Novellus, Neah Power re-up for fuel cell work

May 31, 2006 – Novellus Systems Inc. and Neah Power Systems Inc. have renewed and extended an agreement to develop silicon-based fuel cell technology, related to the application of catalyst and conductive films to porous silicon structures to be used as fuel cell electrodes.

Neah’s porous silicon direct methanol fuel cell, still in the R&D stage, uses porous silicon to obtain better power densities (~40x), reliability, scalability, and manufacturability than methanol fuel cells based on proton exchange membrane technology. In a SEC filing, Neah Power indicated it has achieved stable, high-power operation of its silicon-based chemical reactor, and expects to have a working prototype for bench-top testing in 2H06. The company also plans to raise up to $20 million to convert the prototype into a self-contained, portable system for sample use.

Under the extended partnership, Wilbert Van der Hoek, CEO and president of venture fund Novellus Development Co. and former Novellus CTO, will take over as chairman of Neah Power Systems’ technology advisory board. John Drewery, Novellus director of technology in charge of advanced metals processing development, will continue his work at Neah as EVP of engineering, and another Novellus project scientists will be assigned on a full-time basis.

Novellus, which invested $2.5 million in Neah Power Washington two years ago, will receive approximately 4.7 million in Neah stock, in addition to what it already owns, amounting to about 9% ownership. Neah expects to acquire rights to the codeveloped fuel cell technology, and will have access to Novellus technical assistance for seven years. Neah paid Novellus about $300,000 in 2004 for development services; another $150,000 is scheduled to be paid by September of this year, and a $150,000 nonconvertible note is due to be repaid in June 2007.

Novellus’ venture fund was formed in March 2005, seeded with $10 million, to invest in technologies complementing its own product portfolio, as well as technologies and applications beyond the semiconductor manufacturing sector for its thin-film deposition, surface preparation, and polishing competencies, such as fuel cells.


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