Vahé Mamikunian, Senior Analyst Lux Research Inc. March 15, 2007 Investor Enthusiasm for Nanotech...

Vahé Mamikunian, Senior AnalystLux Research Inc.

March 15, 2007

Investor Enthusiasm for Nanotech Opportunities in Electronics

Agenda

• Nanotech? Opportunity?

• Breakdown of funding

• Venture capital investments

• Examples of electronics applications and impact

• Three things to keep in mind

• Q&A

4Lux Research Inc. • 140 East 45th Street, 30th FloorNew York, NY 10017 • +1 888-589-7373 www.luxresearchinc.com

Not just “small;” “small and different”

Not “nano by accident”

Really small

What’s nanotechnology again?

“The purposeful engineering of matter at scales of less than 100 nanometers (nm) to achieve size-dependent

properties and functions.”

5Lux Research Inc. • 140 East 45th Street, 30th Floor New York, NY 10017 • 888-589-7373 www.luxresearchinc.com

Electronics will dominate the $3.7 trillion in emerging nanotechnology manufactured goods in 2014

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ m

illio

ns

Manufacturing and materials Electronics and IT Healthcare and life sciences

Source: October 2004 Lux Research Report “Sizing Nanotechnology’s Value Chain”* Nanointermediates and nano-enabled products only; nanomaterials cannot be meaningfully broken down by sector.

16%

50%

34%

2004:Selective

deploymentsproliferate

2005 to 2009:Commercial breakthroughs

open markets

2010 to 2014:Nanotechnology becomes

commonplace

Agenda






• Q&A


Nanotech funding worldwide, 2005 – $9.6 billion total

Sources: Lux Research Reference Study “The Nanotech Report, 4 th Edition”; Lux Research Report “How Industry Leaders Organize for Nanotech Innovation”; Lux Research Report “Ranking the Nations:

Nanotech’s Shifting Global Leaders”; Lux Research Report “Making Sense of Nanotech Venture Capital”

$0.18

$3.37

$2.06

$3.96

North America EuropeAsia Rest of world

$0.78

$1.59

$4.46

$2.74

Materials ElectronicsLife sciences Other

US$ billions US$ billions

By region By sector


Nanotech funding worldwide, 2005 – by sector (estimated for government funding)

Sources: Lux Research Reference Study “The Nanotech Report, 4 th Edition”; Lux Research Report “How Industry Leaders Organize for Nanotech Innovation”; Lux Research Report “Ranking the Nations:

Nanotech’s Shifting Global Leaders”; Lux Research Report “Making Sense of Nanotech Venture Capital”

$0.40 $0.11

$2.76

$1.20

Materials ElectronicsLife science Other

$0.36

$1.32

$1.53

$1.41

Materials ElectronicsLife sciences Other

$132

$179

$165

$20

Materials ElectronicsLife science Other

US$ billions US$ billions US$ millions

Corporations: $4.47 billion Governments: $4.61 billion Venture capital: $497 million

Agenda






• Q&A


After examining every VC investment in nanotech companies through 2006, we found that…

To date, there have been 362 investments in 171 companies, totaling $3.08 billion invested globally (1991 to 2006)

In 2006, there were 57 investments totaling $654 million in VC funding

Average deal size increases 19% to $11.5 million in 2006 as number of deals falls 11% from 2005

0

10

20

30

40

50

60

70

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E

$0

$100

$200

$300

$400

$500

$600

$700

Number of deals Value of deals

Number of deals

Value of deals

(US$ millions)

$0

$2

$4

$6

$8

$10

$12

$14

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Average deal

size (US$ millions)

Average deal size, 1995 to 2006

Number and value of deals, 1995 to 2006

Data Analysis Recommendations


Electronics and ITHealthcare and life sciencesManufacturing and materials Nanotools

0

10

20

30

40

50

60

70

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E

Number of deals

Number of nanotech VC deals by sector, 1995 to 2006

Average deal size by sector, 1995 to 2006

$0$2$4$6$8

$10$12$14$16$18

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006E

Average deal size

(US$ millions)

Electronics and ITHealthcare and life sciencesManufacturing and materials Nanotools

Breaking down investment by sector, Electronics & IT trumps other sectors on number of deals and average deal value

Electronics & IT leads with 21 deals totaling $243 million in 2006, for an average deal value of $15.8 million

Healthcare & life sciences follows with 15 deals worth $124 million in 2006, with an average deal value of $10.6 million

Manufacturing & materials ties with $122 million over 18 deals in 2006, with an average deal size of $8.7 million

