[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
NANOTECHNOLOGY: WHERE DOES
THE U.S. STAND?
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RESEARCH
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
JUNE 29, 2005
__________
Serial No. 109-21
__________
Printed for the use of the Committee on Science
Available via the World Wide Web: http://www.house.gov/science
______
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COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas BART GORDON, Tennessee
LAMAR S. SMITH, Texas JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California LYNN C. WOOLSEY, California
KEN CALVERT, California DARLENE HOOLEY, Oregon
ROSCOE G. BARTLETT, Maryland MARK UDALL, Colorado
VERNON J. EHLERS, Michigan DAVID WU, Oregon
GIL GUTKNECHT, Minnesota MICHAEL M. HONDA, California
FRANK D. LUCAS, Oklahoma BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland RUSS CARNAHAN, Missouri
W. TODD AKIN, Missouri DANIEL LIPINSKI, Illinois
TIMOTHY V. JOHNSON, Illinois SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia BRAD SHERMAN, California
JO BONNER, Alabama BRIAN BAIRD, Washington
TOM FEENEY, Florida JIM MATHESON, Utah
BOB INGLIS, South Carolina JIM COSTA, California
DAVE G. REICHERT, Washington AL GREEN, Texas
MICHAEL E. SODREL, Indiana CHARLIE MELANCON, Louisiana
JOHN J.H. ``JOE'' SCHWARZ, Michigan DENNIS MOORE, Kansas
MICHAEL T. MCCAUL, Texas
VACANCY
VACANCY
------
Subcommittee on Research
BOB INGLIS, South Carolina, Chairman
LAMAR S. SMITH, Texas DARLENE HOOLEY, Oregon
CURT WELDON, Pennsylvania RUSS CARNAHAN, Missouri
DANA ROHRABACHER, California DANIEL LIPINSKI, Illinois
GIL GUTKNECHT, Minnesota BRIAN BAIRD, Washington
FRANK D. LUCAS, Oklahoma CHARLIE MELANCON, Louisiana
W. TODD AKIN, Missouri EDDIE BERNICE JOHNSON, Texas
TIMOTHY V. JOHNSON, Illinois BRAD MILLER, North Carolina
DAVE G. REICHERT, Washington VACANCY
MICHAEL E. SODREL, Indiana VACANCY
MICHAEL T. MCCAUL, Texas VACANCY
VACANCY
SHERWOOD L. BOEHLERT, New York BART GORDON, Tennessee
DAN BYERS Subcommittee Staff Director
JIM WILSON Democratic Professional Staff Member
MELE WILLIAMS Professional Staff Member/Chairman's Designee
ELIZABETH GROSSMAN, KARA HAAS Professional Staff Members
JAMES HAGUE Staff Assistant
C O N T E N T S
June 29, 2005
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Bob Inglis, Chairman, Subcommittee on
Research, Committee on Science, U.S. House of Representatives.. 14
Written Statement............................................ 15
Statement by Representative Darlene Hooley, Ranking Minority
Member, Subcommittee on Research, Committee on Science, U.S.
House of Representatives....................................... 15
Written Statement............................................ 16
Prepared Statement by Representative Russ Carnahan, Member,
Subcommittee on Research, Committee on Science, U.S. House of
Representatives................................................ 17
Prepared Statement by Representative Eddie Bernice Johnson,
Member, Subcommittee on Research, Committee on Science, U.S.
House of Representatives....................................... 17
Witnesses:
E. Floyd Kvamme, Co-Chair, President's Council of Advisors on
Science and Technology
Oral Statement............................................... 18
Written Statement............................................ 20
Biography.................................................... 27
Matthew M. Nordan, Vice President of Research, Lux Research, Inc.
Oral Statement............................................... 27
Written Statement............................................ 29
Biography.................................................... 37
Financial Disclosure......................................... 38
Sean Murdock, Executive Director, Nanobusiness Alliance
Oral Statement............................................... 38
Written Statement............................................ 41
Biography.................................................... 50
Financial Disclosure......................................... 51
Jim O'Connor, Vice President, Technology Incubation and
Commercialization, Motorola, Inc.
Oral Statement............................................... 51
Written Statement............................................ 53
Biography.................................................... 56
Financial Disclosure......................................... 58
Discussion....................................................... 59
Appendix 1: Answers to Post-Hearing Questions
E. Floyd Kvamme, Co-Chair, President's Council of Advisors on
Science and Technology......................................... 84
Appendix 2: Additional Material for the Record
Letter to Robert Inglias from E. Floyd Kvamme, Co-Chair,
President's Council of Advisors on Science and Technology,
dated July 14, 2005............................................ 90
NANOTECHNOLOGY: WHERE DOES THE U.S. STAND?
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WEDNESDAY, JUNE 29, 2005
House of Representatives,
Subcommittee on Research,
Committee on Science,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:05 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Bob Inglis
[Chairman of the Subcommittee] presiding.
hearing charter
SUBCOMMITTEE ON RESEARCH
COMMITTEE ON SCIENCE
U.S. HOUSE OF REPRESENTATIVES
Nanotechnology: Where Does
the U.S. Stand?
wednesday, june 29, 2005
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
1. Purpose
On Wednesday, June 29, 2005, the Research Subcommittee of the
Committee on Science of the House of Representatives will hold a
hearing to examine the findings and recommendations of the recent
assessment of the National Nanotechnology Initiative (NNI) by the
President's Council of Advisors on Science and Technology (PCAST) and
will hear from the nanotechnology community on how U.S. research and
business activities in nanotechnology measure up to those of
international competitors.
2. Witnesses
Mr. Floyd Kvamme is the Co-Chair of the President's Council of Advisors
on Science and Technology and a partner at Kleiner Perkins Caufield &
Byers, a high-technology venture capital firm.
Mr. Jim O'Connor is Vice President of Technology Incubation and
Commercialization at Motorola, Inc.
Mr. Sean Murdock is the Executive Director of the NanoBusiness
Alliance.
Mr. Matthew M. Nordan is the Vice President of Research at Lux Research
Inc., a nanotechnology research and advisory firm.
3. Overarching Questions
What is the position of U.S. research and development
and U.S. businesses in nanotechnology relative to that of other
countries? What key factors influence U.S. performance in the
field, and what trends exist among those factors?
Which fields of science and engineering present the
greatest opportunities for breakthroughs in nanotechnology, and
which industries are most likely to be altered by those
breakthroughs in both the near-term and the longer-term?
What are the primary barriers to commercialization of
nanotechnology, and how can these barriers be overcome or
removed? What is the Federal Government's role in facilitating
the commercialization of nanotechnology innovations, and how
can the current federal nanotechnology program be strengthened
in this area?
4. Brief Overview
In December 2003, the President signed the 21st
Century National Nanotechnology Research and Development Act
(P.L. 108-153), which originated in the Science Committee. This
Act provided a statutory framework for the interagency National
Nanotechnology Initiative (NNI), authorized appropriations for
nanotechnology research and development (R&D) activities
through fiscal year 2008 (FY08), and enhanced the coordination
and oversight of the program. Funding for the NNI has grown
from $464 million in fiscal year 2001 (FY01) to $1.1 billion in
FY05, and 11 agencies currently have nanotechnology R&D
programs.
In addition to federal investments, State governments
and the private sector have become increasingly involved in
supporting nanotechnology. In 2004, the private sector in the
U.S. invested roughly $2 billion in nanotechnology research,
while State and local governments invested roughly $400
million. The State and local investment is primarily spent on
infrastructure and research at public universities, while the
private funding focuses on applied research and development
activities at small and large companies, and funding for start-
up nanotechnology ventures.
Other countries are also investing significant funds
in nanotechnology research and development. In 2004,
governments in Europe, Japan, and elsewhere spent approximately
$2.8 billion in this area, and corporations outside North
America spent roughly $2 billion.
The 21st Century National Nanotechnology Research and
Development Act required that a National Nanotechnology
Advisory Panel (NNAP) biennially report to Congress on trends
and developments in nanotechnology science and engineering and
on recommendations for improving the NNI. The first such report
was released in May 2005 (the executive summary is attached).
Its recommendations include strengthening federal-industry and
federal-State cooperation on nanotechnology research,
infrastructure, and technology transfer, and broadening federal
efforts in nanotechnology education and workforce preparation.
5. Background
Overview of Nanotechnology
The National Academy of Sciences describes nanotechnology as the
``ability to manipulate and characterize matter at the level of single
atoms and small groups of atoms.'' An Academy report describes how
``small numbers of atoms or molecules. . .often have properties (such
as strength, electrical resistivity, electrical conductivity, and
optical absorption) that are significantly different from the
properties of the same matter at either the single-molecule scale or
the bulk scale.'' Scientists and engineers anticipate that
nanotechnology will lead to ``materials and systems with dramatic new
properties relevant to virtually every sector of the economy, such as
medicine, telecommunications, and computers, and to areas of national
interest such as homeland security.'' \1\
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\1\ Small Wonders, Endless Frontiers: A Review of the National
Nanotechnology Initiative, National Research Council/National Academy
of Sciences, 2002.
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Nanotechnology is an enabling technology and, as such, its
commercialization does not depend specifically on the creation of new
products and new markets. Gains can come from incorporating
nanotechnology into existing products, resulting in new and improved
versions of these products. Examples could include faster computers,
lighter materials for aircraft, less invasive ways to treat cancer, and
more efficient ways to store and transport electricity. Some less-
revolutionary nanotechnology-enabled products are already on the
market, including stain-resistant, wrinkle-free pants, ultraviolet-
light blocking sunscreens, and scratch-free coatings for eyeglasses and
windows.
In October 2004, Lux Research, a private research firm, released
its most recent evaluation of the potential impact of nanotechnology.
The analysis found that, in 2004, $13 billion worth of products in the
global marketplace incorporated nanotechnology. The report projected
that, by 2014, this figure will rise to $2.6 trillion--15 percent of
manufacturing output in that year. The report also predicts that in
2014, ten million manufacturing jobs worldwide--11 percent of total
manufacturing jobs--will involve manufacturing these nanotechnology-
enabled products.\2\
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\2\ Lux Research, ``Sizing Nanotechnology's Value Chain,'' October
2004.
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National Nanotechnology Initiative
The National Nanotechnology Initiative (NNI) is a multi-agency
research and development (R&D) program. The goals of the NNI, which was
initiated in 2000, are to maintain a world-class research and
development program; to facilitate technology transfer; to develop
educational resources, a skilled workforce, and the infrastructure and
tools to support the advancement of nanotechnology; and to support
responsible development of nanotechnology. Currently, 11 federal
agencies have ongoing programs in nanotechnology R&D; funding for those
activities is shown in Table 1. Additionally, 11 other agencies, such
as the Food and Drug Administration, the U.S. Patent and Trademark
Office, and the Department of Transportation, participate in the
coordination and planning work associated with the NNI.
In 2003, the Science Committee wrote and held hearings on the 21st
Century National Nanotechnology Research and Development Act, which was
signed into law on December 3, 2003. The Act authorizes $3.7 billion
over four years (FY05 to FY08) for five agencies (the National Science
Foundation, the Department of Energy, the National Institute of
Standards and Technology, the National Aeronautics and Space
Administration, and the Environmental Protection Agency). The Act also:
adds oversight mechanisms--an interagency committee, annual reports to
congress, an advisory committee, and external reviews--to provide for
planning, management, and coordination of the program; encourages
partnerships between academia and industry; encourages expanded
nanotechnology research and education and training programs; and
emphasizes the importance of research into societal concerns related to
nanotechnology to understand the impact of new products on health and
the environment.
National Nanotechnology Advisory Panel Report
The 21st Century National Nanotechnology Research and Development
Act required the establishment or designation of a National
Nanotechnology Advisory Panel (NNAP) to assess and provide advice on
the NNI. In July 2004, the President designated the existing
President's Council of Advisors on Science and Technology to serve as
the NNAP. The NNAP's responsibilities include providing input to the
administration on trends and developments in nanotechnology and on the
conduct and management of the NNI.
The NNAP is required to report to Congress on its activities every
two years, and its first report was formally released in May 2005. (The
executive summary of this report is included in Appendix A, its content
is described below, and the full report is available online.\3\ ) The
report assesses the U.S. position in nanotechnology relative to the
rest of the world, evaluates the quality of current NNI programs and
program management, and recommends ways the NNI could be improved.
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\3\ The PCAST's report, National Nanotechnology Initiative at Five
Years: Assessment and Recommendations of the National Nanotechnology
Advisory Panel, is available online at http://www.nano.gov/
FINAL-PCAST-NANO-REPORT.pdf.
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Benchmarking
The NNAP report finds that U.S. leads the rest of the world in
nanotechnology as measured by metrics such as level of spending (both
public and private), publications in high-impact journals, and patents.
The report also finds, however, that other countries are increasing
their efforts and investments in nanotechnology and are closing the gap
with the U.S.
Nanotechnology is a relatively new field, and relevant activities
in the U.S. and abroad are focused more on research and development
than on production and sales. The NNAP observes that, because the
relevant markets are still emergent, useful economic indicators, such
as market share, are not yet available for the evaluation of the U.S.
competitive position. Therefore, the NNAP report considers where the
U.S. stands by examining benchmarks such as funding for nanotechnology
research and development and numbers of publications and patents.
Reliable data on spending is difficult to gather, as definitions of
nanotechnology vary, and investments in the private sector are often
not reported. Information gathered by the National Science Foundation
demonstrates that funding for nanotechnology around the world has grown
significantly over the past decade or so; specifically, while total
government investment in nanotechnology research and development was
roughly $430 million in 1997, by 2005 it had climbed to roughly $4.1
billion--a factor of 10 increase in just eight years. The U.S.
traditionally has accounted for just over a quarter of that spending.
Japan and the European Union countries collectively each spend roughly
the same amount as the U.S.
There is less historical data available for private sector spending
on nanotechnology research and development, but current data are
gathered. The most recent analysis from Lux Research estimates that
corporations worldwide spent $3.8 billion in this area in 2004, with 46
percent ($1.7 billion) of that spent by North American companies, 36
percent ($1.4 billion) by Asian companies, 17 percent ($650 million) by
European companies, and less than one percent by companies from other
regions. In addition, venture capital firms invested approximately $400
million in nanotechnology start-up companies.
Data on spending describe current levels of effort and hence
information about future generation of knowledge. Data on publications
and patents provide a sense of the level of recent innovations and
advances. Analysis of the U.S. share of publications show that, while
the U.S. produces the most papers in nanotechnology, both overall and
in the most highly-regarded journals, the percent of such papers
originating in the U.S. is declining as other countries' contributions
grow more rapidly than those from the U.S. Similar trends can be seen
in studies of patents awarded.
One of the reasons that the U.S. is the acknowledged leader in
nanotechnology is its breadth of investment; research and development
activities are ongoing in areas relevant to a wide range of industries
(such as materials, energy, electronics, health care, etc.). Most other
countries cannot afford to invest as broadly as the U.S. Some of these
other countries--particularly in Asia--have chosen to concentrate their
investments in particular areas to make strides in a specific sector.
For example, Korea and Taiwan are investing heavily in nanoelectronics
while Singapore and China are focusing on nanobiotechnology and
nanomaterials, respectively.
NNI Management
The NNAP report finds that the NNI is a well managed program. The
report notes that the balance of funding among different areas of
nanotechnology is appropriate and emphasizes the importance of
investment in a diverse array of fields rather than a narrow focus on a
just a few ``Grand Challenges.'' In particular, the NNAP lauds the NNI
for advancing the foundational knowledge about control of matter at the
nanoscale; creating an interdisciplinary nanotechnology research
community and an infrastructure of over 35 nanotechnology research
centers, networks, and user facilities; investing in research related
to the environment, health, safety, and other societal concerns;
establishing nanotechnology education programs; and supporting public
outreach.
Recommendations
The NNAP recommends continued strong investment in basic research
and notes the importance of recent federal investment in research
centers, equipment, and facilities at universities and national
laboratories throughout the country (see Appendix B). Such facilities
allow both university researchers and small companies to have access to
equipment too expensive or unwieldy to be contained in an individual
laboratory.
The NNAP also emphasizes the importance of state and industry
contributions to the U.S. nanotechnology efforts and recommends that
the NNI expand federal-State and federal-industry interactions through
workshops and other methods.
The NNAP also recommends that the Federal Government actively use
existing government programs such as the Small Business Innovation
Research (SBIR) and the Small Business Technology Transfer (STTR)
programs to enhance technology transfer in nanotechnology. All grant-
giving agencies are required by law to have SBIR and STTR programs, and
some of them specifically target solicitations toward nanotechnology.
However, it is hard to get a clear, up-to-date picture of how much
funding is actually provided for nanotechnology-related projects in
these programs and on what the demand for SBIR/STTR funding in this
area is. The NNAP also recommends that federal agencies be early
adopters and purchasers of new nanotechnology-related products in cases
where these technologies can help fulfill an agency's mission.
The NNAP also finds that the NNI is making good investments in
environmental, health, and safety research, and recommends that the
Federal Government continue efforts to coordinate this work with
related efforts in industry and at non-profits and with activities
conducted in other countries. The NNAP emphasizes the importance of
communication with stakeholders and the public regarding research and
findings in this area.
Finally, the NNAP emphasizes the importance of education and
workforce preparation and recommends that the NNI coordinate with
Departments of Education and Labor to improve access to materials and
methods being developed for purposes of nanotechnology education and
training.
Challenges Ahead
The NNAP notes that successful adoption of nanotechnology-enabled
products will require coordination between federal, State, academic,
and industrials efforts (including for efficient commercialization of
products), training of a suitable high-technology workforce, and
development of techniques for the responsible manufacture and use of
these products.
Developing a federal strategy to facilitate technology transfer of
nanotechnology innovations is a particularly complex challenge because
of the wide range of industry sectors that stand to benefit from
nanotechnology and the range of time scales at which each sector will
realize these benefits. The NNAP report provides examples of various
possible nanotechnology applications and when they are expected to
reach the product stage (Table 2). The applications cover sectors from
information technology and health care to security and energy, and some
applications are on the market now, while others are more than 20 years
in the future.
As the NNAP report notes, the states are playing an increasing role
in nanotechnology. In 2004, State funding for nanotechnology-related
projects was $400 million, or approximately 40 percent of the total
federal investment. To date, State funding for nanotechnology has been
focused on infrastructure--particularly the construction of new
facilities--with some research support being provided in the form of
matching funds to public universities that receive federal research
dollars. In addition to receiving State support, universities and
national laboratories also leverage federal investments through
industry contributions of funds or in-kind donations of equipment and
expertise. The NNAP report lists 15 examples of nanotechnology
infrastructure investments at the State and local levels, and further
details on non-federal initiatives can be found in the recent report on
a 2003 NNI workshop on regional, State, and local nanotechnology
activities.\4\
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\4\ Regional, State, and Local Initiatives in Nanotechnology is the
report on a workshop convened on September 30-October 1, 2003 by the
Nanoscale Science, Engineering and Technology (NSET) Subcommittee, the
interagency group that coordinates NNI activities. The report is
available online at http://www.nano.gov/041805Initiatives.pdf.
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In recent years, the focus has been on the construction of
nanotechnology facilities, but as these building projects financed by
federal, State, and private funding are completed, the nanotechnology
community must consider how best to capitalize on these new resources.
Specifically, funding will have to be found for operating expenses, and
policies that will attract public and private sector users to these
facilities will be needed on topics such as collaboration, intellectual
property, and usage fees.
The diversity of industry sectors will be a challenge for
developing appropriate education and workforce training programs in
nanotechnology. The predicted scale and breadth of research and
manufacturing jobs related to nanotechnology will require not only
specialized programs but also integration of nanotechnology-related
information into general science, technology, engineering, and
mathematics education.
Finally, successful integration of nanotechnology into products
will require an understanding of the standards and regulations needed
to govern responsible manufacturing and use of nanotechnology-enabled
products. Under the FY06 budget request, $82 million (eight percent) of
the proposed NNI R&D funding would be spent on research related to the
societal implications of nanotechnology. Of this amount, $38.5 million
(four percent of the overall program) would be specifically directed at
environmental, health, and safety research, while the remainder is for
the study of economic, workforce, educational, ethical, and legal
implications. In addition to this funding, relevant work is also
ongoing in other NNI focus areas. One example is the development of
measurement techniques at the nanoscale which are necessary to set
standards that can be used for quality control of nanotechnology
products and to manage compliance with safety regulations. Another
example is the study of the basic mechanisms of interaction between
nanoscale materials and biological systems, which can provide critical
information for health care applications as well as safe use practices.
6. Witness Questions
The witnesses were asked to address the following questions in
their testimony:
Questions for Mr. Floyd Kvamme:
What is the position of U.S. research and development
in nanotechnology relative to that of other countries? What key
factors influence U.S. performance in the field, and what
trends exist among those factors?
What fields of science and engineering present the
greatest opportunities for breakthroughs in nanotechnology, and
what industries are most likely to be affected by those
breakthroughs in both the near-term and the longer-term?
What is the Federal Government's role in facilitating
the commercialization of nanotechnology innovations, and how
can the current federal nanotechnology program be strengthened
in this area?
What is the workforce outlook for nanotechnology, and
how can the Federal Government help ensure there will be enough
people with the relevant skills to meet the Nation's needs for
nanotechnology research and development and for the manufacture
of nanotechnology-enabled products?
Questions for Mr. Jim O'Connor:
What is the position of U.S. research and development
in nanotechnology relative to that of other countries? What key
factors influence U.S. performance in this field?
What fields of science and engineering present the
greatest opportunities for breakthroughs in nanotechnology
relevant to Motorola, and what products are most likely to be
affected by those breakthroughs in both the near-term and the
longer-term?
What countries and corporations do you perceive to be
your closest competitors in nanotechnology science and
business? What factors influence Motorola's ability to compete
with these groups?
What is the workforce outlook for nanotechnology, and
how does the U.S. position compare to that of other countries?
