understanding the biological interactions of well-
characterized engineered nanomaterials (ENM) through
careful application of experimental standards and
knowledge bases.
b. Development of heuristics, then predictive models
and design rules for ENM properties and performance.
c. Simultaneous optimization of accurate
characterization tools and efficient fabrication
processes.
3. The benefits of this approach go well beyond risk
identification and reduction. A common fundamental
understanding of nanomaterial-biological interactions will
enable unprecedented productivity in product development,
especially for medical and environmental applications.
A very promising development in which ONAMI is integrally involved
is the NIEHS- and NIBIB-led NanoHealth Enterprise Initiative:
http://www.niehs.nih.gov/research/supported/programs/nanohealth/
index.cfm
. . .which seeks to join the Foundation for NIH, industry, academia and
numerous federal agencies in a public-private partnership aimed at
effectively organizing and administering the accomplishment of this
task. One important consideration is that, unlike the pharmaceutical
industry, which funds much of the similar Biomarkers enterprise, the
nanomaterials industry is newer, smaller, and more diverse/fragmented--
so probably not able or willing to fund this effort to the same degree.
ONAMI experience and accomplishments: We were among the first to
see the vital connection between the principles of green chemistry and
nanoscience, and to emphasize deep collaboration between EHS-oriented
research and nanotechnology product development (``implication'' and
``application''). After inventorying assets among our collaborating
institutions and building a relationship with the Air Force Research
Laboratory, we believe we have the strongest Green Nanotechnology
program in the world. We are participating in the ANSI TAG to ISO-229
WG3 (EHS), and were asked to be one of the few regional centers
involved in organizing the NanoHealth Initiative. Finally, we hold an
annual ONAMI Greener Nano conference in March, which brings to together
national experts from research and industry on all the major topics
related to nano-EHS.
Collaboration and Resource Leverage: Required for such a broad and
cross-cutting effort to be both successful and efficient
It may be true that nanotechnology represents the largest single
federal research effort since the Apollo moon program, but
unfortunately it is not (and almost certainly cannot be) as tightly
focused as ``landing a man on the Moon and returning him safely to
Earth.'' It will soon influence/penetrate over 10 percent of GDP and
has relevance to the mission of at least 25 federal agencies, of which
13 have R&D budgets for nanotechnology (www.nano.gov). The NNI, led by
the NNCO, has indeed broken new collaborative ground with interagency
collaboration, even though it has no budget or real decision-making
authority. This progress needs to accelerate.
There are also established trends in industry and the academic/
research community (though not yet as pronounced or driven by need
there) to form partnerships where tasks and sub-tasks in a larger
effort are assigned to a global network of suppliers/contractors
selected competitively based on capability, cost and other terms and
conditions. The purpose is to provide the best product or service to a
global customer base at the lowest cost in the shortest period of time.
Of great importance to small/medium business and entrepreneurial
startups is access to talent (not necessarily on a permanent/full-time
basis) and to sophisticated research equipment and facilities--
particularly for measurement and characterization. The term ``high tech
extension'' is used at ONAMI for this concept and suggests that there
really needs to be greater geographic distribution and more local
outreach than is currently possible for the 13 sites of the NNIN if the
benefits of nanotechnology entrepreneurship are to occur in all but a
few locations in the U.S. Universities and national laboratories are an
ideal home for this mission, but only if they locate, organize and
operate their major laboratory assets as ``shared user facilities''
that are truly open and available to all researchers and for industry
collaborations (at appropriate market rates). It is also true that this
shared/open business model makes better and more efficient use of
federally funded equipment.
Successful and highly-valued ONAMI collaborative efforts and
experiences to date have included:
1. A network (NWNanoNetTM) of complementary facilities open to
all researchers on an equal cost/access basis, and available
for industry collaborations and small company assistance. These
facilities include:
a. Microproducts Breakthrough Institute (emphasizing
micro-energy and chemical systems, including
nanomaterial fabrication)
b. Center for Advanced Materials Characterization (2/
19/08 public grand opening of one of the world's best
and quietest facilities for SEM/eSEM, STEM, HR-TEM,
FIB, SIMS, XRD and more)
c. Center for Electron Microscopy and Fabrication
(SEM, TEM, FIB, NT/NW fabrication and characterization
d. Additional facilities emphasizing microscopy/
analysis for bioscience and nanoscale fabrication) are
planned.
2. Technology (e.g., web cams, virtual network connections) to
enable effective interactions with remote research or industry
clients.
3. Dramatic growth in collaborative projects (and overall
tripling of ONAMI-affiliated research volume between FY04 and
FY07), and even sharing of graduate students between campuses.
4. Formal and informal education (both children and adults)
collaborations with community colleges and NISEnet member
Oregon Museum of Science & Industry (OMSI). In particular,
joint public forums on the benefits and risks of nanotechnology
have been highly effective, showing that ``average citizens''
are accepting/enthusiastic about nanotechnology when they
understand that the experts are conscientiously weighing these
factors.
Closing Comments and Additional Considerations:
Nanotechnology represents the convergence of chemistry, condensed
matter physics, and biology at the nanometer scale, so it is essential
that the structure and management of the federal NNI investment reflect
the multi-disciplinary interaction and collaboration implied in this
convergence. This should be true of all agencies in the NNI, not just
the five named in P.L. 108-153 (NSF, DOE, NASA, NIST, EPA). Multi-
disciplinary initiatives involving multi-disciplinary proposal review
are recommended to the extent possible.
At least one other critical cross-cutting topic (in addition to
EHS) deserves to be called out for special attention: nanoscale
metrology--for both physical and chemical measurements. This is of
sufficient criticality that a significant extramural funding program
(i.e., to capture the creativity at universities) is warranted.
P.L. 108-153 called for certain specific centers to be established
(i.e., American Nanotechnology Preparedness Center, Center for
Nanomaterials Manufacturing). If the reauthorization is organized
around the concept of center solicitations, topics deserving of special
mention include:
Chemical Imaging and Measurement at the Nanoscale
Nanotechnology and Nanobiotechnology (with emphasis on
commercialization and industry collaborations)
Green Nanomanufacturing
All three of the above topics would be excellent fits for
leadership from the Pacific Northwest, especially institutions in
Oregon and Washington.
ONAMI President & Executive Director Skip Rung and members of the
ONAMI leadership team will be happy to answer questions or participate
in discussions related to these recommendations.
Biography for Robert D. ``Skip'' Rung
Mr. Rung is a senior high technology R&D executive with over 25
years of R&D management experience in CMOS process technology,
application-specific integrated circuit (ASIC) design and electronic
design automation (EDA), IC packaging, MEMS, microfluidics, and inkjet
printing.
Mr. Rung was asked in December 2003 to serve as the initial
Executive Director of the Oregon Nanoscience and Microtechnologies
Institute (ONAMI), Oregon's first ``Signature Research Center'' and an
unprecedented collaboration among Oregon's research universities and
the Pacific Northwest National Laboratory. ONAMI's dual mission is to
grow ``small tech'' research in Oregon and commercialize technology in
order to extend the success of Oregon's world-leading ``Silicon
Forest'' technology cluster, which includes the most advanced R&D and
manufacturing operations for leading companies such as Intel
Corporation, Hewlett-Packard Company, FEI Company, Invitrogen, Electro
Scientific Industries, Planar Systems, Xerox Office Products,
Tektronix, ON Semiconductor and many dynamic smaller firms. ONAMI has
so far received $37M in State investment and approximately doubled
Oregon's annual federal and private research awards in the fields of
nanoscience, green nanotechnology, nanoscale metrology, and
microtechnology-based energy and chemical systems (MECS).
Following his retirement from Hewlett-Packard in 2001, Mr. Rung
consulted in the areas of innovation management, technology business
development, and intellectual property. He is a co-author of the 2004
Oregon Research Competencies study commissioned by the Oregon Economic
and Community Development Department and the author of the initial
business plan for the Oregon Nanoscience and Microtechnologies
Institute, successfully recommended for funding as Oregon's first
Signature Research Center by the Oregon Council on Knowledge and
Economic Development. OCKED's determination was aided and influenced by
Mr. Rung's 2002 consulting study of Oregon's most commercially
promising and industrially relevant research.
Mr. Rung was a member of the Oregon Engineering and Technology
Industry Council from 1999-2003 and a co-founder of the New Economy
Coalition. He is currently a technical advisor to Northwest Technology
Ventures, an Oregon seed-stage venture capital firm, a director of the
Oregon Entrepreneur's Forum, Vice-Chair of the Corvallis-Benton County
Economic Development Partnership, and active in several other community
development efforts.
From 1987 to 2001, Mr. Rung was the Director of Research and
Development at Hewlett-Packard's Corvallis, Ore. facility, responsible
for the development of future generations of HP's world-leading thermal
inkjet technology, and for developing future business opportunities
enabled by HP's microelectronics, MEMS, and microfluidics competencies.
During Mr. Rung's 14 years as R&D director, inkjet printing became HP's
largest and most profitable business, maintaining worldwide technical
leadership through several major new generations of technology and
holding market share nearly twice that of the next largest competitor.
Prior to his work on inkjet, Mr. Rung was the R&D Manager for HP's
Northwest Integrated Circuits Division in Corvallis, which achieved
worldwide ASIC technology leadership in 1986 with a one-micron process
comparable to those used for DRAM. Mr. Rung's organization also
developed novel and performance-leading in-house IC design automation
systems and custom IC packaging technologies (hybrids, flat packs, TAB)
to enable calculators and other HP products.
Mr. Rung began his industrial career in 1977 at Hewlett-Packard
Laboratories in Palo Alto, CA, performing advanced research in the
areas of CMOS process device isolation, latch-up, and comparison with
alternative silicon and compound semiconductor technologies. In 1981-
1982, Mr. Rung was selected by HP to be a technology exchange engineer
with Toshiba Corp. in Kawasaki, Japan, where he continued his research
inside the world's leading semiconductor memory engineering group. He
is the holder of two U.S. Patents, author or co-author of over 14
refereed journal or conference papers on IC technology, four invited
papers (two at leading international meetings), and four invited
presentations on inkjet printing technology.
Mr. Rung received his BSEE and MSEE co-terminally in 1976 from
Stanford University, where he was elected to both Phi Beta Kappa and
Tau Beta Pi in his junior year. His Master's thesis concerned the
experimental determination of semiconductor doping profiles, and was
part of the Stanford research on process simulation that was seminal
for the rapid growth of computer simulation for solid state electronic
processes and devices.
Chairman Baird. Thank you very much. We will likely follow
up with some questions about that. Excellent testimony.
Dr. Chen.
STATEMENT OF DR. JULIE CHEN, PROFESSOR OF MECHANICAL
ENGINEERING; CO-DIRECTOR, NANOMANUFACTURING CENTER OF
EXCELLENCE, UNIVERSITY OF MASSACHUSETTS LOWELL
Dr. Chen. Thank you Chairman Baird and the other Committee
Members for inviting me here today. I am Julie Chen. I am a
Professor of Mechanical Engineering at the University of
Massachusetts Lowell, and I am also co-director of a state-
funded Nanomanufacture Center of Excellence. I would be remiss
not to pass along the best wishes and greeting of our
university's new chancellor, and your former colleague, Marty
Meehan.
UMASS is also part of a very unique equal partnership with
Northeastern University and the University of New Hampshire in
a National Science Foundation-funded Center for High-rate
Nanomanufacturing. This is one of only four such centers in the
United States focuses on developing tools and processes for
high-volume, high-rate production. The center has partnership
with over two dozen companies, and these companies represent
the full spectrum of industry sectors and company size,
everything from start-up to Fortune 100.
Mr. Chairman, we have seen that from drug therapies and
efficient energy sources, to protection for our war fighters,
innovative nanotechnology is going to be important for this
nation. We are not the only country to recognize the
possibility of nano. Several nations in Europe and Asia have
made nano a national priority and have invested heavily in its
expansion. As with much of the U.S., the City of Lowell has
seen it share of industry strength and loss, from the textile
industry to minicomputers to biotechnology. As a nation, we
cannot afford to have a laissez faire approach to technology
transfer of the research coming out of nanotechnology.
Today, I would like to concentrate my specific comments on
four points. The first one is company attitudes. I am aware of
two major surveys that have been done of business leaders and
their attitude toward the nanomanufacturing industry, the most
recent, one conducted in 2006, by a team lead by Barry Hock,
with collaboration between the UMASS Lowell Center for Economic
and Civic Opinion and Small Times Magazine, the prior survey
conducted by NSF was conducted in 2005. The results are
consistent. Of the respondents, almost 90 percent felt that the
Federal Government should participate or take the lead in
fostering R&D and providing commercializing incentives. On both
surveys, items like the high cost of processing, perception of
lengthy times to market, and process scalability were cited as
key areas. It is clear that industry believes that Federal
Government funding is really a key to closing the gap between
the early successes that we have had in the lab and delivery of
products. An additional note is that 89 percent of these
business leaders also stated the importance of EHS risks the
Committee has addressed. At Lowell, we have EHS researchers
working side by side with nanomanufacturing researchers,
measuring potential levels of exposure and making suggestions
in terms of the chemicals and materials that could be used to
ensure that the products that we develop in the future, and the
processes, are greener in their development. It is this type of
multi-disciplinary partnership that we need to foster and to
encourage to help move this technology forward.
The second point is in terms of basic research. Over the
past decade, we have made significant advances in fabrication
of the building blocks, the nanotubes, the nanoparticles, and
we are getting a better understanding through experimentation
and modeling of how forces interact with these building blocks.
We have only scratched the surface, though. We haven't yet
gotten to the point to where we can sit down and design the
process and the product for a nanotechnology-related product.
Here, what I would like to do is emphasize that we need to
think of nanotechnology not as a single-industry sector or a
single way of making products. Differences that we see, in
fact, today, in manufacturing between making steel, making a
medical device, making an electronic device, carries over
through nanotechnology, and we can see from the foreign NSF
centers that that is true. Many different mechanisms are being
used, and we need to recognize that there is a broad array of
techniques.
So I am going to talk about three examples in terms of
basic research that cut across these different processes,
rather than a specific one. The first example is in-line
metrology. To paraphrase one of my colleagues, Professor Carrol
Barry at UMASS Lowell, you can make 100 products an hour, but
it is going to take you a week to find out if any of them are
any good. You need end-line rapid measurement in order to move
process development forward. Example B, processing equipment,
it takes more than just making the filament to make the light
bulb. You need to make the filament, the bulb, the battery, the
switch, and put that all together. We need more efforts in
terms of the processing equipment to integrate these things.
And the third area is models. We see from nature that things
are not perfect. In a spider web, you have radial lines, nice
circular lines, but they are not all perfect, and yet the web
is still able to catch the fly. We need to understand from
modeling how perfect do we have to be in order to truly make
commercial products.
My third point is in terms of university industry
interaction. We believe that a percentage of funds needs to go
towards technology demonstration projects in the form, perhaps
of an STTR program, but allowing both small and large companies
to participate because nanotechnology is really going to be
important to both. The other thing that we would say is that
the bulk of federal support should not be targeted. We cannot
prevent the discovery not yet envisioned from being funded, but
the small percentage of funding for these technology-
demonstration projects will help to focus and drive the
research forward and will help to dispel any concerns from
venture capitals about the commercial viability of
nanotechnology.
My last point is in terms of user facilities. Over 90
percent of the business leaders stated that user facilities
were critical to their advancement, although smaller companies
are more likely to use user-facilities because of lack of
resources. But again, user facilities should not just be
limited to the traditional characterization and lithography
based. We found many different ways of making things, and we
want to make many different types of facilities available
across the country, so the idea of not just selecting a few but
allowing any facility that shows that there is industry
interest to have some funding to provide for that
administrative support is important for moving this forward.
In conclusion, Mr. Chairman, and Members of the Committee,
I would like to thank you again for the opportunity to testify.
I believe that there is an important role that NNI and the
Federal Government can play in fostering this technology
transfer. The bulk of funding for R&D must remain at the basic
research level to conceive the emerging technologies of the
future, but a few of these targeted funds, in terms of
university-industry partnerships for technology demonstration
for developing tools and processes are going to be important to
move forward this technology. Thank you.
[The prepared statement of Dr. Chen follows:]
Prepared Statement of Julie Chen
ABSTRACT
Nanotechnology is facilitating the advancement of new applications
across many fields and industries. While many major commercial
applications of nanotechnology are still five to ten years out, private
sector investors seek much shorter-term investment returns. Business
leaders overwhelmingly identified challenges of high cost of
processing, process scalability, perception of lengthy times to market,
and Environmental, Health, and Safety (EHS) unknowns as barriers to
commercialization. While a portion of the NNI's funds have been
targeted towards efforts such as nanomanufacturing, R&D facilities and
EHS research, much more needs to be accomplished in these areas. The
United States remains the leader in nanotechnology R&D and maintaining
this position and continually advancing nanotechnology is a major goal
of the NNI. While the bulk of the federal funding for R&D must remain
at the basic research level to ensure future discoveries and emerging
technologies, some federal funding is needed to provide incentives for
the university-industry partnerships that are needed--(1) to accelerate
technology demonstration efforts; (2) to develop and expand the
accessibility of new tools for rapid, in-line measurements and new
processing equipment; and (3) to address concomitant issues such as
environmental, health, safety, and intellectual property. Increased
federal support for basic research and development and for technology
transfer incentives is essential to maximize nanotechnology's potential
and to maintain America's competitive advantage in the global
marketplace.
INTRODUCTION
Thank you, Mr. Chairman and the other Committee Members for
inviting me here today to discuss the state of nanomanufacturing
research and the National Nanotechnology Initiative's (NNI) efforts in
fostering the transfer of our research and development efforts toward
commercial products and greater economic competitiveness of the United
States. While informed by discussions with many colleagues, the
statements in this testimony are my personal opinions.
I am a Professor of Mechanical Engineering at the University of
Massachusetts Lowell and I am Co-Director of the Nanomanufacturing
Center of Excellence. I would be remiss not to pass along the best
wishes and greetings of our University's new Chancellor and your former
colleague, Marty Meehan.
In addition to being designated a State-funded Nanomanufacturing
Center of Excellence, UMass Lowell is part of a unique equal
partnership with Northeastern University and the University of New
Hampshire in the National Science Foundation (NSF) sponsored Center for
High Rate Nanomanufacturing (CHN).\1\ Funded as part of the NNI, this
Center is one of only four NSF Centers in the country that focuses on
nanomanufacturing. The Center has as its overarching goal, the creation
of tools and processes that will enable high-rate/high-volume,
template-directed assembly of nano-building blocks, such as carbon
nanotubes and polymer nanostructures. The CHN thrives by integrating
complementary expertise in semiconductor and MEMS (micro-electrical-
mechanical systems) fabrication, plastics processing, chemical
synthesis and functionalization, and environmental health and safety.
This theme of multi-disciplinary and multi-institutional partnerships
is one that I will revisit throughout my testimony.
---------------------------------------------------------------------------
\1\ CHN Director, Ahmed Busnaina (Northeastern), CHN Deputy
Director, Joey Mead (UMass Lowell), and CHN Associate Director, Glen
Miller (UNH) are the leads at their respective institutions.
(www.uml.edu/nano, www.nano.neu.edu, www.nanotech.unh.edu)
---------------------------------------------------------------------------
An important component of the NSF nanomanufacturing centers is
external partnership--for example, the CHN has partnerships with over
two dozen companies, other universities, government agencies including
the Army Research Lab and Lawrence Livermore National Laboratory, and
international collaborators. These companies represent the full
spectrum of industry sectors--e.g., defense, electronics, biomedical,
transportation--and sizes--e.g., from startup companies to Fortune 100
companies. One of the specific goals of all of the NSF
nanomanufacturing centers, as well as our Center of Excellence, is to
help industry overcome the technical barriers to commercial
applications of nanotechnology innovations.
Mr. Chairman, from the drug therapies to clean water to more
efficient energy sources to addressing the critical force protection
needs of the war fighter, the transfer of innovative nanotechnology
research to applications of commercial and public benefit is a primary
objective of the National Nanotechnology Initiative. More personally,
as a researcher and an engineer, my goal and that of many of my
colleagues, is one of discovery but with the desire to see that
knowledge creation lead to products that will benefit society.
Unfortunately, such pathways to commercialization must navigate the
commonly referenced ``valley of death'' between R&D and the
marketplace. Even successful technologies can take decades to reach the
marketplace. Yet, we see the lifetimes of technological advantage
continue to shrink with the decreases in time to market and increases
in global competition for manufacturing. For example, Lowell has seen
its share of industry strength and stagnation from the textile industry
to minicomputers to biotechnology. Biotechnology is one of the region's
economic drivers, but the fierce competition can be seen by the
aggressive presence of over 30 international delegations with pavilions
at the 2007 BIO International Convention held in Boston.
What does this global competition mean for the more nascent
nanotechnology field? Since its inception in 2001, federal funding for
nanotechnology research and development has more than doubled. While
this is an impressive start, we are not the only country to recognize
the remarkable societal and economic possibilities of nanotechnology
research. Several nations in Europe and Asia have made nanotechnology a
national priority and have invested heavily in its expansion. As a
nation, we cannot afford a laissez-faire approach to technology
transfer of R&D.
RESPONSES TO SPECIFIC QUESTIONS
Today, I would like to concentrate my specific comments on four
areas:
1. Companies' attitudes towards the need for federal support
of nanotechnology and the critical areas of investment
2. Areas of basic research that need greater support to move
industry towards high-rate nanomanufacturing
3. Interaction between universities and industry for setting
research direction
4. The role of user facilities in advancing technology
transfer
1. Companies feel strongly about the need for federal support of R&D
in high-rate/high-volume nanomanufacturing and commercialization
incentives for nanotechnology
I am aware of two major surveys that have been conducted on the
attitudes of companies towards the developing nanomanufacturing
industry. The most recent, conducted in 2006 by a team led by Barry
Hock, was a collaboration between the UMass Lowell Center for Economic
and Civic Opinion and Small Times Magazine\2\. Where relevant, I will
also comment on comparisons to a prior NSF-funded survey conducted in
2005 by Dr. Manish Mehta and the National Center for Manufacturing
Sciences (NCMS).\3\ The former analyzed responses from phone surveys of
roughly 400 business leaders in nanotechnology-identified companies,
while the latter compiled results from online survey responses of
roughly 600 industry executives.
---------------------------------------------------------------------------
\2\ B. Hock, et al., ``Survey of U.S. Nanotechnology Executives,''
full report available on http://www.masseconomy.org/html/
3-0ceo-ceosurvey.html#nanoexec (accessed March 3,
2008) and summary article available in Small Times Magazine, Jan/Feb
2007 (and online at http://www.smalltimes.com/
display-article/281851/109/ARTCL/none/none/1/Survey-says:-
Manufacturing,-government-keys-to-US-success/, accessed March 3, 2008).
\3\ M. Mehta, ``2005 NCMS Survey of Nanotechnology in the U.S.
Manufacturing Industry,'' full report available on http://www.ncms.org/
publications/PDF/05NCMSNanoFinalReport.pdf (accessed March 3, 2008).
---------------------------------------------------------------------------
Of the respondents in the 2006 survey, 45 percent felt that the
Federal Government should take the lead in fostering R&D and providing
commercialization incentives, while an additional 43 percent favored
participation, but in a limited fashion. These results mirrored those
of the 2005 survey, where over 90 percent favored ``Federal Government
involvement in the commercialization of nanomanufacturing.'' In the
2006 survey, when asked what single area of R&D needed the most
strengthening, ``high volume manufacture of nanotechnology materials
and products'' was selected by 39 percent of the respondents, with the
second highest area (basic, long-term research) coming in much lower at
15 percent. Again, this aligned well with the 2005 survey where ``high
cost of processing,'' ``perception of lengthy times to market,'' and
``process scalability'' represented three of the top five barriers to
commercialization. It is clear that industry believes that Federal
Government funding is critical to closing the gap between the early
successes in the lab and the delivery of products.
