BASF sets aside $221 million for nano R&D, opens Asian center

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Mar. 20, 2006 – BASF, the world’s largest chemical company, is devoting $221 million to nanotechnology research and development between 2006 and 2008. The German corporation is opening up a new nanotech center in Singapore this year as well. The investments are part of an expansion of its global R&D activities, with nanotech one of five “growth clusters” that BASF will build over the next two years to ensure it stays competitive.

“Nanotechnology gives us the possibility to innovate, especially in a hard market like chemicals,” said Elmar Kessenich, manager of nanotechnology coordination at BASF. “Most of the chemical market is commodities, so if you really want to be competitive, you have to add value. You can do that with nanotechnology.”

Besides nanotechnology, BASF is concentrating on energy management, raw material change, plant biotechnology and white biotechnology. (White biotechnology uses biological systems and techniques to make cleaner or more energy efficient industrial processes.) All together, the five areas will receive $982 million.

The list of nanotech areas BASF plans to support with the cash infusion is long. It includes new products for the automotive and construction markets, cosmetics, printed electronics, electronic components and energy management systems such as fuel cells, OLED displays, and a variety of surfaces, such as scratch-resistant coatings and dirt-repellent paint.

BASF says its R&D strategy will enable it to stay at the forefront of materials innovation. While nanotechnology is still in its early stages regarding widespread application, even conservative estimates put growth rates at 10 percent a year and an end-user market size at $614 billion in 2010. BASF expects the market for its nanosystems and components to be between $61 billion and $74 billion in four years.

“It’s a key technology for us, since it helps us meet challenges of the global market not only with new products but also with old ones,” Kessenich said. As an example, he cited the company’s Ultradur High Speed product, an engineered plastic for electronic components. While a previous version of the product had been on the market for several years, BASF added nanoparticles to the mix, which brought down manufacturing costs and increased performance.

Part of BASF’s more intensive focus on nanotechnology is a new research center in Singapore, the company’s first nanotech facility to be opened in Asia. Set up to open at the end of the first quarter of 2006, the center will concentrate on nanostructured surface modifications, such as controlling the hydrophobic or hydrophilic characteristics of a surface. Hydrophobic molecules shun water; hydrophilic molecules have an affinity for water.

The facility will employ about 20 people, including six researchers, technicians and post-docs, with most of them coming from the region. BASF chose Singapore because of the city-state’s good infrastructure, its location and the fact that intellectual property protection is better there than in China. That’s “a prerequisite for any R&D project,” said Harald Lauke, president of the company’s Asia-Pacific division.

According to Kessenich, Asia is focusing more of its attention on nanotech. “There are a lot of interesting nano startups there,” he said. “At international conferences we see increasing numbers of good researchers from Asia presenting their results.”

Asia in general is also becoming a more important market for BASF, which is interested in getting a firm foothold there. BASF is not completely new to Asia; the company opened a chemical production facility in Nanjing, China in 2005. A presence in the region will also help BASF recruit Asian chemists, since the company could offer them a position closer to home instead of asking them to move to another continent.

BASF’s strategy appears to be on target, since Asia as a recruiting ground is looking more fertile all the time. A Georgia Institute of Technology study found that as more Asians earn doctorates, they increasingly apply them to Asian — not U.S.-based — careers. In the meantime, the number of U.S. citizens earning advanced degrees continues to decline.

The investment advisory group Innovest gave BASF good marks in the nanotechnology index it published in the fall. It highlighted the company as having high growth potential relative to its competitors, especially regarding transparency and addressing potential concerns like product safety.

“It’s not all sunshine. Some of their products are still in the commodity range and they do have a lot of risk,” said Heather Langsner, author of the report. “But they have paid attention to nanotech risk factors and will most likely succeed in sensitive markets.”


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