How can the Federal Government help ensure there will be enough
people with the relevant skills to meet the Nation's needs for
nanotechnology research and development and for the manufacture
of nanotechnology-enabled products?
Questions for Mr. Sean Murdock:
What is the position of U.S. businesses in
nanotechnology relative to that of other countries? What key
factors influence U.S. performance in the field, and what
trends exist among those factors?
What investments are other countries making in
nanotechnology research, development, and commercialization
activities? How do other countries' approaches differ from that
of the U.S.?
What industries are most likely to be affected by
breakthroughs in nanotechnology in both the near-term and the
longer-term?
What are typical pathways by which ideas or
prototypes of new nanotechnology-related products or processes
are successfully developed into commercial applications? What
are the primary barriers to these pathways, and how can these
barriers be overcome or removed?
What is the Federal Government's role in facilitating
the competitiveness of U.S. industry in nanotechnology, and how
can the current federal nanotechnology program be strengthened
in this area?
Questions for Mr. Matthew Nordan:
What is the position of U.S. businesses in
nanotechnology relative to that of other countries? What key
factors influence U.S. performance in the field, and what
trends exist among those factors?
What investments are other countries making in
nanotechnology research, development, and commercialization
activities? How do other countries' approaches differ from that
of the U.S.?
What industries are most likely to be affected by
breakthroughs in nanotechnology in both the near-term and the
longer-term?
What are typical pathways by which ideas or
prototypes of new nanotechnology-related products or processes
are successfully developed into commercial applications? What
are the primary barriers to these pathways, and how can these
barriers be overcome or removed?
What is the Federal Government's role in facilitating
the competitiveness of U.S. industry in nanotechnology, and how
can the current federal nanotechnology program be strengthened
in this area?
Appendix A
The National Nanotechnology Initiative at Five Years: Assessment and
Recommendations of the National Nanotechnology Advisory Panel
Report to the President from the President's Council of Advisors on
Science and Technology\1\
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\1\ Released May 2005, full report available online at http://
www.nano.gov/
FINAL-PCAST-NANO-REPORT.pdf
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EXECUTIVE SUMMARY
The President's Fiscal Year (FY) 2004 Budget, released in February
2003, tasked the President's Council of Advisors on Science and
Technology (PCAST) with reviewing the National Nanotechnology
Initiative (NNI) and making recommendations for strengthening the
program. Congress ratified the need for an outside advisory body with
its passage of the 21st Century Nanotechnology Research and Development
Act of 2003 (the Act), which called for the President to establish or
designate a National Nanotechnology Advisory Panel (NNAP). By Executive
Order, the President designated PCAST as the NNAP in July 2004. To
augment its own expertise in managing large research and development
(R&D) programs, PCAST identified a Technical Advisory Group (TAG)
comprising about 45 nanotechnology experts representing diverse
disciplines and sectors across academia and industry. The TAG is a
knowledgeable resource, providing input and feedback with a more
technical perspective.
The Act calls upon the NNAP to assess the NNI and to report on its
assessments and make recommendations for ways to improve the program at
least every two years. This is the first such periodic report provided
by PCAST in its role as the NNAP.
The Administration has identified nanotechnology as one of its top
R&D priorities. When FY 2005 concludes later this year, over four
billion taxpayer dollars will have been spent since FY 2001 on
nanotechnology R&D. In addition, the President's FY 2006 Budget
includes over $1 billion for nanotechnology research across 11 federal
agencies. Such a substantial and sustained investment has been largely
based on the expectation that advances in understanding and harnessing
novel nanoscale properties will generate broad-ranging economic
benefits for our nation. As such, the NNAP members believe the
President, the Congress, and the American people are seeking answers to
four basic questions relative to the federal investment in
nanotechnology R&D:
1. Where Do We Stand?
2. Is This Money Well Spent and the Program Well Managed?
3. Are We Addressing Societal Concerns and Potential Risks?
4. How Can We Do Better?
Answers to these questions provide the assessments and
recommendations called for by the Act. Our conclusions can be
summarized as follows:
1. Where Do We Stand?
Today, the United States is the acknowledged leader in
nanotechnology R&D. The approximately $1 billion annual Federal
Government funding for nanotechnology R&D is roughly one-quarter of the
current global investment by all nations. Total annual U.S. R&D
spending (federal, State, and private) now stands at approximately $3
billion, one-third of the approximately $9 billion in total worldwide
spending by the public and private sectors. In addition, the United
States leads in the number of start-up companies based on
nanotechnology, and in research output as measured by patents and
publications. Our leadership position, however, is under increasing
competitive pressure from other nations as they ramp up their own
programs.
2. Is This Money Well Spent and the Program Well Managed?
The NNAP members believe strongly that the money the United States
is investing in nanotechnology is money very well spent, and that
continued robust funding is important for the Nation's long-term
economic well-being and national security. Nanotechnology holds
tremendous potential for stimulating innovation and thereby enabling or
maintaining U.S. leadership in industries that span all sectors. The
focus of the NNI on expanding knowledge of nanoscale phenomena and on
discovery of nanoscale and nanostructured materials, devices, and
systems, along with building an infrastructure to support such studies,
has been both appropriate and wise. The NNI has accomplished much
already-advancing foundational knowledge, promoting technology transfer
for commercial and public benefit, developing an infrastructure of user
facilities and instrumentation, and taking steps to address societal
concerns--and the economic payoffs over the long-term are likely to be
substantial.
The NNI appears well positioned to maintain United States
leadership going forward, through both its coordinated interagency
approach to planning and implementing the Federal R&D program and its
efforts to interact with industry and the public. This approach is
outlined clearly in the recently released NNI Strategic Plan, which
spells out the goals and priorities for the initiative for the next
five to 10 years. The NNAP members believe that this Plan provides an
appropriate way to organize and manage the program.
3. Are We Addressing Societal Concerns and Potential Risks?
The societal implications of nanotechnology--including
environmental and health effects--must be taken into account
simultaneously with the scientific advances being underwritten by the
Federal Government. The NNI generally recognizes this, and is moving
deliberately to identify, prioritize, and address such concerns.
Environmental, Health, and Safety. The NNAP convened a panel of experts
from Government regulatory agencies, academia, and the private sector
to discuss the environmental and health effects of nanotechnology.
Based on these panel discussions, as well as on information received
from the NSET Subcommittee and the TAG, the NNAP members believe that
potential risks do exist and that the Government is directing
appropriate attention and adequate resources to the research that will
ensure the protection of the public and the environment. The NNAP
members are particularly pleased that strong communication exists among
the agencies that fund nanotechnology research and those responsible
for regulatory decision-making.
Education. The future economic prosperity of the United States will
depend on a workforce that both is large enough and has the necessary
skills to meet the challenges posed by global competition. This will be
especially important in enabling the United States to maintain its
leadership role in nanotechnology and in the industries that will use
it. The NNI has launched a range of education-related programs
appropriate for classrooms at all levels and across the country, along
with other programs that are aimed at the broader public. While the NNI
cannot be expected to solve the Nation's science education problems
singlehandedly, the NNAP members believe that these NNI activities can
help improve science education and attract more bright young minds into
careers in science and engineering.
Other Societal Dimensions. Understanding the impact of a new technology
on society is vital to ensuring that development takes place in a
responsible manner. In addition to research into societal issues such
as the environmental, health, and safety effects of nanotechnology, the
NNI's diverse and growing R&D program is exploring other issues such as
economic, workforce, and ethical impacts. In addition, communication
among the various stakeholders and with the public on these topics is
an important element of the program, as indicated by the establishment
of an interagency subgroup to address this topic.
4. How Can We Do Better?
The NNAP will monitor progress on the program elements discussed
above; in the meantime, the NNAP offers the following recommendations
aimed at further strengthening the NNI.
Technology Transfer. The level of interest and investment across many
industrial sectors is growing and will likely outpace Government
investment in the United States soon, if it hasn't already. The NNI
needs to take further steps to communicate and establish links to U.S.
industry to further facilitate technology transfer from the lab to the
marketplace. The NNAP calls attention to two areas that would augment
the existing suite of activities and enhance commercialization of
research results.
The NNI's outreach to, and coordination with, the
States should be increased. Such efforts would complement those
NNI activities already underway with various industrial
sectors. The States perform a vital role in fostering economic
development through business assistance programs, tax
incentives, and other means. In addition, collectively the
States are spending substantial amounts in support of
nanotechnology R&D and commercialization. The NNAP members
believe that practical application of NNI-funded research
results, workforce development, and other national benefits
will increase with improved federal-State coordination.
The NNI should examine how to improve knowledge
management of NNI assets. This would include assets such as
user facilities and instrumentation available to outside
researchers, research results, and derivative intellectual
property. Through mechanisms such as publicly available and
searchable databases, the NNI can--and should--improve
infrastructure utilization and the transfer of technology to
the private sector.
The NNAP notes that, although ultimate commercialization of
nanotechnology is desirable and to be supported, the NNI must remain
mindful that its primary focus is on developing an understanding of the
novel properties that occur at the nanoscale and the ability to control
matter at the atomic and molecular level. While we all want the United
States to benefit economically from nanotechnology as quickly as
possible, it is critically important that the basic intellectual
property surrounding nanotechnology be generated and reside within this
country. Those who hold this knowledge will ``own'' commercialization
in the future.
Environmental and Health Implications. The NNI should continue its
efforts to understand the possible toxicological effects of
nanotechnology and, where harmful human or environmental effects are
proven, appropriate regulatory mechanisms should be utilized by the
pertinent federal agencies. Nanotechnology products should not be
immune from regulation, but such regulation must be rational and based
on science, not perceived fears. Although it appears that the public
and the environment are adequately protected through existing
regulatory authorities, the NNAP encourages the Government regulatory
agencies to work together to ensure that any regulatory policies that
are developed are based on the best available science and are
consistent among the agencies.
The NNAP notes that research on the environmental and health
implications of nanomaterials and associated products should be
coordinated not only within the Federal Government, but with other
nations and groups around the world to ensure that efforts are not
duplicated unnecessarily and information is shared widely.
Education/Workforce Preparation. A key to realizing the economic
benefits of nanotechnology will be the establishment of an
infrastructure capable of educating and training an adequate number of
researchers, teachers, and technical workers. To maximize the value of
its investment in developing materials and programs for education and
worker training, the NNI should establish relationships with the
Departments of Education and Labor. While the science agencies such as
the National Science Foundation can conduct education research and
design excellent programs and materials, ultimately the mission
agencies, Education and Labor, must be engaged to disseminate these
programs and materials as widely as possible throughout the Nation's
education and training systems.
The NNI's education focus should be on promoting science
fundamentals at K-16 levels, while encouraging the development and
incorporation of nanotechnology-related material into science and
engineering education. To promote mid-career training for
professionals, the NNI should partner with and support professional
societies and trade associations that have continuing education as a
mission.
Societal Implications. The NNI must support research aimed at
understanding the societal (including ethical, economic, and legal)
implications and must actively work to inform the public about
nanotechnology. Now more than ever, those who are developing new
scientific knowledge and technologies must be aware of the impact their
efforts may have on society.
In summary, the NNAP supports the NNI's high-level vision and
goals, and the investment strategy by which those are to be achieved.
Panel members feel that the program can be strengthened by extending
its interaction with industry, State and regional economic developers,
the Departments of Education and Labor, and internationally, where
appropriate. The NNI should also continue to confront the various
societal issues in an open, straightforward, and science-based manner.
Chairman Inglis. The Subcommittee will come to order, and
thank you for joining us this morning for a second hearing on
nanotechnology. Last month, the Research Subcommittee heard
from experts about examples of successful partnerships between
government and the private and public sectors, and discussed
barriers to future advancement. The witnesses also cited the
National Nanotechnology Initiative as a successful program that
is helping advance the nanotechnology industry.
Also last month, the President's Council of Advisors on
Science and Technology, PCAST, released a report on the state
of and the outlook for technology in the U.S. On the whole, the
report is very encouraging, and I am glad to see that Mr. Floyd
Kvamme, the Co-Chair of PCAST, is one of our witnesses here
today. The good news is that the United States still leads the
world by most metrics, including funding, patents, and
scientific publications. But I find it troubling that other
countries are catching up, and not just in funding. I hope we
can talk today about ways the U.S. can maintain its status as a
world leader in these emerging technologies.
I have said it before. I am not a scientist by background.
My minuscule knowledge of nanotechnology, that I guess pun is
intended there--is a result of preparing for hearings such as
this, and is driven by the realization that this technology
will quickly become as commonplace as the Internet.
Nanotechnology is already changing the products we use and has
the potential to revitalize our manufacturing base. It promises
to impact virtually every field, with applications in fields
from energy to defense to healthcare to transportation.
Just yesterday, we rolled out the House Hydrogen and Fuel
Cell Caucus, with the ultimate goal of leading us to a national
hydrogen economy. I am excited to hear that efforts are already
underway to use nanotechnology to improve hydrogen production,
storage, and fuel cells. The development of this technology is
truly amazing, and holds great promise. As many of you know, a
hydrogen economy is an issue near and dear to my heart, as is
the education of our nation's children in math and science. It
is imperative that we encourage and nurture a future generation
of scientists to help us maintain our prominence in
nanotechnology and in other critically important scientific
fields.
That is why today's hearing is so important. As the PCAST
report shows, the U.S. is currently ahead of the nanotechnology
curve, but other nations continue to invest more and more time,
energy, and money in their nanotechnology efforts. If we pause
even to glance over our shoulders, we will see them on the
horizon, several of whom are already on our heels and pushing
to take the lead. This possibility is no small matter. Our last
stronghold of competition is innovation, and the United States
can not afford to lose the lead on this technology.
Today, I hope our witnesses will address our current
nanotechnology position, relative to other countries, from an
R&D perspective and from a business perspective, and discuss
where our greatest opportunities for breakthroughs are, and
what the potential impacts may be in the near-term and in the
long-term. Furthermore, we hope to hear what barriers exist to
commercializing nanotechnology, how we could overcome them, and
the Federal Government's role in the process.
I look forward to hearing each of your testimonies. At this
point, I would recognize Ms. Hooley for an opening statement.
[The prepared statement of Chairman Inglis follows:]
Prepared Statement of Chairman Bob Inglis
Good morning, and welcome to our second hearing on nanotechnology.
Last month, the Research Subcommittee heard from experts about examples
of successful partnerships between government and the public and
private sectors and discussed barriers to future advancement. They also
cited the National Nanotechnology Initiative (NNI) as a successful
program that is helping advance the nanotechnology industry.
Also last month, the President's Council of Advisors on Science and
Technology (PCAST) released a report on the state of, and outlook for,
nanotechnology in the U.S. On the whole, the report is very
encouraging, and am I glad to see Mr. Floyd Kvamme, the Co-Chair of
PCAST, as one of our witnesses here today. The good news is that the
United States still leads the world by most metrics, including funding,
patents, and scientific publications. But I find it troubling that
other countries are catching up, and not just in funding. I hope we can
talk today about ways the U.S. can maintain its status as a world
leader in these emerging technologies.
I've said it before: I'm not a scientist by background. My
minuscule knowledge of nanotechnology (pun intended) is a result of
preparing for hearings such as this, and it is driven by the
realization that this technology will quickly become as commonplace as
the Internet. Nanotechnology is already changing the products we use
and has the potential to revitalize our manufacturing base. It promises
to impact virtually every field-with applications in fields from energy
to defense to health care to transportation.
Just yesterday, we rolled-out the House Hydrogen and Fuel Cell
Caucus, with the ultimate goal of leading us to a national hydrogen
economy. I'm excited to hear that efforts are already underway to use
nanotechnology to improve hydrogen production, storage and fuel cells.
The development of this technology is truly amazing and holds great
promise. As many of you know, a hydrogen economy is an issue near to my
heart, as is the education of our nation's children in math and
science. It is imperative that we encourage and nurture a future
generation of scientists to help us maintain our prominence in
nanotechnology and in other critically important scientific fields.
This is why today's hearing is so important. As the PCAST report
shows, the U.S. is currently ahead of the nanotechnology curve, but
other nations continue to invest more and more time, energy and money
in their nanotechnology efforts. If we pause even to glance over our
shoulders, we will see them on the horizon, several of whom are already
on our heels and pushing to take the lead. This possibility is no small
matter. Our last stronghold of competition is innovation, and the
United States can not afford to lose the lead on this technology.
Today, I hope our witnesses will address our current nanotechnology
position relative to other countries, from an R&D perspective and from
a business perspective; discuss where our greatest opportunities for
breakthroughs are and what the potential impacts may be in the near-
term and the long-term. Furthermore, we hope to hear what barriers
exist to commercializing nanotechnology, how we can overcome them, and
the Federal Government's role in the process.
I look forward to hearing your testimony.
Ms. Hooley. Today, the Research Subcommittee concludes its
review of the National Nanotechnology Initiative, or NNI, which
we began with a hearing on May 18. Just prior to the May 18
hearing, I was astonished to learn the Administration had
prevented the appearance of the Co-Chair of the President's
Council of Advisors on Science and Technology, to present the
Council's Congressionally mandated report on NNI.
Subsequently, the Science Committee ably laid out for the
White House our objections to that decision. The decision was
reconsidered, and I am happy to say, reversed, and as a result
our witnesses this morning include Mr. Floyd Kvamme, who I am
extremely pleased to welcome to the hearing.
We will now be able to hear from a key author of the report
that provides the initial biennial assessment of NNI. This
assessment covers both the content and the management of this
important $1 billion per year R&D initiative.
One aspect of the NNI of great interest to me is how the
initiative helps to facilitate the commercialization of
nanotechnology. In today's testimony, we will see that Lux
Research projects that nanotechnology will impact nearly every
category of manufactured goods over the next 10 years, becoming
incorporated into 15 percent of global manufacturing output,
totaling $2.6 trillion in 2014. We clearly need to ensure that
the United States is a major player in this market, and fares
well against strong international competition.
During the Subcommittee's May hearing, we heard about
investments underway in the states to advance nanotechnology,
and to foster the transition of research results into new
products and applications. For example, one of our witnesses,
Dr. Cassady, from Oregon State University, described the Oregon
Nanoscience and Microtechnologies Institute, better known as
ONAMI, which is a collaboration between Oregon's three major
research universities, federal research agencies, and the
state's thriving high tech sector.
There was a general consensus among the witnesses at the
May hearing that the Federal Nanotechnology Funding should
include support for applied, pre-competitive research. I will
be interested in your views, Mr. Kvamme, and our other
panelists, on how we can ensure that the Nation gains the full
benefit of the large federal basic research investment being
made in nanotechnology. In particular, I would like your
suggestions on the kinds of activities that will ensure
effective technology transfer to the private sector.
Mr. Chair, I want to thank you for calling this hearing,
and I thank all of our witnesses for appearing before the
Subcommittee today, and I look forward to our discussion.
[The prepared statement of Ms. Hooley follows:]
Prepared Statement of Representative Darlene Hooley
Mr. Chairman, today the Research Subcommittee concludes its review
of the National Nanotechnology Initiative, or the NNI, which we began
with a hearing on May 18th. Just prior to the May hearing, I was
astonished to learn that the Administration had prevented the
appearance of the Co-Chair of the President's Council of Advisors on
Science and Technology to present the Council's congressionally
mandated report on the NNI.
Subsequently, the Science Committee ably laid out for the White
House our objections to that decision. The decision was reconsidered,
and I am happy to say, reversed. And as a result, our witnesses this
morning include Mr. Floyd Kvamme, who I am extremely pleased to welcome
to the hearing. We will now be able to hear from a key author of the
report that provides the initial biennial assessment of the NNI. This
assessment covers both the content and the management of this important
$1 billion per year R&D initiative.
One aspect of the NNI of great interest to me is how the initiative
helps to facilitate the commercialization of nanotechnology. In today's
testimony we see that Lux Research projects that nanotechnology will
impact nearly every category of manufactured good over the next 10
years, becoming incorporated into 15 percent of global manufacturing
output totaling $2.6 trillion in 2014. We clearly need to ensure that
the United States is a major player in this market and fares well
against strong international competition.
During the Subcommittee's May hearing, we heard about investments
underway in the States to advance nanotechnology and to foster the
transition of research results into new products and applications. For
example, one of our witnesses, Dr. John M. Cassady from Oregon State
University, described the Oregon Nanoscience and Microtechnologies
Institute. ONAMI is a collaboration between Oregon's three major
research universities, federal research agencies, and the state's
thriving high-tech sector.
There was a general consensus among the witness at the May hearing
that federal nanotechnology funding should include support for applied,
pre-competitive research. I will be interested in the views of Mr.
Kvamme and our other panelists today on how we can ensure that the
Nation gains the full benefit of the large federal basic research
investment being made in nanotechnology. In particular, I would like
your suggestions on the kinds of activities that will ensure effective
technology transfer to the private sector.
Mr. Chairman, I want to thank you for calling this hearing and
thank our witnesses for appearing before the Subcommittee today. I look
forward to our discussion.
Chairman Inglis. Thank you, Ms. Hooley. Other Members, we
would be pleased to receive opening statements for the record,
if you would like to submit them, so that we can get right to
our panel, and let me introduce them.
[The prepared statement of Mr. Carnahan follows:]
Prepared Statement of Representative Russ Carnahan
Mr. Chairman and Ms. Ranking Member, thank you for holding this
important and very interesting hearing.
I am especially pleased to revisit the role our country has in the
nanotechnology field in light of The National Nanotechnology Initiative
five-year assessment and recommendations release.
Nanotechnology has the promise of allowing scientists to control
matter on every length scale, including materials in the range of one
to 100 nanometers. Science is allowing us to control material behavior
by altering structures at the level of one billionth of a meter.
The field includes three main categories of promise, materials and
manufacturing, information technology and medicine. I am most eager to
see what this technology can do for our nation's health and am hopeful
that the utilization of nanotechnology will someday positively affect
our economy and job market.
Thank you for your willingness to join us, Mr. Kvamme, Mr.