Surprisingly, environmental, health, and safety (EHS) was selected
as a critical R&D area by only a small percent of respondents, even
though the same executives overwhelmingly (89 percent) stated that it
was very important for the government to address EHS risks associated
with nanotechnology and that little was known about the risk (64
percent). One possible explanation for this apparent discrepancy is
that given the option of selecting only the single most important area,
industry executives felt that R&D-fueled advances in high volume
manufacturing would more directly impact their ability to make
products. Nevertheless, the strong response on EHS risks, coupled with
the testimony at the Research and Science Education Subcommittee's
October 31, 2007 hearing on environmental and safety impacts of
nanotechnology, clearly state the need for federal support for EHS
research. This EHS research should be conducted, not in isolation, but
rather in combination with R&D on new nanomanufacturing processes and
targeted nanotechnology applications. At Lowell, we have EHS
researchers in the lab, working side-by-side with the nanomanufacturing
researchers, measuring potential levels of exposure and suggesting
``greener'' chemical and materials choices, as new processes are being
created. It is through this type of multi-disciplinary partnership that
we can better ensure safer new products.
2. Areas of basic research that need greater support to move industry
towards high-rate nanomanufacturing include the need for research
advances in supporting fields, such as metrology, multi-scale
integration, modeling, and EHS.
Over the past decade, we have made significant advances in
fabrication of carbon nanotubes, nanoparticles, and other such nano-
building blocks, as well as in methods for depositing nanoscale layers
of material. Through experimentation and molecular-level modeling, we
have a better understanding of the interaction of forces, whether they
are optical, electrical, magnetic, fluidic, chemical, etc., with
nanoscale elements. We have, however, still only scratched the surface
towards ultimately being able to predict and design the process and the
end-product performance for a breadth of nanotechnology applications.
Thus, while today, an engineer could sit down at a computer and design
the mold, material, and process conditions to manufacture miniature
plastic medical device parts or the layout of a semiconductor chip for
your phone, we still have many challenges to address to achieve the
same at the nanoscale.
Here, I would first like to state that to think of
nanomanufacturing or nanotechnology as a single industry sector would
be a mistake. Unlike the biotechnology industry or the semiconductor
industry, companies incorporating nanotechnology into their products do
not all identify themselves as nanotechnology companies. Rather,
nanotechnology and nanomanufacturing are methods to create more
competitive products for automotive, aerospace, communications,
electronics, energy, medical, and many more applications. Thus, the
vast differences in the current processes for manufacturing steel or
catheters or the iPhone, are also represented in the many different
approaches towards nanomanufacturing research taken by the four NSF
Centers--e.g., the University of Illinois in nanofluidics,\4\ UMass
Lowell/Northeastern/UNH on template-assisted assembly, UMass Amherst
using self-assembled block co-polymers,\5\ and UC-Berkeley/UCLA in
plasmonic lithography.\6\ While technology roadmaps have been useful
for industries such as the semiconductor industry, one would need to
have multiple roadmaps, tying related product types to
nanomanufacturing approaches. Therefore, here I have limited my brief
remarks to challenges that cut across multiple processes and where I
believe a significant federal investment in basic research will yield
dividends over the next three to five years:
---------------------------------------------------------------------------
\4\ http://www.nano-cemms.uiuc.edu/ (accessed March 6, 2008).
\5\ http://www.umass.edu/chm/ (accessed March 6, 2008).
\6\ http://www.sinam.org/ (accessed March 6, 2008).
In-line Metrology--The NNI has sponsored several
workshops over the years to identify critical barriers and
grand challenges in nanomanufacturing.\7\ In every case, the
lack of measurement tools for in-line, large-area measurement
of product characteristics is cited as a barrier. To paraphrase
one of my Co-Directors at UMass Lowell, Professor Carol Barry,
``you can mold 100 parts in an hour, but it will take you a
week of microscopy to figure out if what you have is any
good.'' Clearly, off-line, labor-intensive electron (SEM, TEM)
and atomic force microscopy (AFM) is not the answer for process
development and product quality control in these early stages.
Just as the development of the scanning tunneling microscope
(STM) in the early 1980's enabled the growth of nanotechnology
by allowing us to ``see'' and manipulate atoms at the
nanoscale, there is a need for new tools that can extend our
measurement capabilities to the manufacturing environment.
---------------------------------------------------------------------------
\7\ J. Chen, H. Doumanidis, K. Lyons, J. Murday, M.C. Roco,
``Manufacturing at the Nanoscale,'' NNI Workshop Report, http://
www.nano.gov/
NNI-Manufacturing-at-the-Nan
oscale.pdf (accessed March 3, 2008).
Processing equipment for multi-scale and hierarchical
manipulation, assembly, and integration--Similarly, while we
can manipulate individual nanoparticles and molecules in the
laboratory using AFM and STM, doing so is not a practical
approach to manufacturing. Hence, much of the current
nanomanufacturing research focuses on self-assembly or directed
self-assembly using chemical, electrical, optical, fluidic and
other forces. While we can use these indirect forces to
manipulate many nano-building blocks into place, fabricating a
whole device or structure typically involves connecting one
component or layer to the others. Thus, precise positioning and
manipulation of each component or layer relative to the next is
needed. The semiconductor industry has extensive expertise in
this type of precision for 2D-layer-by-layer lithography-based
manufacturing processes, but other methods must be developed
for a full 3D capability. Some funding is available for
research on the fundamental mechanisms, but funding for
innovative processing equipment development is extremely
---------------------------------------------------------------------------
limited.
Models incorporating statistical variation (robust
and redundant designs)--Being able to control material
structure at the nanoscale means that we can start to approach
fabrication of truly multifunctional structures. While such
control can be achieved over small areas, it is difficult to
maintain the same level of control over much larger areas.
Precise patterns begin to exhibit some variations. For
commercially-viable products, the answer is not to require
precision and exact replication over large volumes. Rather,
just as in nature, variation is acceptable as long as
functionality is maintained. For example, as beautiful as a
spider web is with its radial and circumferential lines, all of
the lines are not perfectly spaced nor are they perfectly
oriented. Nevertheless, the web is still effective at capturing
the fly, and a break in one radial line does not cause the
collapse of the entire web. Functionality is often maintained
through redundancy. To achieve this level of robustness in our
engineered materials and devices, our understanding of exactly
what degree of variation, defect, or damage is acceptable must
improve. Models that incorporate statistical variation and
uncertainty can help to define the precision required in
manufacturing.
Life cycle analysis of environmental, health, and
safety--EHS was discussed already in reference to the survey,
so I will only make one additional comment here. While we are
actively looking at measuring exposures and quantifying
oxidative stress in cells due to exposure, another component of
the EHS question is understanding in what form nanomaterials
will exist through their entire life cycle, i.e., from
processing to disposal. For sustainability, one generally hopes
that products tossed into a landfill do biodegrade, but we must
also understand what intermediate separation of nanoparticles
from the bulk material may mean in terms of exposure.
3. Universities and industry need to communicate better on setting
research directions and on scalable approaches to addressing the
challenges--a few key technology demonstrations would accelerate the
R&D progress as well as sustain interest from capital investments and
the public.
Continued funding of basic research is critical to harvest the
long-term benefits of the past and current investment in
nanotechnology. Recognizing that even after over 50 years of studying
heart disease we still much to learn, long-term basic research support
is needed for emerging technologies. This must combat the trend of
attention spans getting shorter and shorter. Funding sources for R&D
and capital investments looking for the next big thing must recognize
that we have yet to harvest the real promise of nanotechnology. Current
first and second generation nano-products--pants that don't stain, golf
balls that fly straighter, cars that are lighter--represent harvesting
fruit trees to build a shelter--important for survival, but not reaping
the full benefits. By continuing to care for and plant more trees for
cross-pollination, we can eventually harvest the fruit from the trees
for food and for future sustainability. For nanotechnology, we need to
continue to fund basic R&D and to provide incentives for high-quality
cross-pollination from university-industry partnerships.
One approach would be to allocate a percentage of funds towards
technology demonstrations or industry/university testbeds. The key to
these testbeds is that they must be an active collaboration between the
industry sponsor and the university researchers. Specific technical
challenges and measurable targets must be identified that will lead to
a commercially-viable product. For example, there are researchers
working on sensors at every research university in the U.S.; yet, why
do so many not make it to the marketplace? In many cases, there is a
large gap between demonstrating a sensing mechanism that works in the
lab and actually manufacturing a sensor with power, input/output
signals, and robust sensing and packaging for a harsh environment. By
encouraging researchers and sensor manufacturers or users to work
together, the development can occur in a parallel and more effective
fashion.
The Center for High-rate Nanomanufacturing and the
Nanomanufacturing Center of Excellence have taken an aggressive
position in involving industry in our work. This is in part due to our
research focus on nanomanufacturing but is also in part due to history
of UMass Lowell and Northeastern and UNH working with industry, both
regionally and nationally, on collaborative research to address real
businesses' real needs. To initiate discussions of research directions
with industry, we have active industrial advisory boards, host and
participate in trade shows, conferences and workshops to introduce
industry to our faculty, facilities and research, and solicit and
secure industry funded research that extends a general discovery
towards the needs of a specific application area. For example, as part
of our Army Research Laboratory sponsored Nanomanufacturing of Multi-
functional Sensors program, we are working closely with the Army and
with companies on developing manufacturable sensors to protect the war
fighter.
In general, the bulk of federal support of R&D should not be
tightly targeted or directed, as this will inhibit the important
discovery not yet envisioned. Nevertheless, a small percentage of funds
supporting a few such technology demonstrations can serve many
purposes: (1) they help to focus and drive the research forward more
rapidly for a particular application; (2) they help to dispel concerns
from sources of investment capital about the general feasibility of
nanotechnology by providing examples of commercial successes; and (3)
they help to capture the imagination of the general public, and
communicated correctly, can help to generate continued support for R&D.
Such incentives for technology demonstration partnerships between
industry and academia could be a modified form of the STTR program, but
with participation from small and large companies.
4. User facilities (and complementary expertise) are needed to advance
technology transfer, especially in support of small businesses.
The 2006 survey responses towards use of university (mostly
federally-sponsored) user facilities reflected the likely need for a
broad range of equipment to develop nanotechnology products. Over 90
percent rated access to unique equipment and facilities as very
important. Although almost 60 percent rated their own infrastructure as
excellent or very good, a similar percentage also indicated their
company planned to use university user facilities. This suggests that
companies are likely to have specialized equipment in-house that is
critical to their product space, but that supplementary equipment for
characterization or scientific and engineering support needed on a
limited basis would be sought at universities or other user facilities.
These survey results match well with our experiences. We have had
success working with industry, but we have also encountered some
challenges, primarily because of intellectual property (IP) concerns.
Smaller companies are much more likely to collaborate with universities
because they cannot afford to have all the facilities, such as a clean
room, or the breadth of equipment that the university has built up. The
piece that often is overlooked in the discussion of user facilities,
however, is that it is the expertise associated with how to use the
equipment, how to interpret the results, and how to move forward based
on those results that can lead to success, not just the physical
equipment. While many user facilities such as the NNIN have procedures
where facility use does not require companies to share IP,
revolutionary advances require the type of in-depth, open discussions
between researchers who are at the cutting-edge and their industry
counterparts that can be inhibited by IP concerns.
Although the high cost of equipment tends to favor consolidation of
facilities, it should be recognized that even with the power of the
internet, distance is a factor. We find that companies located within
our region are much more likely to collaborate with us because of the
opportunity for face-to-face interaction, even though our capabilities
could help companies across the country. Another consideration in
establishment of user facilities is that there are many types of
manufacturing approaches, with different equipment and facility
requirements. For example, the earlier version of the NNIN was heavily
focused on lithography-based processes and characterization. The NNIN
has since added more bio-based capabilities with the inclusion of the
University of Washington and other new partners, but there are dozens
of other types of facilities that could be of use towards advancing
technology transfer. Sharing these facilities with other universities
and companies involves additional costs in terms of staff time and
maintenance. It is difficult, however, to hire the one-third or one-
half of a staff person needed to assist the first few industry
partners. One model that could be explored would be similar to the NSF
Industry-University Cooperative Research Center Program (IUCRC) where
NSF provides funding to cover administrative support, provided enough
companies demonstrate their interest in the Center through direct
funding of projects. Therefore, if a university could demonstrate
enough industry interest in a particular characterization or processing
facility--e.g., a multi-layered extrusion, nanocomposite dispersion, or
nano-molding facility--then federal funds could be made available to
provide initial stability for the additional staffing needed. The
federal funds could then be phased out or adjusted as the facility
grows the number of users. This would ensure that federal funds are
going to facilities that are in demand and that user facilities have an
incentive to grow their number of users.
CONCLUDING STATEMENT
Mr. Chairman, Members of the Committee, I would like to thank you
again for the opportunity to testify before your committee. I believe
that there is an important role that the NNI and the Federal Government
must play in fostering the transfer of technology from the research lab
to the marketplace. While the bulk of the federal funding for R&D must
remain at the basic research level to ensure future discoveries and
emerging technologies, some federal funding is needed to provide
incentives for the partnerships that are needed--university-industry
partnerships to accelerate technology demonstration efforts, to develop
and expand the accessibility of new tools and processing equipment, and
to address concomitant issues such as environmental, health, safety,
and intellectual property. That concludes my prepared remarks and I
look forward to answering any questions you may have.
Biography for Julie Chen
Dr. Julie Chen is currently one of the three Co-Directors\8\ of the
UML Nanomanufacturing Center (she is responsible for the NCOE\9\
component) and the Co-Director of the Advanced Composite Materials and
Textile Research Laboratory at the University of Massachusetts Lowell,
where she is a Professor of Mechanical Engineering. Dr. Chen was the
Program Director of the Materials Processing and Manufacturing and the
Nanomanufacturing Programs in the Division of Design, Manufacture, and
Industrial Innovation at the National Science Foundation from 2002-
2004. Dr. Chen has been on the faculty at Boston University, a NASA-
Langley Summer Faculty Fellow, a visiting researcher at the University
of Orleans and Ecole Nationale Superieure d'Arts & Metiers (ENSAM-
Paris), and an invited participant in the National Academy of
Engineering, Frontiers of Engineering Program (U.S., 2001, U.S.-
Germany, 2005, and Indo-U.S., 2006). In addition to co-organizing
several national and international symposia and workshops on composites
manufacturing and nanomanufacturing for NSF, ASME, ASC, and ESAFORM,
Dr. Chen has also served on editorial boards, advisory committees, and
review panels for several journals and federal agencies, including NSF,
NIH, the National Academies, ARL, and AFOSR.
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\8\ With Professors Joey Mead and Carol Barry.
\9\ The Nanomanufacturing Center of Excellence (NCOE) is a state-
funded center with the mission of fundamental scientific and applied,
industry-collaborative research on environmentally-benign,
commercially-viable (high rate, high volume, high yield) manufacturing
with nanoscale control.
---------------------------------------------------------------------------
Dr. Chen received her Ph.D., MS, and BS in Mechanical Engineering
from MIT. She has over 20 years of experience in the mechanical
behavior and deformation of fiber structures, fiber assemblies, and
composite materials, with an emphasis on composites processing and
nanomanufacturing. Examples include analytical modeling and novel
experimental approaches to electrospinning and controlled patterning of
nanofibers, nanoheaters, and forming, energy absorption, and failure of
textile reinforcements for structural (biomedical to automotive)
applications.
Chairman Baird. Mr. Welser.
STATEMENT OF DR. JEFFREY WELSER, DIRECTOR, NANOELECTRONICS
RESEARCH INITIATIVE
Dr. Welser. Good morning. My name is Jeff Welser, and I am
on assignment from the IBM Corporation to head the
Nanoelectronics Research Initiative, or NRI. I appreciate the
opportunity to testify today on behalf of the NRI, the IBM
Corporation, the Semiconductor Industry Association, and the
Semiconductor Research Corporation.
Let me start by noting that as its name implies, NRI is
focused on nanoelectronics, which is the application of
nanotechnology to the electronics field, including the
semiconductor devices and chips which fuel our economy today
from supercomputers to laptops to cell phones to automotive
electronics. This industry has been built on constantly
shrinking the size of these components and arguable was the
first industry to begin exploit nano for commercial products.
But now, we are quickly approaching the fundamental limits of
the current technology, and we will need to find entirely new
devices to continue these unprecedented technological advances.
It is not just about shrinking things anymore. It is about
taking advantage of the physics that comes with small sizes to
create new functionality, the same promise nanotechnology hold
for so many other fields of science as well.
And since so many of the advances in these other fields, as
well as in the economy as a whole, will depend on
semiconductors, our success will be crucial to America's
overall competitiveness. Simply put, whichever country is first
to market with the new chip technology will lead in the coming
nanoelectronics area the way the U.S. had led for half a
century in the microelectronics era.
In the next five minutes, I would like to focus my remarks
on two key questions submitted by the Committee. I will answer
these in the context of how our initiative is advancing and
commercializing nanoelectronics, but I feel strongly that the
partnership model and approach we employ can be utilized across
all of the areas of nanotechnology that the NNI addresses.
First, given our industry's grand challenge of finding a
new semiconductor device, how to we interact with government to
set research directions and manage research activities? The
NRI's model is to do goal-oriented, basic research. This model
balances the need for a broad range of research into many
different science phenomena with the need to drive the research
in the most productive directions for future commercialization.
All of the NRI's research is done at multi-university centers,
and we are currently supporting work at 25 universities in 13
states.
Centering the work at universities rather than in our own
industrial labs or at national labs is important, not only for
driving the research, but also to expand the number of involved
students which will up a future workforce and leverage related
university work. To engage the largest number of top
researchers across the U.S., we have set up three centers
already, in the West, the Northwest, the Northeast, and
Southwest, and are looking to open a fourth in the Midwest
later this year. Building a strong university capability for
nanotechnology research in general is crucial in increasing
American competitiveness for all industries.
Utilizing both the federal NNI funding and State
initiatives, we currently partner government in three different
ways. First, our centers are strongly supported by funding from
the lead state in each case, California, New York, and Texas.
These states recognize that close industry-government-
university partnership leads to faster commercialization of the
research, thereby increasing the potential for future economic-
development activity. In short, they see the impending
technology transition point to grow an entirely new industry
around their university base, the same way Silicon Valley grew
up around the transistor.
Second, NRI and NSF provide supplemental co-funding of
nanoelectronics projects at existing nanoscience and
engineering university centers. Our industry liaison team then
interacts with the centers and gives industry input on the
individual projects as well as the overall center research.
This leverage has a significant NSF investment in these
centers, guiding that work towards areas we think will have
large potential for future commercialization and giving us a
broad view of many emerging areas of research.
Third, NRI and NIST started a new partnership last
September to extend the NRI Center work. NRI and NIST now
jointly choose projects to fund, conduct joint reviews, and
hold monthly meetings to direct the ongoing program. In
addition, NIST labs and researchers can interact directly with
university professors to support the nanotechnology work,
leveraging the lab's capabilities for advance nanometrology and
helping to guide their continued work, internally, on new
revolutionary tools that can have the most impact on future
commercialized products. This partnership model is unique and
utilizes the best of university and government partners to
produce results most likely to benefit future products.
This leads, naturally, into the Committee's second
question: how can NNI help foster commercialization of
nanotechnology? First, increase funding across the agencies for
nanotechnology equipment and research at universities. This is
similar to what NSF has been doing with the National
Nanotechnology Infrastructure Network, but expanding the
equipment base to enable nanomanufacturing and prototyping of
early devices will facilitate a more rapid transition from the
lab into a commercial product.
Second, encourage direct partnership with industry to
pursue this research. Industry involvement leads, naturally, to
identifying early commercialization opportunities for
technology, such as the recent introduction of nano self-
assembly to fabricate air-gap wiring in IBM's computer chips,
based on work being done at the Albany Nanotech Center. And
industry involvement can even help direct basic research in the
most promising directions. As an example, at a 2006 NRI review,
a physics professor presented work on a new phenomenon he
dubbed pseudo-spintronics, which occurred far below room
temperature. After discussion with industry research engineers
about the potential for utilizing this phenomenon in a future
device, by the next review, he was showing us how the
phenomenon could be made more robust for higher temperature
operation and even had a novel idea of his own for a new
transistor based on this affect. This is the university-
industry synergy that NNI should strive to achieve in all areas
of nanotechnology research.
In my written testimony, I have given five specific
recommendations to the Committee, but the two key points I hope
to leave you with today are, one, we would like to see the NNI
reauthorization increase federal funding for both equipment and
research at universities and strongly encourage government,
university, and industry partnerships to guide this research
into commercial applications rapidly; and two, we would like to
see the NNI reauthorization include a strong focus on
nanoelectronics in particular, including it as a priority
program activity across the agencies.
In closing, I would like to point out that the magnitude of
the effort we face, finding a new transistor, is equivalent to
what was done in the 40s and 50s as we developed the first
semiconductor device that replaced the vacuum tube. Research on
this scale, both in terms of time and money, is more than
individual companies can possibly fund. It is also more than
universities, alone, can conduct with current, limited federal
funding; thus, close collaboration among industry, academia,
and government is absolutely necessary in order to solve this
grand challenge and ensure that the U.S. remains the leader in
the nanoelectronics era.
Thank you, and I look forward to answering any questions
you might have.
[The prepared statement of Dr. Welser follows:]
Prepared Statement of Jeffrey Welser
Good morning. My name is Jeffrey Welser, and I am on assignment
from the IBM Corporation to serve as the Director of the
Nanoelectronics Research Initiative (NRI). I am testifying today on
behalf of the NRI; the IBM Corporation; the Semiconductor Industry
Association; and the Semiconductor Research Corporation.
The Nanoelectronics Research Initiative (NRI) is a research
consortium that supports university basic research in novel computing
devices to enable the semiconductor industry to continue technology
advances beyond the limits of the CMOS\1\ technology that we have been
using for the past four to five decades. The NRI leverages industry,
university, and both U.S. state and Federal Government funds to support
research at universities that will establish the U.S. as the world
leader in the nanoelectronics revolution. Fundamental breakthroughs in
physical sciences and engineering resulting from NRI leadership will
ensure that the U.S. remains a world leader in high-technology.
---------------------------------------------------------------------------
\1\ Complementary Metal Oxide Semiconductor
---------------------------------------------------------------------------
At IBM, we lead in the business of innovation. IBM takes its
breadth and depth of insight on issues, processes and operations across
a variety of industries, and invents and applies technology and
services to help solve its clients' most intractable business and
competitive problems.
The Semiconductor Industry Association (SIA) has represented
America's semiconductor industry since 1977. The U.S. semiconductor
industry has 46 percent of the $257 billion world semiconductor market.
The semiconductor industry employs 216,000 people across the U.S., and
is America's second largest export sector.
The Semiconductor Research Corporation is a world class university
research management consortium that seeks to solve the technical
challenges facing the semiconductor industry and develop technical
talent for its member companies. SRC manages several semiconductor
research programs, including the NRI. Since its founding 25 years ago,
the SRC has managed through its core program in excess of $1 billion in
research funds, supporting 6,976 students and 1,598 faculty at 237
universities, resulting in 39,536 technical documents and 302 patents.
