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By Paula Doe
WaferNews Contributing Editor

Suppliers of semiconductor equipment trimmed at least 20,000 workers worldwide and cut out at least $1 billion a year in overhead expenses as they aggressively sliced costs in 2001 to survive the industry’s worst downturn. And this time many are thinking seriously about not building back up so much again in the next upturn, hoping leaner management and more reliance on outsourcing can make it easier to survive these cycles.

“You can manage by thinking about the next upturn during the downturn, or by thinking about the next downturn during the upturn, and the results will be very different,” explains Lam VP of Business and Finance Terry Plette. “We’re going to be thinking in the next upturn about the next downturn, and be very cautious about adding permanent resources. In the last upturn we consciously put as much variability as we could into manufacturing, making 30% of our manufacturing employees temporary. This time we’re actively looking to outsource as many things as it makes sense to for the next upturn.”

“As to growing the infrastructure again, I don’t think we will,” concurs Tegal Corporate Controller Kathy Petrini. “We’re going to have to stay lean and mean to contain costs.” She also notes that after the experience of the last downturn, “We reacted more quickly this time, were more nimble.”

Indeed, the sector cut back drastically and fast to remain viable as sales fell. Tool companies tracked by WaferNews had cut back spending on selling, general, and administrative expenses by a total of some $223 million by 3Q01 compared to the same period a year before, or some 16.5%, and expected further reductions in 4Q, for which results are not yet available. That suggests the toolmakers have reduced overhead expenses by roughly $1 billion a year.

WaferNews looked at SG&A as representative of overhead costs within a company’s control, not so determined by volume and overhead absorption as manufacturing costs, and not muddled by R&D and one-time write offs as are total operating costs. We track companies that get more than 50% of revenues from semiconductor equipment, and have quarterly revenues of $3 million or more.

A number of companies managed to make impressive reductions to get expenses down to industry benchmark levels, even with significantly reduced sales.

Speedfam-IPEC cut SG&A spending by 51%, PRI Automation by 42%, to bring these overhead expenses down to under 20% of sales. Micro Component Technology, Varian Semiconductor Equipment Assoc., Tegal, and ASM International all also cut SG&A expenses by more than 30%. Other companies among the low-overhead leaders who still managed to make 20 to 30% reductions were Cymer, Applied Materials, Novellus, and Rudolph.

Biggest cost savings naturally came from layoffs. Suppliers of semiconductor equipment announced work force reductions of at least 20,000 worldwide during the year, according to a running count of press releases and media reports kept by semiconductor Equipment and Materials International (SEMI), plus additional data collected by WaferNews from conference calls and interviews. Most companies have apparently trimmed their work forces by about 10 to 20%. But Mattson has announced reductions that trim its headcount at merger by 53%, Speedfam-IPEC has cut staff by 45%, VSEA has reduced fulltime equivalent headcount by 44%, and Tegal by 30%.

On the other hand, Novellus figures it will reduce expenses by $50 million a quarter by 4Q01 from 1Q01, or some $200 million a year, without a layoff, though it may consider them in 2002. Risto Puhakka, VLSI Research’s VP of operations, credits Novellus for recognizing the need to cut costs early on and holding on to its employees. “You want to maintain the labor force and cut everywhere else,” he notes. “Don’t show up at trade shows in order to save money.”

Industry salaries were down sharply too, with pay cuts for executives and companywide shutdowns and down days common. One company has put essentially everyone on a four-day workweek, for four day’s pay, effectively cutting all salaries by 20%. All employees at Agilent took 10% pay cuts. Novellus employees took up to 5% cuts, executives 25%. Executives at Advanced Energy, FSI, and Lam took 10% pay cuts.

Forced to cut costs, companies find more efficient ways of doing things

Besides these basic savings on labor costs, companies have come up with a host of other creative ways to save money as well, and which will keep saving money in the next upturn as well. Tegal, which cut SG&A 30%, says it got major savings from consolidating its European offices, dissolving its separate entities in Europe and making them into US subsidiaries, and closing some offices and having people work out of their homes instead. Though arduous and expensive, the consolidation has resulted in major cost savings.

