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Asia's rising star: Nanotech
By Jayanthi Iyengar

PUNE, India - High-technology innovations such as semiconductors and information technology (IT) over the years have generated new income and hope for Asia, which still reaps the advantages and is again poised for techno-liftoff. Now the next technological revolution is beginning, generating intense and widespread interest in what Taiwanese President Chen Shui-bian calls "the new century's rising star": nanotechnology.

While most of the big spending is in the United States and the West, Japan, South Korea and Taiwan are making major investments. China has plans as well, and India sees huge benefits from its existing expertise, technological advances and low labor costs. India and China, Asia's promising technology giants, however, spend very little on this technology of the future.

Mass production of hardware has yet to take off - this is still in the rapidly evolving research and development (R&D) stage - but nanotechnology applications include soldiers' lightweight impenetrable suits of armor, sensors, computers, military hardware, substances that eat through metal and plastic, durable coatings, rock-fuel additives, telecommunications advances, new, better-targeted drugs and delivery systems, artery and capillary replacements - and new fashion and utility fabrics, even better sunscreen, now a hot seller in Australia.

Global spending is projected to be at least US$1 trillion over the next six years.The United States spent $610 million on nanotechnology in 2002, and scaled up this budget by 39 percent to $847 million in 2003 - a big chunk goes to defense.

Billed as the next revolution in technology after semiconductors and IT, nanotechnology is a whole new field, working with materials that are smaller than small: a nanosecond is a billionth of a second; a nanometer is a billionth of a meter. As new players increasingly are drawn to this burgeoning field, experts are projecting a nanotechnology products and services market worth $1 trillion by 2010, and possibly double that amount by 2015. This is roughly 10 percent more that the world's total global manufacturing output.

With its potential in defense - or offensive - applications, a nanotechnological edge also aids the geopolitical ambitions of nations. As in the case of IT, this field could provide new opportunities in which Asia could excel, using its low labor costs and technological advantages.

So what exactly is nanotechnology? What is its future? What does it mean for business? And what does it mean for countries that are pumping in such huge sums of money, and those that are failing to do so?

Smaller than small
Simply defined, nanotechnology is the creation, use or manipulation of matter on the nanoscale, to take advantage of properties that reign at that scale, a billionth of a meter or less. In ordinary parlance, it means working with materials that are smaller than small.

To create perspective, working on the nanoscale often has been described as working with materials that are smaller than a hair's breadth, although nanotechnology experts often find this gross comparison odious. For them, hairs are not identity and they vary greatly in width. Another example is soot. At one level, it is a carbon nanoparticle. In nanotechnology, scientists work on materials at that level to take advantage of their properties. One area of significant development, for example, has been in carbon nanotubes, or minuscule tubes made out of carbon nanoparticles. Futuristic uses of nanocarbon tubes could include electricity generation in a laboratory or the replacement of damaged arteries, veins and capillaries in the human body, assuming eventually that the cost allows the commercialization of these tubes for life-saving medical purposes.

Given today's rush for technology patents, countries, companies, investors and scientists want to sew up patents in this emerging area, thereby controlling future returns. For countries, it could mean an opportunity for global trade supremacy, wealth creation and unemployment alleviation. For pioneering companies, it could mean new areas of growth. For employees, a technological edge, which could mean access to some of the highest paying jobs. For scientists and academicians, unprecedented risk returns. For venture capitalists and inventors, new markets for their products.

Asia views nanotechnology as a chance to make good on technological innovations that once passed it by and could very well come out on top in this emerging field.

"The capital required for many of the disruptive technology developments within nanotechnology is not prohibitively high," said Dr Deepak Srivastava, senior scientist and group leader for computation materials at National Aeronautics and Space Administration (NASA) Ames Research Center at Moffet Field, California.

"The strong cultural influences on the value of higher education, the infrastructure for nanotechnology-related R&D and services is already well set up. Also, the relative cost of advance developments in Asia will be much lower as compared to the similar developments in the West," Srivastava said.

Girish Narasimhan, operations head of IndiaNano, a non-profit venture-capital fund allocation for nanotechnology research, put it more simply: "We envision a strong possibility in the materials."

Leaving no one behind
Naturally, nobody wants to be left behind, particularly the developed West. Every country is banking on its scientists, and India has evolved a unique experiment. Short on capital and having lost out through time, it is inviting non-resident Indian scientists such as Professor V K Varadan of Penn State University, Professor Ajay Malshe from the University of Arkansas, Professor Shekhar Bhansali from the University of South Florida, and Dr Srivastava from NASA to help it reduce the learning curve. India, like China, is banking on private-public partnerships to help it reap the benefits.