In July 2007, SRC was awarded the National Medal of Technology by
President Bush with a citation recognizing the unique value of this
organization: ``For building the world's largest and most successful
university research force to support the rapid growth and 10,000-fold
advances of the semiconductor industry; for proving the concept of
collaborative research as the first high-tech research consortium; and
for creating the concept and methodology that evolved into the
International Technology Roadmap for Semiconductors.''
Executive Summary
Semiconductor technology advances have been credited
with driving the increased productivity that the U.S. economy
has enjoyed since the mid-1990's.
The Nanoelectronics Research Initiative (NRI)
leverages industry, university and government resources (both
State and federal) to fund university research that will keep
America at the forefront of the nanoelectronics revolution.
NRI, in partnership with the National Institute of Standards
and Technology (NIST), currently works largely through three
regional university centers headquartered in California, Texas,
and New York, as well as with some of the National Science
Foundation (NSF) Nanoscience centers across the country.
The interaction of industry, government, and
university researchers in the NRI facilitates the sharing of
ideas, enables each partner to focus on its particular
strength--such as NIST's expertise in metrology, allows
efficient utilization of expensive nanoelectronics equipment,
and promotes increased student interest in nanoelectronics.
This partnership ultimately will result in faster
commercialization of the research results.
The semiconductor industry strongly supports the
reauthorization of the National Nanotechnology Initiative (NNI)
to ensure continued critical research and interagency
activities in the area of nanoelectronics, specifically. Since
current semiconductor technology is approaching its physical
and other limits, a new electronic switch must be identified to
replace the current technology if the U.S. is to continue
receiving the benefits of smaller, faster, and denser
electronic devices. The country whose companies are first to
market with a new logic switch likely will lead in the
nanoelectronics era for decades to come, the way the U.S. has
led for the last half a century in microelectronics.
Current federal funding levels for nanoelectronics-
focused research are inadequate in light of the enormity of the
research challenge in this area.
Specifically, the NNI reauthorization should:
1. Explicitly include as a priority program activity
the support of nanoelectronics research;
2. Include a request for the National Nanotechnology
Coordination Office to develop and implement a plan to
ensure U.S. leadership in nanoelectronics;
3. Request that the National Academies include a
nanoelectronics study as part of its triennial external
review of the NNI;
4. Include specific and higher-than-current
authorization levels for nanoelectronics-focused
appropriations from within total NNI authorization
amounts;
5. Address the need for nanoelectronics research
infrastructure, i.e., equipment and equipment operating
funds, at universities and national laboratories;
6. Specifically encourage direct industry-government
partnerships in support of nanoelectronics research at
universities and national laboratories.
NNI should be reauthorized, and include specific and increased
authorizations for nanoelectronics
Let me state at the outset that the semiconductor industry strongly
supports the reauthorization of the National Nanotechnology Initiative
(NNI) to ensure continued critical research and interagency activities
on nanotechnology.
The legislation should include specific and higher-than-current
level authorizations for nanoelectronics research and equipment. This,
in turn, would enable the U.S. to be the first in the world to
demonstrate a nanotechnology-based electronic logic switch that is able
to replace the solid state transistors that store and process
information in integrated circuits. Finding a new switch should be a
priority area for the NNI.
Before discussing the importance of the NNI, I should note that the
industry's support for increased federal research funding is part of
our complete set of competitiveness recommendations, which include
increased availability of green cards and H-1Bs visas through
immigration reform; increased numbers of science, technology,
engineering and math (STEM) graduates; improved K-12, undergraduate and
graduate STEM education; enactment of a permanent and enhanced R&D
credit; and increased awareness of the impact of foreign tax
incentives.
Federally funded basic research, and in particular, funding for
nanoelectronics research, is vital to America's future economic growth
and global competitiveness. Simply put, as we approach the fundamental
limits of the current technology that has driven the high tech
industry, the country whose companies are first to market in the
subsequent technology transition likely will lead the coming
nanoelectronics era the way the U.S. has led for half a century in
microelectronics. NNI can play a critical role in ensuring that America
earns this leadership position.
Today I would like to address four topics:
the technical challenges we have as we move to the
nanoelectronics era;
why U.S. leadership in nanoelectronics is vital to
our nation;
the Nanoelectronics Research Initiative (NRI), as an
example of industry-government collaboration that can be
furthered by the NNI; and
policy recommendations that should be included in the
NNI to help maintain U.S. leadership in nanoelectronics.
To continue semiconductor technology advances, we must find a new
switch
Semiconductors are the enabling technology for computers,
communications, and other electronics products that, in turn, have
enabled everything from Internet commerce to sequencing the human
genome.
Better, faster, and cheaper chips are driving increased
productivity and creating more jobs throughout the economy. For over
three decades, the industry has followed Moore's Law, which states that
the number of transistors on a chip doubles about every eighteen
months. The transistor is the basic building block within the
semiconductor chip and can be thought of as an electronic switch or as
a device to retain one bit (a one or a zero) in memory. The transistor
is composed of a series of precisely etched and deposited layers of
materials, and with as many as two billion transistors integrated on a
single silicon chip, modern computer chips are the most complex product
manufactured on the planet.
The phenomenal advances in technology may slow drastically as
semiconductor technologists have concluded that we will soon reach the
fundamental limits of Complementary Metal Oxide Semiconductor (CMOS)
technology, the process that has been the basis of innovation for the
semiconductor industry for the past 30 years. By introducing new
materials into the basic CMOS structure and devising new CMOS
structures and interconnects, further improvements in CMOS can continue
for the next ten to fifteen years, at which time, CMOS begins to reach
its physical (layers only a few atoms thick) and power dissipation
limits. For the U.S. economy to benefit from continued information
technology productivity improvements, there will need to be a ``new
logic switch'' to replace the current CMOS-based transistor.
There are a number of candidates for the new switch, including
devices based on spintronics (changing a particle's spin) and molecular
electronics (changing a molecule's shape). Scientists must address many
challenges in many different basic research fields (chemistry, physics,
electrical engineering) in the search for the new switch. The
challenges include:
measuring the dimensions, shapes, and electrical
characteristics of individual molecules;
manipulating and measuring the spin of individual
electrons;
fabricating whole new classes of materials with
unique electronic properties, and then characterizing their
fundamental physical behavior and their long-term reliability;
inducing novel chemical compounds to self-assemble
into the precise structures needed by the new devices and
architectures, and doing so in a way that can be manufactured
at commercial volumes;
developing complex circuits to take advantage of, or
overcome limitation of, the properties of the new devices; and
finding ways to interconnect the devices and
integrate them into our technology infrastructure in a cost-
effective manner, which will enable us to continue the
historical cost and performance trends for information
technology.
Note that addressing these challenges not only will require the
best minds from industry and academia, but it also requires new
equipment for fabricating and characterizing these nanostructures.
While existing facilities at university centers already enabled by
NSF's continuing investment in the National Nanotechnology
Infrastructure Network (NNIN) can be used, significant additional
investment in new specialized equipment is required, particularly to
enable the realistic prototyping of new nanoelectronic devices and
circuits. This will be crucial to transitioning these into both
commercial and manufacturing environments.
U.S. leadership in nanoelectronics is vital to our nation
As stated earlier, the country that finds a new logic switch
undoubtedly will lead in the nanoelectronics era. Moreover, this
leadership will have widespread impact across our entire technology and
science-driven economy, since nanoelectronics have significant
applications in information technology, communications, medicine,
energy, and security.
Research investments to continue the increased circuit density
described in Moore's Law have immense benefits to the U.S. economy.
Moore's Law has resulted in a 65 percent drop in the price of a
computer over the past 10 years, while increasing the computer's speed,
memory, and functionality. Harvard economist Dale Jorgenson has noted,
``The economics of Information Technology begins with the precipitous
and continuing fall in semiconductor prices.'' Professor Jorgenson
attributed the rapid adoption of IT in the U.S. to driving substantial
economic growth in the U.S. gross domestic product since 1995,
concluding, ``Since 1995, Information Technology industries have
accounted for 25 percent of overall economic growth, while making up
only three percent of the GDP. As a group, these industries contribute
more to economy-wide productivity growth than all other industries
combined.'' \2\
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\2\ Dale W. Jorgenson, ``Moore's Law and the Emergence of the New
Economy'' in ``2020 is Closer than You Think''; 2005 SIA annual report.
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To see the impact of the productivity gains on a single sector, it
is instructive to consider the benefits the government (federal, State,
and local) receives as a consumer of semiconductors. The Department of
Commerce's Bureau of Economic Analysis has data indicating that the
government sector of the economy purchased $8 billion of computers in
2006, but that it would have had to spend $45 billion for that same
amount of computing power if it were paid for in 1997 prices. The
cumulative benefit from technology improvements and resulting price
declines from 1997 to 2006 is $163 billion of ``free'' computing. In
this tight budget environment, it is important to remember that federal
investments made to support basic research not only are beneficial to
the overall U.S. economy, but they also allow the government itself to
do more with less as a result of falling computing costs.
Nanoelectronic computing also will have benefits in medicine and
energy. It is not an overstatement to say that mapping the human genome
is as much a success of computer science as biology, and future
challenges such as modeling protein folding and creating cheaper and
clearer MRIs and 3D X-ray imaging will require continued advances in
computing speed. The Technology CEO Council has documented the effects
of improved information technology on improving energy efficiency,
which advances U.S. energy security and climate change policies. While
automobiles' miles per gallon have improved 40 percent since 1978, and
replacing a 1978 incandescent bulb with today's compact fluorescent
bulb improves the lumens per watt by 339 percent, the improvement in
computer systems' instructions per second per watt since 1978 has
increased 2,857,000 percent.\3\ Continuing these trends into the
nanoelectronics era is absolutely essential to continue the
improvements in U.S. energy intensity (increased economic output per
unit of energy). In addition, many of the technologies developed to
further the semiconductor chip industry now are utilized in new
innovations for the renewable energy sector, most notably to develop
cheaper and more efficient solar cells.
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\3\ Technology CEO Council, ``A Smarter Shade of Green--How
Innovative Technologies are Saving Energy, Time, and Money,'' 2008.
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So too, nanoelectronics computing is important for national
security. Precision weapons, satellite imaging, submarine detection,
secure global communications, monitoring of adversaries'
communications, and real time identification of allies' positions to
avoid friendly fire casualties are but a few of the examples of why
many people consider leadership in semiconductor technology to be in
the Nation's security interests. Indeed, the original semiconductor
diode was implemented as a mission-critical project at universities and
industrial labs in the 1940's, funded largely by the Department of the
Defense because it recognized the urgency of being the first country to
have this technology in its weapon systems.
Finally, it should be emphasized that all of these commercial
benefits only will be realized if we invest heavily now in basic
nanoelectronics science and engineering. Many of the breakthrough
products and innovations we see today are being built on basic research
that was done in the 1990's. With more federal money focused on near-
term--rather than long-term--research projects, the country runs the
risk of under-funding the basic research pipeline which our industries
rely on for future innovations.
Fortunately, the House Appropriations Committee recognized
nanoelectronics as a priority area when it singled out NSF's work with
the Nanoelectronics Research Initiative in its FY 2008 committee
report, stating:
``Given the economic importance and pervasive impact of
semiconductors, the Committee supports NSF's continued
sponsorship of the Nanoelectronics Research Initiative and
other programs to advance semiconductor technology to its
ultimate limits and to find a replacement technology to further
information technology advances once these limits are reached.
The Committee encourages NSF to continue its support for such
research in fiscal year 2008.'' \4\
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\4\ House Report 110-240--Commerce, Justice, Science, and Related
Agencies Appropriations Bill, 2008.
The NRI is an industry-university-government partnership to find a new
switch
As the laws of physics narrow the potential for the kind of scaling
that historically has characterized the semiconductor industry,
attention has turned to the discovery of a new logic switch as a means
to continue the progress depicted by Moore's Law. To take on the
daunting task of identifying and demonstrating the commercial
feasibility of a new logic switch, the SIA launched the Nanoelectronics
Research Initiative (NRI).
The NRI pulls together semiconductor companies,\5\ the National
Science Foundation, the National Institute of Standards and Technology,
State governments, and 25 universities in 13 states with about 60
professors and 70 students/post-docs. The industry contribution through
the NRI is over $5 million per year; this is in addition to about $60
million that the semiconductor industry invests in universities through
other research consortia, with millions more invested directly by
individual companies.
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\5\ The semiconductor companies funding the NRI are Advanced Micro
Devices, Freescale, IBM, Intel, Micron Technology, and Texas
Instruments.
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The research activity is organized within three NRI university
centers that were established in 2006, plus NRI and NSF supplemental
co-funding of nanoelectronics projects at 10 existing NSF university
centers. The three NRI university centers are virtual centers, grouped
largely by geography. While all of the centers are working on research
aimed at discovering a new logic switch, the focus of the programs at
each center has its own specific character:
The Western Institute of Nanoelectronics (WIN) is headquartered at
UCLA and includes UC-Berkeley, UC-Santa Barbara, and Stanford
University. WIN focuses solely on spintronics and related phenomena,
extending from material, devices, and device-device interaction all the
way to circuits and architectures. In addition to its NRI funding, this
center receives additional direct support from Intel and California's
UC Discovery program.
The Institute for Nanoelectronics Discovery and Exploration (INDEX)
is headquartered at the State University of New York-Albany (SUNY-
Albany) and includes the Georgia Institute of Technology, Harvard
University, the Massachusetts Institute of Technology, Purdue
University, Rensselaer Polytechnic Institute and Yale University. INDEX
focuses on the development of nanomaterial systems; atomic-scale
fabrication technologies; predictive modeling protocols for devices,
subsystems and systems; power dissipation management designs; and
realistic architectural integration schemes for realizing novel
magnetic and molecular quantum devices. INDEX also receives additional
direct support from IBM and New York State.
The South West Academy for Nanoelectronics (SWAN) is headquartered
at the University of Texas-Austin and includes UT-Dallas, Texas A&M,
Rice, Notre Dame, Arizona State and the University of Maryland. SWAN
focuses on a variety of new devices, including spin-based switches,
nanowires, nano-magnets, and devices which use electron wave or phase
interference. In addition, work is being done on modeling; novel
interconnects, such as plasmonics; and nano-metrology techniques. In
addition to its NRI funding, SWAN receives additional support from
Texas Instruments and the Texas Emerging Technology Fund.
In addition to these centers, NRI and NSF co-fund supplemental
grants for NRI-related research at existing NSF nanoscience centers,
Nanoscale Science and Engineering Centers (NSECs), Materials Research
Science and Engineering Centers (MRSECs), and the Network for
Computational Nanotechnology (NCN). We currently are supporting 12
projects at 10 NSF centers, which range from advanced computer
simulation of spin-based devices to measurements of non-equilibrium
coherent transport in single-layer graphene sheets to directed self-
assembly of quantum dot and wire structures for novel devices. The goal
in making this joint investment with NSF is not only to complement the
work going on in the NRI centers, but also to jointly leverage the
knowledge gained from work going on in both NSF and NRI centers.
NSF's involvement with nanoelectronics was highlighted by the
recent announcement of the Science and Engineering Beyond Moore's Law
initiative in the President's FY 2009 budget request. The $20 million
request ``will support research to develop the next generation of
materials, algorithms, architectures and software with capabilities far
beyond those available today, and governed by new empirical laws. With
these advances, computing power will become even more concentrated,
integrated and ubiquitous.'' \6\
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\6\ Remarks by NSF Director Arden Bement, Jr.; Presentation of the
NSF FY 2009 budget request to Congress; February 4, 2008.
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In 2007, NIST concluded an open competition by entering into
partnership with the NRI to accelerate research in nanoelectronics.
Under the partnership, NIST and NRI will jointly provide $18.5 million
over five years toward high-priority university research projects
identified by industry and NIST researchers. NIST scientists and
engineers have been leaders in nanoelectronics research, especially in
the science of measurement. The partnership implements the conclusion
of NIST's major February 2007 report which called for the development
of measurement techniques for frontier technologies such as post-CMOS
electronics.\7\
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\7\ NIST, ``An Assessment of the United States Measurement
System,'' February 2007, http://usms.nist.gov.
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The NRI complements another government-industry partnership, the
Focus Center Research Program (FCRP). This program is cosponsored by
the semiconductor industry and the Department of Defense to fund
research at 38 universities. It seeks to advance the current CMOS chip
technology to its ultimate limits, while the NRI's objective is to go
beyond the limits of the current technology. Both the NRI and FCRP are
administered by the Semiconductor Research Corporation (SRC), a non-
profit consortium of companies representing of the full spectrum of the
semiconductor industry. The SRC also administers the Global Research
Collaboration (GRC), which funds a large research program focused on
addressing the challenges in the nearer-term semiconductor roadmap,
crucial to continuing the rapid rate of industry innovation.
While still in its early stages, the NRI already is beginning to
show results with over 100 technical publications and five patent
disclosures. As the research begins to come to fruition, prior industry
involvement will facilitate technology transfer, even before the
ultimate goal of finding a new switch is realized. An example of this
kind of early commercialization due to close industry-university work
outside of NRI is the air gap wiring announcement made by IBM in 2007,
based on work being done at the Albany Nanotech Center. It is a very
early application of self-assembly, which has been actively researched
for many years, in a real product in an unexpected way, and it points
out the importance of universities and industry working together. Rapid
commercialization of academic research is in the interest of
universities and government funding agencies, as well as industry, as
it directly contributes to American competitiveness. The NRI is
building on 25 years of experience by its parent, the SRC, in managing
university research, in partnership with industry and the government.
Industry-Government-University Roles in Nanoelectronics Research
From the beginning, the NRI has welcomed input from the government
on our overall program, and it would like to see these partnerships
increase going forward. NSF, DARPA, and NIST attend the NRI's Governing
Council meetings. The Council provides executive oversight to the
program. Due to the magnitude of the scientific challenges ahead and
the large diversity of scientific disciplines required, government
expertise and resources are absolutely critical.
The overall model for the NRI is to do mission-focused basic
research at multi-university centers. This best balances the need for a
broad range of research into many different science phenomena with the
need for a clear goal to drive the research in the most productive
directions. Five research vectors are used to provide a concrete
framework for the mission focus, as well as focus the work on the
overall goal of finding a new logic switch. These vectors, distilled
from an initial list of thirteen, were considered the top research
priorities based on a series of industry-government-university
workshops and studies conducted by SRC, SIA, and NSF.
Centering the work at multi-university centers--rather than in
industry or national labs--is crucial not only for driving the
research, but also to expand the number of students and the capability
of universities engaged in nanoelectronics-related research. This will
sustain and expand the industry in new directions in the future. It is
equally important to set up several of these centers across the U.S. to
engage the largest number of top researchers at many different
universities. To this end, we are currently looking to open a fourth
NRI center later this year in the Midwest, complementing the three
existing centers in the East, West, and Southwest.
We have used two models to enable the multi-university work. With
the NSF, we jointly fund research in existing NSF nanoscience centers.
These projects are chosen by independent reviews by the NRI industry
team and the NSF itself. An industry liaison team is assigned to
interact with the centers and give industry input on the individual
projects as well as the overall center research. This model works well
for leveraging the significant NSF investment in these centers, helping
to guide that work towards areas we think will have large potential for
future commercialization and giving us a broad view on many emerging
areas of research.
At the NRI centers themselves, we take this partnership model even
further, both for joint funding and technical guidance, with the hope
of accelerating the discovery process. Initially, the multi-university
centers were set up geographically, and strong partnerships were
developed with State governments for funding the work. The state
partnership is unique in that states not only are providing several
million dollars annually to their universities to support the NRI
research, but they also are investing hundreds of millions into new
Nanoelectronics buildings, centers and infrastructure to enable the
next generation of this research. Examples includes the New York Albany
NanoTech center (www.albanynanotech.org), the California NanoSystems
Institute (www.cnsi.ucla.edu), as well as major support for recruiting
and endowing new faculty for Nanoelectronics research in Texas. These
investments are focused not simply on enabling the research, but also
on enabling the rapid commercialization of any new technologies that
emerge from the research. Hence, this support is crucial to translating
discovery into product innovation.
And the states are investing for the same reason the NNI needs to
be investing: economic competitiveness. The transition to a new switch
will be challenging and uncertain, meaning that the companies, states,
and universities that benefited from the previous technology era may
not be the ones to lead in the new era. State governments see this
transition point as an opportunity to grow an entirely new industry
around their university base to drive their economies, the same way
Silicon Valley grew up around the transistor.
The NIST agreement extends the work in the NRI centers to now
include a federal partner in a unique technical, management, and
funding role. We think this should be a model for future engagements. A
Technical Program Group (TPG), consisting of members from both NIST and
industry, evaluates the project proposals to determine where the funds
from both groups will be invested in the universities, as well as
oversees the on-going research through a variety of mechanisms. The TPG
has monthly meetings to make decisions on the overall program, and sub-
teams from the TPG meet monthly with the lead professors from each of
the NRI centers to discuss the progress of the technical work and
center logistics in detail. Moreover, the industry has full-time
assignees working alongside the professors and students at each of the
centers to provide daily input and guidance on the research. In
addition to the usual publication of results in technical journals and
conferences, the centers also hold annual on-site reviews and produce
semi-annual reports for both the NRI industry members and NIST. Lastly,
we intend to strongly leverage the expertise and facilities within the
NIST labs themselves, by having university researchers at the NRI
centers work directly with the labs on projects to advance the NRI
mission.
Nanometrology and characterization are key to any advances in
nanoelectronics--particularly in trying to link experimental work to
theory. The partnership with NIST should open the door not only to
utilizing the existing NIST facilities, but also to help guide their
continued work on new characterization tools to those most vital for
developing and characterizing the next generation of nanoelectronic
devices. For example, it is now becoming possible to measure the spin
of an individual electron, but to truly characterize spintronic
devices, we would want to be able to track that spin's evolution as it
is manipulated in the switch itself. This is precisely the kind of
grand challenge that NIST is uniquely suited to undertake. By working
closely with NRI university and industry researchers, the results of
this new capability will have much more rapid impact on new device and
product development.
While the NIST labs--and the other national labs--offer a very
valuable resource for enabling nanoelectronics research, we continue to
believe it is equally important to invest federal funding in state-of-
the-art facilities directly at the universities themselves. While some
work, such as characterization utilizing large neutron or synchrotron
radiation, can be done most efficiently at the national lab facilities,
much device and materials research relies on daily work in a facility
local to the university, where the students are working directly with
their professors and other group members. This cannot easily be
replicated remotely. To balance the desire to have easy access by the
largest number of faculty and students with the large investment costs,
having an extended network of nanoelectronics infrastructure capable of
fabrication, characterization, and early prototyping at a number of
multi-university centers (such as NNIN) is particularly effective. And
with the NRI model, the states and universities are already doing their
part to invest in new buildings and base infrastructure. What they need
is expanded federal funding to match their investments for equipment
and on-going support.
To summarize, we feel the NRI model for direct partnering between
industry, government, and universities is the most effective way to
conduct mission-oriented basic research that most rapidly leads to new
product innovations. And far from hindering basic science research,
this close early industry involvement can actually accelerate it in
promising directions. As an example, at one of the first NRI reviews, a
professor presented work on a new phenomenon he dubbed
``pseudospintronics.'' As a physics professor looking to understand the
basic science, all of his work had been at very low temperatures. After
discussions at the review with other engineering professors and
industry researchers on the potential for this phenomenon to be
utilized in a future device, he continued his basic research, but he
also focused on understanding its extendibility to room temperature. By
the next review, he not only had several exciting new insights into the
science, but he had ideas about how it could be made more robust for
higher temperature operation. He even had a novel idea for a new logic
switch based on the effect. This experience is precisely the kind of
new thinking that comes from conversations between the science and
engineering worlds (and the industrial and academic worlds) that NRI
hopes to foster, and it ultimately will result in faster
commercialization of the ideas it produces.