ASM International, which also cut SG&A by 30%, found it could reduce costs by rethinking internal procedures to do things more efficiently, and reduce the time spent shuffling paper around. Instead of filing time sheets with human resources every week, for example, it has started reporting the exceptions only, filing a sheet only when someone is not there. It also cut back internal distribution lists and found very few people noticed or complained. Next the company plans to implement a new enterprise resource planning system – and change its procedures to match the software.

“We plan direct implementation without any customization,” says ASM COO Daniel Queyssac, president of ASM America. “The system will direct us how to organize work and force us to go to the best practices.”

He also notes that ASM had to cut back employment less this time since the company learned in the last downturn to do more outsourcing, now doing only the 30% of final assembly in-house.

Lam Research led the sector with the lowest SG&A as percent of sales in 3Q, though of course the ratio got a boost by the way the company’s sales held up better than most in the period. Still, Theodore O’Neill, senior analyst and managing director at C.E. Unterberg, Towbin, cites Lam, along with LTX, as doing a “spectacular job of cutting costs.” “Looking back at last downturn, [LTX and Lam] have significantly improved their operating margins,” O’Neill said.

Lam’s Plette explains that it’s a lot of little things that add up to keeping costs down in line with revenues. The company consciously built as much variability into its costs as possible after the last downturn, with a variable compensation (profit sharing) program and a manufacturing workforce with 30% temporaries, and leasing its buildings to expand and contract out of them through the cycles.

Besides the usual layoffs, shutdown days, reductions in travel and the like, the company figures it has saved an additional 0.5 to 1% by asking people to volunteer for pay cuts, or to take stock options in lieu of pay. The company is not as liberally staffed as some of its competitors in finance, human resources or marketing, and during the downturn it has implemented a program to train senior managers in finance and human resources so they can do more on their own.

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By Richard Acello
Small Times Correspondent

SAN DIEGO, Jan. 22, 2002 — Scientists are studying how nanotechnology can fight sudden invasions of brown tide and other forms of algae harmful to the seafood industry.

“Clams stop feeding and they starve to death,” said David Caron, a professor of biological sciences at the University of Southern California. “The Long Island scallop and clam industries lose millions of dollars to brown tide.”

But brown tide isn’t the only scourge lurking in the oceans. Urban runoff, sewage spills, and other harmful microorganisms pose a health threat to human and marine life. With a

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A brown tide cell:
Seafood industry’s
public enemy No. 1.
$1.5 million research grant from the National Science Foundation in tow, Caron and a team of colleagues at USC will use nanotechnology, robots and computers to hunt down pathogens in the ocean.

Using colloidal gold and silver balls as small as two nanometers, a group led by chief investigator and computer science professor Ari Requicha programs a computer-controlled atomic force microscope — a kind of scanning probe microscope — to slide gold balls onto slides mica or silicon. In this way, Requicha and Caron hope to attach antibodies to the sharp silicon tip (about 10 nanometers) of the microscope probe to interact with a sample.

“We’re going to go fishing,” Requicha explained. “When there’s an interaction between the antibodies and a corresponding antigen, it will bind” to the tip of the probe. This can be done at room temperature and in water, Requicha added.

Identifying pathogens in this way, Requicha said, takes minutes or hours, instead of days. Time is of the essence in warning the fishermen of brown tide, surfers of harmful bacteria or the existence of toxic agents in drinking water.

From the lab, Requicha plans to move his experiments to a 5-by-5-foot tank with microscopic robots searching for microorganisms. The group has already constructed a nanoscale single-electron transistor and an optical waveguide, used to guide light. The group is also working on a nanosize actuator or switch, and is starting to assemble 3-D nanostructures by building up successive layers of nanoscale assemblies.

But Requicha is still wrestling with ideas on how to make his robots mobile. “How do you get the robots to propel themselves or to swim?” he asks. “One idea is they could be propelled like bacteria with flagella.”

Eventually, though, the team wants to create robots that are as small as the microorganisms that they seek to monitor. In any event, Requicha said he’ll be ready to move his early stage robots into the ocean “in a couple of years or so.”

But the Holy Grail of the technology, said Requicha, is its use in the human body. “If you can make a system that can detect microorganisms in a marine environment, it could be deployed in blood. If you were successful, you could have artificial cells, you could program an artificial immune system for those with impaired immune systems. The possibilities are amazing.”