O'Connor, Mr. Murdock and Mr. Nordan. I am eager to hear your
testimony. Thank you.
[The prepared statement of Ms. Johnson follows:]
Prepared Statement of Representative Eddie Bernice Johnson
I want to thank Chairman Inglis and Ranking Member Hooley for
bringing the issue of nanotechnology before the Subcommittee today. I
appreciate their continued leadership on this issue.
Experts believe that nanotechnology could have an impact on our
economy and society as significant as the impact of the steam engine,
electricity, the Internet, and the computer chip. Researchers and high-
tech start-ups have already identified many potential benefits and
applications of nanotechnology in health, energy and the environment,
information and communications technology, advanced materials,
manufacturing, and national security. It is possible that
nanotechnology could lead to solar energy that is competitive with
fossil fuels.
Medical researchers are already working on using nanotechnology to
develop tools for the diagnosis and therapy of cancer. I am proud to
say that Texas is playing a leading role in the development of
nanotechnology.
Texas is at the center of the impending nanotechnology revolution.
Four of the twenty-one Texas universities (Rice University and the
Universities of Texas in Austin, Arlington and Dallas) involved with
nanotechnology research programs have already developed nanotechnology-
specific research centers.
University of Texas Southwestern Medical School in Dallas is the
only medical school in the world where four Nobel Laureates are
actively involved in research. The center of the world's
telecommunications industry is in Richardson, a Dallas suburb, known as
Telecom Corridor. The Dallas and Austin regions are focal points for
the semiconductor industry in Texas. More silicon wafers are produced
in Texas than in any other U.S. state except California.
I urge my colleagues to continue to pay attention to nanotechnology
after this hearing and I hope that the Administration and the Congress
can look for ways to build on and strengthen the nanotechnology
research. With this committee leadership, we can work is in the
direction of creating a brighter and more prosperous future for all
Americans. I look forward to continue working with my colleagues on
both sides of the aisle to ensure the full development of this
important initiative.
Chairman Inglis. Each of you will have five minutes to
speak and then we will follow that with a period of questions
from the Members here.
Mr. Floyd Kvamme is the Co-Chair of the President's Council
of Advisors on Science and Technology, the PCAST organization
that I just mentioned. Mr. Matthew Nordan is the Vice President
of Research for Lux Research, Inc. Very happy to have you with
us. Mr. Sean Murdock is the Executive Director of the
NanoBusiness Alliance. Mr. Jim O'Connor is the Vice President
of Technology Incubation and Commercialization at Motorola,
Inc.
Mr. Kvamme, if you would start us, and we will recognize
you for five minutes, and then, we will go down the panel.
Thank you.
If you would push that button. Thank you.
Mr. Kvamme. Missed that.
Ms. Hooley. We don't have nanotechnology here.
Chairman Inglis. It is not voice activated.
STATEMENT OF E. FLOYD KVAMME, CO-CHAIR, PRESIDENT'S COUNCIL OF
ADVISORS ON SCIENCE AND TECHNOLOGY
Mr. Kvamme. My name is Floyd Kvamme, and I am here in my
capacity as Co-Chair of the President's Council of Advisors on
Science and Technology, or PCAST, which the President
designated as the National Nanotechnology Advisory Panel, or
NNAP, called for by the legislation that the Science Committee
passed and the President signed in late 2003.
In the first periodic--in that report, the approach that
the panel took, based on the requirements of the Act, was to
ask four basic questions that we felt the President, the
Congress, and the American public wanted to hear.
First, where do we stand, or how does our competitive
position in nanotechnology R&D stack up relative to other
countries? Second, is the NNI money well spent, and the program
well managed? Third, are we addressing societal concerns and
potential risks? And four, how can we do better, or how can we
strengthen the U.S. nanotechnology effort?
During the review process, PCAST convened panels, met with
members of the Nanoscale Science Engineering and Technology
Subcommittee of the National Science and Technology Council,
attended NNI workshops, and consulted individually with
researchers across the United States and around the world.
In addition, a particularly valuable resource was our
technical advisory group, or TAG--some 45 nanotechnology
experts who provided input and feedback from a technical
perspective on the various aspects of nanotechnology and the
NNI. Because the focus of this hearing is on the U.S.
competitiveness in nanotechnology, I will concentrate my
remarks on the first of these questions, ``where do we stand?''
and on our recommendations for improving the program.
Regarding the other two questions, the NNAP members
generally feel that the federal funding for nanotechnology
research and development is money very well spent, and that the
program is well managed. Likewise, the NNAP concludes that the
NNI is taking appropriate steps to understand and address
societal concerns and potential risks. For more details about
the NNAP's assessment in these areas, please see my written
testimony, or the report itself, or I would be happy to answer
questions.
So, where do we stand? The metrics that we used to compare
the U.S. position in nanotechnology with that of other
countries were R&D spending, a measure of input, and percentage
of patents and publications, a measure of output. We found,
from the data we surveyed, that today, the U.S. is the leader
in nanotechnology R&D. The approximately $1 billion in annual
federal funding is roughly one-quarter of the current global
investment by all nations. Moreover, many comparisons of
international investments do not report total R&D spending;
that is, not only federal but also state and private funding.
When all public and private funding is considered, the U.S. is
funding approximately $3 billion, or one-third of the nearly $9
billion in total worldwide spending for what is classified as
nanotechnology R&D.
In the United States, states have been particularly active
in promoting nanotechnology R&D, investing an estimated $400
million in 2004 alone. The U.S. also leads in the number of
nanotechnology-based startup companies, and in research output,
as measured by U.S. patents and publications. However, other
countries are aggressively chasing the U.S. leadership position
by increasing support for coordinated national programs, and in
some cases, by focusing investments in areas of existing
national economic strength. For example, many Asian countries
are investing heavily in nanoelectronics.
So, how can we do better? The NNAP report makes a number of
recommendations. I will mention four here. First, the NNI
should increase its outreach to facilitate tech transfer and
commercialization. State and regional entities are directing
considerable funding toward nanotechnologies. Examples of state
nanotechnology initiatives include New York's Albany
Nanocenter, the Oregon Nanoscience and Microtechnologies
Institute that has just been mentioned, South Carolina's
Nanocenter, and others from California, Texas, Pennsylvania,
Illinois and many other states, all of which are very active in
supporting nanotechnology-based economic development.
While the NNI has begun to reach out to the states, and has
begun an organized program of outreach to other, to various
industries, more outreach will leverage the federal investment,
and complement those NNI activities already underway with
various industrial sectors, many of which appear anxious to
pull technology developments from the federal research
activity.
Second, as mentioned above, we recommend that the NNI
continue its efforts to understand the possible toxicological
effects of nanotechnology. While it appears that the public and
environment are adequately protected through existing
regulatory authorities, the NNAP encourages continued research
into possible toxicological effects in the workplace, and urges
regulatory agency cooperation to ensure that any policies based
on best science, are based on best science, not perceived
fears, and are consistent among the agencies. The NNAP also
recommends coordinating and sharing environmental health and
safety research results internationally, and working with
international entities to ensure that efforts are not
duplicated and information is shared widely.
Third, in accordance with the Act, the agency group that
coordinate the NNI has identified seven program component
areas, PCAs, that generally follow the broad categories of
foundational research being conducted today. The PCAs represent
areas in which ongoing and coordinated investment, across
multiple agencies, will be required to support the development
of the many anticipated applications of nanotechnology. The
NNAP recommends that these PCAs be regularly reexamined and
adjusted as necessary to track the developments in
nanotechnology R&D. We cannot know where the state of
nanotechnology will be 10 years from now, but we can be fairly
certain it will be considerably different than what exists
today. Flexibilities in these definitions are essential.
Lastly, any look at nanotechnology or technology
development in general highlights the need for a more
technically trained workforce. A separate, recent PCAST study
focused on this subject. Encouraging our young people to pursue
technical degrees so that we have a rich mix of technically
trained people throughout our society will be a requirement for
success in a world increasingly driven by technical advances.
In conclusion, I am personally excited about the continual
flow of new discoveries and revolutionary opportunities made
possible by nanotechnology R&D, but while all of us would like
to see rapid commercialization of nanotechnology research, our
panel feels strongly that the NNI must have, as its primary
focus, the development of and understanding through research
and development of the novel properties that occur at the
nanoscale, and the ability to control matter at the atomic and
molecular level.
While we all want the U.S. to benefit economically from
nanotechnology as quickly as possible, it is critically
important that the basic intellectual property surrounding
nanotechnology be generated and protected within this country.
Those who hold this knowledge and have the workforce to exploit
it will own commercialization in the future.
Mr. Chairman, I appreciate the work and support of this
committee for nanotechnology R&D, and look forward to continued
dialogue with you on this important subject.
[The prepared statement of Mr. Kvamme follows:]
Prepared Statement of E. Floyd Kvamme
Introduction
Mr. Chairman and Members of the Committee, it is a pleasure and an
honor for me to testify to you today regarding the National
Nanotechnology Initiative (NNI) and general competitive position of
United States in nanotechnology. My name is Floyd Kvamme and I am a
Partner at Kleiner Perkins Caufield & Byers, a high technology venture
capital firm located in Silicon Valley. That is my full time
occupation. I was also honored to be asked, and accepted an invitation,
by President George W. Bush in 2001 to co-chair his science and
technology advisory group, the President's Council of Advisors on
Science and Technology (PCAST). The PCAST is a group of non-government
advisors comprising some two dozen senior representatives, appointed by
the President, and drawn from industry, education, and research
institutions, and other non-governmental organizations. The President's
Science Advisor, the Director of the Office of Science and Technology
Policy (OSTP) Jack Marburger, co-chairs the PCAST along with me.
Potential of Nanotechnology
``Nanotechnology'' touches upon a broad array of disciplines,
including chemistry, biology, physics, computational science, and
engineering. And like information technology, nanotechnology has the
potential to impact virtually every industry, from aerospace and energy
to health care and agriculture. Based on the ability to see, measure,
and manipulate matter at the scale of atoms and molecules,
nanotechnology was born, in many ways, with the advent of atomic force
microscopy in the mid-1980s. Today many industries such as those based
on semi-conductors and chemicals already are creating products with
enhanced performance based on components and materials with nanosized
features.
Nanotechnology today reminds me very much of the early days of the
semiconductor industry. The new interdisciplinary relationships being
forged and the sense of excitement over future possibilities are very
reminiscent of that earlier period.
As with semiconductors, future application of nanotechnology based
on evolving research could have significant impact throughout the
world. Examples where nanotechnology has the potential to vastly
improve standards of living in industrialized and developing nations
include: medical applications, clean water, and energy. In our report,
we highlight some key research in these areas. In medical applications,
for example, nanotechnology has made possible the creation of a
synthetic bone replacement material that is highly biocompatible and
allows bones to heal faster and more completely than the materials that
are used today. In the area of energy efficiency, researchers at Sandia
Laboratories have demonstrated a light source that mixes different
sized ``quantum dots'' to create high-efficiency white ``light emitting
diodes'' that use about one-tenth as much energy as an incandescent
bulb and that could reduce by more than half the amount of electricity
used for lighting nationwide. Finally, researchers at Lawrence
Livermore National Laboratory are nanoengineering membrane systems that
can target and remove contaminants in water, while reducing treatment
costs by at least half compared to conventional technologies. Low-cost
clean water technologies have obvious application in remediation of
contaminated groundwater and treating industrial waste, as well as
significant potential to help improve public health in developing
nations.
The early recognition of the broad range of useful and powerful
nanotechnology applications led to the formal establishment of a
National Nanotechnology Initiative (NNI) in Fiscal Year (FY) 2001. Due
to its potential to promote innovation and economic benefits, to
address the needs of the Federal agencies, as well as to strengthen the
position of the United States as a leader in science and technology,
the Administration has identified nanotechnology as a top research and
development (R&D) priority for the past several years.
History of PCAST's Involvement with Nanotechnology
The history of PCAST's involvement with the NNI extends back to
1999 when the analogous body under the previous Administration
supported a proposal for establishing an interagency nanotechnology
initiative. In their letter to the President, they included a
recommendation that ``the progress toward NNI goals be monitored
annually by an appropriate external body of experts, such as the
National Research Council.'' In part based on this recommendation, the
National Research Council (NRC) was commissioned to do a study of the
NNI, which was released in 2002. The first of that study's ten
recommendations was that OSTP establish an independent standing
nanoscience and nanotechnology advisory board to provide advice to the
Nanoscale Science, Engineering, and Technology (NSET) Subcommittee (the
interagency body that coordinates the NNI) on policy, strategy, goals,
and management.
The President's FY 2004 Budget, released in February 2003,
acknowledged the NRC's recommendation for external review, and directed
PCAST to conduct an assessment and provide advice regarding the
strategic direction of the NNI program. PCAST began this task shortly
thereafter.
The 21st Century Nanotechnology Research and Development (R&D) Act
As PCAST was undertaking its review of the NNI, this subcommittee
and its Senate counterpart were also in the midst of creating new
legislation that would make statutory the activities and organization
of the NNI, along with periodic reviews and other aspects of this vital
R&D effort. The requirement for an ongoing outside advisory panel was
ratified by Congress in the 21st Century Nanotechnology Research and
Development Act of 2003 (Public Law 108-153; hereafter referred to as
``the Act''), which called for the President to establish or designate
a National Nanotechnology Advisory Panel (NNAP). PCAST's role was
reaffirmed when, in July 2004 by Executive Order, the President
formally designated PCAST to fulfill the duties of the NNAP. The order
amended the original Executive Order commissioning PCAST, thus
establishing that nanotechnology should be included in the formal PCAST
charter.
As detailed by Congress in Section 4, the Act calls upon the NNAP
to assess the national nanotechnology program in the following areas:
Trends and developments in nanotechnology
Progress in implementing the program
The need to revise the program
Balance among the component areas of the program,
including funding levels
Whether program component areas, priorities, and
technical goals developed by the NSET Subcommittee are helping
to maintain U.S. leadership
Management, coordination, implementation, and
activities of the program
Whether social, ethical, legal, environmental, and
workforce concerns are adequately addressed by the program.
The Act requires the NNAP to report on its assessments and to make
recommendations for ways to improve the program at least every two
years. The first such report provided by PCAST in its role as the NNAP
is now complete and was delivered to this subcommittee at the hearing
that was held on May 18th. The remainder of my testimony will focus on
this report and the observations and recommendations contained therein.
Also, because PCAST was designated as the statutorily mandated NNAP,
from this point forward in my testimony I will refer to PCAST as the
NNAP.
Technical Advisory Group
Before getting into the specifics of the report, I'd like to
highlight a resource that our panel relied on during the course of the
review in order to augment the NNAP's expertise in managing large R&D
programs with more specific nanotechnology technical expertise. Early
in our review, the NNAP identified a Technical Advisory Group (TAG)
comprising approximately 45 nanotechnology experts who represent
diverse disciplines and sectors across academia and industry. The TAG
is a knowledgeable resource, providing input and feedback with a more
technical perspective. The NNAP called upon its TAG on several
occasions for broader expert opinions on various topics. Two particular
areas where the TAG was very helpful were in reviewing and providing
feedback on the NNI Strategic Plan and in helping to illuminate and
rationalize for the NNAP some of the key opportunities in
nanotechnology research over the short-, medium- and long-term. Input
from the TAG has been considered and is represented in the report you
have before you today.
NNAP Report
The approach we took during our first assessment of the NNI was to
ask some basic questions that encompass the requirements of the Act and
that we perceived to be the most pressing questions the President, the
Congress and the American public wanted answers to. These were:
Where do we stand? In other words, how does our
competitive position in nanotechnology R&D stack up relative to
other countries?
Is this money well spent and the program well
managed? This encompasses the general request for an external
assessment of the NNI.
Are we addressing societal concerns and potential
risks? Responding to specific Congressional and public
concerns, are we paying close enough attention to
environmental, health and safety risks and other societal
issues?
How can we do better? What does the NNAP recommend
that will help the U.S. strengthen its nanotechnology effort?
I will summarize our assessment and recommendations, and recommend
to the committee our full report for a more thorough review of these
issues.
Where do we stand?
In attempting to compare the strength of the U.S. nanotechnology
effort internationally, the NNAP reviewed a number of metrics that our
members felt were appropriate for assessing the competitive position of
the U.S. in this new technology area where research and technology
discoveries in many cases have yet to reach the marketplace. We looked
at available data for levels of international R&D investment by
governments (including Federal, regional, State, and local), as well as
private corporations and venture capital firms. We also surveyed data
on patent and publication trends to assess commercial interest and
strength of research findings among various countries that are active
in nanotechnology.
The data surveyed indicate that, today, the United States is the
leader in nanotechnology R&D. The approximately $1 billion annual
Federal Government funding for nanotechnology R&D is roughly one-
quarter of the current global investment by all nations. Total annual
U.S. R&D spending--including federal, State, and private funding--now
stands at approximately $3 billion, one-third of the approximately $9
billion in total worldwide spending by the public and private sectors.
It is noteworthy that State, local and regional governments have been
particularly active in promoting nanotechnology development, investing
$400 million in 2004 according to one estimate.\1\ In addition, the
United States leads in the number of start-up companies based on
nanotechnology, and in research output as measured by patents and
publications.
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\1\ Lux Research, Inc. 2005. Statement of Findings: Benchmarking
U.S. States in Nanotech. New York: Lux Research, Inc.
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However, the data also show that other countries are aggressively
chasing this leadership position, both in terms of ramping up
coordinated national programs--many of which are modeled directly on
the NNI--as well as in focusing investments to areas of existing
national economic strength. For example, many of the Asian countries
are investing heavily in nanoelectronics. Further, the U.S. lead in
publications and patents appears to be slipping. Increased
international activity is resulting in increased competitive pressure
from other nations and, in the opinion of the NNAP, an increased
urgency that the U.S. continues its focus on nanotechnology R&D
excellence.
Is this money well spent and the program well managed?
Chapter 2 of the report provides an assessment of the NNI program
and its accomplishments. The NNAP also evaluated the Administration's
recently released Strategic Plan and the mechanisms in place to manage
the program. The NNAP concludes that the money the United States is
investing in nanotechnology is money very well spent, and that
continued robust funding is important for the Nation's long-term
economic well-being and national security.
Nanotechnology holds tremendous potential for stimulating
innovation and thereby enabling or maintaining U.S. leadership in
industries that span all sectors. The NNAP concludes that the strategic
focus of the NNI on expanding knowledge of nanoscale phenomena and on
discovery of nanoscale and nanostructured materials, devices, and
systems, along with building an infrastructure to support such studies,
has been both appropriate and wise. The NNI has accomplished much
already--advancing foundational knowledge, promoting technology
transfer for commercial and public benefit, developing an
infrastructure of user facilities and instrumentation, and taking steps
to address societal concerns--and we believe the economic pay-offs over
the long-term should be substantial.
The NNAP commends the NNI in particular for making the long-term
commitment to nanotechnology R&D through the establishment of a
geographically distributed suite of centers of excellence and broadly
available user facilities. Largely university-based, the centers
provide education of skilled scientists and engineers as well as
serving as focal points of multi-disciplinary R&D and, hopefully, new
economic opportunities that are geographically dispersed. User
facilities, such as the five Department of Energy Nanoscale Science
Research Centers, provide access for all researchers to state-of-the-
art equipment and expertise for advanced nanotechnology R&D. Staff at
the Center for Nanophase Materials Sciences at Oak Ridge National
Laboratory in Tennessee--the first of the DOE centers to become fully
operational--are currently installing equipment and hiring additional
researchers.
At this time, the NNI appears well positioned to maintain United
States leadership going forward, through both its coordinated
interagency approach to planning and implementing the Federal R&D
program and its efforts to interact with industry and the public. This
approach is clearly outlined in the recently released NNI Strategic
Plan, which spells out the goals and priorities for the initiative for
the next five to 10 years. The NNAP surveyed the TAG to augment our
review of this Plan, and we believe it provides an appropriate way to
organize and manage the program, and that the goals and priorities
outlined in the Plan are likewise appropriate.
There are a number of cautionary notes and minor recommendations
contained in our report, which I will detail in a few minutes when I
discuss how we can do better, and I would be happy to answer any other
questions on items I may not have covered in my testimony. However,
overall I think I can safely say that the NNAP endorses current funding
and management of the NNI and believes the strategic direction of the
program is sound at this point.
Are we addressing societal concerns and potential risks?
The NNAP believes that the societal implications of
nanotechnology--including environmental and health effects--must be
taken into account simultaneously with the scientific advances being
underwritten by the Federal Government. In its review, the Panel found
that the NNI does recognize this, and is moving deliberately to
identify, prioritize, and address these concerns. The NNI and NNCO are
more organized on this front than when the PCAST first began its review
of the NNI two years ago. Because, as many members of the Congress and
this committee have rightly pointed out, addressing risks and societal
concerns is so important, the NNAP placed special emphasis on this
topic, and will continue to do so.
In order to gain insight into environmental, health, and safety
issues around nanotechnology, the NNAP convened a panel of experts from
Government regulatory agencies, academia, and the private sector. Based
on this panel discussion, as well as on information received from the
NSET Subcommittee and its TAG, the NNAP believes that potential risks
do exist and that the Government is directing appropriate attention and
adequate resources to the research that will ensure the protection of
the public and the environment. The NNAP is particularly pleased that
strong communication exists among the agencies that fund nanotechnology
research and those responsible for regulatory decision-making. The
pertinent government agencies are devoting more attention and resources
toward these issues than most people may realize.
In addition to research into issues related to environmental,
health, and safety effects of nanotechnology, the NNI's diverse and
growing R&D program is exploring other societal issues such as
economic, workforce, and ethical impacts. The NNAP believes that
understanding the impact of a new technology on society is vital to
ensuring that development takes place in a responsible manner. The NNAP
is pleased with the level of discourse on societal issues and believes
these efforts should continue.
In addition, communication with the various stakeholders, including
the public, on these topics is an important element of the program.