Building on the government-industry NRI partnership: recommendations
for the NNI
As outlined above, the obstacles for identifying a viable new
switch are daunting, but the benefits of being the leader in this new
technology are huge. The semiconductor industry supports the
reauthorization of the National Nanotechnology Initiative to ensure
continued critical federal research and interagency activities on
nanotechnology. The industry specifically recommends that Congress
include the following:
1. The NNI reauthorization should explicitly include as a
priority program activity the support of a research,
development and demonstration program in nanoelectronics.
The National Nanotechnology Coordination Office and
the federal agencies that participate in the National
Nanotechnology Initiative should be asked to develop
and implement a plan for the above activity, with the
goal of ensuring that U.S. researchers are the first in
the world to demonstrate a nanotechnology-based
electronic logic switch that is scalable, reliable,
low-power, capable of being manufactured in commercial
volumes, and potentially able to replace solid state
transistors in integrated circuits.
2. The NNI reauthorization should require that the National
Academies include, as part of its triennial external review of
the NNI, a study on nanoelectronics research opportunities. The
study should identify the most promising research opportunities
in the application of nanotechnology to electronic logic
switches. The study also should include a recommended research
and development roadmap for federal agencies that conduct or
support nanoelectronics research.
3. The NNI should include specific and higher-than-current-
level authorizations for nanoelectronics appropriations from
within the NNI authorization amounts for the NSF, NIST, and
Department of Energy. The authorizations should reflect the
pervasiveness of information technology in the U.S. economy,
IT's impact on U.S. economic growth, and the magnitude of the
challenges involved in identifying and demonstrating an
electronic switch capable of replacing our current technology.
4. The NNI reauthorization should address the need for
nanoelectronics research infrastructure, i.e., equipment and
equipment operating funds, in addition to funding for research.
This applies not only to authorizations for NSF to support
infrastructure at our nation's universities, but also to NIST
for equipping and operating the equipment for the
nanoelectronics research at the Gaithersburg and Boulder labs.
5. The NNI Reauthorization should specifically encourage
direct industry-government partnerships in support of
nanoelectronics research at universities and national
laboratories. These partnerships promote cross-fertilization of
ideas, facilitate technology transfer and ultimately
commercialization of nanoelectronics devices, as well as
promote potential economic development around nanoelectronics
research clusters.
Summary
Discovering, developing, and implementing a new logic device is a
daunting task, but it is not unprecedented. In the 1940's, when vacuum
tubes were state-of-the-art but reaching their own limits, the U.S.
Government realized a critical need for finding smaller, faster, and
lighter devices for its radar and guided missile systems. The result
was not only technology to enable advanced weapon systems, but the
birth of the solid-state transistor, which became the foundation of the
information technology revolution that drives our economy to this day.
It was the combination of the best basic science research coming out of
the universities, the practical guidance and mission-focus of the
industrial labs, the significant research funding from the government,
and the collaborative interaction of all of these groups that enabled
both the scientific breakthroughs and the reduction to practical
implementation necessary for such a project to succeed.
As we look for a switch to replace our current CMOS transistor, we
now face a similar transition. We are just beginning this research, and
the initial efforts are small in comparison to what was done in the
1940's and 1950's. It is critical we grow these efforts significantly
over the next several years, and finding flexible models for industry
and government to interact will be critical to success. To this end,
increasing attention and research funding in the nanoelectronics area
are absolutely essential if we are to continue our accelerated economic
growth and productivity, thereby enabling America to lead in the coming
nanoelectronics era.
Biography for Jeffrey Welser
Dr. Jeffrey Welser is on assignment from the IBM Corporation to
serve as the Director of the Nanoelectronics Research Initiative (NRI),
a subsidiary of the Semiconductor Research Corporation (SRC). The NRI
supports university-based research on future nanoscale logic devices to
replace the CMOS transistor in the 2020 timeframe.
Dr. Welser received his Ph.D. in Electrical Engineering from
Stanford University in 1995, and joined IBM's Research Division at the
T.J. Watson Research Center. His graduate work was focused on utilizing
strained-Si and SiGe materials for FET devices. Since joining IBM, Jeff
has worked on a variety of novel devices, including nano-crystal and
quantum-dot memories, vertical-FET DRAM, and Si-based optical
detectors, and eventually took over managing the Novel Silicon Device
group at Watson. He was also working at the time as an adjunct
professor at Columbia University, teaching semiconductor device
physics. In 2000, Jeff took an assignment in Technology group
headquarters, and then joined the Microelectronics division in 2001, as
project manager for the high-performance CMOS device design groups. In
May 2003, he was named Director of high-performance SOI and BEOL
technology development, in addition to his continuing work as the IBM
Management Committee Member for the Sony, Toshiba, and AMD development
alliances. In late 2003, Jeff returned to the Research division as the
Director of Next Generation Technology Components. He worked on the
Next Generation Computing project, looking at technology, hardware, and
software components for systems in the 2008-2012 timeframe. In mid-
2006, Jeff took on his current role for NRI, and is now based at the
IBM Almaden Research Center in San Jose, CA.
Chairman Baird. Mr. Moffitt.
STATEMENT OF MR. WILLIAM P. MOFFITT, CHIEF EXECUTIVE OFFICER,
NANOSPHERE, INCORPORATED
Mr. Moffitt. Thank you Mr. Chairman, Ranking Member Ehlers,
and Members of the House Research and Education Subcommittee of
the Committee of Science and Technology, for the opportunity to
testify on this important issue. I am Bill Moffitt, Chief
Executive Officer of Nanosphere, Incorporated. Nanosphere
develops, manufactures, and markets an advance molecular
diagnostics platform, the Verigene System, that enables simple,
low-cost, and highly sensitive genomic and protein testing on a
single platform. Our mission is to improve the diagnosis and
treatment of disease by enabling earlier access to and
detection of new and existing biomarkers of disease.
Nanosphere was founded in 2000, based upon nanotechnology
discoveries made by Dr. Robert Letsinger and Dr. Chad Mirkin at
Northwestern University and Evanston, Illinois. We have taken
basic science, funded by NIH and NSF out of the university
research setting and translated it into a diagnostics platform
that delivers three distinct value propositions across a
variety of fields, the ability to economically move complex
genetic testing into mainstream medicine; second, early
detection of diseases, such as cardiovascular disease, cancer,
and neurodegenerative diseases, as nanoparticle probes improve
detection sensitivity by orders of magnitude; and third, the
potential to test for disease where no test exist today.
Moreover, while we are focused on medical diagnostics, this
same technology platform is applicable to biosecurity,
agriculture and food safety testing and industrial
contamination control. Nanotechnology has a potential to shift
markets on a global economy and replace or greatly modify
existing leadership positions. As such, it represents both a
challenge and an opportunity for American competitiveness.
With that as the context for my remarks, I would like to
share with you my thoughts on the four on which the Committee
has sought input. First, the hurdles to commercialization of
nanotechnology. First and foremost is the lack of early stage
capital for cutting-edge, translational research. Much of the
government's direct spending in nanotechnology has been on
scientific discovery. It takes extensive capital to translate
nanoscience discoveries into platform technologies and
demonstrate potential and commercial viability in order to
attract the capital required for commercialization. For
example, at Nanosphere, up to the point first commercial
product launch, we invested over $100 million in converting
nanoscience to scalable product technology platform. Many great
nonscientific discoveries fail to attract the extensive capital
required for commercialization, and for this reason, the gap
between the research lab and the product prototype is often
referred to as the Valley of Death. There is a great need to
balance spending on basic research and translational work or
goal-oriented development programs and to focus such programs
on specific areas with the greatest promise of benefit to
national interest.
Another hurdle to commercialization of nanotechnology is
the difficulty in finding technical talent. Nanotechnology has
need for highly trained scientists from multiple disciplined.
These highly paid, high quality jobs are difficult to fill
because of the well-documented decline in STEM graduates. In
addition to Ph.D.s, nanotech companies also need trained and
skilled laboratory and manufacturing technicians. There are
currently very few technical-training programs that fill this
need. We can address both issues by developing vocational
curricula and deploying them at community colleges and
encouraging internships by high school and college students
that expose them to nanotech as a career.
The second question was federal programs that can help
bridge the Valley of Death and how effect SBIR, STTR, and ATP
programs have been. Conceptually, these programs have helped in
this process, but often these grants fail to provide a
sufficiently significant amount of capital. Of the $100M in
high-risk capital spent by Nanosphere in its March 1 commercial
launch of products, approximately $7M was provided by
government-funding sources. However, if I subtract the
biosecurity contract, the total government support has been
less than $2 million.
To some degree, the competitive process of grant-review and
award provides third-party verification of the potential value
of the science, especially in the early-development phases
where capital is high risk. What the government can do to
address this need is to provide additional incentive for
private-sector investment in the form of a program of tax and
investment credits will help mitigate risk for early capital
and provide additional incentive for investments directed at
goal-oriented research and development programs. Focusing
investment and tax-credit programs at specific problems enables
the governments to broadly direct investment while placing the
onus of efficiency and effectiveness of investment on the
private sector. Since private investors use a competitive,
market-driven mechanism to select companies, these tax and
investment credits will benefit those companies with the most
potential to produce meaningful applications.
The third question was whether or not there are areas of
focus for commercialization that will position the Nation for
leadership. These goal-oriented development programs will
translate much of this new science into platform technologies
that will likely impact several industries, but clearly there
are two areas of focus where the U.S. has strong potential:
energy and health care. Our growing energy needs are evident,
and in health care, we are both the largest provider and
largest consumer in the world. Historically, health care has
not scaled the way other industries have, driven by innovations
and technology. Where is the leverage? Nanotechnology holds
promise for impacting every aspect of medical care from
research, to diagnostics, to imaging to therapeutics.
Nanosphere's molecular diagnostics platform is but one example
of nanotechnology enabling breakthroughs in medical
diagnostics, replacing technologies that are decades old.
In conclusion, the U.S. must retain its leadership in this
industry, changing technology, which has the potential to
realign global competitiveness. The U.S. Government must set
the gold standard in supporting an efficient and productive
climate, not only for discovery, but also for commercializing
nanotechnology innovation. Not only will such an initiative
enhance American competitiveness, but it will also address
significant issues that will impact generations to come. Thank
you, Mr. Chairman and Members of the Committee.
[The prepared statement of Mr. Moffitt follows:]
Prepared Statement of William P. Moffitt
I would like to thank you, Mr. Chairman, Ranking Member Ehlers, and
Members of the House Research and Education Subcommittee of the
Committee on Science and Technology for the opportunity to testily on
this critically strategic question.
My name is Bill Moffitt and I am the Chief Executive Officer of
Nanosphere, Inc. Nanosphere develops, manufactures and markets an
advanced molecular diagnostics platform, the Verigene System, that
enables simple, low cost and highly sensitive genomic and protein
testing on a single platform. Our mission is to improve the diagnosis
and treatment of disease by enabling earlier access to, and detection
of, new and existing biomarkers.
Nanosphere was founded in the year 2000 based upon nanotechnology
discoveries made by Dr. Robert Letsinger and Dr. Chad Mirkin at
Northwestern University in Evanston, Illinois. Among other
achievements, these discoveries made possible the reliable production
of functionalized gold nanoparticles that have molecules such as DNA,
RNA or antibodies attached to them. These functionalized gold
nanoparticle ``probes'' very specifically bind to nucleic acid and
protein targets of interest thereby creating a platform for accurate
and sensitive diagnostic applications.
Since its founding, Nanosphere has made continuous enhancements to
the original technology advances by coupling the gold nanoparticle
chemistry with multiplex array analysis, microfluidics, human factors
instrument engineering and software development to produce a full-
solution, molecular diagnostics workstation, the Verigene System. The
underlying core nanotechnology imparts characteristics to diagnostic
tests that result in a platform that is very sensitive, easy to use,
accurate and inexpensive, thus further enabling decentralization of
complex diagnostic tests while lowering the cost of such testing.
Nanosphere is now a fully-integrated diagnostics company with
established cGMP manufacturing operations, leading edge research and
development teams, and veteran customer service and support teams.
In November 2007, Nanosphere received FDA clearance to market the
Verigene System and the first warfarin metabolism test ever cleared by
the FDA. Warfarin-based anticoagulants, perhaps more commonly known by
a leading brand name, Coumadin, are widely prescribed to treat
thrombosis, abnormal clotting of blood, which can lead to stroke and
other life-threatening conditions. While this is an effective drug, it
is also the second leading cause of all adverse drug reactions, second
only to insulin. Adverse reactions include excessive internal bleeding
which can lead to complications including hemorrhagic stroke and death.
According to the FDA, tens of thousands of such adverse reactions occur
each year. The Nanosphere warfarin metabolism test, which detects
certain genetic mutations in patients, is used to guide appropriate
initial dosage to ensure safety in patient care. This is one example of
a complex genetic test that must be readily available to physicians on
a timely basis. This is just one example of how nanotechnology is
addressing significant issues in health care.
These nanotechnology probes also create an ability to detect
proteins, the building blocks and warning signs of the body, at a level
at least 100 times more sensitive than current technologies, which may
enable earlier detection of and intervention in diseases associated
with known biomarkers and may also enable the introduction of tests for
new biomarkers that exist in concentrations too low to be detected by
current technologies. We are currently developing diagnostic tests for
a variety of medical conditions including cancer, neurodegenerative,
cardiovascular and infectious diseases, as well as pharmacogenomics, or
tests for personalized medicine.
There is a growing demand among laboratories to implement molecular
diagnostic capabilities but the cost and complexity of existing
technologies and the need for specialized personnel and facilities have
limited the number of laboratories with these capabilities. We believe
that the Verigene System's ease of use, rapid turnaround times,
relatively low cost and ability to support a broad test menu will
simplify work flow and reduce costs for laboratories already performing
molecular diagnostic testing and will allow a broader range of
laboratories including those operated by local hospitals, to perform
molecular diagnostic testing.
Our effort at Nanosphere to improve diagnostic testing and provide
for earlier detection of diseases ranging from cancer to Alzheimer's to
cardiovascular disease is but one example of the potential for
nanotechnology. Developments in science support the prospects for
nanotechnology to have a significant impact on many industries.
Nanotechnology has the potential to shift markets in a global economy
and replace or greatly modify existing leadership positions. As such it
represents both an opportunity and a challenge for American
competitiveness.
The U.S. currently leads in science, but could lose the
commercialization race. While we are bearing the burden of fundamental
research a significant global investment in development programs to
commercialize nanotechnology is occurring in Asia. In fact, when
purchasing power and exchange rates are accounted for, Asia now leads
the world in nanotech funding.
In decades past, large corporations had significant internal
translational research efforts, but the landscape has changed.
Investments tend to be made in shorter-term improvements to existing
product platforms, while relying upon acquisitions of start-up
companies to provide longer-term replacements for core competencies. It
is a question of risk adjusted capital investment.
At the same time, start-up companies struggle to attract
significant venture capital funding until they have established the
commercial viability of their technologies. As a result, much of
nanotechnology's potential remains locked in the translational phase of
its life cycle. We have solid fundamental research but inadequate
effort is being made to translate that fundamental science to
specifically address important societal and economic problems.
Nanoscience needs to be directionally focused to enable fundamental
improvements in a number of industries ranging from energy to health
care to telecommunications and computing technology.
With that as context for my testimony, l would like to share with
you my thoughts on the Transfer of NNI Research Outcomes for Commercial
and Public Benefit, specifically addressing four questions:
1. What are the hurdles to the commercialization of nanotechnology?
a. First and foremost, lack of early stage capital for
cutting-edge, translational research. To go from lab to
product, a nanoscience concept must first find capital to
develop the core science into a ``platform technology.'' Such
platform technologies are usually novel materials or material
combinations that have the ability to generate multiple
products. It takes extensive capital to develop the platform
and demonstrate its potential and commercial viability. This
includes being able to reliably and cheaply produce the
platform, integrating the platform into a specific application,
tailoring it to improve the application's efficiency and then
scaling the manufacturing of the platform. Only at this point
can commercial efforts generate revenue and profits to reinvest
for commercialization of additional applications. The
significant amount of capital required and the early-stage,
high-risk nature of translating technology from lab to market
makes it difficult to raise capital for emerging nanotech
businesses. Many great nanotech scientific discoveries fail to
attract the extensive capital required for commercialization
and for this reason the gap between the lab and product
prototype is often called the ``valley of death.''
b. Second, lack of a good mechanism to balance focus on
multiple, high-potential technologies. The government should
focus more spending on translational work or goal-oriented
development programs with an appropriate balance on scientific
research. To realize the societal and economic benefits of
nanotech, government and private sector funds need to focus on
the nanotechnologies with the greatest potential applications.
Quite often capital is redundantly spread across too many
organizations each of which is aiming for the same target. As
an example, we still see requests from the military for the
development of a biosecurity testing platform that Nanosphere
has already developed and provided under contract. The
government needs to develop methods to address a broader
spectrum of nanotechnologies and control redundant spending.
Spending should factor in the existing investment in an area
and the potential of the technology to lead to an important
product.
c. A third hurdle to commercialization of nanotechnology is
difficulty in finding technical talent. Nanotechnology is
unique in its need for highly-trained scientists from multiple
disciplines. Since a given nanotechnology can enable multiple
applications, nanotech companies find themselves needing Ph.D.s
in both the underlying nanotechnology and in the specific area
of application. These highly-paid, high-quality jobs are
difficult to fill because of the well-documented decline in
STEM graduates. In addition to Ph.D.s, nanotech companies also
need trained and skilled laboratory technicians. There are
currently very few technical training programs producing
workers that fill this need. We can address both issues by
developing vocational curricula and deploying them in community
colleges and encouraging internships by high school and college
students that expose them to nanotech as a career.
2. What federal programs or activities can help to bridge the ``valley
of death'' successfully? How effective have the SBIR/STTR and ATP
programs been in this regard?
a. We must find a way for government funds to bridge the
``valley of death'' where promising science is unable to
attract sufficient capital to bridge the gap to corporate
sponsorship. This gap is in part a result of the fact that
corporate America is more interested in developing and
improving already proven technology platforms and the
government is largely focused on fundamental research rather
than goal-oriented research. Countries such as Taiwan, Korea
and China regularly leverage America's investment in
fundamental research by using government sponsored programs to
directly fund companies to commercialize that research and
develop products. America's position in the global market may
rest on retaining leadership in nanotechnology. To close the
``valley of death,'' we must invest more in goal-oriented
research and in helping translate research from the lab into
the marketplace.
Conceptually programs such as SBIR/STTR and ATP have
helped in this process, but often these grants fail to provide
a sufficiently significant amount of capital. Up to the point
of the first product launch of our nanotechnology-based
diagnostic platform Nanosphere had spent approximately $110M in
``high risk'' capital, with only $7M coming from government
funding sources including TSWG, SBIR/STTR grants and others.
However, if I subtract the biosecurity contract funding, the
total government support has been less than $2M.
While much of the early work on the science was funded
through NIH and NSF in a university research setting, those
expenses are minor in comparison to the cost of platform
development and commercialization. What SBIR/STTR and TSWG
funding did do was provide a certain element of validation for
private sector investors. To some degree the competitive
process of grant review and award provides third party
verification of the potential value of the science, especially
in early development phases where capital is at the highest
risk.
What the government can do to provide additional incentive
for private sector investment is to develop a program of tax
and investment credits which will help mitigate risk for early
capital and provide additional incentive for investments
directed at goal oriented research and development programs.
Focusing programs at specific problems enables the government
to broadly direct investment while placing the onus of
efficiency and effectiveness of investment on the private
sector. Since investors use a competitive, market-driven
mechanism to select companies, these tax and investment credits
will benefit those companies with the most potential to produce
meaningful applications.
3. Are there areas of focus for commercialization that will position
the Nation for leadership in nanotechnology?
a. While there are areas of focus that will position the U.S.
for leadership, it also makes sense to support goal oriented
research and development more broadly beyond today's primary
focus on basic science and discovery. Such goal oriented
development programs will translate much of this new science
into platform technologies that will likely impact several
industries.
b. Clearly there are two areas of focus where the U.S. has
strong potential, energy and health care. Our growing energy
needs are evident and in health care we are both the largest
provider and largest consumer in the world. Historically,
health care has not scaled the way other industries have,
driven by innovations in technology. Where is the leverage?
Nanotechnology holds promise for impacting every aspect of
medical care from research to diagnostics to imaging to
therapeutics.
In my own company we have taken basic science from
Northwestern University's Nanotechnology Institute and
converted it into a diagnostics platform that delivers three
distinct value propositions: 1) the ability to move complex
genetic testing into mainstream medicine, 2) the prospect of
earlier detection of diseases such as cardiovascular disease
and cancer as nanoparticle probes improve detection sensitivity
by orders of magnitude and 3) the prospect for developing tests
for diseases where none exist today as biomarkers of active
disease are undetectable by current technologies. Imagine a
future where economical, widely available genetic testing
provides the architectural game plan for personalized medicine
and a panel of ultra-sensitive biomarker tests specifically
tailored to an individual monitor for the earliest on-set of
disease, a timeframe when therapies are most effective.
4. Are there any barriers to commercialization imposed by current
intellectual property policies at NNI supported user facilities, and if
so, what are your recommendations for mitigating these barriers?
a. The issues for user facilities are:
i. Availability and proximity--Although the user
facilities are geographically dispersed, they are not
always proximate to business users. Furthermore, there
is no single source of data on the services these
facilities provide or the equipment they have, making
it difficult for many companies to access them
efficiently. An effort should be made to create a
central database where potential users can see all
facilities and their available services and equipment
and to create new facilities in locations where
nanotechnology centers of excellence are emerging and
translational development can be most effectively
developed. As an example Chicago does not have a user
facility in the National Nanotechnology Infrastructure
Network (NNIN) in sufficiently close proximity even
though the surrounding area has many nanotech
companies.
ii. Cost and intellectual property--These facilities
charge ``full cost recovery'' which means a significant
overhead burden (not related to the facility or service
itself) is layered onto the direct cost of the service
provided, typically making the cost of use
significantly higher than the value of the service
provided. In addition, the facilities need strong
assurances that protect companies with regard to IP and
trade secret information that may develop.
iii. Support services--Most start-ups do not have
personnel that are trained and proficient in using
these facilities. Users need support personnel to make
use of the facilities or must invest significant time
and effort into educating facility personnel prior to
engaging for what may ultimately be short-term
projects. This may also add to the concern for
protection of confidential information and intellectual
property, especially in circumstances where the
facility sponsor may try to claim joint ownership of IP
generated during the use of the facility. These issues
make the use of these facilities cost-inefficient for
most businesses.
Conclusion
The U.S. must retain its leadership position in this industry-
changing technology which has the potential to realign global
competitiveness. The U.S. government must set the ``gold standard'' in
supporting an efficient and productive climate, not only for discovery,
but also for commercializing nanotechnology innovation. Not only will
such an initiative enhance American competitiveness, but it will also
help us address significant issues that will impact generations to
come.
Thank you for the opportunity to voice my concern and share my
perspective with the Committee.
Biography for William P. Moffitt
William Moffitt became President, Chief Executive Officer and a
Director of Nanosphere, Inc. in July 2004. Nanosphere (NSPH) is
developing and commercializing a nanotechnology-based molecular
diagnostics platform for earlier detection of disease and economical
decentralization of complex genetic testing. Mr. Moffitt has 35 years
of experience in the diagnostics and medical device industry, and has
spent the last 20 years developing novel technologies into products and
solutions that have helped shape the industry.