Jan. 17, 2002 – Santa Clara, CA – Intel Corp.’s board of directors has elected 27-year Intel veteran Paul Otellini president and COO.

Otellini will join CEO Craig Barrett in a two-person executive office. Otellini will be responsible for overseeing Intel’s internal operations, focusing on the development and delivery of new products and technologies, and the efficiency and productivity of the company’s business. Corporate strategy and long-range planning will continue to be led by Intel’s CEO Barrett.

“As Intel’s silicon products span beyond PCs and servers to communications, the job of keeping Intel at the competitive forefront with customers, the industry and government, and in internal operations has grown,” said Barrett. “The breadth and depth of Paul’s experience certainly qualify him to take responsibility for Intel’s internal operational excellence. He headed our core microprocessor products business for the last four years after leading sales and marketing worldwide for five years, in addition to holding key product development and finance roles. Paul understands the dynamics of Intel’s business, industry and company culture, and has the skills to help execute on our plans and programs as we move forward.”

Since 1998, Otellini served as exec. VP and GM of the Intel architecture group, responsible for the company’s $21 billion microprocessor and chipset businesses. He served as exec. VP of sales and marketing from 1992 to 1998.

Since joining Intel in 1974, he has held a number of other positions, including GM of the company’s peripheral components operation and of the folsom microcomputer division.

By Pieter Burggraaf
WaferNews Technical Editor

Looking for an application that will bring the IC industry out of its current slump? Consider the projected growth of broadband and in particular the microelectronics necessary to establish “residential gateways” and “simple to use home networks.”

“Estimates show broadband use growing worldwide from 12 million users in 2000 to 90 million in 2003,” said engineer Johan Danneels from Alcatel Microelectronics, Brussels, Belgium, speaking at the 2001 IEEE International Electron Devices Meeting (IEDM), held late last year in Washington, DC.

Associated with this, fiber optics connections are doubling every nine months, but the last mile, which includes residential gateways, is the bottleneck to greater broadband use. Residential gateways are needed to manage shared Internet access for what Danneels eventually sees as “pervasive computing” — where a user is surrounded by computing devices (i.e., web pads, e-books, PDAs, set top boxes, personal video recorders, IP phones, game consoles, etc.) and smarter kitchen appliances.

“Today, we still think of an Internet appliance as a stripped down PC, but over time even a dishwasher will become a simple Internet appliance that connects to a manufacturer’s site for maintenance needs. In the near future in a home, more money will be spent on electronics than on stoves,” he said.

Danneels believes that deep-submicron CMOS — not emerging alternatives that target replacing CMOS — and first-time-right SoC designs are essential to achieve residential gateways at the right consumer price and with the ability to hit market windows. “Standard CMOS is the only way to drive cost down quickly and aggressively, which are absolute musts,” he said.

In addition, SoC semiconductor companies must master digital, analog, RF, and high voltage designs. Successful companies must rely on third parties — he sees mega-fabs of today’s silicon foundries, as well as research institutes, playing a large role in providing design and process technology needs.

—- CMOS milestones —-

Presenters at 2001 IEDM revealed significant milestones in continuing conventional CMOS transistor technology and advances in associated wafer processing skills. However, a noticeably smaller audience of about 900, compared to 1,700 in 1999 (Washington, DC) and 2,300 in 2000 (San Francisco, CA), attended this key confab. According the IEDM General Chair, MIT’s Judy Hoyt, low attendance this year was due to travel budget cuts, but also current international sensitivity to traveling to the US capital.

Many attendees who did attend directed their attention to low-k and high-k materials issues associated with the relatively short-term continuation of CMOS technology.

—- Low-k technology —-

The continued development of copper low-k processing for advanced CMOS is focused on reliably applying yet softer “ultra-low” <\<>2.3 dielectric-constant materials:

* A large team of engineers at International SEMATECH, Austin, TX (including engineers from TI, Motorola, IBM, and others), is addressing the propensity of porous candidate materials not to maintain mechanical strength and adhesion through CMP processing and k <\<>2.3 after integration. Work at International SEMATECH has also shown a degree of incompatibility with DUV photoresist, which is suspected due to etch and ash processing using nitrogen. International SEMATECH engineers have seen results with “one spin on porous silica material” that maintains its ~2.3 k value after integration.