Therefore, we were pleased that the interagency group managing the NNI
established a new subgroup to address the topic of public engagement.
One societal issue that I would say has engendered the most
lingering concern for the NNAP during this review is one which also
affects the broader science and technology enterprise and about which
PCAST has previously studied and reported. That is, the health of
science education in the U.S. and the projected shortage of a qualified
science and technology workforce. The future economic prosperity of the
United States will depend on a workforce that both is large enough and
has the necessary skills to meet the challenges being posed by global
competition. This will be especially important in allowing the United
States to maintain its leadership role in nanotechnology and the
industries that will use nanotechnology. The NNI has launched a range
of education-related programs appropriate for classrooms at all levels
and across the country, along with other programs that are aimed at the
broader public. While the NNI cannot be expected to solve the Nation's
science education problems single-handedly, the NNAP believes that NNI
activities can help improve science education and attract more bright
young minds into careers in science and engineering. The issue of
science education in the U.S. is one about which the PCAST feels
strongly, and I would direct you to our previous report, ``Sustaining
the Nation's Innovation Ecosystem: Maintaining the Strength of Our
Science and Engineering Capabilities'' for more information and for our
views on this issue generally.
How can we do better?
This chapter of our report presents NNAP recommendations for how we
feel the NNI program can be strengthened and improved. I will describe
briefly the areas in which our recommendations are principally focused,
and would be happy to answer questions about these and any of the other
recommendations in our report.
Technology Transfer: The issue of facilitating the transfer of
technology from government labs or universities into the marketplace is
a subject that I know this committee has been interested in and which
generates a significant amount of discussion. In the case of
nanotechnology, the level of interest and investment across many
industrial sectors is growing and will likely outpace Government
investment in the United States soon, if it hasn't already. In our
report, the NNAP recognizes and applauds current efforts to promote
technology transfer, such as ongoing dialogues between the NNI and
various industries and recent efforts by research agencies to direct
Small Business Innovative Research (SBIR) and Small Business Technology
Transfer (STTR) contracts toward nanotechnology projects. However, the
NNAP also believes there are additional steps the NNI should take to
further communicate with and establish links to U.S. industry in order
to facilitate technology transfer from the lab to the marketplace.
The NNAP calls out two particular areas that could augment the
existing suite of activities and enhance commercialization of research
results. The first of these is increasing NNI's outreach to the States,
which, as previously noted, are directing considerable funding toward
nanotechnology projects. The NNAP believes that greater federal-State
interaction can leverage the investments and competencies of both.
States, in particular, have a strong interest in and capacity for
stimulating economic development and commercial activity.
A notable example of State activity is Albany NanoTech, home to
five R&D centers and the College of Nanoscale Sciences and Engineering
at the State University of New York (SUNY) Albany. As you heard in
testimony by Mr. Michael Fancher at the May 18th hearing that you
convened, Albany NanoTech has attracted over $1 billion in private
investment and has over 100 partnerships with other universities,
federal labs, and industry. Programs in nanoelectronics have led to
close relationships with major electronics firms such as IBM, ASML,
Tokyo Electron and International Sematech.
Oregon is another state that has developed a nanotechnology
initiative and committed state funds to support infrastructure
development for Oregon's Nanoscience and Microtechnologies Institute.
The University of South Carolina has invested in the creation of the
USC NanoCenter to serve as a focal point for the University's
nanotechnology research, to foster multi-disciplinary research and
education efforts, and to promote economic development. South
Carolina's NanoCenter has developed a special emphasis on creating
dialogue concerning the societal and ethical implications of
nanotechnology. These are a few examples of specific state and regional
activities. Obviously, there are others, including states like
California, Texas and Illinois, all of which are very active in
supporting technology clusters to spur economic development.
The NNI has begun to reach out and understand what the states are
doing, as evidenced in workshop on Regional, State, and Local
Nanotechnology Initiatives held in late 2003. The NNAP encourages more
outreach to the States to help leverage the federal investment. Such
efforts would complement those NNI activities already underway with
various industrial sectors. The NNAP believes the States perform a
vital role in fostering economic development through business
assistance programs, tax incentives, and other means. The NNAP believes
that practical application of NNI-funded research results, workforce
development, and other national benefits will increase with improved
federal-State coordination.
A second, related effort is the development of improved knowledge
management of NNI assets. Funding for the NNI to date has resulted in a
vast network of assets that should, through proper management, be
available to outside researchers and other private interests. The NNAP
recommends the NNI focus on improving access to its knowledge assets--
including user facilities and instrumentation available to outside
researchers, research results, and derivative intellectual property.
Through mechanisms such as publicly available and searchable databases,
the NNI can--and should--improve infrastructure utilization and the
transfer of technology to the private sector.
While the NNAP agrees that ultimate commercialization of
nanotechnology is desirable and to be supported, I do want to emphasize
that the Panel feels strongly that the NNI must remain mindful of its
primary focus toward developing an understanding, through research and
development, of the novel properties that occur at the nanoscale and
the ability to control matter at the atomic and molecular level. While
we all want the United States to benefit economically from
nanotechnology as quickly as possible, it is critically important that
the basic intellectual property surrounding nanotechnology be generated
and reside within this country. Those who hold this knowledge and who
have a workforce prepared to exploit it will ``own'' commercialization
in the future.
Environmental and Health Implications: Picking up on the issues
raised in Chapter 3, the NNAP recommends the NNI continue its efforts
to understand the possible toxicological effects of nanotechnology and,
where harmful human or environmental effects are proven, that the
pertinent federal agencies should promptly regulate accordingly.
Nanotechnology products should not be immune from regulation, but such
regulation must be based on science and rationality, not perceived
fears and irrationality. Judging on where we are today with existing
research and regulation, it appears that the public and the environment
are adequately protected through existing regulatory authorities.
However, the NNAP encourages continued research into possible
toxicological effects--particularly in the workplace--and urges
Government regulatory agencies to work together to ensure that any
regulatory policies that are developed are based on the best available
science and are consistent among the agencies. The NNAP recommends
coordinating and sharing environmental, health and safety research
results internationally to ensure that that efforts are not duplicated
unnecessarily and information is shared widely. The NNAP will continue
to monitor the development of these issues very closely.
Program Component Area Flexibility: In accordance with the Act, the
interagency group that coordinates the NNI has identified seven Program
Component Areas (PCAs) that generally follow the broad categories of
foundational research being conducted today. The PCAs represent areas
in which ongoing and coordinated investment across multiple agencies
will be required to support development of the many anticipated
applications of nanotechnology. The NNAP recommends that these PCAs be
regularly re-examined and adjusted as necessary to track the
developments in the nanotechnology R&D field. Today's PCAs should not
be viewed as set in stone, and today's organizational choices cannot be
allowed to continue indefinitely and thereby to drive the future
progression of the program. We cannot know where the state of
nanotechnology will be 10 years from now, but we can be fairly certain
it will be considerably different than exists today.
Education/Workforce Preparation: A key to realizing the economic
benefits of nanotechnology will be the establishment of an
infrastructure capable of educating and training an adequate number of
researchers, teachers, and technical workers. To maximize the value of
its investment in developing materials and programs for education and
worker training, the NNAP felt that better relationships should be
established between the NNI and the Departments of Education and Labor.
While the science agencies such as the National Science Foundation
(NSF) can conduct education research and design excellent programs and
materials, ultimately the mission agencies, Education and Labor, must
be engaged to disseminate these programs and materials as widely as
possible throughout the Nation's education and training systems. The
NNAP also felt that the NNI's education focus should be on promoting
science fundamentals at K-16 levels, while encouraging the development
and incorporation of nanotechnology-related material into science and
engineering education. To promote mid-career training for
professionals, the NNAP recommends that the NNI partner with and
support professional societies and trade associations that have
continuing education as a mission.
Other Societal Implications: The NNAP strongly supports continued
NNI funding for research aimed at understanding the societal
implications of nanotechnology, including ethical, economic, and legal
aspects. The NNAP members believe the NNI also must work to inform the
public about nanotechnology and seek to understand and address public
concerns about this emerging area of technology development. Now more
than ever, those who are developing new scientific knowledge and
technologies must be aware of the impact their efforts may have on
society. Nanotechnology, like biotechnology, has the potential to
require individuals, corporations, and governments to make decisions
that have ethical, legal, and other societal implications. The NNI must
actively engage scholars who represent disciplines that might not have
been previously engaged in nanotechnology-related research to address
these issues. Moreover, these efforts should be integrated with
conventional scientific and engineering research programs so that the
people who develop nanotechnology are more fully aware of the societal
implications of their work. While the NNAP generally felt that the NNI
through its National Nanotechnology Coordination Office (NNCO) has done
a good job initiating public outreach and is working to facilitate
stakeholder discourse on these subjects, we would encourage continued
attention to societal issues into the future.
Other Recommendations/NNAP Report Schedule: Beyond the issues I
have highlighted, the NNAP report generally endorses the NNI and
recommends continued robust funding to help maintain U.S. leadership.
We also suggest increased coordination with other interagency groups
and more involvement by agencies not participating in NNI at a level
appropriate to their mission, most notably DHS. Finally, there are a
few administrative items, such as a recommendation that the NNAP report
schedule be adjusted to more adequately complement NNI strategic plan
reporting activities. These recommendations and others are more fully
described in the report, and I would be happy to respond to any follow-
up questions you have.
Conclusion
In conclusion, speaking as a member of the NNAP who has been very
closely involved in studying and monitoring developments in
nanotechnology over the past several years, and as a an early
participant in the semiconductor research industry, I am personally
excited about the continual flow of new discoveries and truly
revolutionary opportunities made possible by nanotechnology R&D. I
believe the NNAP report echoes this enthusiasm and conveys our general
support for continuing down the path of robust funding and support for
the NNI in order to maintain the U.S. competitive edge in this emerging
area. I particularly appreciate the work of this committee and the
support in Congress generally for nanotechnology R&D, and I look
forward to continued dialogue with you on this important research
endeavor.
Biography for E. Floyd Kvamme
Since March 1984, Floyd Kvamme has been a Partner at Kleiner
Perkins Caufield & Byers, a high technology venture capital firm. He is
responsible for the development of high technology companies from early
start-up to publicly traded phase.
Floyd Kvamme currently serves on the boards of Brio Technology,
Gemfire, Harmonic, National Semiconductor, Photon Dynamics, Power
Integrations, and Silicon Genesis.
Mr. Kvamme is Chairman of Empower America, a Washington based issue
advocacy organization. He serves on the boards of the Markkula Center
for Applied Ethics Advisory Board at Santa Clara University and the
National Venture Capital Association (NVCA) and on the Executive
Committee of The Technology Network. In 1998, Kvamme served as Chairman
of the Electronic Commerce Advisory Council for the State of
California.
On the political front, Mr. Kvamme served on the High Tech Advisory
Committee and on the National Finance Committee of the Bush for
President Campaign. Previously, he served on the Finance Committee of
the Fong for Senate Campaign.
Floyd Kvamme was one of five members of the team that began at
National Semiconductor in 1967, serving as its General Manager of
Semiconductor Operations and building it into a billion-dollar company.
He served as President of the National Advanced Systems subsidiary,
which designed, manufactured and marketed large computer systems.
In 1982 he became Executive Vice President of Sales and Marketing
for Apple Computer. While at Apple, his responsibilities included
worldwide sales, marketing, distribution and support.
He holds two degrees in Engineering; a BS in Electrical Engineering
from the University of California at Berkeley (1959) and an MSE
specializing in Semiconductor Electronics from Syracuse University
(1962).
Chairman Inglis. Thank you, Mr. Kvamme. Mr. Nordan.
STATEMENT OF MATTHEW M. NORDAN, VICE PRESIDENT OF RESEARCH, LUX
RESEARCH, INC.
Mr. Nordan. And there we go. Good morning, Chairman Inglis,
Ranking Member Hooley, and Members of the Committee. Thank you
for inviting me to testify today. My company, Lux Research,
advises corporations, investors, startups, and public sector
institutions on exploiting nanotechnology for competitive
advantage. I lead the research team.
Now, let us start with the good news. The U.S. leads the
world in nanotechnology today. Last year, $4.6 billion of
government spending went into nanotech R&D worldwide. $1.6
billion was in the U.S., far exceeding second place Japan at $1
billion flat. Sixty-nine percent of nanotech patents issued by
the USPTO are assigned to U.S. based entities, versus only 56
percent for patents overall, so we have a lead there. Last
year, $3.8 billion in corporate R&D went into nanotechnology.
Of that, $1.7 billion came from U.S. based companies like GE
and GM, again far exceeding second place Japan at $1.1 billion.
Finally, 24 percent of scientific articles on nanoscience and
nanotechnology have emerged from the U.S., with China and Japan
next, at 13 percent and 11 percent respectively.
However, our lead is tenuous. The rest of the world is
catching up. We are falling behind in government investment. At
purchasing power parity, Taiwan, Japan, and South Korea all
exceed us on a per capita basis. Taiwan's $9.40 per head at PPP
last year was nearly twice our $5.42. We are threatened by
industrial policies abroad that do what the U.S. will not,
namely put universities and corporations together to dominate
specific, near-term applications. To return to Taiwan, 60
percent of the funds in its $640 million nanotechnology
initiative are devoted to working directly with corporations to
achieve leadership in specific product categories.
Even when measured by patents at our own USPTO, we lag
other countries in some of the most promising and near-term
fields. Of 70 patents for carbon nanotube field emission
displays, 22 are assigned to South Korean entities, and 20 to
Japanese ones, versus only 12 for the U.S. We have
overestimated our lead. Scientists in countries with a less
rich history of science and technology are not lagging when it
comes to nanotech. On the contrary, they are studying our
publications, being educated in our universities, and
outfitting their labs with equipment from U.S. firms. China
spent $130 million U.S. on nanotech last year. At purchasing
power parity, that was $611 million, 38 percent of what we
spend. The Iranian nanotechnology initiative was ordered by
none other than President Mohammad Khatami.
U.S. patents are at risk in countries that do not strongly
enforce intellectual property laws. There is a class of
nanomaterials called metal oxide nanoparticles. They are used
in everything from high SPF sunscreens to rocket fuels. Now, I
recently met with several manufacturers in this field at a
conference. First, I spoke with U.S. based firms, like
Nanotechnologies, Inc., NanoGram, and NanoPhase, all of whom
have invested great amounts of money to develop exclusive
patented processes for making these nanoparticles. Then, I
spoke with a marketing manager from a Chinese competitor, and
he was full of detailed, quantitative information about his
company's products, until I asked what his production process
was, aiming to see if his company might be infringing on the
patents of one of the U.S. based firms. He professed that the
question had never come up.
What can the U.S. do to maintain and, moreover, extend
leadership in nanotechnology? I see five key actions. First,
the U.S. must grow federal funding for nanotechnology research.
Nanotech is a horizontal enabler most similar to assembly line
manufacturing or to electricity that will impact virtually
every manufactured good. It is as critical for us to lead in
this field now as it was to lead in packet switched networks
decades ago, far before the Internet stimulated economic
development.
Second, we must eliminate regulatory uncertainty
surrounding environmental, health, and safety issues in
nanotechnology. There are no firm guidelines from the EPA or
OSHA today about how those agencies plan to regulate
nanomaterials, and as a result, large corporations are
beginning to hold back investment, for fear that the ground
will shift underneath them.
Third, we must attract U.S. students to the physical
sciences, but as well, we must retain the foreign students that
we import. Nobel laureate Richard Smalley has observed that on
current trends, by 2010, 90 percent of physical scientists
worldwide will be Asian nationals, 60 percent will be
practicing in Asia. The U.S. should strengthen science
education in K-12, reconsider the effect of visa tightening on
the inflow of foreign science and technology students, and
develop economic incentives to retain those researchers when
they study here. Quite frankly, we risk becoming a drive-
through educational institution for other countries' students.
Fourth, we must create financial incentives aligned with
desirable applications. Such programs can be coordinated
through existing agencies. They require no incremental
bureaucracy. Consider NASA's $11 million project with Rice
University to develop extremely low loss power cables based on
carbon nanotubes.
And finally, we must be sensible about export controls in
nanotechnology, which could choke commercialization. Export
controls in this field, per se, are a dead end. The field is
too broad to implement them. Such action would be like trying
to impose controls on assembly line manufacturing techniques
and equipment. Instead, we believe the U.S. should identify
specific nanotech applications with military significance, like
nanoparticulate explosives, and impose sensible controls on
them within existing frameworks.
I appreciate your inviting me here to speak. I think
nanotechnology is critical to our nation's future, and I am
pleased to answer any questions.
[Statement of Mr. Nordan follows:]
Prepared Statement of Matthew M. Nordan
The U.S. leads the world in nanotechnology today, but its position
is tenuous. To maintain global leadership, U.S. policy-makers must grow
federal funding for nanotech research; eliminate regulatory uncertainty
surrounding environmental, health, and safety issues; and do a better
job of retaining foreign Ph.D. students. In addition, the U.S. must
create financial incentives aligned with desirable applications and
approach export controls sensibly.
The U.S. Leads the World in Nanotechnology Today
Nanotechnology is the purposeful engineering of matter at scales of
less than 100 nanometers (nm) to achieve size-dependent properties and
functions. Nanotech innovations occupy a value chain starting with
nanomaterials like carbon nanotubes and dendrimers, followed by
intermediate products like memory chips and drug delivery carriers
built with nanomaterials, and ending with enhanced final goods like
mobile phones and cancer therapies (see Figure 1). Lux Research
projects that new, emerging nanotechnology applications will affect
nearly every type of manufactured good over the next ten years,
becoming incorporated into 15 percent of global manufacturing output
totaling $2.6 trillion in 2014 (see Figures 2 and 3).\1\
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\1\ Source: October 2004 Lux Research report, ``Sizing
Nanotechnology's Value Chain.''
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Multiple Metrics Testify to the Position of the U.S.
Massive investment is going into nanotech--$8.6 billion combined in
government spending, corporate R&D, and venture capital worldwide in
2004, up 10 percent from 2003 (see Figure 4-1).\2\ By most measures,
the U.S. leads in nanotechnology today, including:
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\2\ Source: 2004 Lux Research reference study, ``The Nanotech
Report 2004.''
Absolute public sector spending. Of the $4.6 billion
spent by governments on nanotechnology R&D last year, the U.S.
led in absolute terms with nearly $1.6 billion; runner-up Japan
spent less than two-thirds as much at $1.0 billion (see Figure
4-2).\3\
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\3\ Source: 2004 Lux Research reference study, ``The Nanotech
Report 2004.''
Patents issued. U.S. leadership in patent activity in
general is amplified when it comes to nanotechnology. While 56
percent of total issued patents at the U.S. Patent and
Trademark Office are assigned to U.S.-based entities, 69
percent of nanotech patents are.\4\
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\4\ Source: USPTO searches as of June 22, 2005. For more
information on nanotechnology and patents, see the March 2005 Lux
Research report, ``The Nanotech Intellectual Property Landscape.''
Corporate R&D spending. We conservatively estimate
that corporations worldwide spent $3.8 billion on
nanotechnology R&D in 2004; of this, $1.7 billion was spent by
corporations based in the U.S., far more than in any other
country (see Figure 4-3).\5\
---------------------------------------------------------------------------
\5\ Source: 2004 Lux Research reference study, ``The Nanotech
Report 2004.''
Scientific publications. Of a representative sample
of 109,728 articles published in peer-reviewed journals about
nanoscience and nanotechnology through June 2005, 24 percent
were authored by U.S.-based scientists--exceeding second-place
China (at 13 percent) and third-place Japan (at 11 percent) by
a wide margin (see Figure 4-4).\6\
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\6\ To identify these articles, we used the Science Citation Index
with a search string of ``(quantum dot OR nanopartic* OR nanotub* OR
fullerene* OR nanomaterials* OR nanofib* OR nanotech* OR nanocryst* OR
nanocomposit* OR nanohorn*).''
Deeply Embedded Sociocultural Values Drive U.S. Leadership
The U.S. owes its leadership position in nanotechnology to wise
decisions, made by both governments and private sector entities like
venture capital investors, about how science and technology innovations
should be commercialized. These decisions, in turn, stem from deeply
embedded sociocultural values--for example, that successful risk-taking
innovators should capture large rewards, and that short-term failure is
a step toward long-term success. The U.S. benefits from:
World-class universities that create grist for the
commercialization mill. Universities provide an effective
vehicle for transferring cutting-edge technology from the lab
to the manufacturing floor.\7\ The U.S. serves as a model for
the world in this regard, for both high technology in general
and nanotech in particular. U.S. investment in knowledge as a
percentage of GDP totaled 6.8 percent in 2000, topping the
league tables of the first-world OECD countries.\8\ The Bayh-
Dole Act of 1980 gave universities powerful financial
incentives to transfer innovation into commercial entities, and
corporations working in nanotech eagerly tap these resources:
85 percent of corporations active in nanotech R&D interviewed
by Lux Research in Q4 2004 have university collaborations.\9\
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\7\ It should be noted that national labs such as Oak Ridge and
Sandia also serve as wellsprings for innovation that can be
commercialized down the road.
\8\ Source: OECD Factbook 2005.
\9\ Source: December 2004 Lux Research report, ``The CEO's
Nanotechnology Playbook.''
A culture of entrepreneurship that thrives on
constructive failure. In the U.S., leaving a comfortable
corporate job to launch a start-up company is widely considered
a positive career move. In other first-world countries, it may
either be viewed as foolish or be nearly impossible to
accomplish. Hotbeds like Massachusetts's Route 128,
California's Silicon Valley, and Texas's greater Austin area
teem with the combination of innovative thinkers, technical
talent, and experienced management needed to forge a successful
start-up. It's no surprise that, of approximately 1,200
nanotech start-ups active in 2004, half were located in the
U.S.\10\
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\10\ Source: 2004 Lux Research reference study, ``The Nanotech
Report 2004.''