Prior to joining Nanosphere, he served as President and CEO of i-
STAT Corporation, a developer, manufacturer and marketer of diagnostic
products that pioneered the point-of-care blood analysis market. Mr.
Moffitt led i-STAT from its early research stage to commercialization
and through its initial public offering in 1992 to its acquisition by
Abbott Laboratories in 2003. Prior to i-STAT, Mr. Moffitt held
increasingly responsible executive positions from 1973 through 1989
with Baxter Healthcare Corporation, a manufacturer and distributor of
health care products, and American Hospital Supply Corporation, a
diversified manufacturer and distributor of health care products, which
Baxter acquired in 1985. Prior to entering the medical device and
diagnostics field, Mr. Moffitt was director of an experimental
education program in science funded under Title III of ESEA in the city
school system in Washington, N.C.
Mr. Moffitt is also active on the boards of other companies and
industry associations. He is Non-executive Chairman of the board of
Glysure, Ltd., a privately held U.K.-based company developing
continuous intravascular blood glucose measuring devices for monitoring
insulin therapy in critical care settings; he is a Director of Nevro,
Inc., a privately-held company developing therapeutic pain management
devices; he is a Director of Rapid MicroBiosystems, a privately-held
company commercializing systems for rapid detection of contamination in
pharmaceutical manufacturing; and, he is a Director and a member of the
Executive Committee of the Illinois Biotechnology Association
(``iBIO'') where he also serves as an entrepreneurial coach for start-
up companies.
Moffitt earned a B.S. in Zoology from Duke University.
Chairman Baird. Dr. Melliar-Smith.
STATEMENT OF DR. C. MARK MELLIAR-SMITH, CHIEF EXECUTIVE
OFFICER, MOLECULAR IMPRINTS, AUSTIN, TEXAS
Dr. Melliar-Smith. Good morning. My name is Mark Melliar-
Smith, and I am the Chief Executive Officer of Molecular
Imprints. I am please to be able to provide testimony today in
support of the Nation's efforts in nanotechnology. My company
is but one example of the successful support of new technology
by the U.S. Government, and I am happy to talk about this
success.
Molecular Imprints is a start-up company which was spun off
the University of Texas at Austin in 2001. The company was
created to commercialize a newly invented technology called
step-and-flash imprint lithography, which has demonstrated the
capability to pattern features down as small as the diameter of
a DNA molecule.
Nano-lithography is the method used in creating very small
patterns on a substrate. The technology is critically
important, especially in the production of electronic devices
such as computer chips. Today, the technology used to do this
is an optical technique, much like making photographic prints,
where the patterns are projected onto a light-sensitive resist
on the substrate using a very sophisticated and expensive
camera.
Chairman Baird. Could you make sure you mic is on, Dr.
Smith?
Dr. Melliar-Smith. It began to be limited by the wavelength
of light. It is a very difficult to make a 50 nanometer feature
with a 20 nanometer light source.
Molecular Imprints has developed a superior alternative
technique called nano-printing. We make a very accurate master
using an electron beam tool of almost unlimited resolution and
then use the master to simply print, using a special ink, the
features on the substrate.
[Graph.]
Dr. Melliar-Smith. As you can see from this graph, the
quality of the images are much better, and the simplicity of
the tool makes it much less expensive. The analogy to
photography can be extended here. We don't make prints
photographically anymore; we simply print them.
The step-and-flash imprint development will have
significant impact on the United States economy. The original
optical photographic techniques were invented in the United
States in the late '50s and early '60s and build up into a
billion-dollar industry. However, in the '80s and '90s, the
U.S. lost this capability to superior products from Europe and
Japan, and now this $10 billion industry is almost entirely
sourced from outside of the United States, as shown in this
chart.
[Chart.]
Dr. Melliar-Smith. At Molecular Imprints, we intend to turn
this around and bring the business back to the U.S. through the
use of new and superior nano-printing technology.
However, the economic impact extends well beyond the $10
billion annual market for the litho tools themselves. This
technology enables multiple industries. The largest is a $250
billion computer chip industry, with companies such as Intel
and Texas Instruments, which itself enables the $1.5 trillion
electronics industry and much of our advanced weapons systems.
This industry has been built over the past 50 years on our
ability to make smaller transistors every year.
The disk drive industry, with companies such as Seagate and
Western Digital is also moving into nanotechnology. To increase
the density of their drives, they will soon have to start
patenting the magnetic disks themselves, and I have shown an
example of this in this particular chart here.
[Chart.]
Dr. Melliar-Smith. What you can see are 20 nanometer
magnetic pillars on a magnetic disk drive, and a large disk
drive in the future will have ten trillion--yes, that is
trillion with a t--on each drive. We are also working with the
LED industry to place nano-features on high-brightness light
emitting diodes to increase the efficiency and brightness. The
objective is to make the LED a replacement for all forms of
architectural lighting, which if completed, would serve a
significant fraction of all of the electricity used in the
United States, and would remove about 50 million tons of carbon
from the air each year. Finally, looking further out, there is
growing interest in the use of nano-medicines. By making the
drugs into small particles, typically less than 50 nanometers,
and of a particular shape, there is evidence that they can be
made much more effective and much more specific.
[Slide.]
Dr. Melliar-Smith. To create this opportunity, we received
a large amount of help from many different government agencies,
shown in this slide here, and the purpose of my testimony today
is to mention that.
As you can see--and I won't read through them--we have
received support in significant amount from several different
government agencies and also from the University of Texas. In
all of the cases, the programs and project management of these
funding agencies has, in my mind, been impeccable, maintaining
fiscal responsibility for the taxpayer without overly micro-
managing the technical efforts.
We have also received extensive help from government-funded
facilities. Recently, especially useful has been our access to
state-of-the-art electron beam tools at the molecular foundry
at Lawrence-Berkeley National Laboratory in California, to make
the very fine imprint marks required for our technology.
The government funding has been supplemented by over $60
million of venture capital and industry investment, and in
fact, in my experience, I found no dichotomy between the two
sources of funding. They seem to be synergistic and
collaborative. We are grateful for all of this support. Our
company has already grown to 90 people, and I might add, with
an average salary of $95,000 a year, so they are really good
jobs. And we expect to get $25 million in revenue this year,
twice that of 2007. And essentially, we see an almost unlimited
future for ourselves and our customers. None of this would have
been possible without the various forms of support I have
described.
Now, I think we all know that one swallow does not a summer
make, but if you will grant me an example of one, I would say
that the programs have been very successful. Thank you.
[The prepared statement of Dr. Melliar-Smith follows:]
Prepared Statement of C. Mark Melliar-Smith
Good morning. My name is Mark Melliar-Smith and I am the Chief
Executive officer of Molecular Imprints. I am pleased to be able to
provide testimony today is support of the Nation's efforts in
nanotechnology. My company is but one example of the successful support
of new technology by the U.S. Government, and I am happy to talk about
this success.
Molecular Imprints is a start-up company, which was spun out of the
University of Texas at Austin in 2001. The company was created to
commercialize a newly invented technology called ``Step and Flash
Imprint Lithography,'' which has demonstrated capability to pattern
features down as small as 3nm, or about the diameter of a DNA molecule.
Nano-lithography is the method of creating very small patterns on a
substrate. The technology is critically important, especially to the
production of electronic devices such as computer chips. Today, the
technology used to do this is an optical technique, much like making
photographic prints, where the patterns are projected onto a light
sensitive resist on the substrate using a very sophisticated and
expensive camera. However this technology has begun to be limited by
the wavelength of light. It is very difficult to make a 50nm feature
with a 200nm light source.
Molecular Imprints offers a superior alternative based on nano-
printing. We make a very accurate master using an electron beam tool of
almost unlimited resolution and then use the master to simply print,
using a special ink, the features on to the substrate. As you can see
the quality of the images are much better and the simplicity of the
tool makes it much cheaper. The analogy to photography can be extended
here. You don't make prints photographically any more--you simply print
them.
The Step and Flash Imprint development will have a significant
economic impact on the United States. The original optical
photolithographic techniques were invented in the United States in the
late fifties and early sixties and build up into a billion dollar
industry. However, in the eighties and nineties the U.S. lost this
capability to superior products from Europe and Japan, and now this
$10B industry is almost entirely sourced from outside the United States
as shown on this chart. At Molecular Imprints we intend to turn this
around and bring the business back to the U.S. trough the use of a new
and superior nano printing technology.
However, the economic impact extends well beyond the $10B of litho
tools themselves. This technology enables multiple industries. The
largest is the $250B computer chip industry with companies such as
Intel and Texas Instruments--which itself enables the $1.5T electronics
industry and much of our advanced weapons systems. This industry has
been built over the past fifty years on our ability to make smaller
transistors every year. The disk drive industry, with companies such as
Seagate and Western Digital, is also moving into nanotechnology. To
increase the density of their drives, they will soon have to pattern
the spinning magnetic disks--an example of which is shown here. These
are 20nm magnetic pillars and a large disk drive in the future would
have 10 trillion--yes, trillion with a T, on each drive. We are working
with the LED industry, to place nano features on high brightness LEDs
to increase their efficiency and brightness. The objective to is make
LEDs a replacement for all architectural lighting which if completed
would save a significant fraction of all the electricity used in the
United States and remove 50M tons of carbon from the air each year.
Finally, looking further out, there is a growing interest in the use of
nano medicines. By making the drugs into very small particles--less
than 50nm, and of a particular shape, there is evidence that they can
be made much more effective and much more specific.
So our technology has multiple applications from semiconductors to
drugs to energy saving device for clean technology.
To create this opportunity--we have received a large amount of help
from many different government agencies--and that is the purpose of my
testimony today. Chronologically we have been supported by:
The University of Texas where the basic invention was
created in the mid nineties and I would be remiss if I did not
put in a word for the large research Universities in the
country--they have become a great resource especially as the
large corporate labs like Bell Laboratories are less available,
and a resource that is hard to duplicate/outsource.
Some of the early funding to the University of Texas
in the late nineties came through the joint activities of my
colleague from SRC and Defense Advanced Research Projects
Agency DARPA.
Our first funding for Molecular Imprints in 2001 came
from the DARPA to the tune of $3.5M.
We also won a major Advanced Technology Program grant
of $9M in 2004 from the Department of Commerce.
And finally a $2.6M contract from the Office of Naval
Research to help make the process more production worthy.
In all cases the program and project management from these funding
agencies has been impeccable, maintaining fiscal responsibility without
overly micro-managing the technical efforts.
We have also received extensive help from government funded
facilities. Especially useful has been our access to state-of-the-art
electron beam tools at the Molecular Foundry at Lawrence Berkeley
National Laboratory in California to make the very fine imprint masks
required for our technology.
The government funding has been supplemented by over $60M worth of
ventures capital and industry investment--and I have found no dichotomy
between the two sources of funding. They are synergistic and
collaborative.
We are grateful for all of this support. Our company has already
grown to 90 people, and I might add with an average salary in excess of
$95K per year, so these are really good jobs, and we expect $25M in
revenue this year, twice that of 2007, and essentially we see an almost
unlimited future for ourselves and our customers. None of this would
have been possible without the various forms of support I have
described.
Now I think we all know that one swallow does not make a summer,
but if you will grant me an example of one--I would say the programs
can be very successful.
Biography for C. Mark Melliar-Smith
Experience Summary:
General management (President and CEO of SEMATECH,
CEO Molecular Imprints, CTO for Lucent Microelectronics)
Managing a start up operation (GM of AT&T
Microelectonics Lightwave Business Unit; CEO Molecular
Imprints)
Extensive R&D and manufacturing experience in
integrated circuits, photonics, fiber optics (Executive
Director at Bell Labs; managed large electronic component
factory for AT&T Technology Systems)
Venture capital--selection and support of start-up
companies (Venture Partner, Austin Ventures; President MSC)
Managing a large collaborative program (CEO of
SEMATECH)
2004-Present--COO and then CEO (from October 2005); Molecular Imprints
Molecular Imprints, located in Austin, Texas, was founded in 2001
with the objective of developing a totally new form of lithography for
the semiconductor industry. Founded by two Professors at UT-Austin, it
has been very successful both in terms of product development and
sales, and also in raising venture funding. The company is growing
rapidly and has 80 employees.
2003-Present--President; Multi-Strategies Consulting (MSC)
Consulting and investment company focused on high tech, early stage
start-ups in Central Texas.
2002-2003--Venture Partner; Austin Ventures
Austin Ventures is one of the largest venture capital companies in
the southwest, focusing on software, telecommunications and
semiconductors. With several billions in investment and some 40+
companies in its portfolio, the organization focuses not only on
finding and funding innovative new high tech companies, but also
supporting and nurturing them through the first five years of their
existence. My responsibilities focused on semiconductors, photonics and
components.
1997-2001--President and CEO of SEMATECH
Responsible for all aspects of a $160M, 600 person semiconductor
R&D consortium, reporting to a board of 13 member companies which
represent about 50% of all integrated circuit production in the world.
Lead a direction change from the original mission for SEMATECH
(restoring U.S. preeminence in manufacturing) to one of driving the
technology roadmap acceleration from three to two year development
cycles. Expanded membership to include the major semiconductor
companies in Europe, Taiwan and Korea.
1990-1997--Chief Technical Officer, Lucent Technologies
Microelectronics
Responsible for R&D and Technology for Lucent Microelectronics
Business Units including silicon integrated circuits, photonics,
gallium arsenide, power supplies and printed wiring boards. Reported to
the President of Lucent Microelectronics and was a member of Executive
Committee. Greatest challenge was to not only maintain state of the art
R&D, but also to help transition an historically vertically integrated
cost center (AT&T Western Electric) to an independent, market based
entity with profitable P&L and $4B in revenue, 80% of which came from
outside the company. Member of the 12 person Bell Labs Council advising
President of Bell Labs.
1988-1990-- Vice President and General Manager--AT&T Microelectronics,
Lightwave Business Unit
1987-1988-- Executive Director, Bell Laboratories Photonics and
Microelectronics Division
1984-1987-- Director of Engineering and Operations, AT&T Kansas City
Works, Western Electric.
1970-1984-- Various engineering and management responsibilities in Bell
Laboratories
Various pre-1970 employment in Canada (technical sales), Australia
(chemical engineering), Europe (technician, manufacturing tech)
Board Memberships
Power-One Inc., Camarillo, CA; Chair of Governance Committee, Member of
Audit Committee
Technitrol Inc., Trevose, PA; Chair of Audit Committee
Molecular Imprints Inc., Austin, TX
Metrosol, Austin, TX
Education
1967--BS Chemistry, Southampton University, England
1970--Ph.D. Chemistry, Southampton University, England
1986--MBA, Rockhurst College, Kansas City, MO
Community activities:
1998-present: Member of the Engineering Advisory Board at the
University of Texas.
Drawn from around the United Sates, this group meets several times
per year to advise the Dean and faculty of the College of Engineering
on a wide variety of policy issues such as intellectual property
strategies, fund raising, government and funding agency relations etc.
In addition, members of the EFAC also provide resources for students as
needed in special cases.
2006-present: Member of Board of Trustees for Huston-Tillotson
University
HTU is a Historically Black University located in Austin. The Board
of Trustees meets on a regular basis to advise the President of the
University and to provide expensive support in the area of business
affairs, fund raising, community relations, student internships, etc.
1998-present: Board of Capital IDEA (Board Chair 2002-2004)
Capital IDEA is a non-profit organization devoted to adult
education in Central Texas. Using government and private funding, it
provides financial assistance, mentoring, books and tuition for under-
employed adults to allow them to build their skills to achieve a
position with a living wage and benefits; graduating approximately 100
people each year.
Discussion
Chairman Baird. Outstanding testimony, and we appreciate
very much your insights and expertise. I want to focus on two
things as we look to reauthorize the bill. Give us, if you
use--and I am going to rule out one option. You can't just say
more money. We hear that enough on Capitol Hill. We have a $400
billion deficit this year, a multi-trillion-dollar debt, as you
know, and so the more money thing I will take off the table.
Apart from that, if you could each pick one thing to do and one
thing not to do as we look towards reauthorizing this bill,
what would be? And I will go with you, Mr. Rung, and work
across from you.
Mr. Rung. The one thing to do would be to have some
intentional and accountable with measures funding for
commercialization associated with multi-year, large award so
that might take the form as a gap fund such as ours that
provides an incentive and some specific funding. In our case,
it is grants to university projects in collaboration with
entrepreneurial startups with the goal being that the startups
raise funds.
In terms of the one thing not to do, I wasn't prepared for
that question, so I guess I will just say ``more of the same''
without thinking through----
Chairman Baird. We have yet to repeal the law of unintended
consequences. That is the one law that doesn't sunset here, so
I am always cognizant. I ask this very often whatever the
topic, because I just want to not make mistakes that set you
back in our effort to move things forward.
Dr. Chen.
Dr. Chen. The one thing to do, I think I would mirror what
Mr. Rung said, which is to take a portion of it and have it
targeted to help and support university-industry partnership on
a few specific areas and projects.
In terms of things not to do, I think the flip side is for
the basic research funding. You don't want to target that too
much. You want to leave that open, because that is where you
don't want to pick and choose what the winners are because then
you prevent the unexpected discovery from happening.
Dr. Welser. Because they already took my university-
industry partnerships, the other thing I would say is do look
to what the states are doing as well in this. I mean the states
are being very responsive to the NRI, in particular, in terms
of finding it as an opportunity to build up new economies. And
they are willing to invest money in buildings and facilities
around the universities. They can't necessarily afford all of
the equipment and things that are going to go into that or the
types of infrastructures costs that go along with it, but they
are ready to catch a lot of this stuff as it comes out and will
be more than willing to fund startups as well on that, so I
think leveraging that capability with federal funds is very
important.
Mr. Moffitt. I would like to see the initiative balance
spending between basic research and bridging the gap to
commercialization of products. Historically, we focused a
tremendous amount of money and effort at developing the
science. It is not time to bring some of that through to
fruition so that those industries profit and jobs can being to
fuel and repay back in to the cycle, if you will.
The thing I wouldn't do is ignore the need for funding to
develop human resources. To all of us that are in the
commercial side of this, this is extremely critical.
Dr. Melliar-Smith. I think the point that I would like to
focus on are the utilization of the national laboratories. They
have been built up over 50 year or longer in the country, and
they are an enormous resource for the economy and the well
being of the Nation. I think anything that we can use to try to
draw the national labs more into the world of innovation and
commercialization would be enormously beneficial.
After the Second World War, this nation and a lot of its
industries were built on the basis of large, corporate
laboratories, which now, unfortunately, have fallen, generally,
onto harder times, so it is rare that you can find a really
talented group of multi-disciplinary world-class scientists.
And those are located in the national labs now, but somehow we
need to find a way to get them more involved.
And the thing that we don't want to do, it is always
difficult for me to say stop doing something, because I have
only dealt with mostly successful activities with the
government, so if I might be excused from straying a little bit
of, perhaps, this committee, I would like to see us not deny
immigrants the chance to work in this country. Many of the
universities have got large numbers of graduate students who
were not born in the United States. They are another enormous
beneficial aspect of our university system which we ought to be
able to exploit. Thank you.
Chairman Baird. Outstanding comments. My time will shortly
expire, so on the second round I will be asking you about
education issues. Expensive infrastructure may be better said
that it costs to do nanotech work, how do we export that? Can
we use web-based instruction or remote access to help, for
example, community college students, et cetera, along the lines
of something Mr. Moffitt said, but I hear it from nanotech
folks as well that that pipeline of students that would get
this great gee-whiz development, great economic potential, but
we don't have the pipeline, and that is on of our risks in
terms of where we lose the technology, is another country has
the human resources to exploit the developments that we make
here. We have seen this in other fields in the past. So I will
yield to Dr. Ehlers or recognize Dr. Ehlers for five minutes,
but I will get back to that question in a moment.
Mr. Ehlers. Thank you, Mr. Chairman. And first, I would
just like to make an observation. Looking around the room, you
will notice that this hearing is fairly lightly attended, both
in the audience and by Members, and I don't even know if
members of the press are here. But yet I think this particular
hearing, and certainly this topic, will have much greater
impact on the future of this nation and its economy than most
anything, certainly more so than whether or not Roger Clemens
took steroids, which has preoccupied the press and part of the
Congress for some time.
Chairman Baird. If we had the proper chips, we could have
assessed whether he took steroids--a plug for Mr. Moffitt.
Mr. Ehlers. Right. It is just striking to me, and it shows
me the importance of this committee and the lack of
understanding of the public and occasionally our colleagues of
the importance of the issues that we deal with.
I thank the panel for being here. Your testimony has been
outstanding and very helpful to me. In some cases, you have
answered the questions I was going to ask, but let me just try
to get a cross section. A few of you have answered this
already, but I want a broader and more complete response.
For example, Mr. Moffitt and I think Dr. Chen, as well,
mentioned that the U.S. currently leads in the science of
nanotechnology but could lose the commercialization race. Now,
the question is how can we turn that around? It is not just a
matter of money, you know as well as I. Education comes in here
and a lot of other factors. You also mentioned immigration. I
think I would refer you to John McCain's campaign. Maybe you
could help in that process because he seems to be the only one
supporting proper immigration.
But what is the answer, or what can we do in the Federal
Government to help with the commercialization, given our
current budget situation, not a lot of money. What do you need?
Do you need more encouragement? Do you need more security to be
able to raise money, et cetera? What is your response?
Dr. Chen, why don't you kick it off?
Dr. Chen. I would say that actually one of the things goes
back to what you referred to which is why people aren't
interested. And it is the technology demonstration projects,
actually, is something that can address both issues because if
you have a few examples of things where we have taken things
from the lab and turned it into a commercial success, it starts
to feed the pipeline. People see that you can succeed, that you
can accelerate progress in a particular area, and the success
there makes people realize that you can have success in other
directions, so I think these technology demonstration projects
where university and industry work together is one area where
you don't need a huge amount of investment because you are not
going to invest in hundreds of them, but if you invest in a few
as a starting point, you can make things move forward.
And in terms of the education and immigration, I totally
agree. I think that this country needs to recognize that we are
going to lose a lot of knowledge if we make it difficult for
people to stay here. My parents came here as graduate students.
I was born here, and so that is an example of how encouraging
the people we train to stay here is going to help this country.
Mr. Ehlers. Mr. Moffitt.
Mr. Moffitt. The single greatest hindrance to
commercialization, I think, today, and keeping it in this
country is at the root of that education. We simply lack the
workforce. This requires a highly skilled, very technical labor
organization, not dissimilar from what the semiconductor
industry required 15, 25 years ago. So this, again, is against
a falling tide of graduates, STEM graduates, if you will, so I
think education is certainly one yet to the answer here.
And I think the second is the ability to provide validation
for the private sector investments in a given nanoscience. Now,
one of the greatest difficulties is that extremely high risk
capital that is used to start a small venture, and then have
the ability to cover the gap, if you will, and prove out the
commercial viability or value of the product and that, I think,
is where if the government would focus spending--I won't say
more--but spending on the gap, if you will, that serves to
validate, and validation brings in private-sector money, of
which there is an abundance in this country.
Mr. Ehlers. Okay, I appreciate those comments because I've
spent about 40 years of my life trying to improve math and
science education in the elementary and secondary schools,
including during my time in Congress.
Just a quick follow-up, Mr. Moffitt, and then there will be
a quick question for Dr. Melliar-Smith. Are you having trouble
filling spots in your company? Are you having trouble hiring
qualified people?