* Engineers from TSMC, Hsinchu, Taiwan, and Sony, Tokyo, Japan, separately have succeeded in incorporating electropolishing as an alternative to CMP thus allowing use of mechanically weaker low-k materials in four-level copper low-k interconnects. At TSMC, for example, this process has achieved production yields, compared to a process using conventional CMP, on 4Mb SRAMs.

* Other work at International SEMATECH (in conjunction with Infineon Technologies, Munich, Germany; Philips, Eindhoven, Netherlands; and Novellus Systems, San Jose, CA), engineers are investigating the interaction between porous low-k materials and CVD barriers, especially diffusion of CVD precursors into the pores of the low-k material and subsequent metal deposition inside the low-k material. While still needing more complete characterization, the International SEMATECH based group has seen positive results with a novel 5nm thick TiN(Si) copper barrier used with JSR KLD 5109 ultra low-k material.

* Engineers at Hitachi, Tokyo, Japan, have developed the processing necessary to integrate Dow Chemical’s SiLK ultra low-k material with a SiCN barrier, overcoming high capacitance problems associated with using SiN.

—- High-k dielectric —-

Emphasizing the crucial importance to the future of CMOS for developing high-k and metal gate technologies, IEDM included two sessions on this timely topic. While development work continues with zirconium silicates and other alternative such as lanthanide oxide Pr 2 O 3 (Kwangju Institute of Science and Technology, Korea) and Ru<->x<->Ta<->x<-> films (North Carolina State U.), a significant portion of the development activity here is building around hafnium oxide (HfO2):

* Motorola, Austin, TX, engineers have fabricated polysilicon-HfO2 gate-stack MOSFETs, depositing HfO2 at 550 dgC with MOCVD and performing co-silicidation that produces an oxide at the polysilicon interface. This process has produced acceptable NMOS performance, but further work is needed to improve PMOS performance.

* Working with a variation to silicon-surface nitridation (bottom nitridation), researchers at the U. of Texas Microelectronics Research Center, Austin, TX, have incorporated nitrogen in the upper layer of HfO2 via sputtering, resulting in improved and even superior MOSFET characteristics.

* At International SEMATECH, in a comparison of self-aligned MOSFETs fabricated using atomic layer deposited ZrO2 or HfO2 as gate dielectrics and polysilicon as gate electrode, overall transistor characteristics were better for HfO2. Among the advantages were tolerance to a source-drain anneal cycle at 1000 dgC for 10 sec, mobility degradation of ~15%. Further process optimization is needed, however, to improve threshold voltage and drive current.

* A team of engineers from Yale U., Jet Process Corp, New Haven, CT, and IBM, Hopewell Junction, NY, have shown that adding aluminum (Al) to a HfO2 film substantially increases its crystallization temperature; the propensity of HfO2 to crystallize with subsequent processing temperature leads to greater leakage. Specifically, 6.8% Al raises the temperature ~200 dgC and 31.7% ~400 dgC.

The overall message at the 2001 IEDM was that Moore’s Law definitely has life and that fabrication technologies and designs are emerging that will bring the industry to the projected 10nm MOSFET barrier. The beauty of IEDM is that it is also the industry meeting where root sources of eventual CMOS replacement technologies and fabrication diversification for new products emerge.

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Mark A. DeSorbo

BEIJING—With crackdowns on substandard drugs and shoddy pharmaceutical manufacturing well underway, China has launched efforts to clean up its food supply in the wake of mass food poisonings by establishing a monitoring network.

The measure is the most recent step China has taken toward securing its seat in the World Trade Organization. [See “China copes with drug woes amid business development,” CleanRooms, March 2001.]

“They are going to have to make a concerted effort to adopt ISO or U.S. standards to be competitive in the World Market,” says public safety consultant Robert W. Powitz, principal of R.W. Powitz & Associates, P.C. (Old Saybrook, CT). “It's going to have to be a Herculean effort on their part with help from and a lot of foreign expertise.”