World-leading availability of risk capital. Although
corporations do an effective job of incubating incremental
nanotechnology applications that complement their existing
products, disruptive nanotechnology applications overwhelmingly
arise from start-up companies such as Aspen Aerogels,
Nanospectra Biosciences, and Nantero. Venture capital is the
lifeblood of these small firms, and the U.S. claims 56% of
venture capital deployed in start-ups globally.\11\
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\11\ Source: Lux Research analysis based on Thomson Venture
Economics and IMD World Competitiveness Yearbook 2004.
The Dominant U.S. Position in Nanotechnology Lies at Risk
Despite the U.S.'s strong position in nanotechnology, other
countries--from the usual suspects like Japan and South Korea to
surprises like Australia and Israel--challenge its dominance. Witness:
U.S. loss of spending leadership on a relative basis.
Although the U.S. puts more government funding to work on
nanotech research than any other country on an absolute basis,
it has already fallen behind Asian competitors on a relative
basis. This trend becomes even more apparent when spending
levels are corrected for purchasing-power parity, reflecting
the difference in what a dollar buys from one country to the
next. On this basis, the U.S. invested $5.42 per capita in
government spending on nanotechnology last year, exceeded by
South Korea at $5.62, Japan at $6.30, and Taiwan at $9.40--
nearly twice the level of the U.S. (see Figure 5-1).\12\
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\12\ Source: Published spending allocations and Lux Research
analysis.
Industrial policy abroad aimed at dominating specific
product segments. U.S. industrial policy eschews direct
government/industry collaboration for leadership in specific
applications. In Europe and Asia, many governments pursue the
strategies that the U.S. avoids, giving foreign competitors a
leg up on their U.S. rivals. For example, of the $640 million
allocated to Taiwan's Nanoscience and Nanotechnology Initiative
over five years, 60 percent is earmarked for ``strategic
industry applications'' developed collaboratively between
government institutions and industrial champions.\13\ Two of
Taiwan's top nanotechnology applications are magnetoresistive
RAM, which U.S. companies Freescale Semiconductor, IBM, and NVE
have been developing for more than a decade, and carbon
nanotube field emission displays, which U.S.-based electronics
giant Motorola, small-cap company Nano-Proprietary, and start-
up cDream are working on.\14\
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\13\ Source: ``The Strategy and Experiences to Industrializing
Nanotechnology in Taiwan,'' presentation delivered at SEMI NanoForum
2004, November 15, 2004, by Tsung-Tsan Su, Ph.D., General Director,
Nanotechnology Research Center, Industrial Technology Research
Institute, Taiwan.
\14\ Such initiatives do not exist only in Asia. In Europe, the
NanoCMOS project aims to reach the 45-nm semiconductor process node in
2005, well ahead of the International Technology Roadmap for
Semiconductors targets. It received =24 million in initial funding from
the European Commission and is being executed by a consortium anchored
by semiconductor heavyweights Infineon (Germany), Philips (the
Netherlands), and STMicroelectronics (France).
Leadership of high-volume, near-term applications on
foreign shores. In many specific, promising application
domains, researchers in other countries have begun to outpace
the U.S. in developing intellectual property--even when
measured by patents issued within the U.S. patent system.
Consider carbon nanotubes in displays, where the wonder
materials have been proposed for a new type of large, flat-
panel monitor that could outperform LCD and plasma at lower
cost and energy consumption. Of 70 patents for carbon nanotube
display applications issued by the U.S. Patent and Trademark
Office through February 2005, only 17 percent were issued to
entities based in the U.S. compared with 29 percent in Japan
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and 31 percent in South Korea (see Figure 5-2).
Innovative efforts in unexpected places. Scientists
in countries with a less rich history of science and technology
innovation are not lagging when it comes to nanotech. On the
contrary, they are studying U.S. scientific publications, being
educated in U.S. universities, and orienting their initial
capital investments toward the instrumentation needed for
nanotechnology research, without having to maintain technology
infrastructures and skill sets that were cutting-edge 20 years
ago. The result: impressive efforts in countries not known for
scientific leadership. The $130 million in estimated government
spending on nanotech last year in China equaled $611 million at
purchasing-power parity, or 38 percent of U.S. expenditure; in
addition, China recently launched a world-leading effort to set
standards for nanomaterials.\15\ Further, some countries that
the U.S. considers to represent strategic threats have thriving
nanotech programs; the Iranian NanoTechnology Initiative was
ordered by none other than President Mohammed Khatami.\16\
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\15\ Source: Lux Research analysis.
\16\ Source: ``Revolutionary Nanotechnology,'' Hamshahri (Iranian
daily newspaper), No. 3651, page 10, March 3, 2005. Accessed via http:/
/www.netiran.com/?fn=artd(3434).
Lack of concern with violating intellectual property
(IP) protection. Companies exploiting nanotechnology depend on
international property protection to defend their freedom to
operate. Yet in many foreign countries, lax enforcement of
intellectual property means that rivals appear to ignore
patents in practice. In the crowded field of metal oxide
nanoparticles, with applications in everything from sunscreens
to rocket fuels, 74 companies compete globally, eight of which
are in China. The U.S.- and European-based companies--like
NanoGram, Nanophase, and Nanotechnologies Inc.,--depend on
proprietary, patented production processes. for their
differentiation and financial valuations. But the Chinese
manufacturers stress their ability to deliver identical
products at prices 15 percent to 20 percent cheaper--and
generally refuse to name their production processes, raising
suspicion that they are using Westerners' patent filings like
recipe books. With lax Chinese IP enforcement and no way to
infer a manufacturing process from the nanoparticles that
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result, U.S. nanoparticle firms have limited means to compete.
Entrepreneurs Face Steep Hurdles on the Path from University Lab to
Successful Start-Up
For the U.S. to remain highly competitive, it must help start-ups
overcome:
Funding gaps. The widespread perception that
nanotechnology start-ups have more venture capital than they
can reasonably deploy is dead wrong. In fact, venture funding
for nanotechnology start-ups declined from $385 million in 2002
to $200 million in 2004, and accounted for only two percent of
nanotechnology R&D funding that year; cautious VCs burned by
the Internet bubble hesitate to commit more cash until they see
substantial exits (see Figure 6).\17\ To encourage
entrepreneurs to bring nanotech innovations out of university
laboratories and into the commercial arena, government funding
through vehicles like Small Business Innovation Research (SBIR)
grants and the National Institute of Science and Technology's
Advanced Technology Program (ATP) is an absolute necessity.
---------------------------------------------------------------------------
\17\ Source: 2004 Lux Research reference study, ``The Nanotech
Report 2004.''
Human resource gaps. The U.S. is not generating
enough Science and Engineering Master's degree and Ph.D.
holders to maintain leadership in nanotechnology. Tighter
controls on student visas since the September 11 attacks have
reduced the inflow of Ph.D. students to the United States in
favor of Western Europe, and as economies in China, India, and
South Korea develop, foreign scientists are less likely to
remain in the U.S. for their careers than they were a decade
ago. Nobel Laureate Richard Smalley from Rice University has
noted that at current rates, by 2010, 90 percent of all
physical scientists will be Asian and 50 percent of them will
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be practicing in Asia.
Manufacturability gaps. Nanotechnology start-ups must
cross a much ballyhooed ``valley of death'' to obtain the risk
capital funding required to move the business forward. Yet they
also must cross another, related, valley between small-scale
benchtop production volumes and the pilot-scale production
required to win commercial contracts. Our contacts with
nanotechnology researchers indicate that the Nanoscale Science
Research Centers scattered throughout the U.S. assist with
basic research only (not scale-up), are ill-used, and do not
help bridge this gap. As a result, many start-ups spend
redundant millions to build the same manufacturing pilot plants
that they end up using perhaps 10 percent of the time;
dedicated, shared manufacturing facilities devoted to
technology incubation would help bridge this gap more cost-
effectively.
The U.S. Government Must Take Concerted Action to Maintain Leadership
We recommend that the U.S. Government:
Grow federal funding for nanotechnology research. To
maintain leadership, the U.S. National Nanotechnology
Initiative (NNI) must be funded at or beyond current budget
request levels. It should not be assumed that U.S. states will
pick up any slack should federal spending ebb: Although U.S.
states spent $432 million last year, complementing
approximately $1.15 billion at the federal level, most of this
money went to initial purchases of equipment and construction
of facilities, not to funding ongoing research activity by
Ph.D. and postdoctoral students. This state spending
essentially represents one-time capital expenditure unlikely to
be sustained.
Eliminate uncertainty surrounding environmental,
health, and safety (EHS) issues. Nanoparticles present new EHS
issues; not enough fundamental toxicity research has been done
on nanoparticles to decisively determine what hazards they may
pose to workers, the public, and the environment--or how such
hazards may be mitigated. We believe fundamental research on
nanoparticle toxicity can realistically be performed only under
a government aegis; to perform it, the U.S. Government must at
least double the small sums currently allocated at the federal
level for nanotech EHS research, which totaled only 3.7 percent
of the 2006 NNI request (see Figure 7).\18\
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\18\ Source: May 2005 Lux Research report, ``A Prudent Approach to
Nanotech Environmental, Health, and Safety Risks.''
Beyond fundamental research, agencies like the Environmental
Protection Agency have not yet established firm guidelines for
how new nanoparticles will be treated under existing, or
potentially new, regulatory schemes. While this unwillingness
to rush to judgment before all the facts are in is well
intentioned, it has perverse effects: Based on our contact with
individuals driving nanotech initiatives at America's largest
corporations, it's clear to us that ambiguity surrounding EHS
regulation of nanoparticles is hampering commercialization--
firms do not want to play a game whose rules may change at any
time. To move forward, the EPA, the FDA, and NIOSH must issue
clear guidance to industry on how they plan to approach
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nanoparticles.
Attract U.S. students to science and engineering and
retain foreign ones. As with many science and technology
fields, funding and development incentives for nanotechnology
research will amount to nothing without a steady stream of
advanced science and engineering degree holders entering the
workforce. The U.S. should strengthen programs designed to
inspire students with wonder for the physical sciences in K-12
education, reconsider the effect of visa tightening on the
inflow of foreign science and technology graduate students, and
develop economic incentives for foreign science and technology
graduates to remain in the United States rather than
repatriate, taking with them the skills they acquired in the
U.S.
Create financial incentives aligned with desirable
applications. We believe U.S. economic development policy is
right not to fund specific solutions to broad technology
problems. However, the U.S. would be well served by government
programs that provide funds to nanotechnology researchers,
giving them incentives to develop applications with well-
defined ends, without specifying particular technology means.
Such programs can be coordinated through existing agencies and
require no incremental bureaucracy.
Consider NASA's $11 million project with Rice University to
develop extremely low-loss power cables based on carbon
nanotubes: Such cables could enable a national power grid,
shuttling electricity from locations of sustainable resources
to areas of high demand without losing it on the way. The
National Renewable Energy Laboratory estimates that solar cells
covering a 100-by 100-mile area in Nevada could meet the U.S.'s
entire energy needs, but without low-loss power cables the
electricity could never reach demand hubs like Chicago and New
York.\19\
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\19\ Source: John A. Turner, ``A Realizable Renewable Energy
Future,'' Science, Vol. 285, Issue 5428, pp. 687-689, July 30, 1999.
Employ export controls sensibly, without choking
nanotech commercialization. Export controls for products
incorporating nanotechnology have become a hot topic inside the
Beltway; individuals representing multiple organizations across
branches of government have independently sought Lux Research's
advice on this issue. We believe that export controls for
``nanotechnology'' per se are a dead end. The field is too
broad; such action would be like trying to impose export
controls on assembly-line manufacturing techniques and the
equipment used to implement them--impossible to carry out
rationally. Instead, we believe the U.S. should identify
relevant nanotechnology applications (e.g., radiation-hardened
solar cells, high-frequency beam-steerable antennas,
nanoparticulate propellants and explosives) and impose sensible
export controls on them within existing frameworks rather than
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introducing new ones.
Biography for Matthew M. Nordan
Matthew Nordan heads Lux's research organization. Under Matthew's
leadership, the Lux Research analyst team has become a globally
recognized authority on the business and economic impact of
nanotechnology. Lux Research serves as an indispensable advisor to
corporations, start-ups, financial institutions, and governments
seeking to exploit nanotechnology for competitive advantage.
Matthew has counseled decision-makers on emerging technologies for
a decade. Prior to Lux Research, Matthew held a variety of senior
management positions at emerging technology advisor Forrester Research,
where he most recently headed the firm's North American consulting line
of business. Earlier, Matthew lived for four years in the Netherlands
growing Forrester's operations in Europe, where he launched and led
research practices in retail, mobile commerce, and telecommunications.
Matthew has been invited by news outlets including CNN and CNBC to
comment on emerging technology markets and has been widely cited in
publications such as The Wall Street Journal and The Economist. He has
delivered advice to clients and been an invited speaker at conferences
in North America, Europe, Southeast Asia, Japan, Australia, and South
Africa. Beyond the corporate sphere, Matthew has participated in
developing public-sector technology strategy for organizations
including the World Economic Forum, the European IT Observatory, and
the Dutch transportation ministry.
Matthew is a summa cum laude graduate of Yale University, where he
conducted cognitive neuroscience research on the neural pathways
mediating emotion and memory.
Chairman Inglis. Thank you, Mr. Nordan. Mr. Murdock.
STATEMENT OF SEAN MURDOCK, EXECUTIVE DIRECTOR, NANOBUSINESS
ALLIANCE
Mr. Murdock. We are all going to make that mistake. Good
morning. I would like to thank you, Mr. Chairman, Ranking
Member Hooley, and the Members of the Research Subcommittee of
the Committee on Science for the opportunity to testify on this
critically strategic question.
My name is Sean Murdock, and I am the Executive Director of
the NanoBusiness Alliance. The NanoBusiness Alliance is the
premier nanotechnology policy and commercialization advocacy
group in the United States. Our members span multiple
stakeholder groups, from startups surviving on angel funding
and SBIR funding, to Fortune 500 companies with multimillion
dollar commitments to nanotechnology R&D, to academic research
institutions and public-private partnerships working to derive
economic development, benefit, and growth through
nanotechnology. This wide group of stakeholders has come
together because we believe that nanotechnology will be one of
the key drivers of business success, economic growth, and
quality-of-life improvements in the 21st Century. The Alliance
provides a collective voice and vehicle for efforts to advance
the benefits of nanotechnology across our economy and our
society.
With that perspective in mind, I would like to share with
you my thoughts on the United States' competitive position in
the commercialization of nanotechnology. To briefly synthesize,
the U.S. is leading the world today, but our lead is far from
secure. We face stiff and accelerating competition and we need
to take action to ensure leadership.
Nanotechnology will have tremendous impact on virtually
every sector of our economy. Near-term applications include
scratch resistant coatings, stain resistant textiles, high
performance tennis rackets and golf clubs, computer memory and
storage, flat panel displays, drug delivery systems, chemical
and biological sensors, and dramatically more sensitive and
selective diagnostics to name a few applications. Given this
breadth, it is clear that nanotechnology will be the engine of
innovation for the next 50 years, and we must be at the
forefront of this revolution.
Furthermore, nanotechnology's implication for homeland
security, defense, cleaning the environment and developing
renewable, sustainable sources of energy make its development
strategic as well as economic for the United States. For these
reasons, we as a nation and as the last superpower cannot
afford to hold anything less than a commanding position of
leadership in the commercialization of nanotechnology.
While the knowledge development that we refer to in
nanoscience R&D create value for the U.S. and society as a
whole, it is through the commercialization of nanotechnology
into new processes and products that businesses will create
jobs, and that this nation will see a return on its investment.
On this dimension, the United States is performing quite well.
According to our database, of all companies involved with
nanotechnology, a little over 50 percent are in the United
States.
That is the good. The bad news is while we lead in the
number of nanotech startups, the so-called valley of death, the
period between a company's formation and its achieving
significant cash flow, is particularly acute for
nanotechnology, and is constraining the growth of the sector.
Most nanotechnology innovations require significant investment
and platform development before any revenues can be generated
because they are based upon fundamental scientific
breakthroughs and basic research at universities and federal
labs.
Burned by the dot-com bubble, and needing to raise internal
rates of return in order to raise the next fund, venture
capitalists have been shying away from investments in these
kind of platform technologies that have longer-term
commercialization processes and unclear market economics.
According to data from Small Times Media, we continue to
generate about 30 to 40 venture backed startups a year, and I
am sure that there are many, many others that are being formed
that fall beneath the radar screen because they lack the
capital to get noticed. However, the growth of this group has
been stagnant over the past several years, as venture capital
funding for nanotech has remained relatively flat at about an
average of a little more than $200 million. To put that in
perspective, the investment over the past seven years by VCs
has been about the equivalent of the investment of the Federal
Government in 2004.
Leading Fortune 500 companies also have nanotechnology
initiatives and funding for R&D, but many have scaled back
their early stage research and development in response to stock
market pressures for near-term profitability and the reduction
of cost. The commitment to early stage R&D at GE, IBM and the
likes of Motorola is the exception and not the rule. Many
companies plan to innovate through acquisition. Relying upon
startups to develop and commercialize innovations further
expands the valley of death since companies are looking for
startups to have developed their technologies far enough to
ease integration. It also means that more than ever, startups
represent the product pipeline for large corporations and their
successful formation is key not only to creating new
prosperity, but continuing our existing prosperity.
Until the VC cycle changes again, and stock markets allow
companies to adopt longer horizons, we have a substantial and
growing valley of death. Since the market is not prepared to
take on this risk, the government needs to help bridge this
gulf. Specifically, the government must fully and effectively
use the SBIR and other programs at its disposal to enhance
commercialization activity.
Many member companies speak of the myth of SBIR Phase III
grants. The Phase I innovations proved out in Phase II are
supposed to be brought into use in the sponsoring agency. While
SBIR grants in and of themselves are quite valuable for those
attempting to commercialize nanotech innovations, purchases to
meet agency needs would generate a sustainable source of
revenues, provide customer validation, and accelerate the
learning curve through production. Furthermore, this would
ensure that our agencies, particularly defense and homeland
security, would remain ahead of the world in terms of nanotech
integration capability.
We need to create new nanotech innovation ecosystems to
form particularly between U.S. startups and incumbents. If we
are to retain our jobs in existing companies and industries,
then we will need to integrate the innovations of nanotech
startups into these sectors rapidly. Without incentives to form
domestic partnerships, the value from our nation's investment
may be disproportionately captured by foreign companies with
patient capital who partner with cash-strapped U.S. startups.
However much the government can do directly, in the end the
greatest leverage will be achieved by creating greater
incentives for the private sector to invest and aggressively
participate in the commercialization process. To that end, we
should investigate establishing a permanent R&D tax credit, and
potentially creating new vehicles, like the R&D limited
partnerships, that were instrumental in the formation of
commercialization capital for biotech. These will unlock not
only more of the potential of nanotech, but all technology-
driven industries.
Thank you, Mr. Chairman. I would be happy to answer any
questions you may have.
[The prepared statement of Mr. Murdock follows:]
Prepared Statement of Sean Murdock
I would like to thank you, Mr. Chairman, Ranking Member Hooley, and
Members of the House Research Subcommittee of the Committee on Science
for the opportunity to testify on this critically strategic question.
My name is Sean Murdock, and I am the Executive Director of the
NanoBusiness Alliance. The NanoBusiness Alliance is the premier
nanotechnology policy and commercialization advocacy group in the
United States. NanoBusiness Alliance members span multiple stakeholder
groups and traditional industrial sectors, including newly formed
start-ups surviving on angel funding or SBIR grants, Fortune 500
companies with multi-million dollar commitments to nanotechnology R&D,
academic research institutions, and public-private partnerships working
to derive economic development and growth through nanotechnology. This
wide group of stakeholders has come together because we believe that
nanotechnology will be one of the key drivers of business success,
economic growth and quality-of-life improvements in the 21st century.
The Alliance provides a collective voice and a vehicle for efforts to
advance the benefits of nanotechnology across our economy and society.
With that perspective in mind, I would like to share with you my
thoughts on the United States' competitive position in both the
research and commercialization of nanotechnology. The U.S. is leading
the world in nanoscience today, but our lead is narrow and we face
stiff and accelerating competition. Action, both in terms of spending
and policy, is required at the federal, State, and local levels to
assure that we maintain this lead.
Since this subcommittee has relatively strong familiarity with
nanotechnology and the 21st Century Nanotechnology Research &
Development Act, I only need to give some highlights of the potential
of nanotechnology and why it is so important. It is my belief and the
belief of every member of the Alliance that nanotechnology will have a
tremendous impact on virtually every sector of the global economy, a
belief that is reflected in the diversity of our membership. In some
industries, such as data storage, companies without a nanotechnology
strategy already cannot compete. This will become pervasive in all
industry sectors that produce goods rather than services. Furthermore,
I believe that nanotechnology is not just a tremendous economic driver,
but that its implications for homeland security, defense, cleaning the
environment, and developing renewable, sustainable energy sources
should make its development a key strategic as well as economic goal
for the U.S. For these reasons, we as a nation and as the last
superpower cannot afford to hold anything less than a commanding
leadership position in the commercialization of nanotechnology.
Investing in nanotechnology could also bring other benefits, beyond
the creation of jobs, bolstering of the economy, and strategic
leadership. Investing in commercialization allows us to reinvest in
nanoscience education, research, and development, forging a virtuous
circle that will ensure our children enjoy the same improvement in
quality of life that we have. Nanotechnology's potential to provide
solutions to the grand challenges of today could provide a rallying
point and inspire interest comparable to the race to overtake Sputnik
in the 50's and 60's, still one of the greatest periods of innovation
in American history.