Mr. Moffitt. Most definitely. In fact, I would tell you
very quickly that yesterday, in a staff meeting, we discussed
the potential to move manufacturing of our products offshore to
get access to a labor force that would be sufficient to supply
our needs.
Mr. Ehlers. Okay, and a quick follow-up from Dr. Melliar-
Smith. You commented about use of the National Labs. How about
the university centers?
Dr. Melliar-Smith. I believe the universities also fall
into the same category of being a national resource for
research and development. And what I might add, that is very
hard to duplicate or outsource. It takes several generations to
build a great research university, and we need to support those
activities.
The only comment I would make in the form of sort of
constructive criticism, if I may, is that I think that the
universities could provide an increasing reference toward
commercialization in their tenure decisions for professors. We
have been very fortunate in having a professor at the
university who spent a lot of time at Molecular Imprints as our
chief technical officer. I am not sure that it has helped his
tenure track to a full professor position, and I think in some
universities such activities are, in fact, almost frowned on.
So any encouragement we can give to universities that
commercialization of the inventions of which they act as a
wellspring for could be used further the academic career of the
professor.
Mr. Ehlers. In my experience in universities, the answer
has been that the professors go off and form their own
companies and take care of the commercialization that way,
which is not healthy for the universities. With that, I yield
back.
Chairman Baird. But it makes tenure a whole lot less
relevant if you are successful.
Mr. Ehlers. Go back and donate a building.
Chairman Baird. Dr. Lipinski.
Mr. Lipinski. Thank you, Mr. Chairman, and I want to try
not to repeat the same questions. I think all three of us
doctors up here think alike on these questions, but I want to
echo a little bit what Dr. Ehlers said about that is apparently
here on this issue. Tomorrow, we are going to have Bill Gates
in this room, and I am sure that everyone will be packed out
the doors and media will be here, and Bill Gates is going to
come and address, talk to the Democratic Caucus. I really think
what we should have, what would probably be more helpful to our
country is to have the five of you come and speak to the
Democratic Caucus and see if you could really raise the
interest.
I have been discussing this. I don't know if it is because
people hear nanotechnology, and they just don't understand it,
they feel that it is too complicated. But I really think that
this is critical to the future economic prosperity of our
country. And there is a couple of things sort of around the
margins, coming off of the questions before: what have some of
the states done that you see as very successful in terms of
helping to promote nanotechnology. I know that New York has
done a lot, but who else has done things that you think are
successful? I will start with Dr. Welser.
Dr. Welser. I would say, New York, I think is a great
example, so I won't dwell on that one right now. The other
things we have seen going on, though, in Texas, they put
together an endowment for pulling in new faculty, specifically
in the area of nanoelectronics and nanotechnology, when they
started the center, which then allowed them to pull in more of
a critical mass of people there working on this effort, both
for training the students and for doing the research. I think
that is extremely useful because getting enough people at a
given university center to work on it oftentimes makes the
difference between whether you just have a few good products
coming out from professor's lab or a whole bunch of ideas
building off each other.
The other thing we see is, in one of the Midwestern States
we are looking at right now, they are specifically looking to
try and build up incubators outside of the university that can
catch some of the spin-offs, but have the university professors
help them in the design of that and actually be able to utilize
those facilities in the early-stage research before it is ready
to be, necessarily, a technology that is going to go out for
actual R&D. I think this is a somewhat smaller investment than
what, say, New York did to build the entire nanotech center
there. But by doing that in a targeted way, I think it is still
going to have a big impact.
Mr. Lipinski. Anyone else have anything on what other
states have done?
Dr. Melliar-Smith. If I might mention that Texas has
something called Emerging Technology Fund, to the tune of about
$100 per year, and that money is passed out to aspiring small
startup companies. Many of them are actually pre-venture
capital companies, so they are very early stage funding. Some
are later-stage funding. And that actually has been very
successful in terms of Texas being able to support a wide
variety of different startup companies in different industries.
I think that program has been pretty successful.
Mr. Moffitt. I am also aware that in the past, the State of
New Jersey has allowed small entrepreneurial companies in
certain industries and meeting certain qualifications to sell
their State net operating loss carry-forwards to large
industries. The large industry buys it and uses it as a credit
against their own taxes if you will. The State of Wisconsin has
a program of matching grants in certain segments of the
industry. The State of Indiana has a program that supplies SSRT
grants for the development of science that is invented inside
of the state and commercialized inside of the state and the
State of Illinois is considering a number of different of these
approaches to try to build a greater center, if you will, of
nanoscience, and a center of excellence in that area.
Mr. Rung. Well, the State of Washington, for many years has
had an organization called the Washington Technology Center
which is a State-funded or initiated user facility that
performs work for a large number of companies and also has a
twice annual competition for research support grant for
companies. They are right adjacent to the University of
Washington Nanotechnology Center. They have been a model for us
in a lot of what we have done.
In Oregon, we have the Signature Research Program. ONAMI is
the signature research center. There are two more now. I think
one of the things that has worked very well, maybe better than
we thought it would, is to encourage the research universities
and the state to collaborate very deeply with one another. That
sounded like something that might be difficult at first, but it
has gone exceedingly well, and we have ideas, successes in
regarding research funds and commercialization that would not
have occurred but for that collaboration.
Dr. Chen. I think one thing that is a little bit of a
difficulty in terms of State funding is that, again, because
nanotechnology cuts across industry sectors--it can have
relevance to biotech; it can have relevance to energy, to
automotive--it is not like a sector where you can have whole
bunch of companies that come together and go to the State and
say we need this. We have that in the state in terms of
biotechnology, but there is not really that equivalent cluster
of nanotechnology identified in the state, even though many of
the companies in the state do benefit from nanotechnology. I
think that is one consideration.
Mr. Lipinski. Thank you. Let me throw this out. I don't
want to get an answer. It will go into the question that the
chairman had. In terms of education, what do we really need--I
should say are we looking for in a workforce, to work in
nanotechnology? What exactly are we trying to do and does that
just mean encouraging STEM education across the board, across
all students, or are we looking for something more
concentrated? But I will turn it over to Chairman Baird for his
questions on education.
Chairman Baird. Let us take that as a friendly amendment to
my question and open that up to what we need to do and how we
can better do that and how the nanotechnology initiative might
adapt it in some fashion to encourage that or if their another
vehicle that might be better to do it.
Mr. Rung. I guess I will start. One of the panelists
mentioned internships or experiences for students. We call this
inquiry-based science and think this is extremely important.
You know, you can talk to a child and try to push information,
but the experience of doing something is very powerful. The
Nanoscale Informal Science Network is a great thing. We are
very proud of our local Oregon Museum of Science and Industry
and for the outreach that they are doing, even in rural parts
of the state, also towards those experiences.
The goal, of course, is to have, you know, U.S. citizen
student, you know, persist, you know, through graduate degrees.
There is an increased demand for graduate degrees, and in the
absence of sufficient numbers of those at the time being, I
have to agree very strongly with the other panelist that we
must keep the immigrant advanced-degree people that we have
educated here. Otherwise, in the short-term, they will create
jobs overseas.
Chairman Baird. Let me follow up on that issue for just a
second. My own belief is, and I can tell you in our local
community, there are industries who have really stepped up to
the plate to better educate the local populous. They take Ph.D.
levels and put them into the schools. They bring high school
and community college students into their labs to work in an
internship, and quite frankly, there are other, comparable
high-tech industries that don't. And interestingly enough, it
is the latter that tend to be busting down our doors to expand
H1-Bs.
And I would much more be inclined to link increased H1-Bs--
and we will hear tomorrow, I think, from Mr. Gates, probably,
about the need to expand H1-Bs. I would be much more inclined
to expand H1-Bs based on a demonstrated effort to educate the
domestic populous rather than just ignore the domestic
populous. And I am aware that there is this piddling $1,500 fee
you get for an H1-B and that goes to an education, and that is
being used pretty well. But quite frankly, given some of the
data about under-funding and underpayment of H1-B recipients
here, how can we do this? How can you folks in the industry
reassure the American people that we are going to try to
educate our own kids so they can fill these gaps rather than
just trying to get folks from overseas, as valuable as they
are, and maybe have a synergy there to where every H1-B you
get, you have to demonstrate you are educating ten Americans,
something like that. I just put that out there.
So I am sympathetic to it, but I hear it far too often when
high-tech people come to us and say expand the H1-Bs, and we
knock on their door and say what are you doing for mentoring?
What are you doing for internships? What are you doing to
invest in the local school? Oh, gosh, you know, we are just too
busy. The economic climate is just too competitive, blah, blah,
blah, and I am kind of tired of it.
Dr. Melliar-Smith. Again, I guess my recommendation would
be to identify and speak with the large industry associations
that are asking for the H1-B visa and just lay it on the table.
They understand a simple partnership as well as anybody. I tend
to agree. My biggest goal is in fact to make sure that we
provide, you know, a green card to every student that graduates
from a large research university with a post-graduate degree in
an area this country needs. Now, I know that is difficult to
put in place in the present environment, but it is such a
simple thing to do, and I think everyone agrees that it would
be good thing to do, but it is difficult for us to make it
happen.
Chairman Baird. I would fully support it, providing that
the green card gets revoked if you don't dedicate some of your
time after you got the green card to educating American
citizens.
Dr. Melliar-Smith. That is fair enough. You can have them
do whatever you want.
Dr. Welser. I guess, just briefly back to question on
education, I think the first thing that, obviously, that we
would love to see is that the NNI can, in fact, fund all of the
stuff that is in the America COMPETES Initiative, and
obviously, we weren't successful in getting that through every
year. I think there is a lot of really good programs there,
both for helping research as well as education.
But the other thing that I think the NNI could do in its
reauthorization is try to identify some grand challenges and
big initiatives that can capture the public mind. I think the
nanotechnology is so large and so vague that sometimes it loses
some of its graspability by the general public. Maybe, you
know, looking for the next transistor isn't quite as sexy as
putting a man on the moon, but we can find some things out
there in nanotech that is stuff to grab people's mind, and
hopefully encourage students that this is an interesting area
to go into.
And lastly to your question on what kinds of education we
need. I do think it is much more cross-functional than it used
to be. One of the things we have found is we are working a lot
more with physicists and chemist and wishing we had more people
who knew organic chemistry in the semiconductor side as we are
trying to transition into more nanoelectronics sorts of
applications. Most of us were trained more in the inorganic
side of things and more on the engineering side, so we need
people with those skills, but we need them from the very
beginning to be talking with engineers and getting an
engineering background in their education so they understand
how you take organic chemistry and actually make a device or
make a product out of it.
Chairman Baird. As you may know, the America COMPETES Act
specifically addresses cross-disciplinary research and funding
for that kind of training. Unfortunately, we didn't get to the
appropriation last year. But in the budget, which just passed
the Committee last week, we have made space for substantial
increases. We'll bring that budget up tomorrow on the floor,
and expect the democratic budget will pass, and it has large
allowances for substantial increases in funding for America
COMPETES related activities.
Other comments on the education issue, especially how we
can skill it up to people who are not necessarily located in
the centers where you have got your equipment directly
available.
Dr. Welser. We have been involved in a project in the FEI
Company with a table-top scanning electron microscope that was
actually demonstrated here in Congress last year. I believe
there is a Nanotechnology in Schools Act that Congress is
considering that would provide funding or an opportunity to
place low-cost tools that expose students to hands-on
nanoscience, and so that would be one example, looking for
placement of those in community colleges or traveling units.
Chairman Baird. If I were a kid in rural Southwest
Washington, is there a way I could go on the net and tinker,
remotely, with some nanotech equipment? Dr. Chen, you seem to
have----
Dr. Chen. Yeah, there are programs where they have set up
through the Internet you can access atomic force microscope and
get a feel for what sort of images you could get out of it, and
so I think those are things that we need to do to excitement in
there. I mean a middle-school kid may not end up working in
nanotechnology, but if they get excited in science and STEM
areas, that is a win for this country. I think you make a very
strong point in terms of forward thinking in that we can't just
rely on people from overseas over the long-term, because as
things get better, they are not going to come. Why are going to
leave their country if things are as good there.
We need to get kids in this country excited about science
and engineering because if they don't get excited at the middle
school level, there is not a lot we can do to recapture them at
the under-grad or graduate level.
Dr. Welser. I am a former middle school science teacher, so
I can appreciate a lot of these comments. I think there is
tremendous opportunity in dealing with the community colleges
in this country. There is a great network of resource there.
There is an opportunity there, not to train necessarily Ph.D.s,
but the supervisory/managerial technical talent that we require
in order to commercialize. And I think a government-industry
cooperation to pull together a curriculum that could be broadly
disseminated across these community colleges would go long way
to solving problems within the next few years as opposed to a
generation away.
However, we still need to underwrite the generation away,
and that simply is just more math and science teachers. I
personally participate in education of math and science
teachers with respect to nanotechnology and have done a lot of
local work, but the local work alone is not sufficient.
Chairman Baird. I appreciate that. We had comprehensive
review in my district, and one of the interesting things was I
invited a fellow in charge of production management for SEH
America, and he listed a number of the thing that he needs
employees to be able to do, and it was such things as looking
at an array of numbers and trying to get a sense of what the
mean and the standard deviation is an what numbers are beyond
the bounds, and then trace that through some other charts and
figure out what here may have caused the deviation here.
He said they can't find people to do that, and we are
talking high-level jobs. We are talking potential billion
dollar investment in the community and just a fairly
rudimentary mathematical reasoning sequence is difficult. But
what was also intriguing was the local educators said that they
had been trying for a long time to get the high-tech community
to articulate clear-cut defined, achievable goals, and until he
had done that at that presentation, they had lacked that. So
there is a huge disconnect between the educational community
and the consumers of the so-called supposedly educated work
force, and we need to close that gap, and your notion of a
curriculum may go well along the way towards that.
Dr. Ehlers.
Mr. Ehlers. Thank you, Mr. Chairman. The one surprise so
far is that no one has mentioned health and safety issues, and
so I feel obligated to raise those issues. Dr. Chen, you
mentioned that you have environmental health and safety
researchers working side by side with the nanomanufacturing
researchers in your center for excellence. I want you to
amplify that with Dr. Melliar-Smith and Mr. Moffitt. I am
wondering what type of health and safety precautions do you
have to take in your facilities to minimize employee exposure
to nanoparticles.
Dr. Chen, first, and we will just work down the line.
Dr. Chen. One of the things that we discovered, actually,
in talking to the EHS researchers, they were so happy to be
involved at the stage where we were looking at creating new
processes because what they said was usually what happens is
people call us in after the fact and ask us to clean up the
mess. And so the exciting thing there is that they really are
side by side. I mean there is someone making product, and there
is someone measuring exposure, and so they can, by being right
in the lab, they can make suggestions, they can take
measurements, they can understand how the manufacturing process
might go so that they can also make suggestions as to how that
process could be designed to be more environmentally friendly.
And so I think that is a key. The EHS research, a good
chunk of it, can't be done in isolation because there is too
much to look at. It needs to be focused in terms of what are
the issues if we go down a certain pathway for a manufacturing
process. What are the issues for a particular type of
application? And I think in the near-term, that is going to get
us there a little faster. I mean we won't be able to solve all
of the problems, but we may be able to address some of the more
urgent problems sooner if we get those groups together.
Mr. Ehlers. Would you consider your center to be a green
center?
Dr. Chen. I would. I mean it is a very important piece, and
it is a unique part of Lowell that we have this very strong
health and environment group as well as the manufacturing.
Mr. Ehlers. Mr. Moffitt.
Mr. Moffitt. We make a biologically reactive gold
nanoparticle, so we must concern ourselves, both with the
biological components of what we do, as well as the
nanoparticle structure. We start with the premise that gold is
inert noble metal, and as such, it is not an active particle if
you will. But once we functionalize it, it becomes active, so
we do some--I would not call it core research--but we do some
basic safeguard measures that you would expect in any
biological facility, so we manufacture products in a clean-room
environment, in an isolated environment. We have P-2 labs,
which are labs that are capable of handling infectious agents
and disposing of them properly, and monitor, of course, on a
safety basis, every step we take in the handling of these
materials.
Mr. Ehlers. Dr. Melliar-Smith.
Dr. Melliar-Smith. Well, I think health and safety goes
without saying. It would be incredibly irresponsible for any
CEO or any citizen, for that matter, of a country to do
something that would risk the health of their employers or
their neighbors or what have you.
In our particular case, the nanoparticles that we produce
are actually patented onto a substrate so they stick to the
substrate. They never come free. They never float in the
environment in the way if you were manufacturing carbon
nanotubes or something of that sort. So in fact, the product we
make does not represent any form of nano- or biohazard to the
community, but I strongly agree that the nano-industry has to
step to the environmental risks that potentially very small
particles do or could create in the environment, and I think it
goes without saying we have to do that.
Mr. Ehlers. Thank you very much. I have no further
questions.
Chairman Baird. Dr. Lipinski.
Mr. Lipinski. Very quickly, what can we do in the NNI, if
anything, to, first of all, do all we can to make sure the
proper work is done so that we do not have these environmental
concerns, health concerns with any kind of nanotechnology, and
what can we do to convince the public about that? Is there
something that should be done in the NNI? I think you
univocally talked about what you do where you are at, but is
there something more general that the government could help in
this area?
Mr. Rung. If I may, I have written extensively about this
in my written testimony. Green nanotechnology is ONAMI's single
largest program, and in fact, in about ten minutes, day two of
our Greener Nano Conference will be getting underway.
The summary is that you want to link the research on
implications with the research on applications, and you need to
have a comprehensive program that is multi-disciplinary, unites
multiple agencies and objectives together. The best example
that I am aware of this, and we are heavily involved in it at
the leadership level, is the NIEHS Nano-health Initiative,
which is breaking out into three projects, one on
characterization of nanoparticles, which is critical--without
data, nothing else is going to be achieved--biological assays
that are efficient and practical to perform, and then very
importantly, a system of federated databases so that data can
be shared and be consistent on the interactions of engineered
nanomaterials with biological systems.
This three-part project would be a great way to fill the
gap between what current EHS funding in the NNI is and the ten
percent or so that the Nanobusiness Alliance and other groups
have suggested. It brings together multiple federal agencies,
industry, academic centers, and I think it is an extremely
promising initiative and following exactly the right approach.
Dr. Chen. I have already made some prior comments, so I may
just add one additional thing. I think we want to also
recognize that EHS research also will benefit from the creation
of tools that will make it easier to measure and understand
what is going on, so I think we want to make sure that there is
a recognition for that piece of the EHS research aspect.
Mr. Lipinski. One other quick question--well, first a plug
for my alma mater, Northwestern University. Northwestern has
really put a lot into nanotech and has been very successful,
and the commercialization has been very successful. It is best
to have some centers of excellence rather than to spread the
federal funding around? Is it better to do that way? I think
maybe someone had suggested that earlier, and I just wanted to
put that out there.
Dr. Welser. Well, I think is a balance. Unfortunately, a
lot the tools that we are going to be needing for this sort of
work are extremely expensive, so you can't afford to put one in
every university, but I think the idea of doing multi-
university centers that span across our geographies has worked
well. It has worked well with the NNIN that the NSF put in
initially for nanofabrication work. It is the same kind of
thing we are trying to do with NRI.
I think a balance is then trying to limit your investments
to what can be afforded, but also tried to pull in as many
universities as you can. And I would note that even though we
center these in distinct states, they actually do pull in
schools from other states, so actually to your questions
earlier, for example, the California center in the proposal
that we are just about to announce is pulling in the University
of Iowa because there are a couple of professor there who were
doing very interesting work. Geographically, we will have to
work it out with telecons, but it is a way to get that school,
also, very much involved in that work.
So I think that you can work around centers and then expand
them out, but you have to give them a mission that they are
going after so everyone understands why they are working
together on this problem.
Dr. Melliar-Smith. I guess I would like to second that. In
my experience in the industry, I think the SRC and the marker
centers have done a very good job of balancing individual
contributors who can come from anywhere because any good idea
can come from anywhere, with the larger organizations which
have got the center of gravity they need to actually be
successful in commercialization. If you are looking for a
model, I think the semiconductor research organization is a
good one.
Mr. Moffitt. I would just echo the comment that I think the
center of excellence approach is the right approach simply
because it does focus and channel available resources and they
are constrained, as we all know, and then I think they do
locally and organically grow from that center. As developments
are made, companies get spun out for commercial viability and
commercial translation to this science, but that just loops
right back in to the university and the universities in the
area as well as other companies, so you tend to think of it as
just dropping a few seeds here an there, and from that will
grow, I think, a tremendous industry.
Dr. Chen. One thing I would say in caution, though, with
the center for excellence approach is that we want to make sure
that we don't define nanomanufacturing as only one type of
process because as we have seen with the predecessor to the
NNIN, that was very heavily based in lithography-based
processes, because that is the industry that was more actively
in the nano-areas. So we don't want to too narrowly define what
we mean by nanomanufacturing when we define what type of
centers of excellence we should have, so I think that is
important.
Dr. Welser. I think every center of excellence is going to
be a center of excellence in nanoscale science because that is
the cutting edge of chemistry, condensed-matter physics and
molecular biology. Nanotechnology affects every conceivable
economic sector, and so we should think of this not as
something esoteric or tied to a single industry, but it is
very, very broad. So there are going to be many, many centers
of excellence, each of them focusing on something they do
uniquely well, and so that, I think, might be the appropriate
vision to have.
Mr. Lipinski. Thank you.
Chairman Baird. We will finish shortly, but I wanted to
raise two other issues.
The issue of access to federal facilities, particularly Dr.
Melliar-Smith, you mentioned the DOE labs. How well is that
working? Can we make it better? What are the obstacles that any
of you have experienced in terms of access to these federal
facilities that provide the infrastructure that allows people
to do some of this work? How can we improve it and what are any
strengths or weaknesses?
Dr. Melliar-Smith. My experience has been very successful.
Inevitably, there is a balance between what a company wants to
do in a research facility and what the facility, itself, can
let them do. There are obviously, ultimately certain
constraints, but our experience at Berkeley has been excellent.
They have allowed our research engineer to come in and use the
equipment, largely unsupervised after full training.
These are things that we could not afford to put into the
infrastructure ourselves and they are crucially important to
us. Generally, we have not had a problem with them. At any
given point in time, there may be an aggravation over this that
or the other, but they are all solvable on both side, so we
have been very supportive.
Dr. Welser. Since we just formed this new partnership with
NIST, we are very interested in how we can leverage the labs,
and one of the things that the partnership started off with was
the idea that NIST was very interested in having people come
and utilize the labs, and we were very interested in taking
advantage of what was there. But without an actual set of
project to further, oftentimes it was difficult to figure out
how you start the collaborations off, so one of their goals was
funding some of the research at the universities as part of the
NRIS to get better insight into what the researchers are doing
to understand what they actually needed for future
characterization tools.
Measuring the spin of an electron is something that is
extremely important to us right now, and that is the kind of
grand challenge that NIST can go after extremely well, and
probably no individual university can really solve that problem
with its own recourses. So I think leveraging the labs on
specific projects, particularly for things that require tools
or capability that is really beyond what a university can have
is very important.
What I think is less effective is if we rely on them to
have all of the fabrication and facilities that are needed to
do the daily research of the students. I mean it is fine for a
student to go to a lab for a week, a month, or whether to go
work on a specific aspect of this project, but he really needs
to be also back at his university working with his research
group and his professor as he goes through. So that is why
there needs to be a balance one-of-a-kind sorts of tools and
capabilities with the labs with more pervasive investment at
university centers to allow students to be able to do work at
both places.
Chairman Baird. The number of people nodding their heads to
that, apparently there is a consensus on that.