At a forum on food safety held here in late November, Zhoa Tonggang, a Ministry of Health official said the network has already unveiled the use of pesticides, growth-enhancing hormones and the lack of sanitization in food storage and production, all of which have led to numerous food-borne illness outbreaks throughout China.

At least 40 farmers suffered food poisoning in Jintan of East China's Jiangsu Province, while 484 people ate poisonous pork in Heyuan of South China's Guangdong Province. No deaths related to the cases have been reported.

Some farmers, tempted by profits, use banned pesticides, chemicals and hormones to increase production and earn higher incomes, Zhoa says.

The increasing demand for food has bolstered the number of food producing entities as well, contributing to the problem. According to ministry statistics, that number has increased from 1.2 million to 5 million throughout the country from 1995 to 2000.

In response to greater demand, many small-scale food producers using simple facilities and untrained staff have emerged, says Zhao. Hygenic facilities for food storage and production, he adds, are rarely used, leading to countless food-borne illnesses like the one that hit Jintan.

Health Minister Zhang Wenkang urged for improvements in the inspection system and pushed for frequent checks on every part of the food production process, including planting, breeding, production, processing, storage, transportation and sale.

At the time of this report, the Chinese government reported that more than 18,000 fake or poor-quality food producing workshops had already been destroyed; 17,316 tons of fake or poor-quality food and 29,300 unhealthy pigs had been seized and more than 150 people were arrested in the crackdowns.

“We should educate food producers to strictly follow the Law on Food Hygiene and enhance their consciousness of professional ethics,” Zhang told China's Xingua News Agency.

Meanwhile, Zhang told the China Daily that a supervisory role of consumers is also being encouraged. Measures will be adopted to expand consumers' access to food safety administration, he added.

Lisa Lee, an expert with the World Health Organization also told the China Daily that food safety is a “shared responsibility” between the government, supervisory bodies and the consumers.

Powitz agrees, adding that China will need to adopt regulatory validation, bring manufacturing facilities up to date and meticulously train personnel.

While it has taken many years for the United States to develop agencies that monitor food from harvest to the table, Powitz says it will probably take China considerably longer given its current situation.

“What China is trying to do is make food safe from the farm to production to the table,” Powitz says. “That's taken us many years, but we're still kicking and screaming into the 21st Century, and by that I mean I'm sure there's a diner or bar in your neighborhood that uses 1940s technology to make your hamburger.”

Dec. 28, 2001 – Seoul, Korea – In a landmark ruling earlier this week, a provincial court ordered 10 executives of Samsung Electronics Co. to pay the electronics manufacturer 97.8 billion won ($74.5 million) for mismanagement.

The ruling was the first court action to hold business executives legally responsible for mismanagement that caused serious financial losses to their company – and shareholders, according to Dow Jones.

The court’s decision was a victory for civic groups, which have waged a vigorous campaign to end widespread illegal business practices among family-controlled conglomerates, such as cross-funding and internal trading.

“The ruling is meaningful as the court cracked down on bad managerial practices of conglomerates,” said the People’s Solidarity for Participatory Democracy, a Seoul-based citizen’s group.

The group led 22 minor Samsung shareholders in 1998 to sue the electronic giant, accusing it of illegal internal trading. It demanded that the company’s chairman, Lee Kun-hee, as well as several other executives reimburse 351.1 billion won to the company.

Cases of mismanagement, cited by those minor shareholders, included cheap sales of Samsung-owned stocks to units — a measure commonly used by conglomerates to subsidize financially weaker units. Such internal trading is illegal under South Korean law but wasn’t strictly cracked down under past military-backed governments.

Conglomerates came under closer scrutiny as South Korea’s economy wobbled in the aftermath of the 1997-98 Asian financial crisis. A few dozen conglomerates collapsed, forcing South Korea to bail out its sinking economy with the help of the International Monetary Fund.

In Thursday’s ruling, the civil court in Suwon, south of Seoul, where Samsung’s head office is located, noted that the illegal business practice devalued the company’s stocks, thus causing financial losses to shareholders.

The court ordered the company’s chairman, Mr. Lee, to pay back $5.5 million he had used in 1988-92 to bribe then President Roh Tae-woo to win government contracts. Mr. Lee had pleaded guilty to the charges in a separate trial.

