A New Report Warns That America May Lose The Nanotechnology Race

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VACUUM TUBES, semiconductors and the internet have changed how we live; now nanotechnology promises a similar revolution. Nanocoatings that make it impossible for liquid to even touch a treated surface are transforming material science. Carbon nanotubes can help artificial muscles behave like the real thing, while nanoscale drug delivery can target cancer cells with deadly accuracy. Concrete infused with nanofibres can be self-sensing, enabling roads and bridges to be monitored remotely for structural weakness or traffic volumes.

And last month, when Rafael Nadal lost the final of the 2014 Australian Open to Stanislas Wawrinka, his opponent’s $US240 racquet was strengthened with nano-materials. Mr Nadal, meanwhile, was wearing a watch reinforced with carbon nanotubes — and costing almost $US700,000.

It is this breadth of nanotechnology’s potential that makes it vital to America’s future competitiveness. Congressman Lamar Smith, chairman of the House Committee on Science, Space, and Technology, believes that American dominance in the field has enormous economic potential and the ability to create new jobs: “it’s a game-changer that could transform and improve Americans’ daily lives in ways we can’t foresee,” he says.

On any measure — patents, private and government-sector investment, academic activity — America has so far been a leader in nanotechnology research and, to a lesser extent, development. Federal funding has helped. From 2000-2013 Congress appropriated some $US18 billion for nanotechnology R&D (although the $US1.7 billion budgeted for 2014 is 8% lower than two years ago). Numbers for private-sector investment are harder to come by, but estimates by Lux Research, a firm of analysts, suggest that by 2010, America’s private sector was investing at least $US3.5 billion a year in nanotechnology-related ventures — far more than its closest global competitors.

So why is the United States Government Accountability Office (GAO), an independent agency that works for Congress and scrutinises how the federal government spends taxpayer dollars, now fretting that America may lose the nanotechnology race? In a new report on nanotechnology manufacturing (or nanomanufacturing) released today and prepared for Congressman Smith’s committee, the GAO finds flaws in America’s approach to many things nano.

The main concern of the industry experts consulted by the GAO is “the missing middle”. Government, universities and start-ups focus their investment on basic research, proofs of concepts and production at laboratory scale. But to win the global nanotechnology race, says the GAO, America must bridge the gap between such activities and being able to produce the technologies at scale. That means everything from prototyping to developing reliable manufacturing processes in a production environment to paying for clinical trials (in the case of health care, a major nano-market). For instance, up to $US20m is often needed to bring a new medical treatment into clinical trials, but investment from big pharmaceutical firms is generally not forthcoming until the second phase of such trials. Promising medical nanotechnologies wither and die in that missing middle.

Circumstances are made worse by policy decisions. The GAO’s experts chide the government for lacking a “grand strategy” on nanomanufacturing, and for starting to fall behind China and Russia in annual spending on nanotechnology. Russia in particular, is taking advantage of America’s missing-middle mortality rate. Rusnano, a multi-billion-dollar government-owned fund, is picking up the intellectual property of failed American nanotechnology firms for cents on the dollar. (The GAO report also comes hot on the heels of a National Science Board study showing that China’s global share of overall high-tech manufacturing rose from 8% to 24% from 2003-2012, close to America’s 27%.)

The fact that a large chunk of America’s high-tech manufacturing capabilities moved offshore long ago doesn’t help either, because it has left the country less able to build the facilities or educate the skilled workforce it will need to compete in large-scale nanomanufacturing. The GAO believes that early-stage, intellectual-property-based industries benefit greatly if a “nexus” of research, design, prototyping and manufacturing evolves in close proximity. This may sound heretical in a world of Foxconns, but has proved largely true in industries such as biotechnology.

Congressman Smith, unsurprisingly, believes there’s an Act for that — specifically the wordy but acronym-friendly Technology and Research Accelerating National Security and Future Economic Resiliency (TRANSFER) Act of 2013, which he co-sponsored. “The bill”, he believes, “will give researchers and universities incentives to partner with entrepreneurs and venture capitalists in order to move new technologies from the laboratory to the marketplace”.

Tim Persons, the GAO’s chief scientist, believes that if policymakers want to address the missing middle, there are existing “industrial commons” in America that show how this might be done. He cites the College of Nanoscale Science and Engineering (CNSE), based in New York’s Hudson Valley, home to many semiconductor firms. Part of the State University of New York, CNSE is an R&D, prototyping and educational public-private partnership focused on nanotechnology, with some 300 partners that range from industrial giants such as IBM to community colleges. Among other things, the $US20 billion project enables pre-competitive collaboration among its partners, who are able to use high-tech CNSE equipment (such as nano-fabrication facilities costing hundreds of millions of dollars apiece) that would be too expensive for individual firms to buy.

There are a handful of such nano-commons in America, and some of the GAO’s experts would like the federal government to kick-start more. In reality, alas, federal funding for three of the existing centres ends this year, and for a fourth in 2015. Small wonder the GAO worries that America could end up as a small player in what will be a vast but vanishingly small business.

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