One last question, Mr. Moffitt, you talked about the $100
million venture cap or financial investment in bringing it from
concept to manufacturing. Obviously, if we took the entire NNI
and we would pretty quickly use up our funds. I was thinking of
a gentleman named Yosi Verdi who is venture-cap, high-tech
entrepreneur in Israel, and he had a very intriguing idea, and
I won't articulate as well as he knows it, but an example where
the Federal Government somehow indemnifies the venture cap
folks, that we share the risks but also share in the profits so
that you are able to leverage up-front money.
Any thought about a mechanism like that, versus say just a
grant that goes and then we don't' necessarily net anything
back from it, but some kind of a collaborative indemnification/
repay model wherein we recycle the funds. Any thoughts about
that?
Mr. Moffitt. I hadn't though about the repay part of it
yet.
Chairman Baird. That would not surprise me. The repay
question, oh, you mean we have to pay this back? But that
allows us to leverage the money, and you would get it up front.
You would get the real startup kick, and then we can give it to
somebody else.
Mr. Moffitt. Of course, the repay comes in the form of us
being successful and ultimately paying taxes, in part, but I
would say----
Chairman Baird. So you are calling for special higher taxes
for----
Mr. Moffitt. No, I do think there is--I would make the
point again the programs that exist today, they do serve as
validators, and you know, as I said, there is a tremendous
amount of private equity out there willing to be invested. The
question is where and how do they separate the winners from the
loser. They certainly will pick the right industry and industry
segments, and I do think that there is a way to develop a
program of investment credits so that the government does share
in the up-front risk. But I agree. It is appropriate to share
in the downstream reward, and perhaps something over and above
just paying routine corporate taxes.
Dr. Melliar-Smith. Certainly, in the Texas Emerging
Technology Fund I spoke about one of the criteria for that
investment is the company receiving the investment provides the
state with common stock such that when the company is
successful and goes through an IPO, the state essentially gets
paid with a lot of profit to boot, assuming the IPO is
successful, so I think there are many way. And again, I would
encourage Congress to be innovative about asking for what you
think you want from industry. It seems to me it is not at all
unreasonable that if the government or a state establishment
makes a significant investment in the company that there is a
way to get the money back, and the venture-capital industry has
lots of different ways for you to get your money back. That is
why they specialize in it. It is what they do all of the time.
And so it is just a matter of sitting down and saying,
okay, I want to try to form a partnership with industry, and
where is what I want, and here what you want, and it isn't just
a one-way street with checks being cut in Washington, but it is
in fact a partnership.
Chairman Baird. Other thoughts or additional responses?
Dr. Welser. An additional though is I strongly agree with
that and the Texas model, as it was described to me is
excellent.
I contended fairly strongly for gap funds, and I will
simply add that I don't think that that is going to take a
great deal of money or would be a large percentage of any given
grant or the NNI. The needs of our gap grants are about
$250,000, maximum, and that can do a great deal to get a
company from the proof-of-concept stage to the point where a
venture capitalist, you know, can consider it as an investment,
so I simply would leave the thought that these don't have to be
large amounts.
Chairman Baird. We have a bill called the Bridge Act which
we introduced a couple of years ago which would allow rapidly
growing companies to reinvest their tax liability in building
the company, and then later on, once you've built up, you would
pay the tax back with modest interest. So you are basically
loaning yourself the money. It is one of those Catch 22s. If
you had the money, you could expand, and if you could expand,
you could pay more taxes, but because you don't have the money,
you can't expand. And especially in your kind of industry, we
need to find creative ways to not penalize, but in fact reward
and incentivize the risk-taking, the expansion, and this Bridge
Act, which I introduced on the House side and Senator Kerry is
our Senator sponsor, we want to make a run at it.
Interestingly enough, there is some up-front cost to the
treasury, but in the long run, our best estimates would
generate hundreds of thousands of jobs with a net profit to the
Federal Government because we would actually generate revenue.
Here is a tax reform, not a tax cut at all, just a change in
how and when we collect the tax and what is done with the money
in the interim, and if anyone wants information on that, we
would happy to share that with you.
Dr. Ehlers, any closing comments or questions?
Mr. Ehlers. Not really. I was just going to say that is the
same rationale for the Bush tax cuts.
Chairman Baird. No, it is actually much different than
that.
Mr. Ehlers. But I won't say that.
Chairman Baird. It is actually completely different. It is
not a cut. You are paying it back. The point is you are still
paying the same rates on it. You are paying it back over time,
but only on the proviso that you reinvest the money. But you
actually have to pay it back. It is a much, much different
structure.
Mr. Ehlers. Thank you. I didn't intend to start that
discussion, but I couldn't resist that.
Chairman Baird. I would let you pass on the John McCain
seems to be the only person that is dealing with immigration in
a responsible way, but I just couldn't let the tax cuts go by.
If President Bush would actually support the Bridge Act, I
would support--I want to thank our witnesses. We have digressed
to much less pleasant topics, but this has actually been very,
very fascinating, highly informative. I hope we will use your
information well enough to justify the red-eye and the time
away from your most important research. We look forward to
great things, and we may well follow up. Also, if there are
suggestions that you feel you want to add--sometimes these
interactions stimulate further thought. You may go back and say
here is a creative way. The reason we do these hearings is so
that the legislation that comes out in a few months will
actually be the best we could possibly make on this round. And
it is an interactive process, as you know, so if there are
further thoughts, we would welcome those.
And thank you. With the gratitude of the Committee, this
hearing stands adjourned. We are grateful for your presence.
Thank you.
[Whereupon, at 11:38 a.m., the Subcommittee was adjourned.]
Appendix:
----------
Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Robert D. ``Skip'' Rung, President and Executive Director,
Oregon Nanoscience and Microtechnologies Institute (ONAMI)
Questions submitted by Chairman Brian Baird
Q1. Both Dr. Chen and Mr. Moffitt remark that user facilities require
technical support, particularly for small company users. This raises
the issue of how to safeguard the companies' intellectual property. Do
you have suggestions on ways to reduce these concerns that now appear
to inhibit use of the facilities by industry?
A1. Although I am not familiar with the user policies at all of the
NNIN facilities, I do not believe there should be any fundamental or
terribly difficult issues related to intellectual property. The
remainder of this response is based on experience and practice at
ONAMI-affiliated user facilities.
We distinguish between two types of usage that we believe are both
valid and important roles for publicly supported nanoscience and
microtechnology facilities: (a) research--including industry-sponsored
or collaborative R&D involving industry partners, and (b) fee-for-
service, i.e., access to sophisticated equipment and expert staff
assistance. In the former case, research contracts with the university
are in place, and these contracts will normally contain provisions
related to intellectual property. Contracts with businesses typically
include some kind of preferred right to negotiate a license (but see
note at end regarding complexities created by federal private-use
restrictions). In the fee-for-service case, no new IP is created by
university or facility personnel, but there may be concerns about
disclosure of client IP (unpatented inventions, trade secrets) that
need to be dealt with by means of a non-disclosure agreement (NDA).
When the actual work is done, the client specifies a measurement or
fabrication task to be performed, and provides as much or little
information to facility personnel as desired. The facility collects the
data or performs fabrication steps as requested and provides the
results to the client. Market rates (as best they can be determined)
are charged for this type of service, and it is often best if the
service is performed by professional staff rather than students (who
may not be compelled to sign an NDA and have, by their nature, high
turnover rates). Data is given to the client (e.g., on CD or thumb
drive) and not retained by the facility unless the client desires it to
be, and no attempt is made to publish the work unless the client wants
to do so. State law and university system administrative rules can have
an important influence on how these matters are handled.
Regarding private use restrictions (please note that I am not a
professional bond counsel): Many research buildings and facilities--
especially at State-supported institutions--have been financed with
tax-exempt bonds. This results in a (federal) limitation (e.g., 10
percent) on the fraction of structure capacity that may be engaged in
``private use'' activities without jeopardizing the tax-exempt status
of the bonds. It is the responsibility of State and university
officials to ensure compliance with related law, which in Oregon's case
is done system-wide. ``Private use'' can include such things as street-
level retail (which is sometimes required of urban campus buildings by
city councils) and valuation/sale of IP before it is created under the
auspices of industry-sponsored research (e.g., advance grant of
exclusive license or non-exclusive royalty-free license) For these
reasons, much of the industry-sponsored research in the U.S. is long-
range and ``pre-competitive,'' funded by large industry consortia such
as the Semiconductor Industry Association. All new ONAMI-affiliated
facilities are being financed with taxable bonds, but this does not
help us with the many existing buildings in which many of our
researchers have their labs. A suggestion to consider that might make
universities freer to engage in nearer-term commercialization is to
create a way to ``reimburse'' the Federal Government for the value of
foregone taxes related to capacity used for ``excess'' private use.
Q2. Relative to your comments on establishing a ``gap'' fund under NNI
analogous to the fund your organization has, how would this work on a
national level? Do you see it as a fund the Federal Government could
use to support projects that would meet defined federal needs or
requirements?
A2. My comments (``the suggested concept here is to have some portion
of NNI funds--perhaps in association with large multi-year awards--tied
to commercialization, perhaps in the form of a gap fund, with a short-
term outcome measure of leveraged private capital investment'') were
not sufficiently clear on this point. I do not advocate creation of a
national gap fund, which already exists to an extent in the SBIR, STTR
and TIP programs. What I do suggest is that NNI funding encourage (and
possibly help fund) local gap fund efforts similar to ours--which
engage the business and investor communities closest to the researchers
and facilities. I believe this could be very beneficial for technology
entrepreneurship growth outside the most familiar venture ``hot spots''
such as Silicon Valley and the Boston and Austin areas. One possible
form this could take would be requiring that a modest portion (perhaps
five percent) of ``center-sized'' awards be managed as a gap fund, with
incentives (e.g., cost-share) to augment these funds with state, campus
and private resources. In addition to their nanoscience investors and
commercialization partners having access to the ONAMI gap fund, Oregon
research universities are now able to offer tax credits (up to a cap)
for donor investments in ``university venture funds'' which may be used
for proof-of-concept work and entrepreneurship development. Again, the
purpose behind all of these programs is accelerated commercialization
in partnership with small businesses and spin-out/start-up companies,
which are often the best places to develop and introduce disruptive
technology. As I will say in answer to Ranking Member Ehlers' first
question, clear measures of success for this type of activity will be
important.
Q3. One of the examples you give for a project supported with your gap
funding (drinking water purification) also received a Phase II SBIR
award. Were the two sources of funds used to fund different aspects of
the project and did the SBIR award precede the gap funding award?
A3. Crystal Clear Technologies received its $500K NSF Phase II SBIR
award in 2006, using those funds for technology development. The ONAMI
gap award--made in 2007 to the University of Oregon to work with CCT--
is being used for fabrication and laboratory scale-up of material
samples for customers and certification testing.
Questions submitted by Representative Ralph M. Hall
Q1. Do you think that tax and investment credits for nanotechnology
investment is a good idea? Do you have any thoughts as to what would be
eligible for such a credit?
A1. I am no expert on tax policy, and in fact somewhat hesitant to
suggest anything that further complicates federal and state tax codes,
but the fact is that the tax codes are extensively used to encourage
desired activity, and therefore they should prioritize incentives for
those things which are most strongly in the national interest.
Accordingly, I believe that an investment tax credit for investors in
research-based businesses that can create high-wage R&D and advanced
manufacturing jobs in the U.S. is worthy of serious consideration. This
is because, except in cases where shipping costs dominate, research-
based intellectual property is going to be the only durable basis for
retaining manufacturing (physical activity-based) high-wage jobs in the
U.S. and other affluent countries. We cannot simultaneously complete
mainly on cost and maintain the world's highest standard of living.
The reason for making this an investor, rather than corporate, tax
credit is that startup and growth stage companies are usually not
profitable, and in fact should not be profitable until they reach a
size commensurate with their targeted market share range. A venture-
backed company, for example, is better off investing generated cash in
growing the company than in distributing profits and paying taxes.
Those things are the ultimate/mature objectives, of course, but it is a
mistake to do them too soon and fail to realize the company's
potential. A good example of this principle is Amazon--one of the
successful dot.com companies. Their investors' and shareowners'
patience with years of losses and negative cash flow has been rewarded,
and it can be argued that if they had not ``bought'' market share with
their large IPO proceeds, they could even have lost their position to
competitors who did. The key point is that corporate tax credits and
tax relief don't help innovative companies at their most critical
stage. But investor tax credits can make them more attractive
investments, so that is where any tax incentive for nanotechnology
commercialization needs to be targeted.
As for determination of eligibility, it seems likely that law
writing and rule-making in support of this idea will be complex. The
things that should be emphasized are some of the same things emphasized
in SBIR, STTR and TIP awards: high research content and technical risk,
a preponderance of high-wage activity conducted in the U.S., potential
for high economic impact and contribution to areas of high national
economic and security interest.
Questions submitted by Representative Vernon J. Ehlers
Q1. You mention in your testimony that ``accountability measures'' are
as important as the research itself--could you elaborate?
A1. My comment in testimony (``Intentional federal investment in, and
accountability measures for entrepreneurial startup company-driven
commercialization of NNI research are just as necessary and important
as the research itself. . .'') meant to suggest that there be (a)
funding for the purpose of accelerating commercialization of NNI
research along the lines described in my answer to Chairman Baird's
second question above, (b) clear goals for what this funding is
intended to achieve. In ONAMI's case, the ultimate goal of our
commercialization ``gap'' funding is to create high-wage jobs in new
traded sector companies. Since it typically takes several years before
startup companies employ dozens, let alone hundreds, of people, a
meaningful proxy metric that can show results much more quickly was
chosen: private capital investment in the new company, with the
expectation that this would happen within 12-18 months of the start of
the gap project. Such capital investment is usually spent on staff
salaries and locally purchased services and materials. It also
indicates that professional investors have confidence that the company
represents a growth opportunity.
Q2. How is ``gap-funding'' defined and identified? Since this type of
funding seems to be a need unique to this industry, is there a point
where the cost-benefit tradeoff will not be worth it? How do you know
when the hurdles to commercialization are insurmountable?
A2. This ``gap,'' by no means limited to the field of nanotechnology,
is between what research agency funding will support and what private
investors need to see before advancing capital to a company. Gap
projects are alternatively referred to as ``proof of concept
demonstration'' or ``translational research,'' and their typical goal
is to produce one or more product prototypes sufficient to convince
customers to enter into supply agreements. Investors need to see
reduced technical risk (i.e., something can be done repeatably) and
customer ``traction'' (there is a demonstrated willingness to buy on
the part of significant customers in a large market). Even with these
things achieved, there still remain significant management team and
execution (e.g., manufacturing and supply chain scale-up) risks, but
investors are used to judging and managing these things. They just
don't want to be surprised by unexpected technology or market risk.
Nanotechnology and other manufacturing businesses typically need
this type of pre-investor R&D funding more than software, information
technology and retail businesses because of their much greater
technical risk and higher cost/longer cycle time of experiments and
prototype builds. ``Pulling the plug'' on an investment is always a
difficult decision to make. In our case, we will invest a maximum of
$250K in a gap project, and we administer the award in three or four
``tranches,'' with each tranche contingent upon meeting specific
project and business development milestones. This is quite different
than a one-time grant where all funds are committed up front. We follow
all of our gap projects closely, and often take an active role in
business plan improvement and introduction to investors. We are
intensely focused on the one goal--and only success measure for the
program--of securing private capital investment in the new company.
Answers to Post-Hearing Questions
Responses by Julie Chen, Professor of Mechanical Engineering; Co-
Director, Nanomanufacturing Center of Excellence, University of
Massachusetts Lowell
Questions submitted by Chairman Brian Baird
Q1. Both you and Mr. Moffitt remark that user facilities require
technical support, particularly for small company users. This raises
the issue of how to safeguard the companies' intellectual property. Do
you have suggestions on ways to reduce these concerns that now appear
to inhibit use of the facilities by industry?
A1. Chairman Baird is correct in identifying IP concerns as a major
hindrance to collaborations between industry and universities. Many
universities have been wrestling with this issue. The IP issue may not
be as difficult for user facilities as it is for funded research
contracts for a large percentage of the cases. Perhaps in terms of
overall numbers, the IP issue may be significant due to the greater
number of industry interactions with the user facilities. There are
three types of interactions:
Type 1--the company is only interested in using
standard characterization and processing equipment available in
the user facility. The testing or processing is according to an
established standard method or protocol, or the company is
providing their own people to use the equipment, and no new IP
is being contributed by the university. In this case, the
company clearly retains all rights to the IP. I believe many
user facilities have policies that work this way.
Type 2--new R&D must be conducted by the university
personnel to help address a design or processing problem, or to
develop a new characterization method for the technology
brought by the company. Here the university is clearly
contributing IP, and the overall IP is thus shared.
Type 3--this is where things get murky. There is no
anticipated IP, as the effort starts out appearing to be a Type
1 effort. In the course of running some standard
characterization or processing, however, university personnel
discover a new idea. Here is where most of the IP negotiation
problems reside and this small possibility also causes problems
with negotiations for the Type 1 cases.
I believe what might help reduce these concerns is to have a group
representing industry, federal funding agencies, and universities look
at developing template agreements addressing these three cases. If the
majority of companies and universities come up with an approach that
seems reasonable to all parties, then such a template will help to
reduce the time and effort required to come to an agreement for each
individual case. Obviously, special cases will occur, but a template
would help to speed up the process for the majority.
Q2. You indicate in your testimony that there would be value in
federal support for technology demonstration partnerships between
industry and academia that could be carried out using a modified form
of the Small Business Technology Transfer Research (STTR) program. How
would this program work; how would it differ from the STTR?
A2. Currently, the STTR program has two limitations that would hinder
its utilization to encourage industry-university collaboration:
(1) only small business is eligible--in the case of
nanotechnology, much of the R&D activity is still quite
entrepreneurial in nature; even within the large companies, the
nanotechnology group is typically a relatively new, relatively
small group. Thus, allowing these groups within large companies
to participate in the modified nano-STTR's would support some
of the exciting opportunities
(2) most STTR topics are defined by the funding agency in
terms of identified needs (e.g., Army, Navy, NASA, . . .)--for
the nano-STTR's the topic should be identified by the industry-
university partners.
The Phase I and II structures of the STTR program would be
beneficial to supporting university-industry partnerships. The amount
of funding and the timeframe would need to be looked at to determine if
it is sufficient to lead to successful technology demonstration
efforts.
Questions submitted by Representative Ralph M. Hall
Q1. Do you think that tax and investment credits for nanotechnology
investment is a good idea? Do you have any thoughts as to what would be
eligible for such a credit?
A1. I am not an expert when it comes to tax and investment credits, so
I cannot answer this question with respect to the economic aspects;
however, I will try to answer with respect to the impact on R&D.
Cash flow is constantly a concern for small companies and large
public companies also have to worry about quarterly outcomes. Thus, any
company investment in R&D typically has to have a very short time of
return. This can be very ineffective in developing and/or transferring
new technology. Tax and investment credits for R&D conducted as part of
a partnership with a university could be one example that would
encourage efforts on bridging the ``valley of death.'' Also, even
without a university involved, I like the idea of having credits that
companies could ``borrow'' to reinvest, but then would ``pay back''
after successful product development. Yes, they do this in terms of
paying taxes on earnings, but having some portion directed funneled
back into the credit program would lead to a more direct connection
(albeit, some complicated bookkeeping) between the objective of the
fund and its success in achieving that objective. I am not sure the
best mechanism, but we need a way to encourage U.S. companies to
support some longer-term R&D.
Questions submitted by Representative Vernon J. Ehlers
Q1. How is ``gap-funding'' defined and identified? Since this type of
funding seems to be a need unique to this industry, is there a point
where the cost-benefit tradeoff will not be worth it? How do you know
when the hurdles to commercialization are insurmountable?
A1. I view ``gap-funding'' as the funds that bridge between the current
R&D funding for universities and venture capital. For example, federal
R&D funding will address the creation and understanding of a sensing
method (e.g., functionalized nanoparticle sensor for chemical agents),
but it will not typically fund the effort required to figure out how to
connect the nanoparticles to the power, input/output, and packaging
needed to make a working sensor.
The reason why this gap-funding is needed for the nanotechnology
industry, is because many of the potential new products (beyond the
``1st generation'' products, which represent relatively minor
modifications to existing processes) require major changes to the
manufacturing process, and are thus viewed as risky by VCs. In
addition, VCs are quite cautious these days due to recent history;
until we have more examples of successes, there is a need to provide
some gap-funding.
Cost-benefit analysis is crucial to deciding where to invest the
gap-funding. Clearly, if significant funding is required for just an
incremental improvement with little societal impact, this is not a
useful investment. On the other hand, if significant funding is
required for a huge advancement of major societal impact, but there is
concern about ``insurmountable hurdles,'' I think the requesters of
such gap-funding have to make a case that is plausible to experts in
the field. There will still be risk, but I think we need to pick a few
examples, learn from them, and continue to push forward.
Answers to Post-Hearing Questions
Responses by Jeffrey Welser, Director, Nanoelectronics Research
Initiative
Questions submitted by Chairman Brian Baird
Q1. Both Dr. Chen and Mr. Moffitt remark that user facilities require
technical support, particularly for small company users. This raises
the issue of how to safeguard the companies' intellectual property. Do
you have suggestions on ways to reduce these concerns that now appear
to inhibit use of the facilities by industry?
A1. NRI is focused on basic research undertaken largely by university
professors and students. Virtually all of this research is destined for
public disclosure. To the extent confidentiality is needed, it is for
only the short time necessary to decide whether to seek intellectual
property protection. For these purposes, the confidentiality measures
within the university community have proven to be quite sufficient.
Q2. NIST recently awarded the Nanoelectronics Research Initiative a
grant of just under $3 million. What was NRI's level of funding before
the NIST award? Did industry members of NRI contribute new funds to the
project because of the NIST grant? If so, how much extra industry
funding was leveraged by the NIST grant?
A2. From the beginning, the model for funding the NRI research has been
to create centers where industry and state funding could be combined
with federal supported university research, so it is important to
consider all contributions. The industry funding directly to the NRI
consortium has been about $5 million a year. In addition, individual
companies have been contributing approximately $1.5 million a year to
some of the NRI university centers, as well as in-kind donations of
tools and equipment. The largest of these donations has been a $10
million commitment of equipment to the Western Institute of
Nanoelectronics (WIN). The states have been contributing approximately
$15 million a year in cash, equipment, and endowments for recruiting
new Nanoelectronics faculty, in addition to major investments in new
buildings, such as the expansion of the College of Nanoscale Science
and Engineering's Albany Nanotech Complex in Albany, N.Y. to house the
NRI's Institute for Nanoelectronics Discovery and EXploration (INDEX),
estimated at over $200 million.
While NIST has just joined a few months ago, we have already
successfully completed a new round of proposal awards, expanding the
work at both the existing centers, including the addition of new
universities and projects submitted independently, and opening a new
center, the Midwest Academy for Nanoelectronics and Architectures
(MANA) centered at Notre Dame in Indiana. The base industry
contributions to the NRI directly have remained constant, but as a
result of this expansion, industry is contributing approximately $2
million a year in additional support between the Midwest center and the
expanded INDEX center in New York; New York state has committed an
additional $1.5 million a year to the INDEX center; and Indiana and the
City of South Bend have committed approximately $5 million a year to
support the new MANA center, in addition to a $40 million investment in
nanoelectronics buildings for both research on the campus and eventual
commercialization in a new Innovation Park adjacent to the campus.