The Suwon court also told nine other Samsung executives to pay back a total of $68 million, holding them responsible for various cases of mismanagement, including a 1997 decision to acquire a near-bankrupt firm without closely checking that firm’s financial health. The company was later liquidated.

“Internal trading is a cancer for the development of capitalism, blocking fair competition,” Judge Kim Chang-suk said in issuing the ruling.

Over the decades, South Korea’s conglomerates expanded recklessly with massive bank borrowings until the early 1990s with the perception of “too big to fail.” A typical conglomerate used to have 40 to 50 units, making everything from computer chips to cars and clothes.

That notion faded as South Korea went through the Asian economic crisis. Today, the government monitors conglomerates more closely to check for any illegal business practices.

South Korea’s economy has rebounded from the regional crisis, growing 10.7% in 1999 and 8.8% in 2000. But many analysts believe the country’s corporate restructuring has a long way to go to achieve sustained growth.

By Richard Acello
Small Times Correspondent

SAN DIEGO, Dec. 28, 2001 — A group of West Coast scientists has developed an improved propellant system for use in aerosol drug delivery.

It’s a development that could allow more than 17 million Americans afflicted with asthma, and millions more with other chronic lung diseases, to breathe easier.

Using hollow, porous, perforated particles or microstructures that one inventor of the system likens to “little Wiffle balls,” scientists have discovered that drugs administered in the propellant are more likely to enter the lungs, leading to more consistent and beneficial results.

The research is described in a patent issued on Oct. 30 to San Francisco Bay area-based biotech Inhale Therapeutic Systems Inc. and a group of inventors that includes Jeffry Weers, Ernest Schutt, Luis Dellamary, Thomas Tarara, and Alexey Kabalnov.

The PulmoSphere process, first described in a 1999 paper published in Pharmaceutical Research, is currently in clinical study. The results of those tests are expected to be published in the upcoming issue of the same periodical.

From his office at Inhale, Weers, said the company is in “early negotiations” with at least one unnamed pharmaceutical firm on a development deal for PulmoSphere. “We’ve been able to form a very stable supply of propellant in that (nanosize) media,” Weers said. “It’s a more efficient dispersal system, meaning there’s less impact on the throat, so more of the drug gets into the lung.”

Currently, the most widely used devices for delivering drugs into the lungs are metered dose inhalers (pMDIs) and dry powder inhalers (DPIs). Both inhalers deliver micronized drugs in a process that has been described as equivalent to throwing a crystal ball at a steel wall.

On contact with the throat, the crystal splinters into millions of pieces with little control over the size, density and other factors that affect how the drug is dispersed into the lungs. Lacking direction, and forced to mingle with other particles, the dose that can be delivered is less than about 10 milligrams. Treatment is also undermined by cohesive forces between drug particles that also hamper powder flow.

In metered dose inhalers, the dry powder must be dispersed in a hydrofluoroalkane (HFA) propellant. But this approach to stabilizing drugs in propellants is subject to flocculation, or clotting. To combat clotting and other effects, the canister containing the drug must be shaken by the patient and used promptly.

Inhale’s line includes 21 products that have completed or are in human clinical testing.

For the quarter that ended Sept. 30, Inhale lost $26.9 million, or 49 cents a share, on revenue of $22.4 million, compared with a loss of $13.2 million, or 31 cents a share, on revenue of 14 million a year earlier. Despite the red ink, Inhale still has a war chest of about $353 million in cash and investments.

John McCamant, editor of the Medical Technology Stock Letter, based in Berkeley, Calif., said Inhale’s third-quarter loss is not unusual.

“That’s to be expected. As the value of the product you’re testing goes up, so do the expenses” associated with clinical trials.

According to McCamant, Inhale scored a recent victory when Chiron Corp. dropped the inhaled drug technology of Sunnyvale, Calif.-based Aerogen Inc. for treating infection in patients that have cystic fibrosis. Instead, Chiron went with Inhale.

Under its agreement with Inhale, Chiron will help develop a new inhaled Tobramycin powder for treating cystic fibrosis patients. This could lead to the development of other inhaled antibiotics.