The stakes are incredibly high. The NSF has estimated that the
global impact of nanotechnology enabled products and services will be
$1 trillion by 2015. Many considered this estimate to be quite lofty
when it was made in 2000 with the launch of the National Nanotechnology
Initiative. However, more recent estimates for the global impact of
nanotechnology enabled goods are even larger than the NSF's. In Realis,
a consulting group, has predicted that nanotech will impact up to $2
trillion of global economic output, while Evolution Capital, an
investment bank, estimates that the market will reach $1 trillion five
years earlier in 2010. Finally, in perhaps the most rigorous study to
date, Lux Research, a nanotechnology analyst group, has estimated that
nanotech will impact $2.6 trillion in global economic output by 2015
(see Figure 1).
While these estimates are mind-numbingly large, a brief mention of
some prospective applications and estimated time to market helps to
make them more tangible and more credible. Simple and passive
applications of nanotechnology including nanoparticles, coatings,
catalysts, and nanocomposites are already on the market, while more
revolutionary applications, including the first generation of
nanotechnology-enabled pharmaceuticals, bulk nanomaterials, sensors,
and many more are beyond the research stage and well into the product
pipeline. In additional to developing revolutionary products,
nanotechnology will radically change the cost-structures of many
industries, making non-nano alternatives simply non-competitive (see
Figure 2).
On the strategic side, nanotechnology will enable dramatic
enhancements in military and homeland security capabilities. Start-ups
are working on new protective armor, chem/bio suits, and chem/bio
sensors, as well as a variety of technologies such as quantum computing
and encryption which have enormous dual-use applications.
Given the potential of nanotechnology and the evidence of traction
toward realizing that potential, it is increasingly clear that
nanotechnology will be a game changing technology. Economists estimate
that technology innovation in the U.S. (transistors, integrated
circuits, recombinant DNA, etc.) generated half of the economic growth
over the past fifty years. Nanotechnology is likely to be the engine of
innovation for the next fifty years, and we must be at the forefront of
this innovation.
That is the importance of nanotechnology as a national goal, but it
does not answer the question of where the country currently stands with
respect to other nanotechnology leaders such as China, Japan, and the
E.U., the other global leaders in nanotech. Fortunately, at the current
time, the U.S. is clearly in a leadership position, evidenced by its
strength in investment, scientific publications, and patents. This
should not be taken for granted--key innovations have been developed in
the E.U. (such as the electron microscope, the instrument that helped
enable all nanotech research) and Japan (such as the discovery of the
nanotube, the most versatile and powerful nanomaterial yet developed).
Ironically, the challenges to U.S. domination of nanotechnology are
in part a result of our early support of nanotechnology. The formal
launch of the NNI in 2000 brought the potential of nanotechnology into
the world consciousness and initiated a race for global leadership. As
a result, the U.S. share of global government expenditures has dropped
since 2001, despite the absolute commitment more than doubling in the
same time period from $465MM to $960MM (see Figure 6).
Not surprisingly, the growth in foreign investment in
nanotechnology R&D has helped other nations to gain ground in the
development of new knowledge, innovations and the production of human
capital (see Figure 7).
Of particular competitive concern is China. The Scientist, an
American academic journal, said that from January to August 2004 China
had presented 3,621 research papers on nanotechnology, more than any
other country, as tabulated by the Scientific Citation Index. According
to the article, China published 14 percent more papers than the United
States in that time period. Furthermore, China currently has more than
3,000 researchers who are engaged in related programs and has had
series of innovative achievements according to the Director of China's
National Center for Nanoscience and Technology and the Vice President
of the Chinese Academy of Sciences.
While knowledge development and nanoscience R&D create value, it is
through the commercialization of nanotechnology into new processes and
products that businesses will create jobs and nations will see a return
on their investments.
According to the NanoBusiness Alliance's proprietary database on
all companies involved with nanotechnology worldwide, a little over 50
percent of the companies are in the United States (613 of 1,175).
However, if one is to believe the announcements made at the
ChinaNano2005 trade expo that China has almost 800 companies involved
with nanotechnology and a recent EU report claiming that Europe has
500, the share would appear to be significantly lower. Unfortunately,
it is notoriously difficult to track commercial developments in
nanotechnology, so we cannot be precisely sure.
However, the rate of formation of new nanotech start-ups over the
past several years has been relatively stagnant (see Figure 8).
This is, perhaps, one of the most disconcerting indicators for
nanotechnology in the U.S. The entrepreneurial culture and deployment
of risk capital, especially venture capital, toward early stage
technology companies has been a key source of competitive advantage for
the United States. This historic advantage appears to be at risk.
Although we lead in the number of nanotechnology startups, these
startups need risk capital to bring these nanotechnology innovations to
market. The so called ``valley of death,'' the period between a
company's formation and its achieving significant cash flow, is
particularly acute for nanotechnology. Most nanotech innovations
require significant investment and ``platform'' development before any
revenues can be generated because they are based upon fundamental
breakthroughs in basic research at universities and federal labs.
Burned by the dot com bubble and needing to raise IRR's in order to
raise the next fund, VC's have been shying away from ``platform''
technologies without near-term commercialization processes and end
market economics. In fact, the total VC financing over the past seven
years is approximately the same as the U.S. Government investment in
2004 (see Figure 9).
Furthermore, the investment to date has been highly concentrated in
a few, mature nanotech companies.
Highlighting this trend, almost all of the venture capital that
went to nanotech companies in the first quarter of 2005 was placed into
four companies, NanoTex ($33MM), Nanomix ($17MM), Nantero ($17MM), and
NanoOpto ($12MM).
While leading Fortune 500 companies have nanotechnology initiatives
and some funding for R&D, most have scaled back their early stage
research and development in response to stock market pressure for near-
term profitability and reducing costs. Many companies plan to
``innovate through acquisition,'' relying upon start-ups to develop and
commercialize innovations. This further expands the ``valley of death''
since companies are looking for startups to have developed their
technologies far enough for ease of integration. It also means that
more than ever start-ups represent the product pipeline for large
corporations, and that their successful formation is key not only to
creating new prosperity, but continuing our existing prosperity.
Until the VC cycle changes again and the stock markets allow
companies to adopt longer time horizons, we have a substantial and
growing ``valley of death.'' Since the market is not prepared to take
on this risk, the government needs to develop programs to bridge this
gulf.
Given the current landscape, there are a few key initiatives that
the Federal Government can take to revitalize nanotechnology
commercialization here and bolster our global lead.
The federal investment in infrastructure and user facilities is
part of the solution. These facilities, in theory, provide access to
critical and expensive equipment, and reduce the capital intensity of
nanotech commercialization activity. However, many nanotech start-ups
lack the process knowledge and internal capabilities to make effective
use of these investments. The government must also ensure sufficient
operating funds to provide services and train the start-ups, or the
assets will be underutilized and the investment will not generate the
return we expect.
The U.S. Government must be the ``gold standard'' as the most
hospitable climate for commercializing nanotech innovations. We must
lead in the development of new nanotech knowledge and research
infrastructure. As such, our share of worldwide government investment
should be at least on par with our share of global GDP.
We should establish goal-oriented research programs to address our
grand challenges. While much fundamental research remains to be done,
we should endeavor to do it to the extent possible within the context
of its potential uses. The National Cancer Institute's Centers for
Cancer Nanotechnology Excellence (CCNEs) provide a model for this. To
quote the recent solicitation, ``The CCNEs will be a national resource
that will integrate nanotechnology development into basic and applied
cancer research to facilitate the rapid application of this science in
the clinic. This initiative will catalyze targeted discovery and
development efforts that offer the greatest opportunity for advances in
the near- and medium-terms and will lower the barriers for those
advances to be translated to the private sector for commercial
development.'' The NCI has established clear objectives without
constraining how to get achieve them, and thus the creativity of the
scientists pursuing the research. This model should be emulated and
extended in other agencies and strategic investment areas.
Next, the government must fully and effectively utilize the SBIR
and ATP programs to enhance commercialization activity. Many member
companies speak of the ``myth'' of the SBIR Phase III--the phase where
innovations proved out in Phase II are supposed to be brought into use
in the sponsoring agency. While the SBIR grants in and of themselves
are quite valuable to those attempting to commercialize nanotech
innovations, purchases to meet agency needs would generate a
sustainable source of revenues and provide customer validation.
Furthermore, this would ensure that our agencies, particularly Defense
and Homeland Security, remain ahead of the world in terms of nanotech
integration capabilities.
The ATP program, although controversial, provides one of the only
sources of capital (and thus incentives) for new nanotech innovation
ecosystems to form, particularly between U.S. startups and incumbents.
If we are to retain jobs in our existing companies and industries, then
we will need to integrate the innovations of nanotech start-ups into
these sectors rapidly. Without incentives to form domestic
partnerships, the value from our nation's investment may be
disproportionately captured by foreign companies and governments with
patient capital who partner with cash strapped U.S. startups.
However much the government can do directly, in the end, the
greatest leverage will be achieved by creating stronger incentives for
the private sector to invest and aggressively participate in the
commercialization process. To that end, we should investigate
establishing a permanent R&D tax credit and possibly create new
vehicles like the R&D Limited Partnerships that were instrumental in
biotech capital formation. These will unlock not only more of the
potential of nanotech, but of all technology-driven industries.
In closing, all technological progress depends first and foremost
upon human capital. We must adopt an integrated human capital strategy
spanning multiple time horizons. In the near-term, we must encourage
the best and brightest to come to the U.S., help build out our
knowledge base, and transform nanotech inventions to innovations that
touch our daily lives. This will mean streamlining immigration
requirements for ``knowledge'' and highly skilled workers so that we
not only attract but retain these workers as citizens. In the medium-
term, we must greatly strengthen our job training programs. In the
longer-term, we must dramatically strengthen the science and technology
education system, the ultimate investment in our commercial future.
Biography for Sean Murdock
Prior to becoming the Executive Director of the NanoBusiness
Alliance, he was the Executive Director and a founding board member of
AtomWorks, an initiative formed to foster nanotechnology in Illinois
and more broadly throughout the Midwest.
Sean has established himself as a leading thinker in the areas of
nanotechnology commercialization and economic development. He has
delivered keynote speeches on the commercialization of nanotechnology
at several nanotechnology conferences, and served as Co-Chair for the
Commercialization Focused NanoCommerce 2003 Conference and Trade Show.
Sean has been quoted extensively on the subject in many leading
publications including Fortune, The Economist, the Chicago Tribune, the
Chicago Sun-Times, and Small Times.
Sean has been very active in nanotechnology trade and economic
development issues. He helped to organize and execute the first
Nanotechnology Trade Mission to Europe in conjunction with the
NanoBusiness Alliance and the U.S. Department of Commerce. He has also
been engaged with senior officials of the U.S. Department of Commerce's
Technology Administration on the potential impact of export control
issues on nanotechnology development and commercialization.
Prior to founding AtomWorks and serving as the Executive Director
of the NanoBusiness Alliance, Sean had more than seven years experience
in management consulting, most recently as Engagement Manager at
McKinsey & Company. Sean served a variety of Fortune 500 companies,
focusing primarily upon the industrial and chemicals sectors. While
there, he developed some of the firm's early perspective on the
business opportunities created by the nanotech revolution, publishing
the first two internal documents on the subject.
Sean received his Master's in Business Administration and Master's
in Engineering Management from Northwestern University. He holds a BA
in Economics from the University of Notre Dame.
Chairman Inglis. Thank you, Mr. Murdock. Mr. O'Connor.
STATEMENT OF JIM O'CONNOR, VICE PRESIDENT, TECHNOLOGY
INCUBATION AND COMMERCIALIZATION, MOTOROLA, INC.
Mr. O'Connor. Chairman Inglis, Ranking Member Hooley, and
Members of the Subcommittee, fellow panelists, good morning. I
want to thank you for inviting me to share Motorola's thoughts
on where the United States stands competitively and
innovatively when it comes to the subject of nanoscience and
nanotechnologies.
As the Vice President for Technology Commercialization at
one of America's largest preeminent technology companies, I am
honored to represent Motorola's 24,000 research scientists and
engineers before this distinguished panel that time and again
stands up and fights for the complex, fast moving technology
world and the ever-growing high tech industry.
Today, as we consider the recent report by the President's
Council of Advisors on Science and Technology on the National
Nanotechnology Initiative at Five Years, I will use it to give
you a snapshot of where we stand in relation to our global
competitors. I also want to provide you some insights on how
Motorola is trailblazing the nanotechnology frontier with
breakthrough sciences and commercial applications.
While the National Nanotechnology Initiative is a
relatively young concept, those of us in the research and
development community know the basic science for its
foundation, and have been around for many years. As the PCAST
Report states, scientists and engineers anticipate that
nanotechnology will lead to materials and systems with dramatic
new properties relevant to virtually every sector of the
economy, such as medicine, telecommunications, and computers,
and lastly, to areas of national interest such as homeland
security.
And because of the strong commitment from the Congress and
those in the Administration who understand these societal
benefits, the U.S. has surged to the forefront of
nanotechnology research and development, ahead of Europe, ahead
of Asia, ahead of all other competing nations around the globe.
Generally speaking, this rise to prominence has been
through good old American collaboration. Thanks to public-
private partnerships between Federal and State governments,
business and academia, our nanotechnology position has become
quite strong. For instance, Motorola today can leverage
researched performed in a number of our nation's esteemed
universities, such as U.C. Berkeley on better nanotubes and
nanowires, Harvard on fabricating nonvolatile electronic memory
using nanotubes, and lastly, Stanford on two particular
projects, one to use synthesis technology for biological and
chemical sensors and field emission devices, and the other, to
build up a portfolio of nanodots, nanotubes, and nanowires for
more enhanced electronics.
And while Motorola is still a few weeks away from
officially announcing it, I am proud to inform this
distinguished panel that this summer, Motorola is launching the
Center for Interdisciplinary Research on Nanotechnology with
Arizona State University. This strong partnership between
university and industry will promote nanotechnology, education,
research, and commercialization. ASU will advance the state of
the art in nanotechnology for communications, while Motorola
will use basic and applied technologies to develop useful and
innovative products and services for American consumers, better
mobile devices, equipment, and high frequency applications.
But the private sector partnering with academia could not
do it alone. We are grateful for federal support through grants
as well as research and development tax credits. To further
illustrate the high tech industry's importance to our economy
in terms of research, sales, and exports, America is at the
vanguard in the number of startup companies based on
nanotechnology, as some of the panelists have spoken. We also
lead the world in research output.
To fully understand the zeal to get a competitive edge in
the global market, let us look at Asia. While some of these Far
East nations may not be spending as much money as the U.S. is
today, they are being very strategic by choosing to concentrate
their investments in particular areas in order to make
significant strides sooner in a specific sector. For example,
Korea and Taiwan are investing heavily in nanoelectronics,
while Singapore and China are focusing nanobiotechnology and
nanomaterials respectively.
Mr. Chairman, you may be wondering why is a continued
federal commitment to nanotech so important? Let me answer it
this way. Nanotechnology research holds tremendous potential
for stimulating innovation, and its revolutionary applications
will enable the U.S. to maintain our global leadership in
industries that span many sectors. That is as long as our
public policies don't ease off the pedal of momentum or slam on
the brakes of critical funding or R&D tax initiatives
altogether. And don't worry. The private sector will not
abandon this effort either. We are in it for the long haul in a
partnership atmosphere.
For instance, in addition to Motorola's efforts, IBM,
Intel, DuPont, and NEC have kicked off major nanotechnology
efforts. These breakthroughs make life simpler, safer, and more
enjoyable. And remember, we are simply on the cusp of much,
much more to come, new advances, and more challenges.
However, there are bumps in the road ahead. You have
probably seen reports on the shortage of Americans skilled in
science and technology. The U.S. is slipping behind our
competitors, Asia in particular, in undergraduate and graduate
training. At Motorola, we have found that every day we go into
the marketplace searching for highly skilled workers, demand
far outpaces supply, and this challenge seems to get worse as
each month passes. It further illustrates another important
component to the global competition in the high tech industry.
We are no longer competing against Europe and Asia in
developing better products, but also in trying to lure and
secure basic workforce needs.
Simply put, we must have a well educated talent pool to
survive. Therefore, Motorola strongly supports the PCAST Report
recommendation that the NNI establish relationships with the
Department of Education and Labor to develop education and
training systems, to improve the Nation's technical proficiency
in the STEM fields of science, technology, engineering, and
math.
Life-changing dreams are becoming a reality in our nation's
nanotechnology labs. We must press forward in a coordinated,
collaborative fashion between Federal and State governments,
businesses in the private sector and our academic institutions.
We must go full speed ahead on the nanotechnology express lane,
to boost our economy and our citizens' quality of life.
Thank you for listening. I will be happy to take any
questions.
[The prepared statement of Mr. O'Connor follows:]
Prepared Statement of Jim O'Connor
Chairman Inglis, Ranking Member Hooley, our homestate Illinois
Congressmen Johnson and Lipinski, and Members of the Subcommittee, good
morning. I want to thank you for inviting me to share Motorola's
thoughts on where the United States stands competitively and
innovatively when it comes to the subject of nanoscience and
nanotechnologies.
As the Vice President for IP Incubation & Commercialization at
America's largest cell phone manufacturer, I am honored to represent
Motorola's 24,000 research scientists and engineers before this
distinguished panel that time and again stands up and fights for the
complex, fast-moving technology world and the ever-growing high-tech
industry.
Today, as we consider the recent report by the President's Council
of Advisors on Science and Technology (PCAST) on The National
Nanotechnology Initiative at Five Years, I will use it to give you a
snapshot of where we stand in relation to our global competitors. I
also want to provide you some insights on how Motorola is trailblazing
the nanotechnology frontier with breakthrough sciences and commercial
applications.
While the National Nanotechnology Initiative (NNI) is a relatively
young concept, those of us in the research and development community
know the basic science for its foundation has been around for years. As
the PCAST Report states: Scientists and engineers anticipate that
nanotechnology will lead to ``materials and systems with dramatic new
properties relevant to virtually every sector of the economy, such as
medicine, telecommunications, and computers, and to areas of national
interest such as Homeland Security.''
And because of a strong commitment from the Congress and those in
the Administration who understand these societal benefits, the U.S. has
surged to the forefront of nanotechnology research and development--
ahead of Europe, ahead of Asia, ahead of all other competing nations
around the globe.
Generally speaking, this rise to prominence has been through good
old American collaboration. Thanks to public-private partnerships
between Federal and State governments, business and academia, our
nanotechnology position has become strong. For instance, Motorola can
leverage research performed in a number of our nation's esteemed
universities, such as:
U.C. Berkeley on better Nano-Tubes and Nano-Wires;
Harvard on fabricating nonvolatile electronic memory
using Nano-Tubes; and,
Stanford on two projects: one to use synthesis
technology for biological and chemical sensors and field
emission devices; the other to build up a portfolio of Nano-
Dots, Nano-Tubes and Nano-Wires for more enhanced electronics.
And while Motorola is still a few weeks away from officially
announcing it, I am proud to inform this distinguished panel that this
summer Motorola is launching the Center for Interdisciplinary Research
on Nanotechnology with Arizona State University. This strong
partnership between university and industry will promote nanotechnology
education, research and commercialization. ASU will advance the ``state
of the art'' in nanotechnology for communications, while Motorola will
use basic and applied technologies to develop useful and innovative
products and services for American consumers--better mobile devices,
equipment and high frequency applications.
But, the private-sector partnering with academia could not do it
alone. We are grateful for federal support through grants as well as
research and development tax credits.
The PCAST Report states: the U.S. Government this year will spend
just over $1 billion on Nano R&D. To put this in perspective, $1
billion is roughly one-quarter of the current global investment by all
nations. And when you combine federal, State and private U.S. dollars,
our overall investment jumps to $3 billion, or one-third of the
estimated $9 billion in total worldwide spending by the public and
private sectors combined on Nano R&D.
To further illustrate the high-tech industry's importance to our
economy in terms of jobs, research, sales, and exports, America is at
the vanguard in the number of start-up companies based on
nanotechnology. We also lead the world in research output as measured
by patents and publications--as you can imagine, this number-one
position is very important to Motorola today and will continue to be
important for our competitive growth in the future.
For example, Motorola is near commercialization on the first of its
kind 5-inch color video flatscreen using Carbon Nanotube technology.
This Nano Emissive Display technology, which provides much brighter and
thinner flat panel displays, is now available for licensing. Motorola
expects this breakthrough technique could create larger flat panel
displays with superior quality, longer lifetimes and lower costs to
consumers than current products in the competitive video display
market.
While that's the good news, the PCAST Report highlights there are
some pressing challenges that threaten our leadership position in the
global economy. Specifically, the relative lead the U.S. currently
holds is in jeopardy because the rest of the world is catching up in a
variety of measurements. In government funding, for example, the rate
of increase in the European Union and Asia is higher than that of the
U.S. This should be a wake-up call for American researchers and policy-
makers alike.
For instance, the EU announced this month the adoption of a
Nanosciences/Nanotechnology Action Plan for Europe for 2005-2009. Their
plan proposes measures to be taken at the national and European level
to strengthen research and develop useful products and services so that
Europe can maintain its competitive edge in the global economy.
In the EU, much work is being leveraged through consortia efforts
which promote partnering between companies and universities. And, Japan
has had over 20 years of commitment to nanotechnology through funding
of broad and focused national programs. Furthermore, China now has over
twice as many engineers working in nanotechnology than the U.S. does
because it's been identified there, as a ``government initiative.''
To fully understand the zeal to get a competitive edge in the
global market, let's look at Asia in general. While some of these Far
East nations may not be spending as much money as the U.S. is today,
they are being very strategic by choosing to concentrate their
investments in particular areas in order to make significant strides
sooner in a specific sector. For example, Korea and Taiwan are
investing heavily in Nano-Electronics while Singapore and China are
focusing on Nano-Biotechnology and Nano-Materials respectively.
Mr. Chairman, you may be wondering:
Why is a continued federal commitment to nanotech so
important?
Why should the American taxpayer invest so much in
the global race over nano R&D?
And maybe most importantly, what are the actual
benefits of nanotechnology to American consumers?