Data Analysis Recommendations

Agenda






• Q&A


Charting nanotech’s visible transformation

Unsungheroes

Gee-whiznanoproducts

Secretweapons

Iconicbreakthroughs

Low

High

Awareness of

application

Incremental Step change

Nature of impact


Emerging nanoelectronics: some examples

Unsungheroes

Gee-whiznanoproducts

Secretweapons

Iconicbreakthroughs

Low

High

Awareness of

application

Incremental Step change

Nature of impact

Conductive

adhesive filler

Non-conductive adhesive

filler/Underfill additive

Reactive foil

Heat transfer

materials

Flexible

electronics Biologically self-

assembled nanoelectronics

CNT

displays

CNT memory

and logic

CNT sensors

Fullerene solar cells

Fullerene transistors and memory devices

Fullerene

photodetectors


Reactive foil for room temperature soldering

What it does: Room temperature fluxless

soldering of heat sinks to IC packages or

component mounting; component mounting

onto printed circuit boards

How it works: A controlled self-propagating

exothermic reaction – initiated by a thermal or

electric stimulus – melts and bonds the solder

between two components

Key nanotech enabler: Alternating nano-

scale layers of nickel and aluminum

Who’s developing it:

– Reactive NanoTechnologies (RNT)

Stage of development: On the market

Heat sink

Solder

Solder

Packaging Integrated circuit

Reactive foil


Heat transfer materials

What it does: Carbon nanotubes

increase the surface contact area

between the heat sink and IC by up

to 20 times (from 2% to 40%)

offering 4 times better thermal

performance

How it works: Multi-walled carbon

nanotubes vertically grown between the heat sink and the IC increase contact surface and facilitate thermal conduction from the IC to the heat sink

Key nanotech enabler: Multi-walled carbon nanotubes


– Nanoconduction, Fujitsu

Heat sink

Packaging Integrated circuit

Current contact area = ~2%

MWCNT contact area = ~40%

Multi-walled carbon nanotubes


Nanotube enabled memory or logic chips

What it does: Non-volatile memory with

low power consumption and high density

How it works: Van der Waals forces hold

nanotubes down representing an “On” state

Key nanotech enabler: Carbon nanotube

solution etched using current CMOS

technology


– Nantero and LSI Logic (On Semiconductor)


Flexible electronics

What it does: Conformable electronics

circuitry or displays

How it works: Conductive ink used

to print micro circuitry on polymer

surface; thin film transistor circuitry

transferred to a polymer film

Key nanotech enabler: Conductive

nanoparticles (e.g. gold or silver)

dispersed in ink solution; carbon nanotube thin film transistors;

Who’s developing it: Epson, Plastic Logic, Nanosys, Nano-Proprietary, NTera, NanoHorizons, Nanometrix,


Self-assembled nanoelectronics

Case study: Cambrios

Based on Angie Belcher’s(MIT) research

Uses genetically modified virusesto deposit perfect, inorganicnanoscale structures

Applications in manufacturingelectronics components – i.e.nanofilms (using bifunctional agents)and nanowires of precise length

Combined with self-assembling capabilities, creates platform for “wet,” bottom-up IC/sensor manufacturing

Potential technology platform to succeed etched silicon

Massive long-term impact on chipmakers (Intel, TI, TSMC), capital equipment makers (Applied Materials, ASML), and materials suppliers (MEMC, ATMI)


Protein-based memory

Porphyrins - redox reactions

Bacteriorhodopsin - light reaction

Zettacore (Levine)

UConn (Birge)

Agenda






• Q&A


Three critical aspects to successfully commercialize nanotech innovations

Environmental, health and safety

Intellectual property

Partnerships


Firms need a comprehensive plan for nanotech EHS

Real Risks

Establish processes to control real risks during manufacture, use, and end-of-life

Regulations

Use realistic projections

to plan for regulations

Perceptual Risks

Communicate with the public, press, and

NGOs to prevent perceptual risks


Source: June 2006 Lux Research Report “Hidden Opportunities in Nanotech IP”White space indicates freedom to operate; challenge gauges how likes patents in the area are to conflict

Nanomaterial IP is dense and entangled

Lux Research looked at the universe of 4,986 nanotechnology patents covering 102,651 claims, and then did an in-depth claim-by-claim analysis of eight nanomaterial platforms covering 2,646 patents and 49,807 claims.

It’s messy – detailed analysis required for each particle and application However, judicious firms can find freedom to operate

General

Structural materials

Energy

Optics

Electronics

Healthcare/ cosmetics

Other

Platformoverall

Fullerenes

Carbon

nanotubes

Dendrimers

Quantum dots

Nanowires

Low white space

Challenge likely

High white space

Challenge unlikelyNo patents

Metal

nanoparticles

Ceramic

nanoparticles

Aerogels


84% of corporations* tap start-ups for nanotech innovation

“We have made huge investments in start-ups – up to $10 million in one case – to guarantee access to the innovations and materials that flow

out of them. We systematically screen for interesting technologies and look for external sources of materials that can help us shorten time to market.”

(Chemicals company)

*Corporations in industries somewhat or highly-impacted by nanotech

47%

69%

84%

16%

13%

44%

0% 20% 40% 60% 80% 100%

None

Others

Corporations

Publicagencies

Academics

Start-ups

“Do you work with these external organizations as part of your nanotech

efforts?”

n=35

Source: Lux Research, “How Industry Leaders Organize for Nanotech Innovation”


Thank you / Discussion

Vahé Mamikunian

Analyst

+1 415 486 2162

[email protected]

www.luxresearchinc.com

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Vahé Mamikunian, Senior Analyst Lux Research Inc. March 15, 2007 Investor Enthusiasm for Nanotech...

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