“That’s a pretty strong vote for Inhale,” McCamant said. Inhale is considered one of the industry leaders in its space, McCamant added.

“You’re looking at decent-sized markets, but you have business model questions, since they don’t own the drugs outright,” McCamant said, referring to Inhale’s moves into PulmoSphere technology.

Joel Martin, a partner at San Diego-based Forward Ventures, is bullish on the role of nanotechnology for “limitless” applications in particulates, coatings and medical devices, but tempers his enthusiasm with the “pragmatic” approach of an investor.

“I always ask ‘What does it do for you?’ ” he said. “I don’t want to be on the bleeding side of technology.” Forward has more than $300 million under management.

Martin said the premise behind Inhale’s PulmoSphere technology is a “sound one, the dry powder spray is a good route of administration for certain drugs.”

He does, however, have one reservation about its commercial potential. “The hard part is getting the drug into the patient who can’t breathe well,” he explained. Patients can have varying degrees of breathing capacity, Martin said, making the metering of the dosage difficult.

Martin joined Forward in November. Previously, he founded Quantum Dot Corp. in Hayward, Calif., and is still chairman of its board of directors.

By Guy Paisner
Small Times Correspondent

LONDON, Dec. 21, 2001 — An ambitious plan for a nanotechnology research center focused around the University of Birmingham is at the heart of a U.K. regional development strategy that hopes to revitalize the birthplace of the industrial revolution.

The launch earlier this week the I2 Nanotech Centre is the first phase of a vision to establish the West Midlands as a global force in the commercial exploitation of nanotechnology. The center will focus on nanoparticles and nano-engineering, with applications ranging from microfabricated devices and novel materials, through to drug delivery systems, dentistry and food production.

Having raised more than $15.9 million in public funding, the new center intends to bridge the nano-engineering expertise of the university with the commercial research of big pharma partners such as AstraZeneca and GlaxoSmithKline. Other partners include QinetiQ, the commercial wing of the U.K. government’s defense research and development organization and CLRC, the parent organization of the world famous Rutherford Appleton Laboratory in Oxfordshire.

Vishal Nayar, business group manager for microsystems and engineering at QinetiQ, will work with the I2 Nanotech Centre on a collaborative basis. “The Midlands has a history of precision engineering and technology, which is allied to the microsystems world,” Nayar said. “It needs to renew its core competence and setting up the nanotech center will be a core part of that process.”

The center has already received planning permission for a building that it hopes to open in the next 12-18 months. It will house multidisciplinary teams organized through an incubator business model that provides in-house business, finance and management expertise designed to accelerate the technology transfer of university intellectual property.

Professor Graham Davies, head of Birmingham University’s School of Engineering and chief executive of the I2 Nanotech Centre, is keen to stress the practical and commercial nature of the project. “This is not about being good academic scientists. We want to engineer products and create new jobs.”

Birmingham University has already spun out two nanotech startups, making it one of the United Kingdom’s leaders in university nanotechnology transfer. Hybrid Systems uses a nanoparticle bound with a polymer to target specific forms of cancer. The company was formed in 1998 by Len Seymour in the Institute for Cancer Studies at the university. In June 2000 Hybrid Systems received around $362,000 of seed funding from angel investors and it has just signed a licensing deal with a U.K. pharmaceuticals company.

Adelan, a developer of nanoparticle catalysts for fuel cells, was founded in 1996 by Kevin Kendall and spun out of the university with an undisclosed amount of angel funding in April 2001.

The center plans to spin out 70 companies over a 10-year period with the long-term aim of creating up to 500 nanotechnology-related jobs for the region. Brian More, business development manager at the university’s School of Physics and Astronomy, says that nanotech has applications across a huge breadth of the economy but he is particularly excited about opportunities in the bionanotechnology arena.

“We have a lead in bionanotechnology due to the strong academic and industrial base here and the launch event demonstrated that there is strong interest from financial institutions and large corporates.”

One example of the research undertaken at the university in the bionanotechnology arena is the work led by Professor James Callow in the School of Biosciences. Callow is interested in the use of biomolecules and cellular systems in the fabrication of tissue and cellular scaffolds, and tissue bio-adhesive composites.