"We envision significant potential to enterprise creation and added value to existing technologies by catalyzing public-private partnerships to see a high growth rate in creation of nanotechnology startups, and to benchmark India as one among the world-class players in nanotechnology applications," said Rahul Patwardhan, chairman of the Nanotechnology Research and Education Foundation.

Although about 1,700 nanotechnology companies are operating worldwide, with about 4,000 nanotechnology patents held by the United States alone, the technology is still largely at the lab-to-land stage. Commercial penetration, however, has taken place in some areas with the creation of nanotextiles, plastic nanocomposites, nanosunscreens and nanotech drug-delivery systems. Nanostructured catalysts have also been used for years by petroleum and chemical-processing companies to remove pollutants.

Nanotextiles are among some of the most popular nanotechnology-based products on the market. This product, made stain-repellent by a fine nano-whisker coating, was developed by Burlington, North Carolina-based Nano-Tex and has found markets even as far off as India, where it is manufactured by Arvind Mills. Plastic nanocomposites are rustproof and scratchproof, and are being used for certain parts in General Motors vehicles and for bumpers on Toyota automobiles.

Nanosunscreens have extraordinary ultraviolet-ray-absorbing qualities and have become so popular that by 2001 they had captured 60 percent of the sunscreen market in Australia. Furthermore, nano-drug-delivery systems use nanoparticles to deliver drugs to targeted body parts, including a gene used in gene therapy. Indian pharmaceutical companies such as Dabur and Shanta Biotech are just two of the outlets using drug-delivery applications on a commercial scale.

In a field projected at $1 trillion over the next six years, the largest growth is expected to be in materials, at about $340 billion, followed by electronics, $300 billion; pharmaceuticals, $180 billion; chemical manufacturing, $100 billion; aerospace, $70 billion; health care, $30 billion; and modeling tools, $20 billion.

Spending strategies
Amid growing fears in the West that it was lagging in new technology sectors, the United States spent $610 million on nanotechnology in 2002, and scaled up this budget by 39 percent to $847 million in 2003. Despite these figures, there remains a huge outcry about the inadequacy of the sum. The science and technology (S&T) lobby wants nothing less than $1 billion earmarked for this year.

The European Union, meanwhile, has committed itself to spending $1.4 billion on nanotechnology from now until 2006. Japan is one of the few Asian countries that have been able to compete with the West on this scale. In 2001 Japan allocated $465 million to nanotechnology, raising that amount to $630 million in 2002. The country's nanotechnology budget for fiscal 2004, which began on April 1, rose 3.1 percent to $875 million, according to Japan's Council for Science and Technology Policy.

Nanotechnology budgets are increasing elsewhere in Asia as well, but unlike the US and Japan, where yearly budget figures reach into the billions, budgets of that magnitude must be spread out over five or 10 years.

For instance, after Taiwan slipped from No 3 to No 4 in the high-tech gear market in 2001, President Chen Shi-bian announced his intention to pump $600 million into small-technology research and another $1.6 billion into biotechnology. The investment, however, was to be spread over five years, with biotechnology R&D spending beginning in 2001, and nanotechnology spending scheduled to start in 2003. About 60 percent of the funds set aside for nanotechnology were to go the Industrial Technology Research Institute (ITRI) for fundamental research in raw materials, electronics, machinery and biomedicine. The rest were slated to go toward the development of nanotech products in research establishments such as Academia Sinica and universities including the National Taiwan University in Taipei and the National Tsinghua University in Hsinchu.

Additionally, in South Korea, then-president Kim Dae-jung, who formerly headed the National Science and Technology Committee, cleared an inter-agency nanotechnology blueprint budget for $1.14 billion in July 2001. This sum, spread over a 10-year period, was scheduled to go into research and development, manpower training and the construction of related facilities.

China and India, on the other hand, still do not have clearly defined nanotechnology budgets. But documents and presentations by Chinese officials indicate that since 2001 Beijing has planned to spend about $2 billion leading up to 2005, half of which will come from private participation. India, meanwhile, has formally allocated about $26 million to nanotechnology, and promises to spend more from the S&T budget, if needed.

Still, the allocations made by many Asian countries seem scant compared with the US National Nanotechnology Initiative (NNI), launched by president Bill Clinton in 2000, and in which the ballooning amount of nanotechnology spending that it tracks is approaching $1 billion, creating sharp interest among the White House Office of Science and Technology Policy in the NNI.

However, nanotechnology research in many Asian countries, including China and India, may be drawing funds from hidden assets, where all research allocation comes out of a common S&T research pool. According to experts such as Dr Srivastava of NASA and Narasimhan, operations head at IndiaNano, these hidden or other assets can be diverted to nanotechnology.