Let me answer this way: nanotechnology research holds tremendous
potential for stimulating innovation. Its revolutionary applications
will enable the U.S. to maintain our global leadership in industries
that span all sectors. That's as long as our public policies don't ease
off the pedal of momentum or slam on the brakes on critical funding or
R&D tax initiatives altogether. And don't worry, the private sector
will not abandon this effort either--we're in it for the long haul.
For instance, a few large multinational companies such as IBM,
Intel, DuPont and NEC have kicked off major nanotechnology efforts. My
company, Motorola, continues to rebuild, retool, and consolidate our
nanotechnology programs. In addition, as I mentioned earlier, the
number of nano start-ups in the U.S. has increased significantly due to
heavy private sector venture capital investing.
However, I want to be candid. One of the biggest challenges before
research scientists and engineers--those not necessarily known for
their communication skills--is being able to relate to the American
people what's actually going on in nanotech labs.
This morning, I'd like to give it a shot by using a very popular
Motorola product--the mobile phone.
When Motorola launched the 1st cell phone, do you remember how
bulky and cumbersome it used to be?
Well, thanks to cutting-edge research utilizing nanotechnology
principles at Motorola labs, tomorrow your mobile phone can have better
optics, better acoustics, and better displays, more efficient
batteries, and overall enriched electronics in a very small form
factor.
Specifically, Nano-Composites can make today's cell phones
structurally stronger, but physically smaller and lighter. Nano-
Displays are larger, brighter and cost less due to embedded carbon
nanotubes, and Nano-Power can give this light-weight phone higher
capacity power sources for storage and conversion.
Let me be as clear as possible: if the Internet improved our
quality of life via the Information Superhighway, then nanotechnology
should be considered the Express Lane for future technological
breakthroughs to make our lives simpler, safer, smarter and more
enjoyable. And please remember, we are simply on the cusp of much, much
more to come--new advances and more challenges.
For instance, understanding the societal implications of
nanotechnology--including ethical, economic, and legal issues--will
still need to be confronted and addressed in the future, and the NNI
must work harder and more consistently to better educate our fellow
citizens about the wonders of nanotechnology.
And talking about education, there have been many recent reports on
the shortage of American workers skilled in science and technology. The
U.S. is slipping behind our competitors--Asia in particular--in
undergraduate and graduate training.
At Motorola, we have found that everyday we go into the marketplace
searching for highly skilled workers, demand far outpaces supply, and
this challenge seems to get worse as each month passes. It further
illustrates another important component to the global competition we're
witnessing in the high-tech industry. No longer is this just about a
company's business demand to develop better products against Europe and
Asia, but about American companies increasingly under pressure to
compete against our rivals when trying to secure our basic workforce
needs. Simply put, we must have a well-educated talent pool to survive.
Therefore, Motorola supports the PCAST Report's recommendation that
the NNI establish relationships with the Departments of Education and
Labor to develop education and training systems to improve the Nation's
technical proficiency in areas related to science, technology,
engineering and math--better known as the STEM fields.
In addition, immigration policies have to be set to allow, at least
in the near-term, U.S. trained graduates from foreign countries to stay
and work here and in the longer-term, a steady influx of new foreign
students to come to the U.S. for their education.
On top of much-needed talent to work inside our labs, Motorola also
believes there's a need for external funds to boost the physical
infrastructure to foster and maintain long-term research. I'd suggest
this be a combination of direct funding and R&D tax credits to the
nanotechnology labs.
As far as innovation and patenting are concerned, Motorola believes
corporate investment in nanotech is very product focused. The scope of
research must be longer-term. In fact, long-term funding could actually
enhance the speed and number of patents that are awarded and help
ensure that America retains its global leadership position.
And our competitive edge isn't just about what the Federal or State
government should be doing. We, as an industry, must look inside our
own operations and see how we can do better. For instance, Motorola
needs to take further steps to communicate with and establish links to
further facilitate technology transfer from the lab to the marketplace.
As I close, the commercialization of nanotechnology does not
necessarily depend upon the creation of new products--such as stain-
resistant, wrinkle-free pants, or even new, emerging markets--like
those more superior flat-panel displays using Carbon Nanotubes being
developed by Motorola researchers as we speak.
Gains can come from incorporating nanotechnology into existing
products, resulting in new and improved versions of these products.
Just imagine: faster computers, lighter materials for aircraft, less
invasive ways to treat cancer, and more efficient ways to store and
transport electricity.
Life-changing dreams are becoming reality in our nation's
nanotechnology labs. We must press forward in a coordinated,
collaborative fashion between Federal and State governments, businesses
in the private sector, and our academic institutions. Simply put, we
must go full speed ahead on the Nanotechnology Express Lane to boost
our economy and our citizens' quality of life.
Thank you for listening. I will be happy to take any questions.
Biography for Jim O'Connor
Jim O'Connor is Vice President of Technology Incubation and
Commercialization at Motorola. In this role, Jim's operational
responsibilities include working closely with a global team of 4,600
technologists, prioritizing technology programs, creating value from
intellectual property, guiding creative research from innovation
through early-stage commercialization, and influencing standards and
roadmaps. Previous to this role, Jim was Managing Director and co-
founder of Motorola Ventures, the corporate venture capital investment
arm of Motorola, Inc. This role included active review of investments
and management of the global minority equity opportunities strategic to
Motorola's core and emerging businesses. During this time, Jim oversaw
the creation of investment operations in Silicon Valley, Europe, Israel
and China. He led Motorola's investment into 4th Pass, Mesh Networks,
Foundstone, Xtreme Spectrum and Bitfone.
He co-founded Motorola Ventures in September 1999 following a year
of service in the U.S. Government as a White House Fellow appointed by
President William Jefferson Clinton. He was chosen by and served his
assignment through Treasury Secretaries Robert Rubin and Larry Summers.
During his time at the Treasury Department, he was responsible for
coordinating strategies on domestic financial policy, electronic
commerce and community development policy. Prior to his public service,
Jim worked as a Management Consultant with the global management
consultancy A.T. Kearney out of Chicago where he focused on strategic
and operational issues with Fortune 100 companies. Jim received his BA
and JD from Georgetown University where he lettered in crew and
football and was named an East Coast Athletic Conference (ECAC) All-
Star and GTE Academic All-American. He received his MBA from the J.L.
Kellogg Graduate School of Management where he received the Dean's
Award for Outstanding Achievement.
Jim was named a Henry Crown Leadership Fellow by the Aspen
Institute in 2004, a United States-Japan Leadership fellow in 2000 and
a Leadership Greater Chicago Fellow in 2000. Jim remains active in the
local Chicago community as Co-Chair of the Chicagoland Entrepreneurial
Center, which is a national model for public-private partnerships that
are established to assist entrepreneurs. He is a Board Member of the
Chicagoland Chamber of Commerce. Jim is also the founder of Kellogg
Corps, a non-profit entrepreneurial program at the Northwestern J.L.
Kellogg Graduate School of Management whose mission is to bring
management expertise to non-profit organizations in developing
countries. In addition, Jim is an Advisory Board Member of the J.L.
Kellogg Graduate School of Management. He serves as an Advisory Board
Member of the NanoBusiness Alliance, the preeminent nanotechnology
public policy organization in the United States. He founded the Field
Associates, the Field Museum's young professional Board, as well as the
Lyric Opera Auxiliary Board, the Lyric Opera's young professional
Board. Jim also serves on the Board for the Children's Home & Aid
Society, the Chicago Cities in Schools Program (CCIS) as well as the
Big Shoulders Board for the Archdiocese of Chicago's inner-city school
fund. He was awarded the Motorola CEO Award for Volunteerism in 2002.
He was awarded the Motorola CEO Award for Outstanding Achievement in
2004. He is a member of the American Bar Association, the Economic Club
of Chicago and Executive Club of Chicago.
Jim lives in Wilmette, Illinois with his wife, Julie, and their
twin sons.
Discussion
Chairman Inglis. Thank you, Mr. O'Connor. I will recognize
myself for a first round of questions here.
Over the last several weeks, I have noticed several
articles about environmental issues associated with
nanotechnology. Maybe they were there before, and maybe it is
just because of the last hearing that I started noticing them.
But Mr. Nordan, you mentioned the regulatory uncertainty about
environmental regulation in the area of nanotechnology. What do
you think is driving those stories? I mean, are there real
concerns out there about the environmental impacts of these, or
is that mostly a health and safety issue, as in workers exposed
to materials. Comment on that, if you would.
Mr. Nordan. Well, it is a complex topic. It doesn't easily
reduce to a sentence or two, I am afraid. My firm just
published a report on this particular topic, that we will be
glad to make available to the Committee.
The first cut that you have to make is between real risks
and perceptual risks, which are equally important. So, on one
hand, there are real risks of manufactured nanoparticles,
nanotubes, metal oxide nanoparticles, fullerenes, dendrimers.
All of the building blocks of nanotechnology may have adverse
effects, adverse effects in high volumes to manufacturers in an
assembly line, who might have the opportunity to encounter
large quantities of them in an aerosol in the air, for example,
adverse effects to consumers at use, or adverse effects on the
environment that may take a long time to rear their heads.
There is a strong belief, and you can demonstrate that the
multiwall nanotube composites that are already used in cars,
for example, today, are in a situation such that the nanotubes
can't get out of their composite matrix, but does that sustain
in a landfill for 20, 30, 50 years? The answer is we don't know
right now.
So, on one hand, there are real risks that companies
working in this field are treating assiduously--DuPont is a
good example--where David Warheit, among others, has been a
leader in conducting EHS research on the real risks of
nanoparticles. On the other hand, there are perceptual threats,
which are often written off by participants in the field of
nanotechnology as not terribly important, but if you look at
the genetically modified food experience in Western Europe, you
can see that the belief that there might be a threat, even when
none actually exists, can choke commercialization just as real
risks do. In fact, in many cases, those threats can appear
earlier, and have a broader magnitude of impact, than real
risks, as we have encountered with materials like asbestos,
have.
To this end, there are a couple of actions that I feel are
relevant at a government level. One of them is to conduct more
and broader research into the real risks of nanoparticles. It
is probably a fallacy to assume that the private sector will
pick up all of the slack here. When it comes to specific
applications, like carbon nanotubes in displays, or in
composite matrices, it is absolutely reasonable to expect that
the DuPonts and GEs and Dows of the world have a vested
interest in their commitment to shareholders to minimize risk,
such that that application level research will be done. When it
comes to fundamental research on the particles themselves,
irrespective of any specific application, it is probably off
the mark to believe that that research will be conducted by the
private sector. Funding here is insufficient today. If you look
at the budget request for the NNI for Fiscal Year 2006, only
3.7 percent of funding is earmarked for EHS concerns. We
believe that number needs to be two to four times higher than
it is today.
Secondly, there is an issue about reducing regulatory
uncertainty, and you have to think about this from a risk
reduction standpoint. Let us say that you or I are a business
manager at, I don't know, what would a good example be, DuPont?
You are looking at introducing a new insulating material that
involves nanoparticles, right? And you sit down with your
government relations head, and start talking about what the
risks are here, and you ask well, what are the applicable
regimes under the EPA? Is this a new substance that has to be
registered under the Toxic Substances Control Act? Is it going
to be considered an existent substance that is not going to
have a lengthy approval process? And the regulator looks at you
and says I don't know. They haven't really decided yet. Now,
the lack of action here is not ill-intentioned by any means.
The folks at these agencies are looking at nanotechnology, and
they don't want to introduce firm regulations before all the
facts are in from research.
That said, we believe that action is required at this
point, because corporations are now looking at these
opportunities, and are putting them off for a year or two or
three or five, until at least an indication of how a regulatory
framework will be developed is in. Action is required here in
order not to stall commercialization.
Chairman Inglis. Mr. Kvamme, any thoughts on that subject
from you, as well as this other thing, the environmental issue,
I have seen rising up. The other thing I have seen in some
media accounts since our last hearing--I don't think it is
associated with last hearing, but it sort of, I have noticed it
since, is a little bit of push back about now, we get a lot of
hype on this subject, and that is not going to change the
world.
Mr. Kvamme. Well, as has already been mentioned, we
actually spent quite a bit of time on the environmental aspects
of this, and I had the pleasure of being in some of the NSET
meetings on this as well, and I am very pleased with the role,
for example, EPA among others, NIOSH, et cetera, are taking in
those roundtables that are essentially monthly meetings.
The concern that we came up with was really workplace
related, as I mentioned in my testimony. That is because of the
raw particles are really available there, and frankly, it is
not a lot different in my view, than what we had in the early
days of the semiconductor business, when we were working with
the same, you know, arsene gases, and et cetera, that are not
good for folks. And so, we had to do controls in our workplace.
Once that material was installed in the silicon, once those
nanotubes are installed in a tennis ball or something like
that, we are far less concerned, because of the technology
involved there.
So, I would totally agree that continued study of this is
necessary, because materials, the way I like to think about it
is, think about a Tinkertoy set, where you are putting
molecules together, and think about the fact that it is a
different material if the peg goes into one different slot in
that round circle. Tinkertoys probably age me, or show my age,
anyway. Those of you that remember Tinkertoys, okay. It is a
different material, and you could say that that means that
carbon can be thousands of materials, really, and we have to be
sensitive of that, particularly in that construction phase. So,
on the environmental thing, like I say, I think it is mostly
workforce-related, at least as far as we have a concern. We
will continue to look at that.
Chairman Inglis. All right. Speaking of being sensitive, I
need to be sensitive to the clock up here, and recognize Ms.
Hooley, but perhaps, others might want to take a crack at that,
as later questions, as you see the opportunity, about whether
this, whether nanotechnology can change the world, as I think
everybody up here is assuming it can, and you are assuming it
can, and how we would answer people who say the other, that it
is much ado about nothing. I am not sure they say that, but
they have been sort of pooh poohing some of the advances that
could happen. So, perhaps, as we go along, you might want to
address that.
Ms. Hooley.
Ms. Hooley. Thank you. Thank all of you for testifying.
Do any of you have any experience with the Advanced
Technology Program, and do you believe it is valuable and
deserving of our continued support? Anyone to comment on that?
Advanced Technology Program? Anyone?
Okay. I am going to go the next--oh, good. Mr. Murdock.
Mr. Murdock. I will say that while I don't personally have
experience with the Advanced Technology Program, there are many
nanotech companies who ultimately have utilized the Advanced
Technology Program, from Luna Innovations in Texas, and Spectra
Biosciences, also in Texas, to name a few, and I think all
would say that it has been incredibly helpful for them in
maturing the technology, and in specific cases, in forming
partnerships with large companies, who will ultimately be the
channel, if you will, to market, to commercialize these
innovations.
Ms. Hooley. Okay. Mr. Kvamme, and excuse me for butchering
your name many times today, your report discusses the federal
role in commercialization of nanotechnology, and specifically
mentions the Small Business Innovation Research and Small
Business Technology Transfer Programs as sources of funding for
critical early stages of technology development. Why is the
report silent on the Advanced Technology Program? Any reason
for that?
Mr. Kvamme. Our emphasis on the commercialization aspect,
as you saw in the report, was utilizing the state economic
development agencies that exist in every single state. We had
the pleasure of meeting with a number of state representatives,
and feel that that is an area where there is a considerable
amount of interest in economic development. Your state of
Oregon, for example----
Ms. Hooley. Right.
Mr. Kvamme.--is very, very active in this area, and we felt
that that close to home area for tech transfer was a more
valuable resource to getting to commercial application of
products than anything else we were able to see. In fact, it is
larger than the SBIR, STTR programs. In fact, on its impact in
the nano area that, at least as far as we could see from our
study.
Ms. Hooley. A question for all of you, and I know a couple
of you mentioned it, talking about how do we make sure that we
have the scientists in this country to work in this kind of
technology? What is your question of what we do to interest our
young people from majoring or taking advantage of science and
math courses that are offered to them in high school, college,
and so forth?
Mr. Kvamme. If I could begin on that, I----
Ms. Hooley. You may.
Mr. Kvamme.--would be very happy, because you have just hit
my hot button. It is the area that concerns me most at all.
Ms. Hooley. It should concern all of us, yeah.
Mr. Kvamme. And we issued a report on that subject, a
workforce report, some several months ago, and made a number of
recommendations. I think some of the most important things is
to stop looking at engineering, for example, as a trade school.
People who graduate with an engineering degree have learned how
to do problem solving, analysis. They shouldn't be considered
only aimed at engineering careers any more than French majors
should be aimed at becoming Frenchmen. There is no connect
there at all. An engineering degree----
Ms. Hooley. I have never heard that before.
Mr. Kvamme. But an engineering degree is a valuable degree,
and we must make sure that people who want to be in problem
solving areas, whether they want to go into public policy, or
any other field, can gain a lot of insight into that by
utilizing a technical degree. So, we have to change that
perception that there aren't jobs for these people. I will
remind you of the G.I. Bill. Nobody questions today whether the
G.I. Bill was a good idea. At the time, however, remember how
controversial it was. I wasn't exactly around then, but I was
alive.
Ms. Hooley. Right.
Mr. Kvamme. But, you know, I will quote the President of
the University of Chicago at that time. ``What are we going to
get? Educated hobos?'' to use a very negative term of the day.
Because he didn't believe that an advancement in technology
would benefit all of society. We have to remove that notion
that we don't need more engineers, we don't need more
scientists, and it is prevalent. Believe me, it is prevalent.
It has to be removed.
Secondarily, I think it is unfortunate, but the facts are,
a science education is tough.
Ms. Hooley. It is.
Mr. Kvamme. And it is harder than a lot of other things.
When kids go away to school, we don't have a problem with
matriculating freshmen at the Bachelor's level. We have a
problem that they drop out and go into other fields, because it
is hard. I think we have to incentivize them. I was, frankly,
very disappointed when Approps, in the last few days, dismissed
a program that we had recommended, that I was with Secretary
Spellings yesterday morning on this subject, had asked for an
initial program to help fund scientific study by Bachelor's
degree students.
I think it is important that we understand that it is
tough, and if you want to call it bribery, call it bribery, but
keep youngsters in there, because they are interested in it,
but it is hard. What incentives can we offer for them? We have
a number of recommendations in our report. I would be happy to
supply copies of that report also, but it is an area of great
concern to us. I think it is our largest area of concern,
because we are entrepreneurial in this country. We just need
more bodies to handle the entrepreneurial nature across our
economy.
Ms. Hooley. Anyone else want to talk about that?
Mr. Nordan. To add to that point from the other end of the
educational spectrum, I know this is probably not something
that is welcome by the Committee to hear, but this essentially
comes down to money, all right.
If you are a Ph.D. student, and you have just completed a
doctoral degree, and you are now looking at doing a postdoc,
and doing an assistant professorship at a university, and
moving upward, the amount of money that you will make doing
that is an order of magnitude less than you will achieve by
taking that same degree, and working for a Wall Street firm, or
a management consultancy, or something else, applying your
scientific knowledge not to scientific development, but in a
professional services context.
If the mechanisms through which we fund postdoctoral
degrees and assistant professorships within state universities
gave a better cost/benefit ratio on the value of time for these
individuals, you would see more of them working to apply the
degrees in scientific context, rather than in other ones.
Ms. Hooley. Okay.
Mr. Murdock. There is also another lever. I am sure this
committee often hears of, you know, the Sputnik generation, and
the race. And we need a clear, compelling, cohesive vision for
how science and technology can change the world around us in
meaningful ways. And that will motivate people, the individuals
going through the educational system, to do that.
That is one of the reasons that we believe, you know,
translational, goal-oriented research should also be in the
mix. If you make the National Cancer Institute's Center for
Cancer Nanotechnology Excellence, they are looking at trying to
take nanotechnology and bring it to bear as rapidly as
possible, not to eliminate cancer, because that is not quite
feasible, but to minimize the pain and suffering associated
with cancer, and they have set a specific target of 15 years
from now. It is that kind of program and activity that people
can relate to that will motivate them to be part of the
solution. And part of this is, as Matthew said, motivation.
There are financial levers to motivation, and there are values-
oriented levers to motivation. We need to pull on both.
Mr. O'Connor. One last comment on that. At Motorola, we
take that very seriously. We have 24,000 scientists, and we
feel we have to make a committed amount of dedicated time to
this with children. I will give you a couple statistics. In
China, for example, 45 percent of the degrees are engineering,
whereas in the U.S., it is five percent.
Ms. Hooley. Forty-five percent?
Mr. O'Connor. That is correct. And that is not uncommon to
see that in some of our international partners. Another
statistic that is of interest is there is a group called the
International Science Engineering Fair, in which there are
600,000 U.S. students that participate. There are six million
students in China that participate.
So, I think there has to be a concerted effort across the
public and private sector to address this issue, and different
nonprofit organizations and large companies need to make a
dedicated commitment, if we really want to get to that supply
of our top talent, to do what we need to do, to get to the next
generation of technology.
Ms. Hooley. Thank you.
Chairman Inglis. Thank you, Ms. Hooley. Mr. McCaul,
recognized for five minutes for questions.
Mr. McCaul. Thank you, Mr. Chairman. I thank you for
putting this hearing together. I thank the witnesses. I wanted
to follow up on the university-industry partnership issue. I
represent the Research and Development Center, the UT system,
it is called the J.J. Pickle Center. He was a former Chair of
the Science Committee. Unfortunately, he recently passed away.
I was at his funeral.
But I wanted to follow up on that. I know, Mr. Murdock, you
had had some experience with the University of Texas. Mr.
O'Connor's comment was interesting. This partnership won't do
it alone, and I am interested in your comments on that. In
getting the tour of the Center, it was very impressive, in
terms of the research and development going on at the
university, and the exchange of information and partnering with
the high tech, which is very prevalent in the Austin area, in
my district. A lot of the funding actually was at the Pickle
Center, to make the semiconductor wafers, and the industry got
a lot of the benefit out of that, and I would like you to
comment on the pros and cons of how can we strengthen the
partnership, what are the problems associated with the
partnership? And lastly, I would say the majority of students
that I saw working at the Center were over here on student
visas, predominantly from Asian countries, and more disturbing
is what I was essentially told that most of them would not
stay, we would not have their talent after they graduated. They
would essentially return back to their countries, and you know,
we have this investment, in terms of training, that we give to
them, and yet, we lose that talent when they return back to
their country. So, if you could, if you wouldn't mind
addressing maybe those two issues.
