Nano tool market is no small change

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Aug. 5, 2003 – Gerd Binnig still recalls what it felt like in 1981 when he tested his technical innovations and saw atomic structures for the first time.

“It was like a dream to discover all this,” said Binnig, a fellow at IBM Zurich Research Laboratory  who shared a Nobel Prize in physics for designing the scanning tunneling microscope (STM) and helped create the atomic force microscope (ATM). “It was like being for the first time on the moon.”

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There now are about 300 companies globally developing instruments for nanoscale imaging, manipulation and manufacturing, including nanofabrication equipment and scanning probe microscopes — the term for STMs, AFMs and their variants.

It may not be a huge market, but tools are among nanotech’s first moneymakers. And the growing number of federal labs, academic research facilities and companies that rely on microscopy and other techniques — plus the standard industries that see uses for precision tools — may explain the rise of toolmakers and new products. Another driver is government funding. Billions globally go toward nano-related research and development, with a major share devoted to instrumentation and equipment.

The bustle also is beneficial for customers, who get less-expensive and easier-to-operate tools. But increasing competition and the rapidly changing technical and economic landscape make it difficult to predict which of today’s most promising firms and technologies will make it to market — much less remain there. It’s a challenge the toolmakers are trying to meet in myriad ways, including acquiring or partnering with other companies, and “piggy backing” innovations onto proven products while the real breakthroughs bubble up from the lab.

One of the most active hives is the scanning probe microscope (SPM) market, where more than 20 suppliers sell machines for characterizing at the nanoscale. Many small startups seek to differentiate themselves in price, performance or function from established players — and vice versa.

“It’s a dynamic marketplace,” said Paul West, vice president of products and chief technical officer of Santa Clara, Calif.-based Pacific Nanotechnology Inc. (PNI), one of the startups. “If you looked at the competitive landscape 15 years ago, it was 20 different companies.”

PNI, which began as Pacific Scanning in 1998, adopted the new name and expanded its business in 2001. That year, it acquired a company that had been making AFMs, a more versatile, three-dimensional atomic-scale measuring tool than the STM.

Officials say they have been shipping the Nano-R general purpose AFM since the first quarter of 2002. Earlier this year, PNI announced the launch of the Nano-I for the imaging of MEMS devices, magnetic read-write heads and other devices. The company declined to reveal sales, but said they have increased with each quarter since AFM shipments began.

CEO Gary Aden said PNI aims to make microscopes that are affordable, high-performance and easy-to-use — not to mention competitive. “We use modern manufacturing techniques,” Aden said. “Common components have allowed us to lower our costs and allow the performance to be really high.”

PNI this year also released a sensory feedback mechanism for its AFMs, allowing users to “feel” nanoscale features as they are manipulated in real time. The company formed a marketing alliance with the Switzerland-based NanoFeel, which develops the force-feedback tool.

Chapel Hill, N.C.-based 3rd Tech commercially launched its force-feedback tool, the NanoManipulator, in 2001. The first-of-its kind system was developed at the University of North Carolina at Chapel Hill, and the latest version has been integrated into a scanning probe microscope (SPM) and software developed by Spain’s Nanotec Electronica

Ken Babcock, vice president and general manager of Veeco Instruments Inc.‘s  Research Products business unit, said his eyes opened to the potential of nanoscience in 2001 when he attended a talk by Neal Lane, assistant for science and technology to former President Clinton and one of the brains behind the National Nanotechnology Initiative.

“It was the first time we realized this is serious — the government is going to dump an extra $1 billion a year into nanoscale research,” Babcock said. “Suddenly, in a meaningful way, more government funding was going to nanoscale science and technology. The cross-disciplinary promise of it … was real, not hype. Truly respected people were talking about all the exciting things going on.”

Veeco had been in the SPM business for several years, primarily for measurement applications in semiconductor and data storage industries.  While it continued in those areas, the Woodbury, N.Y.-based publicly traded firm started to move its R&D toward nanoscale instruments. It also boosted collaborations with researchers, and Babcock said nanoscience now is one of the fastest growing segments for his business unit.

Veeco also bought the AFM divisions or AFM-related intellectual property from Digital Instruments in 1998, IBM in 2000 and ThermoMicroscopes in 2001. In June, Veeco announced it bought the AFM probe business of Santa Barbara, Calif.-based NanoDevices Inc.  The two firms worked together since NanoDevices’ founding in 1998.

Veeco and FEI Co. earlier this year scuttled a planned merger, citing poor economic timing. Veeco planned to buy the Hillsboro, Ore.-based maker of metrology and process control equipment in a stock exchange worth close to $1 billion at the time of the announcement last year. The acquisition would have created the sixth largest semiconductor equipment maker and third largest metrology equipment firm in the United States.

The push into nanoscale tools has led to several products, including the Scentris Cantilever Sensor Research Tool for measurements in gas or liquid environments; the EnviroScope AFM for observing sample reactions to a variety of complex environmental changes; and the MultiMode PicoForce System for tactile interpretation of molecules and force interactions.

Chicago-based NanoInk Inc. works in what’s called Dip-Pen Nanolithography (DPN), a fabrication process for building patterns, layers and structures with nearly any molecule at resolutions fewer than 15 nanometers. DPN, originally developed as a method to directly write molecules onto a surface with an AFM, is based on technology developed by Chad Mirkin and his group at Northwestern University.

“There’s a lot of value out of AFM — I don’t mean to minimize that. But AFM technology, although only 10 to 12 years in the marketplace, it’s ready to go to the next step,” said Ray Eby, NanoInk’s vice president of product development. “We want to take it beyond an imaging tool.”

Before making its first hardware tool — the Nscriptor DPN Writer system, which launched in April — NanoInk licensed its DPN System 1 software to Veeco. It’s a package that introduces AFM users to DPN in a reasonably controlled way, Eby said.

The U.K.-based startup NanoSight is developing a laser-based optical element that can be attached to a conventional optical microscope that will allow users to visualize nanoparticles normally detectable only by electron microscope. Officials call it “the 50-by-50 advantage” — increase resolution by 50 times, 50 times cheaper than a scanning electron microscope.

The firm licensed its patented technology to U.K.-based Smiths Detection to develop biohazard detection devices, while NanoSight retains rights for quality control in manufacturing nanomaterials, virus detection and other uses. Tim Harper, a nonexecutive director of NanoSight as well as chief executive of the nanotech business research firm Cientifica Ltd., said any approach that makes nanoscale work easier is worth pursuing.

“Measuring things at the nanoscale is a hell of a job — trying to achieve repeatability, reliability standards,” he said. “People are not as concerned as how to make an AFM work these days. … What you need to do is dumb down the instrument so you don’t have to be a Ph.D. in metrology. The Ph.D. guys can analyze the results.”

One of the biggest challenges at the dawning of a nanotool market is marketing.  — promoting but not exaggerating the equipment’s potential. It can be a fine line in an emerging area with hundreds seeking dominance.

“A lot of people will tell you it’s in instrumentation … where you make your money first,” Babcock said. “A lot of people are going to take advantage of that. That explains a lot of the cool tools you’re seeing. … But there’s only a handful of profitable nano companies.”

 

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