"It is true that nanotechnology is an interdisciplinary subject. Thus a significant fraction of the budgetary allocation in the enabling fields such as advanced materials, devices, biotech, health care, engineering and sciences, and aerospace and defense could be directed towards doing nanotechnology-related developments," Srivastava said. But he also believes that specific budget allocations are necessary.

In search of a better budget
Now come the crucial questions of just how valid are the national nanotechnology budgets and what kind of relationship exists between R&D budgets and marketable patents. Also, why are Asia's two most populous and most ambitious nations - China and India - spending so little on this field?

In this context, a presentation by Professor Bai Chunli before the Sixth Asian Science and Technology Conference in Tokyo in 2002 was illuminating. Chunli is a top-ranking Chinese official, the vice president of the Chinese Academy of Science (CAS) and the chief scientist for the National Steering Committee for Nanoscience and Related Technology. His presentation is considered to be the single most important "official" source of information on what is happening in China on the nanotechnology front.

According to Chunli, 530 research projects were funded by CAS between 1999 and 2001, 73 of which received as little as $60,000. Yet CAS had produced world-class research results in carbon nanotubes, nanoparticles and powder materials, though over 10 years it spent what the US government spends in one year on nanotechnology research. Moreover, Chunli made clear that the ratio of investment to patents is far more important than absolute investments themselves.

China, like India, is, to an extent, handicapped by its S&T structure when it comes to the state allocation of funds for nanotechnology. China privatized R&D in 1985 and further introduced a new research project subcontracting system in 2001, making R&D a "public-private partnership". This is the case in Japan as well, although Tokyo has made hefty allocations for nanotechnology research in spite of this. Though R&D subcontracting does not exist in India, the nation is gradually moving to recognize its importance.

Another common factor in India's and China's approach to S&T expenditure is that both countries have a common S&T budget from which various constituents draw their share. In China, for instance, R&D expenditures are routed through five major sources, namely the S&T Ministry, the National Commission for Development and Cooperation (NCDP), the Chinese Academy of Sciences, the National Natural Science Foundation of China (NSFC), and the Ministry of Education. In India too, the Department of S&T and the Center for Scientific and Industrial Research (CSIR) are at the helm of affairs.

But other organizations and ministries also devote funds to this scientific research. A case in point is India's National Program for Smart Materials (NPSM). The $15 million MEMS Fund under this program is administered not by the Ministry of S&T, but by the Allahabad Development Authority (ADA). The Agricultural Ministry funds agricultural research. So does the Ministry of Defense. Normally, such research would be accounted for under a separate head as compared to industrial and technological research, but given nanotechnology's undisciplined - or multidisciplinary - nature, it is quite possible that these ministries also are funding nanotechnology projects.

China and India: Promising technology giants
These could be reasons why China and India, two promising technology giants, are not spending as much as their neighbors even within Asia. However, Dr Srivastava sees other possible factors, pointing out that budget announcements, such as those of the US National Nanotechnology Initiative, have a "down the stream" impact, as scientists and engineers at the ground level start to refocus or align their goals with the current nanotechnology-related development.

"The hard budget allocations, thus, not only define the rough limits of what a government is planning to spend under that umbrella, but also act as a magnet or leverage to generate additional resources or funding from the contributing or enabling fields," Srivastava said.

Further, the way commercial technology development works in the US, Europe and Japan proves that the budget allocation versus down-the-stream commercial product developments have a very strong positive correlation. This is because seed investors, venture capitalists, and corporate research houses make significant investments for technology development and exploitation. Based on government budgetary allocations or announcements, they also start to sniff around, pay attention, make investments, and start looking for commercial opportunities where they can exploit not yet fully developed technology, which has great future potential. All this has a kind of cascading effect, which results in successful downstream commercial products.

"In a sense, the commercial technology developments in the developed countries are very strongly tied up with the R&D in academia and government labs. That is why there is a very strong correlation between the budgetary allocations and commercial technology developments," Srivastava said.

In developing countries such as India and China, the situation may be different, possibly because seed investors and venture capitalists are not yet significant drivers of commercial technology developments. In addition, big business houses are not yet at the cutting edge of these technology developments, and the academic and government laboratories are not strongly tied up in an infrastructure that promotes the commercialization of the developed technology. "I believe in China this situation is changing very rapidly," said Srivastava. "In India also this has to happen if they want to keep pace with the rest of the developing and developed world."

Jayanthi Iyengar is a senior business journalist from India who writes on a range of subjects for several publications in Asia, Britain and the US. She may be contacted at [email protected].

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Apr 21, 2004



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