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Jan. 12, 2005 — F. Scott Fitzgerald once said there are no second acts in American life. American Superconductor Corp. (Nasdaq: AMSC) is out to prove that axiom does not hold in the business world.
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Perched in the suburban Boston town of Westborough, American Superconductor in the 1990s rolled out its first product: high-temperature superconducting wire. As ceramic filaments interlaced through silver, the wire could carry far more electricity than copper wire and promised to revolutionize everything from power generation to ship propulsion.
The problem? It cost so much more than copper wire that few could afford it.
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Ten years of nanoscale chemistry later, “AmericanSuper,” as the company is nicknamed, is ready to roll with its second generation of high-temperature superconducting wire — and the sequel stands to be far more popular than the original.
The company filed to sell an additional 4 million shares of stock yesterday. It intends to use some of the proceeds, estimated to be about $48 million, for scaling up manufacturing of this next generation wire.
“The whole purpose of 2G is not to increase the electrical performance, as much as it is to dramatically cut the cost of manufacturing this wire,” said Greg Yurek, AmericanSuper’s founder and chief executive. “2G is clearly the future of this company. We’re going to drive this transition as hard and rapidly as we can.”
Strong words for any chief executive, but Yurek believes nanotechnology has given him the tools to back it up. With improved surface chemistry, Yurek has turned the manufacture of wire on its ear. Rather than interweave filaments through silver as its first-generation (1G) superconducting wire does, 2G wire layers the ceramics onto a nickel-tungsten substrate.
AmericanSuper’s first nanotech breakthrough was to coax sulfur atoms to self-assemble into a monolayer on a nickel-tungsten substrate. Usually sulfur ruins the bond between two layers. Under the right conditions, however (which Yurek only said “we can do really well”), the atoms obediently sandwich between the substrate and the ceramic layer, protecting the two from melting together.
That technique makes 2G wire suitable for cables that might be strung between two utility poles. Yet a large portion of the market is 2G wire wound into coils for motor components — and coiled wire generates a magnetic field, which weakens high-temperature superconducting wire performance.
To solve that problem, AmericanSuper soaks the 2G wire in a solution doped with the elements holmium and yttrium. The two metals form pegs on the wire about 100 atoms wide, which “pin” fluctuations in magnetic force to the wire’s surface. Electrical current can then travel through coiled wire undisturbed. Today its 2G wire can carry 330 amps, 10 percent above the Department of Energy’s requirements. It announced the latest performance improvements in December.
“It’s a really focused effort to create particles on this nanoscale to do a specific job, to pin these magnetic vortices,” Yurek said.
Technology aside, AmericanSuper must still convince customers that 2G will work and fend off competitors as they enter the market. The company already has a steady business selling 1G wire and other power-system components to large industrial customers; it pulled in $41.3 million in revenues for 2004 (with a net loss of $26 million), and Yurek expects to ship 550,000 meters of 1G wire in 2005.
Yurek has established a “pre-pilot” manufacturing unit for the 2G wire, and plans to ship up to 10,000 meters this year to customers such as Sumitomo Electric. By 2006, AmericanSuper hopes to shift into a pilot plant and ship as much as 300,000 meters of 2G wire annually by 2008.
Currently, AmericanSuper’s only competitor is SuperPower Inc., a wholly-owned subsidiary of Intermagnetics General Corp. (Nasdaq: IMGC) based in Schenectady, N.Y. SuperPower’s ion-beam assisted deposition technique allows it to use numerous metal substrates such as nickel or stainless steel that add mechanical strength and fit customer needs more closely.
“It gives us a lot of freedom,” said Venkat Selvamanickam, SuperPower’s project manager for 2G wire. “We feel this is a primary advantage for us.”
Selvamanickam and Yurek both contend that once 2G drops to prices competitive with copper, copper-wire users will embrace high-temperature superconducting wire. (Energy analysts estimate that price at $50 per meter; 1G wire sells for $250 per meter today.) Industrial motors, long-distance power lines and weapons systems are all likely markets.
“The markets we’re talking about are so huge, there’s room for both companies,” said Walter Nasdeo, analyst with Ardour Capital. He expects more companies to jump into the wire business once it matures in the next five years: “Very soon after its rollout, this field will get highly competitive.