Finally, the NIST partnership was instrumental in convincing the NRI
sponsor companies to commit to additional years of industry funding for
the program beyond 2008. This is exactly the kind of increased support
we hoped the NIST partnership would foster, and we are very excited to
see it happening in such a short period of time.
Q3. What is NIST's role in determining where NRI funds will be
awarded? Do NIST scientists participate in the NRI application review
process? If NIST does not feel a particular application merits an
award, are there cases in which NRI would still grant that award?
A3. NIST participates directly in the full proposal and review process,
as an equal member on the NRI Technical Program Group (TPG) and
Governing Council (GC). NIST also receives a variety of rights and
benefits with respect to the research results. For the process we just
completed, NIST helped to write the initial call for proposals; helped
to insure the open call was distributed broadly across all U.S.
universities; and helped review, rank, and choose all of the proposals
that were submitted. The successful proposals all were chosen by
consensus between NIST and industry participants, and it is our goal in
this process to have everyone agree with the final decisions that are
made. However, if NIST felt strongly that a certain proposal did not
merit funding, it would be possible that NRI could still choose to fund
that award using industry funds alone.
Q4. You indicate that the NNI should develop a research plan for
nanoelectronics. At present, what mechanisms are available for industry
to influence the prioritization process for NNI-supported research? Do
your member companies interact with the President's Council of Advisors
for Science and Technology (PCAST), which currently serves as the
advisory committee for the NNI?
A4. Our primary mechanism for influencing NNI prioritization is through
informal interaction with the agencies. We have advisory members from
NSF, NIST, and DARPA who attend our NRI monthly meetings, and industry
members participate on some of the NSF review panels. At the PCAST
level, I have presented the NRI work as a model for public-private
partnership to one of the subcommittees in August, 2007, and George
Scalise, the president of SIA, is on the PCAST.
While these mechanisms are valuable, it is not the equivalent of
having a national research plan for nanoelectronics. What is needed is
a more formal effort that can identify key technology challenges, such
as discovering a new logic switch and the milestones that need to be
achieved to meet the challenge. This type of effort can provide the
basis for a focused and integrated national technology program.
Q5. You have stated in your testimony that there is a need for both
large scale user facilities such as the NIST Center for Nanoscale
Science and Technology user facility and smaller, university-based
facilities where researchers can work directly with students and other
researchers daily. Do you think that the current user facility
infrastructure for nanotechnology at universities is sufficient to meet
the needs of the research under the NNI?
A5. Many of our U.S. universities have excellent facilities for doing
micro-electronics research, and this has served them well for both
finding the new discoveries and training their graduate students to
drive the semiconductor so effectively over the last 10-15 years. Much
of this infrastructure was enabled by a combination of universities and
states investing in the brick and mortar infrastructure, and the
Federal Government supporting much of the specialized equipment through
the NSF's National Nanotechnology Infrastructure Network (NNIN).
However, as we move forward into the nano-electronics era--where it is
not just about making things smaller, but rather about exploiting new
effects and materials that exhibit entirely new behavior when less than
10nm in size--more specialized tools for fabricating and characterizing
these structures are needed. And there needs to be increased focus on
the right level of equipment to move beyond the initial single device
lab demonstrations to doing small scale prototypes, in order to help
expedite the process of commercializing these new discoveries.
The SIA, after multiple consultations with university and
government experts, is suggesting a program be included as part of the
NNI re-authorization to create a National NanoElectronics Research and
Manufacturing Infrastructure Network [(N2)ERMIN] at U.S. universities
based on the NRI model of centers of excellence. Note that the entire
idea presented here is for strengthening the U.S. university
infrastructure--no funding would go to the industry itself. This
network will operate in the field of nanoelectronics, somewhat
similarly to the way the NNIN operates in the field of nanotechnology
in providing users' access to facilities, but with additional
significant focus on both fundamental research and manufacturing
components. This approach will place a major emphasis on the areas with
the greatest potential for future economic development and societal
impact for Nanoelectronics applications. In order to assure success,
there is the need for a visionary and fully integrated approach that
cannot be addressed by fragmented and less coherent activities. This
program will establish the U.S. as the world leader in the field of
nanotechnology, and especially nanoelectronics.
The (N2)ERMIN would operate as a virtual organization, utilizing
and building upon the facilities and infrastructure of the U.S.
universities focused on nanoscience and technology and sponsored in
large part by NSF. It should be noted that the states and universities
at the NRI centers, as well as at other locations, are already
investing hundreds of millions of dollars in the necessary buildings
and infrastructure, so the federal investment in tools, equipment, and
operating costs will be well-leveraged. In considering the appropriate
budget for (N2)ERMIN, it should be noted that many of the individual
tools for nanoelectronic fabrication and characterization can cost
between $3-10 million each. And based on experience from the existing
university nodes of the NNIN, purchasing the equipment solves only half
the problem. One needs to budget monies for long-term ( 10 years)
warranty/maintenance and personnel support. Typical warranty costs are
10 percent of the tool cost per year. A typical operating staff member
with appropriate overheads costs about $150,000 per year.
In addition to the academic facilities and infrastructure, a close
partnership for conducting research should be formed between industry
and the national labs, such as those owned by NIST, DOE and NASA.
Similar to the current partnership between NIST and NRI, this
collaboration should not only include government and industrial co-
funding and technical guidance of the university research, but also
leverage the key assets in the national labs for advancing the research
program. (N2)ERMIN will provide nanoelectronics researchers a key
advantage in conducting cutting-edge research, and through the
partnership with industry, a rapid path for developing commercial
technologies ahead of competitors in other countries is assured. And
while the SIA focus is largely on Nanoelectronics, this same
infrastructure can also be utilized for many other areas of
nanotechnology, including bio-technology and new energy source
research.
To realize the maximum benefit from the investments in
Nanoelectronics, we propose a three-pronged approach to setting up
(N2)ERMIN:
First, an agency, such as the NSF, should be charged with funding
the large investments for the nanomanufacturing equipment and
infrastructure at the universities, similar to what they have done with
NNIN. To create a network of these facilities across the United States,
they should target funding 4-6 multi-university centers using a budget
of $100 million a year for the next five years. Such funding should be
awarded based on merit peer review, including inputs from academia and
industry on the review panels, following the usual approach well
demonstrated by NSF. Preference should be given to universities that
are working closely with industry, states, and multiple (at least two)
government agencies on specific NNI objectives with high impact, such
as finding a new switch. It should be noted that the states currently
involved in the NRI centers are already investing hundreds of millions
of dollars into new buildings and centers for Nanoelectronics research
and product commercialization, so a ready infrastructure is emerging to
house this new equipment, offering good leverage for the NSF
investments.
Second, additional funding for ``one-of-a-kind'' tools should be
allocated to the national labs, such as those owned by NIST and DOE, to
support the university research efforts. This not only accelerates the
pace of the research, by enabling capabilities beyond the scope of a
university facility, but also increases the impact of the work in the
national labs on research that can lead to new commercial applications.
Third, additional government funding on the order of $20 million a
year should be directed through the agencies to be used for funding and
managing the university research in collaboration with industry
partners, similar to the NRI model with NIST currently. Involving
industry early will help guide even the initial science research in
directions that offer the most potential for future commercialization,
and will insure that new breakthroughs can be validated and rapidly
translated into product innovations.
Questions submitted by Representative Ralph M. Hall
Q1. Do you think that tax and investment credits for nanotechnology
investment are a good idea? Do you have any thoughts as to what would
be eligible for such a credit?
A1. The industry does not have a position with regard to specific tax
credits for nanotechnology. We do strongly believe, however, that the
Congress can best support nanotechnology research by expanding and
making permanent the research and experimentation tax credit, which
expired in December 2007. It is worth noting that, according to a study
by the Information Technology and Innovation Foundation, the United
States now provides one of the weakest R&D incentives, below our
neighbors Canada and Mexico, and other nations including Japan, Korea,
and France.
Questions submitted by Representative Vernon J. Ehlers
Q1. How does industry measure how much basic nanoresearch is the
``right'' amount?
Q2. How is ``gap-funding'' defined and identified? Since this type of
funding seems to be a need unique to this industry, is there a point
where the cost-benefit tradeoff will not be worth it? How do you know
when the hurdles to commercialization are insurmountable?
A1, 2. The answers to both questions follow. The semiconductor industry
is somewhat unique in its approach to research, due to the basic
science which governs the scaling of the transistors (currently CMOS)
on our integrated circuit chips. For the past 30 years, scaling has
enabled us to double the number of devices on a chip on predictable
basis, allowing us to build a plan for growth. The increased devices
not only mean that existing products and application will run faster
and cheaper, but also means that whole new applications and products
are enabled. For example, personal GPS units were enabled once we had
scaled the key components for them to be small enough to fit on just a
couple of chips in a portable, affordable unit. This is what has
allowed the industry to grow exponentially--and hence has justified the
subsequent increases in R&D funding to continue the cycle.
The nature of scaling also allows us to more accurately assess how
much research will be needed to reach the next node, based on an
understanding of the current challenges we see in front of us. In the
case of CMOS technology, there exists the International Technology
Roadmap for Semiconductors (ITRS), developed by a worldwide group of
domain experts, that provides a fifteen year forecast for technology
advancements required to advance or scale integrated circuit technology
during this period. Basic research needs are identified using this ITRS
forecast data. Estimates of existing annual research funding are
obtained from contacts in international and domestic industry and
governments and from publicly available data. Projections of funding
required to address the basic research needs are developed based on the
collective research management experience of the SRC staff and several
industry advisors. The `research gap' is the difference between annual
research funding needs and the actual annual expenditures and was
estimated to be on the order of two billion dollars in 2007.
Undoubtedly, we will eventually reach a point where the projections
for the required research to advance forward may seem to be too large.
However, the semiconductor industry, which was founded on innovation,
has learned that its growth is tightly linked to its ability to
continue to provide exponential increases in time of functionality per
unit cost. Worldwide spending from all sources for basic semiconductor
research that would sustain industry growth is less than one percent of
the aggregate semiconductor sales and we think that the `breaking
point' for cost-benefits from research is not very near.
If research results point to the need for capital and human
investments that are far outside the norm for the industry and/or if
the projected performance per unit cost doesn't offer the potential for
order-of-magnitude improvements over conventional technology, then it
is likely that the new technology will not be implemented. A proviso is
that the new technology could offer or open new market opportunities or
distinct advantages in defense applications that might justify its
commercialization.
It should be noted that as we approach the current challenge of
finding a ``new switch'' to replace the CMOS transistor in the next 10-
15 years, we do anticipate a need for much larger investments in basic
science and research. And similar to when we made the last major
transition--from the vacuum tube to the solid state diode--it will
require joint work between industry and universities, with substantial
investment from the Federal Government. In the 1940's, the Department
of Defense made most of these investments, working with both university
and industry labs, and it is estimated that the total investment over a
10-year period was approximately $5 billion (in today's dollars) to do
the first prototypes of the solid state diode that went into their
weapons systems. Leveraging this investment, Bell Labs created the
first solid state transistor which launched the entire semiconductor
industry. This is now a $250 billion industry, enabling a much larger
electronic products industry and driving much of our Information
Technology based economy today.
Answers to Post-Hearing Questions
Responses by William P. Moffitt, Chief Executive Officer, Nanosphere,
Incorporated
Questions submitted by Chairman Brian Baird
Q1. Both you and Dr. Chen remark that user facilities require
technical support, particularly for small company users. This raises
the issue of how to safeguard the companies' intellectual property. Do
you have suggestions on ways to reduce these concerns that now appear
to inhibit use of the facilities by industry?
A1. Given that early stage development companies are typically still in
the ``exploratory'' phase of technology development (even though they
may have specific commercialization targets), investors expect
discoveries made to be the property of the company, which adds to the
value and provides some measure of liquidation risk mitigation.
Therefore, discoveries made while using such facilities require
significant negotiation for the company to retain sole ownership of
those rights. At the same time, there is always a certain amount of
``trade secret'' information developed, which the company would like to
hold as proprietary, but how does one keep learned knowledge in the
minds of the facility staff from spreading? This becomes a question of
value gained from use of the facilities versus risk of loss of
important proprietary information. Add to this perhaps the requirement
to disclose confidential information to educate facility personnel in
order to perform projects and the risk can often outweigh the value
gained by using such a facility. The only recommendation I can make is
to ensure that all proprietary information (whether jointly developed
or not) remains exclusive property of the company using the facility.
How to prevent spread of learned knowledge is another matter and one
that does not have an immediate solution other than non-disclosure
agreements.
Q2. You comment in your testimony on the need of nanotechnology
companies for trained and skilled lab technicians, as well as Ph.D.s.
What is the experience of your company in finding the skilled workers
you need and is this a widespread problem among the companies in the
NanoBusiness Alliance?
A2. Nanosphere has had a difficult time finding highly skilled
technicians who are necessary to build both R&D and production staffs.
We continually have open job requisitions. Some training in
nanotechnology is important to understanding why and how certain
important processes are dissimilar from other highly technical
industries (chemical, semiconductor, etc.). We have not had as great a
problem finding Ph.D.s as we are located in close proximity to the
International Institute for Nanotechnology at Northwestern University
in Evanston, IL. I believe you would find other nanotech companies in
the NanoBusiness Alliance struggling with the same issue.
Q3. Please expand on your comment regarding cost of use of NNI
supported facilities by businesses. Is there a difference in the level
of user costs for facilities supported by NSF versus DOE? Is there much
variation in the quality of user support or the administrative burden
associated with different facilities? And, what specific
recommendations do you have to make these facilities friendlier for
industry users?
A3. My company has no direct interaction with such facilities,
therefore, my remarks are confined to information I have gathered from
other members of the NanoBusiness Alliance. Recommendations for
improving use of such facilities include:
1. Resolve IP issues (see above).
2. Develop and disseminate a single, national resource listing
of all facilities and the equipment and capabilities/services
they offer. To my knowledge this does not exist in one place
today.
3. Price services on a direct cost basis for time and resource
usage, without inclusion of overhead burden and administrative
fees. While these latter costs are real, inclusion of
unabsorbed overhead burden in the cost of use diminishes value
received and can be a deterrent to usage.
Questions submitted by Representative Ralph M. Hall
Q1. You mention in your testimony that it would be good for the
Federal Government to create an additional incentive for private sector
investment by developing ``a program of tax and investment credits
which will help mitigate risk for early capital and provide additional
incentive for investments directed at goal oriented research and
development programs.'' What form do you think these tax and investment
credits should take?
A1. First, I believe the government can direct resources by funding
selected industries, those with the likely greatest payback to society
(health care and energy). There are a few ways to construct such
programs:
1. Within certain guidelines and certain qualifications,
permit small companies who are still cash flow negative to sell
federal net operating loss carry-forwards (``NOLs'') to larger
companies who can then apply them to their taxes. This has the
effect of reinvesting tax revenue in entrepreneurial efforts
that will create jobs and drive product development in a given
area, not just research. The net effect is the small company
raises capital at the government's cost of capital, not that of
a small, high risk start-up.
2. Tax credits for investors in specific nanotech sectors.
Deductions for qualified losses of high risk capital, not just
offsets to gains.
Q2. You state in your testimony that the U.S. currently leads the
science in nanotechnology, but could lose the commercialization race.
How would an early regulatory regime affect the growth of the
nanotechnology commercial industry?
A2. Assuming I have correctly understood the question, my comments were
originally directed at the need to more evenly balance funding for
commercialization efforts with basic scientific research. It is
incumbent upon all in the nanotechnology space to ensure safety of
their products and practices and to that end a question is whether
current regulations suffice to ensure public safety. More regulations
specifically directed toward nanotechnology may be required or
appropriate. I do not have sufficient visibility to data outside my own
company to have an opinion. However, greater regulatory requirements in
the absence of data to support the need would risk unnecessarily adding
to the burden, cost and timeline for commercialization. Those companies
in health care (as is Nanosphere) already come under regulatory
oversight of the FDA, which, while history will show has protected
public health, has added to the burden and cost of product
commercialization. An additional layer of regulations applied to
nanotechnology would further hinder commercialization. If data prove
such regulations necessary, I would strongly support implementation,
but in the absence of data, added regulations make no sense.
Questions submitted by Representative Vernon J. Ehlers
Q1. How does industry measure how much basic nanoresearch is the
``right'' amount?
A1. At the highest level, it becomes an understanding of whether there
is a backlog of discovery in the absence of advancing discoveries to
commercialization and the solutions to problems where nanotech holds
promise. At some point (how to define?), nanotech must provide society
with a return on investment by contributing to or providing solutions
for key problems in society or we run the risk of funding science for
the sake of interesting science. It is always easy to make the
``undiscovered breakthrough'' argument in favor of continued heavy
investment in basic science, but that must be tempered with practical
application of discoveries.
Whether the government and we as a society back one technology or
another should be measured by the ability to convert science to
solutions. In the case of nanotechnology, the science is early, so the
risk for commercialization is still very high. This creates the ``gap''
referenced in the second question below. Venture capital needs to see
some early successes to underwrite confidence and/or see the commercial
promise of a given technology before committing significant funding. It
is this early stage gap between science and building a portfolio of
commercial successes for a new technology that is difficult to fund.
Government support can help bridge this gap. Once nanotechnology begins
to build a portfolio of successes, gap funding requirements will
diminish, if not disappear. Moreover, one would think that continued
funding of basic science in the absence of meaningful practical
applications would underwrite the likely false pretense that nanotech
holds no value (as measured by society).
As for a quantitative measurement of the ``right'' amount of basic
nanoresearch, do data exist to compare invention disclosures (NSF, NIH,
DOD, etc.) with commercialization or licensing activity? How does the
current status of nanotech compare with other platform technologies?
How often do government-funded development contracts result in products
with sustained usage? These measures of productivity may be part of a
formula to balance basic science with development of applications.
Q2. How is ``gap-funding'' defined and identified? Since this type of
funding seems to be a need unique to this industry, is there a point
where the cost-benefit tradeoff will not be worth it? How do you know
when the hurdles to commercialization are insurmountable?
A2. (Reference the answer to the question above as well.) I am not
certain that ``gap funding'' is unique to the nanotechnology industry.
Rather, I would submit that such fundamental breakthroughs in science
are not that common and we happen to be in the midst of one now,
creating the appearance that this is the only industry with such
requirement. Moreover, because nanoscience has the potential to
significantly impact virtually every industry we know, there is
significant inertia. Did not the semi-conductor industry require
significant government funding in the earliest of days? What about the
human genome project? However, the question concerns time and cost for
a return on the investment in nanoscience and recognition of whether
and when challenges are insurmountable. It strikes me that this is not
dissimilar from resolving whether the microprocessor has actually
improved productivity in society. There have been arguments to the
contrary.
No question that it is difficult to objectively measure the return
(or lack thereof) on scientific discovery that unfolds over decades.
One source of data would be government funded nanoscience programs
seeking to develop applications and whether those have been successful.
At a higher level, an analysis of the percentage of any given industry
now represented by nano-enabled technology would also provide both an
understanding of the success of nanotech development and an opportunity
to understand return on investment.
Answers to Post-Hearing Questions
Responses by C. Mark Melliar-Smith, Chief Executive Officer, Molecular
Imprints, Austin, Texas
Questions submitted by Chairman Brian Baird
Q1. Both Dr. Chen and Mr. Moffitt remark that user facilities require
technical support, particularly for small company users. This raises
the issue of how to safeguard the companies' intellectual property. Do
you have suggestions on ways to reduce these concerns that now appear
to inhibit use of the facilities by industry?
A1. In my mind, the issue is less about protecting a company's IP than
it is about how the two organizations (the company and the national
facility) seek to protect their own IP as they work together. Every
company has the responsibility to protect its IP and should do this
through patent applications before the begin working with any other
entity--be it commercial or national. The real issue in my experience
has been that the national facility, which also wants to protect its
own IP on behalf of the taxpayers, will often get into overly legal
battles with the companies seeking to do business with the national
facility. In this respect they are no different than any other
enterprise.
Congress should send a clear directive to the DOE as to what role
they want the National Labs to play. If the purpose is to enhance the
U.S. economy by working with U.S. companies, then the directive can be
towards a laxer protection approach to existing and new IP generated by
the National Labs. Congress should also ask the DOE to measure the
success of this activity and report back to the Congress on these
objectives on a regular basis.
Squabbles over IP are not a new item. They are a regular
occurrence. They are usually solved through negotiation. Small
companies also need to understand that they cannot simply use all the
IP at the National Labs without charge, and the National Labs should
view the small companies as customers.
Q2. Is the research now being supported under the nanomanufacturing
component of the NNI meeting the needs of industry? Do you believe
industry has a voice in determining research priorities for these
activities?
A2. My company has not been that involved with NNI programs and
funding--most of our funding has come from DARPA, ATP and the U.S.
Navy. I would say that this support has been excellent.
Question submitted by Representative Vernon J. Ehlers
Q1. How does industry measure how much basic nanoresearch is the
``right'' amount?
A1. This can be a somewhat different answer if the question is related
to either companies or the government. For companies the answer is
relatively straight forward. It is what the management and the board of
directors feel is appropriate. This can range from 50 percent plus of
revenues for small start up companies to a more typical 15 percent for
established high tech companies.
For governments, I think the answer should be more focused on the
value and outcome of the research rather than the absolute amount of
money. There is certainly a place for fundamental research to expand
the frontiers of knowledge, but even in this case it should be
structured around the eventual objective or benefit. The best research
is always done in this context.
I believe that the total funding being spent by the U.S. Government
on research is adequate at present. Congress should make it a point to
measure the value of the research outcomes on a regular basis.
The National Labs and also the large research universities are a
very valuable, and probably under utilized resource, for the Nation.
Such entities are hard to duplicate and take many years to build up to
their full potential. Funding for these institutions should be
predicated on the expectation that over time, they serve the needs of
the Nation.
Questions submitted by Representative Ralph M. Hall
Q1. You mention in your testimony that you are working with the LED
industry to place nano features on high brightness LED's to increase
their efficiency. How exactly will nano features increase efficiency?
What properties of nanoparticles allow for an increase in efficiency?
A1. High brightness light emitting diodes are built from high
refractive index semiconductors such as gallium nitride. As a result a
significant fraction of the light photons emitted by the semiconductors
are trapped inside the LED by total internal reflection. By adding an
array of specially designed nano features, called a photonic crystal,
to the surface of the LED, it is possible to breakdown the total
internal reflection at the semiconductor/air interface and let the
photons escape. This enhances the efficiency of the LED--light out per
watt of electrical energy used by the LED.
In addition, photonic crystals can be used to coalesce the light
into a sharper beam as it is emitted from the LED. This is important
for some applications where a focused light source is required--for
example automobile headlights. This improvement is referred to as an
increase in brightness.
Q2. You mention an ATP grant that your company received in 2004. Would
you say that this award helped bring in venture capital? Has your
company benefited from the SBIR program and, if so, how?
A2. Our ATP grant was a great value to the company. It helped us fund
the evolution of our capability well into manufacturing and to build
strong customer relationships. It was a very important facilitation to
help move Molecular Imprints to the next level. It was not directly
related to our venture capital funding in that no VC actually came to
us and said ``we will not invest unless you have ATP money.'' However,
as we have approached later stage funding from the VCs it is clear that
the contribution made by the ATP grant has helped as make a stronger
company and hence a stronger case for additional VC funding. We have
not used SBIR funding.
Q3. Do you think that tax and investment credits for nanotechnology
investment is a good idea? Do you have any thoughts as to what would be
eligible for such a credit?
A3. Generally not. Most small companies do not pay any federal taxes
and so tax credits are irrelevant in the early stages where cash flow
is critical. Once the companies become profitable they should pay taxes
like anyone else.