A particular area of interest is the study of bioadhesive nanocomposites produced by marine organisms. Many organisms in the marine environment secure themselves to underwater surfaces through the production of bioadhesives. These materials can withstand the high sheer forces of turbulent marine environments but their ability to function over a very wide range of temperatures and salt levels suggests important applications such as tissue adhesives and in tissue engineering.

Advantage West Midlands, the regional development agency, has also pledged some funding for the I2 Nanotech Centre as part of its plan to develop a regional science corridor. The West Midlands historic dependence on traditional manufacturing industries has made the region vulnerable to competition from cheaper international markets.

Forty years ago, just under 50 percent of the workforce was employed in manufacturing. Now, that figure is now just under 25 percent. Michael Thompson, a strategist at Advantage West Midlands, sees the I2 Nanotech Centre as a potential flagship for the proposed high-tech corridor and an opportunity to bring in a raft of material-based technologies to help diversify the region’s manufacturing base.

“We need new markets and opportunities that leverage off our talent in engineering and we need to move away from volume commodity production of low value companies to higher value components and manufactured products.”

Thompson recognizes that nanotechnology is not as mainstream as the integrated circuit industry but hopes that the region can take the lead in an emerging technology with huge potential. “We are taking the risk in assuming that the technology will mature and generate the types of economic benefits that a lot of futurologists are identifying. The danger is that if we don’t engage in this technology someone else will and the products will make our industries redundant.”

Advantage West Midlands also hopes that the I2 Nanotech Centre will put the region firmly on the map when it bids this spring alongside Birmingham University and QinetiQ to host the National Microsystems Technology Centre.

“We hope to have a portfolio of facilities ranging from microsystems to molecular level nanotechnology that will support new product innovations for the region’s economy well into the 21st century,” Thompson said.

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Dec 17, 2001 – Seoul, Korea – A South Korean consortium led by chip design firm Aralion Inc. said on Monday it expected to sign a deal to buy Hynix Semiconductor’s non-memory chip lines next March.

Hynix is in separate talks with U.S. Micron Technology Inc., according to Reuters, for an alliance which could expand to a merger and expects specific proposals in coming weeks. A merger would mark a major step in consolidating the sagging memory chip market as Micron and Hynix rank second and third in output behind Korea’s Samsung Electronics.

Germany’s Infineon Technologies AG, which ranks fourth, said last week it had reached a preliminary agreement with Japan’s Toshiba Corp to merge memory chip units.

“We will establish a new entity called ”Beyond Micro Inc“ for the takeover with 20 billion won ($15.67 million) in paid-in-capital,” Aralion chief executive Jeong Ja-choon said in a statement.

The consortium will include about 10 chip design firms and was in talks with foreign investment firms and chipmakers to secure acquisition funds.

“We plan to secure $200-$300 million from each foreign investor,” the statement said.

A Hynix official said it was planning a separate statement.

“We (chip design firms) have sought to own our own fabrication lines and acquiring them will pave the way for us to grow as a world-class foundry like Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp,” the consortium statement said.

It said it planned due diligence on Hynix in January and that its negotiations would be separate from Hynix’s talks with Micron.

Dec. 12, 2001 – San Jose, CA – Mark Milligan has joined HPL Technologies Inc., a provider of yield optimization solutions for manufacturers and fabless design companies, as VP and GM for a new division that will increase the company’s focus on addressing manufacturing issues during the design process. In his new role, Milligan will be responsible for directing the division formation, including R&D, marketing, and sales.

“Mark brings over 15 years of electronic design automation and management experience to the team and is suited to lead our growth as we set out to launch a new division,” said David Lepejian, president and CEO of HPL Technologies. “For our customers to have high yield, manufacturing issues must be addressed as early as possible. As we continue to execute on our growth plan, a key area of opportunity is to apply our technology and manufacturing expertise and move upstream into the design process. Mark’s experience will help link these two areas.”

Milligan comes to HPL from Synopsys Inc., where he held VP of marketing positions for several of the company’s product initiatives. He led the marketing team for Synopsys’ Internet initiative called DesignSphere. In addition, he was responsible for marketing at Synopsys’ high level verification unit during the introduction of the VCS Verilog simulator into the Synopsys sales channel following the acquisition of Viewlogic by Synopsys.