Mr. Murdock. To respond, I am not overly familiar with the
specific university-industry partnership that you are referring
to, but having said that, we do rely extensively, in the United
States on foreign students right now for postdoctoral positions
and they do a lot of great research, help us build our
knowledgebase, develop the innovations, in fact, of our patent
applications. And we are training them.
The issue of students' visas on foreign immigration is very
important. In the near-term, we need to have an influx of human
capital from around the globe. The United States should be the
place where the best and brightest from around the world come
to do research and commercialize their activity. I think that
is a very positive thing.
The risk of doing that is that we don't cultivate enough of
our own talent, and so we need to be cognizant of that, and you
know, as we have talked about, increase the supply of trained
scientists and engineers from the lower grades, all the way up
while doing that. So, these need to be pulled simultaneously.
And then, we need to take steps to ensure, and to create
incentives, as Matthew said, to ensure that we retain the
talent here. When we lose the talent, it is a net loss. But it
is important to manage across all phases simultaneously.
Mr. O'Connor. Yes, I would like to comment on the UT
partnership, because I am familiar with it. It is a great
program. In fact, a couple of years ago, I got involved in that
program via a small company called Molecular Imprints, which is
a nanoimprint lithography company. A man by the name of Norm
Schumaker. And a good example of some of the context of
partnership and why it makes a difference in this
commercialization chasm of death that they talk about and how
we can get through it, is this small company came out of UT,
needed some venture funding, and through our venture arm, we
actually formed a partnership, through venture capital and a
commercial agreement, to help get them to the next stage. So,
you had a good example of innovation within a university, a
small startup in venture funding, and a large company working a
collaborative agreement to bring this company's technology to
bear. So, we think that is a great example of the kind of
partnerships that are achievable, and the types of things that
we are looking more often to do.
Mr. McCaul. Thank you. Any other comments on that? Mr.
Nordan.
Mr. Nordan. I would just underscore the fact that the issue
is retention. If the takeaway that you get from today's
discussion is we need to plow resources into inspiring students
with wonder for science and technology in K-12, that is
absolutely right. It will be absolutely ineffectual for years.
In the near-term, the lever that is open to us to pull is being
able to retain foreign students that are already studying on
our shores, but are no longer staying here. If you look at the
course of American Ph.D.s, right. In the first half of this
century, we educated a lot of American Ph.D. and postdoctoral
students who, in rare cases, would go and practice abroad. In
the second half of the 20th century, we then imported a large
number of students, but were highly effective at being able to
keep them here, which is a reason that our university staffs
and the R&D staff of companies like Motorola are so diverse,
and we gain from that diversity.
The problem is that as economic fortunes have improved in
India, China, South Korea, et cetera, the cost/benefit tradeoff
of remaining in the U.S., cut off from cultural links and
cultural support, versus returning home, is no longer as stark
as it once was, and we are losing these students. What can
those incentives be? Well, they are fairly broad-based. There
is a lever that we have to pull in visas. There is a lever that
we have to pull in improving the lot of what a postdoctoral
situation, or an early university professorship would be, in
terms of financial remuneration in the United States. There are
probably other levers that I am not aware of, but in the short-
term, the lever we have to pull is retention, and the long-term
lever we have to pull is education of our students
domestically.
Mr. McCaul. I agree with that, and my time has expired.
Thank you, Mr. Chairman.
Chairman Inglis. Thank you, Mr. McCaul. Ms. Johnson.
Ms. Johnson. Thank you very much. I am pleased to follow
Mr. McCaul, because I think that some of the things that we
have done on this committee might lend a little bit of insight.
About six or seven years ago, with Congresswoman Connie
Morella, we sponsored a bill to try to get the attention of
young people, and interest them in science and technology, and
it was focused, at the time, on women and minorities, only to
find that it was not just women and minorities we need to
attract, because the figure for Anglo males going into
engineering was just dropping like a lead balloon. And so, we
now know that 80 percent of the scientists, researchers in this
country are not American-born, and we do need to give great
attention to that.
The University of Texas Southwestern Medical School is in
my district, and I work closely with them on this kind of
research, as well as University of Texas at Dallas and the
system where we hope to become a leader, just as we led the way
in the Dallas area for the chip. And I think that this
technology, the nanotechnology, is going to be in that
category. I think for healthcare delivery, a number of things,
this is the research we need to focus on. It is like the steam
engine when it came about, or the Internet when it came about.
It is going to make that kind of impact on our economy, so it
is important that we do invest money in this research.
And we are falling behind other countries in research
dollars. We used to be leaders. Now we are behind. But it was
out of this type of research that brought us to where we are
now. This is the research that caused us to have the economy we
had in the '90s. It came from this area. So, I cannot be more
passionate about how much we need the leadership in this area,
and hope that all of us can influence young people to go, and
it does start in K-12, because we know that at the sixth grade,
they start dilly dallying to something else.
We have tried to determine what causes that. We rank number
18 in the world in the science and math, and we should not be,
in a leading country. But we cannot get it without the support
that we need. And so, could you take that back to the White
House?
Mr. Kvamme. I would be very happy to, and in fact, you
might be pleased to know that what you just said would almost
sound like you were a fly on the wall at a meeting I had with
Secretary Spellings yesterday morning, because we talked about
this exact idea, and the fact that you folks here in the
Congress have approved that billion dollar math and science
program, how do we push that? You know, we were reviewing, and
our committee is reviewing a very interesting study out of UCLA
on 1,546 colleges and universities in this country, and what is
motivating kids to take the major that they are. It is very,
very telling. It is also very interesting as to who studies
engineering.
Many, many of the students that go into engineering happen
to be from families that are first time college people. They
are coming from--I am an example of that. My folks are
immigrants. My dad was a carpenter. My mother was a domestic
worker. And--but I am finding that, even in the current
generation, that is still true. How do we make sure that those
families understand that an engineering degree is a good idea?
So, we are working on that. We are looking at where is the
market for this, and hopefully, we will be able to come up with
some concrete proposals. We already have them in our existing
workforce report, but it is a very, very high priority at the
PCAST.
Ms. Johnson. One of the ways we can do it is through
partnerships. I carried legislation on that area. Texas
Instruments is our star company for involving themselves in our
education system in Dallas. What we find is that when students
can relate this to everyday life, and understand how it relates
to the research, and what brings on the technology and the
advancement and what have you, the more they appreciate doing
it. Now, Texas Instruments funds a lot of this for the Dallas
Independent School District, and I have no objection to it. But
we, as a nation, cannot afford not to invest more in this area.
We are losing our edge, our competitive edge.
Mr. Kvamme. At the risk of taking the time, let me just
agree with you, but let me also help you think this through.
Think about it, a hundred years ago, a kid walking down Main
Street saw every potential job they could have in their life.
I defy you to walk down the streets of Silicon Valley--
area--and know what is going on behind those buildings. It is
not possible. We have hidden from our kids. I will tell you a
personal story. When I was running National Semiconductor, we
had 9,000 people in my operations. We decided, for reasons that
are obscure, to have our company picnic at the plant, instead
of going to a distant site. Usually, about 1,000, 1,500 people
showed up. 24,000 people came. The police were irate. Why did
they come? Kids wanted to know what their folks did for a
living. They wanted to see their workplace. They wanted to. It
taught me a real lesson about opening up. We have to understand
that we have to bring our children into the workplace. We have
to make sure the insurance companies don't bar that, because
they try to. They don't like kids running around this
instrumentation, but it is critical that we do that.
I knew what my dad did. He built buildings. He built
houses. Our kids don't know what their parents do. It has an
impact on family values. It has an impact on everything. Open
up. In East Palo Alto, I suggested that those young kids, they
wanted to go visit companies that I was involved in. I said no,
no. Get them to go to Johnny's mom's company. Get them to go to
Billy's dad's company. And go visit that, and open it up so
that they can see, they can relate to work in the environment.
Again, I feel so strongly about this, I am sorry.
Ms. Johnson. Well, my time is up. But I feel equally as
strongly, and I am very happy to meet you. I might become a
worrywart.
Mr. O'Connor. Yes, if I may, I share your passion on this
as well, and I think--to answer one of your questions earlier
about how to make this real. I think that is one of the
problems with nanotechnology is that it is somewhat of an
esoteric concept to people. So, when you talk about it, they
may not get it. And that is why we firmly believe we have to do
more in the communities to do different things, and we are
working with public schools in different areas. And one good
example of it that we like to show, is if you look at the cell
phone, from you know, 10, 15 years ago, and you actually feel
that it is really quite remarkable, and then you compare it to
what you have today. This is just the start of the kind of
technology evolution that nanotechnology is going to allow. The
miniaturization, the better displays, the printed electronics
and transistors inside, to allow shrinkage.
And people get it when they start to see these things, and
when you talk about displays and having carbon nanotubes and
nanoemissive displays that actually allow you to see a
basketball or a baseball more clearly going across the screen,
at a much lower cost than what is currently available, it comes
to life for people, and it is quite real. So, I think those
types of examples make a difference in getting this type of
technology understood by people.
Chairman Inglis. I should not have thrown away that big
phone recently. I should have kept it----
Mr. O'Connor. That is right.
Chairman Inglis.--and used it as a prop. Mr. Kvamme, that
was a very interesting point about openness. That is very
interesting. Mr. Sodrel.
Mr. Sodrel. Thank you, Mr. Chairman. A lot of good comments
and challenges, and I guess, I want to take the final step. Let
us assume that we get all of our students motivated and
inspired to pursue science. We, in fact, produce more
scientists and engineers. We invest more in research and
development. We develop public and private partnerships, and we
provide salaries that attract and keep good folks. So, now, we
are in the ideal world.
As you pointed out early on, I think most of you made the
point that other countries are working hard to catch up. In
some cases, catch up means stealing technology and research
from our country. China, for example, has shown little respect
for intellectual property or patent rights, and a real
enthusiasm for industrial espionage, or whatever term you want
to use. So, my question is, how do we maintain any real lead in
nanotech when any breakthrough in research can be transmitted
to our world competitors at the speed of the Internet?
Mr. Nordan. If I can take a first shot at that one. It is
just like the Red Queen in Alice in Wonderland. It is not an
issue of being in one place before someone else. It is always
being one step ahead, being able to run faster. There is an
evolutionary arms race to think about.
The fact is, if you look at what was mentioned earlier,
revitalizing the U.S. manufacturing base through
nanotechnology, there is certainly pilot scale manufacturing
and certainly manufacturing where specific skills are required,
generally low volume, that will be incentivized by
nanotechnology. But if you look at fields of nanomaterials
today, the manufacturing train has already left the station.
Where the U.S.' economic opportunity is here is in coming
up with the ideas that may be implemented in manufacturing
plants on other shores. To give you an example, in the category
of fullerenes, it is a kind of nanomaterial, think of a soccer
ball, where the intersections between the stitching are carbon
atoms, and the stitching is bonds, right? There is a company
that is a joint venture of Mitsubishi Corp. and Mitsubishi
Electric in Japan, called Frontier Carbon. They built a plant
capable of manufacturing 40 tons of fullerenes a year. Do you
know what world demand for fullerenes was last year? About one
and a half tons. It is unlikely that you are going to find U.S.
based companies investing that far ahead of demand in order to
attain manufacturing dominance, but what is not known is that
at that plant, the manufacturing process they use to make the
fullerenes is not homegrown. It is licensed from a company spun
out of MIT called Nano-C, that has an innovative process using
two dimensional flames to create fullerenes at very high
quality and high purity, right.
The way that the U.S. can maintain its edge in this regard
is not by trying to go toe-to-toe against competencies, be they
be in low labor tasks, or tax advantages for capital investment
in manufacturing facilities, et cetera, that we are unlikely to
catch up in, compared with other countries that have more
runway to go down, in terms of economic development based on
nanotechnology. It is to have an unremitting, relentless flow
of novel ideas that take time and keep us continually two,
three, five years ahead of what other countries can attain.
We cannot prevent research being done that goes into a
startup company being transmitted in some way, be it through a
patent process, et cetera, to a country that perhaps does not
have the respect for intellectual property rights that Western
European and U.S. nations hold. That is going to happen. The
achievement that we can drive toward is to always be ahead, and
always be first to market with those novel ideas. And through
that, I think we will attain economic rewards. After that,
there are a million tiny things that can be done that will have
an impact. Working through organizations like the World Trade
Organization, to encourage stronger IP enforcement in countries
like these. Being able to have win-win partnerships involving
joint development, which countries like--companies like
Motorola are good at doing, that give strategic incentives, as
well as economic ones or legal ones, to these countries to
expect--to respect intellectual property laws.
But ultimately, the number one lever that we have to pull
here is by always being first and always being ahead.
Mr. Kvamme. I actually disagree with Matt on that, so
maybe, I ought to make a comment.
Mr. Sodrel. Okay.
Mr. Kvamme. And have fun. The reason that you put a
semiconductor plant today in China has nothing to do with labor
rates. It has to do with return on capital employed. When you
look at a semiconductor plant, 93 percent of the cost is
related to capital. About six percent is labor. When they give
you a situation in a plant that is going to last 10 years, zero
tax for the first five years, and half tax for the next five
years, in our manufacturing report, we reported that for a $3
billion investment, it costs, just because of cost of capital,
$1.3 billion more for that plant in the United States as it is
in Europe--as it is in China. It has nothing to do with labor
rates, and the public doesn't understand that at all. It is a
capital issue.
So, as we talk about nanotechnology, unfortunately, the
manufacturing plants are going to be expensive. So, who is
going to give you the best opportunity for return on your
capital? If you get hit with 35 percent off the top here, and
four percent someplace else, it makes a dramatic difference.
You do not put those high value plants overseas for four
percent of your cost structure. You just don't do it. When I
sit in board meetings, the reason we go overseas is tax
benefit, okay? I realize that is not the purview of this
committee, but that is the reason.
Now, by the way, the Indian situation is different. India
is looking more at more labor-intensive things, and what I call
the slope-and-intercept problem, you know. It is the same thing
in so many industries. It takes $800 million to make a drug.
The drug manufacturing costs are zero, almost, per pill, but
who is going to pay the $800 million? Who is going to pay the
$3 billion back? Who is going to pay for the software back, the
development cost, that intercept? If you think about it in a
chart, you have this enormous startup cost, so I think that is
a big issue.
On the patent point, I think that is also a point that you
make, and we do have a tool there that has been effectively
used in the past, and sometimes, folks are reluctant to use it.
It is called closing them off at the borders. We can't forget
the fact that we are a huge market. Now, obviously,
international markets are growing, and there, I would agree
with Matt, but as far as serving the U.S. market with products
that are ripped off from us, we have a tool, if we enforce it.
We are not very good, sometimes, at enforcing it. I have good
experiences, and I have had ugly experiences on that front. But
that is a tool we have to protect our markets that I think we
ought to utilize.
Mr. Nordan. Just to keep the discussion going, do you think
it is realistic that tax rates like the ones you have described
in China could ever be approached in the U.S. at any scale?
Mr. Kvamme. These are the folks that make those decisions.
Mr. Sodrel. Okay.
That is music to my ears. I was sworn in in January, and I
often tell people I spent my career in real life, with balance
sheets and profit/loss statements, and so you are speaking my
language now. We certainly need to have you come back and
testify before one of the other committees, when we get into
tax simplification.
Thank you, Mr. Chairman. I am sure my time has expired.
Chairman Inglis. Mr. Murdock, did you want to add something
to that?
Mr. Murdock. Yes, if I could. I also would like to
reinforce the need to, obviously, enforce the intellectual
property laws, that it will be, in fact, critical to
maintaining U.S. leadership. Furthermore, I am not prepared to
cede, if you will, manufacturing of nanotechnology-enabled
products here in the United States. I believe that we need to
endeavor to be more than just IP companies. If you look at the
total value associated with any product, most of the value
tends to accrue to those that are closest to the customer; that
in fact, make it. And while IP may have higher margins, you
know, ultimately, there is a big value pool out there, and we
need to ensure that we are taking steps to capture the value.
Furthermore, IP is not the only source of intellectual
capital, if you will. There is know-how, and that is the reason
for the importance of manufacturing. Ultimately, when we move
from the knowledge or the proof-of-principle into making the
stuff, we develop process knowledge. That process knowledge
helps us to refine and improve both the quality of the product
and the throughput, if you will. And it increases the value of
the labor. It increases the marginal productivity of the labor.
That is what enables us to pay high wages and keep jobs here.
So, while we need to be realistic and understand that this
is a global economy, we also need to take steps to do what we
can to ensure that we do commercialize and manufacture the set
of technologies that we can here.
Chairman Inglis. Thank you. Mr. Honda.
Mr. Honda. Thank you, Mr. Chairman, and this discussion has
been interesting, and being someone who wants to keep jumping
in at each juncture, I sat on my tongue, and I just, you know,
listened. And we have gone all over the board, Mr. Chairman, on
technology and let me see if I can pose a couple of questions.
From education to investment, I think the gentlemen are
correct that we are not doing quite enough, in terms of
education and the research that was done at UCLA, I suspect
that the population was a pretty narrow population at UCLA. And
I suspect a lot of them had black hair, too, in the engineering
department. But I think that there is something to be learned
from that, in that there are a lot of things that we need to be
doing in our society, in terms of education, and taking what we
learned from that research, apply it to our country.
I don't think that this country has been disciplined
enough, and--to apply what we have learned in all spectrums of
our society, like Kansas or Appalachia, where families need
this kind of education, and need this kind of rigor and
expectation. It is not about Asia being better or Asia having
more. It is just that Asia had decided to something, and India
had decided to do something, and this country just needs to
decide what they are going to do with their education and
invest it in this country.
Whether it is Appalachia, Southern states, the valleys of
California, we just need to stop, and invest in our own
education, take the best practices, and expect it of our own
children. That is the problem. The reason why people are coming
over to this country from other places is because the graduate
programs and the companies that work together, they have a
freedom, and there is a lot less control, if you will, in what
they do and how they think.
And I suspect that a lot of the people who work in our
companies in Silicon Valley not only come from India and China.
If you look at a lot of startups, they come from Europe, they
come from the UK, everyplace. So, it is a magnet for the
intellectual curiosity people that want to participate in this
country.
In terms of the PCAST report on government roles in
research and development and commercialization, bridging the
gap, if you will, I think the report went all over the place,
but did not say specifically what the role is. They pushed it
off onto states and private companies, which is being done,
because the Feds refuse to do it. And in the report, it talked
about SBIR and STTR, and there is a role there. Certainly,
there is a role there, because they get a percentage of income
from other projects, and put it in there, and then they use
that money. But when you reduce the amount of money in each of
these programs, they get less money, and then we zeroed out
ATP, I believe.
And I guess, to the gentlemen, I would like to know, just
how strongly do you feel about the role of government in
helping companies bridge this valley of death, in terms of our
competitiveness--you said it once, but I would like to hear it
again, in strong terms. And then have this sent to the
President, the Administration, because the Committee here, the
full Committee, was asked not to move forward on programs like
ATP. We didn't, and so, you know, our job is to propose and
authorize and then it is the Administration's job to figure out
whether they are going to back it up or not, but in this
democratic society, we are the ones that are supposed to listen
to you, and translate that into programs, and I have a bill,
called the Nanomanufacturing Investment, H.R. 1491, which
addresses specifically bridging the valley of death, and I
would like to hear what your reactions are to that bill, and
how that can be improved, and whether it should be supported by
this Administration, as the previous bill that we signed, the
Nanotech bill, that Mr. Kvamme and PCAST had supported also. I
think that is the next piece that needs to be signed, so that
we can make sure that we move forward in areas that you are all
concerned about. That and education, I think, are intertwined,
and then, moving forward with educating our members of our
communities, and bringing them along, so that there is no
perceived fear, that there is knowledge. That is important, and
I think that that is part and parcel of education, and part and
parcel of the bill that we are looking at, so that more and
more people will be exposed to this thing we call nanoscale
activities, because it is a brand new enabling activity, that
will just change the complexion of this world. I wonder whether
you have any reactions to what I said. I have rambled a bit,
but I think you get the gist of my comments.
Mr. O'Connor. If I may. I appreciate your comments,
Congressman. I couldn't agree more. To be emphatic, from the
private sector perspective, we truly feel the government needs
to take a strong hand in developing this technology. It is part
of an overall partnership. Large companies like Motorola, small
startups, nonprofit organizations, venture capitalists, and the
government. It has to be an emphatic focus across the board.
And when you travel abroad, you see this. You go to places
like China and Korea, where there is a strong partnership
between the government and the private sector in developing
these technologies. We can't sit by the wayside. We have to
move this forward. So, from a private sector perspective, we
feel we are not doing enough. We have to do more, and it has to
be really on a consortium partnership level.
Mr. Honda. And is it the nature of nanoscale activities,
one of the reasons why we have to shift federal paradigms in
order to be able to justify going into this activity?
Mr. Murdock. I think the meta-theme, if you will, of the
role of government, is to create a conducive commercialization
climate, to help create an ecosystem where this can be done.
And there is no one silver bullet. It is going to take many
things moving in parallel to accomplish that. Actually, you
referred earlier to the regulatory climate, and export
controls, so obviously maintaining our investment in the
generation of knowledge through nanoscience R&D in the 21st
Century--doing more through the SBIR programs, and potentially,
making them longer and bigger, like NIH has done, if you look
at that as best practice to help get over the transaction costs
of going through the grant program. Leveraging fast track, you
know, there has been talk in the SBIR as to whether venture
capital funded companies should be able to receive grants. You
know, ultimately, we need to do as much as we can to encourage
capital formation associated with the--rather than discourage.
So, we believe that, you know, venture capital companies ought
to be included. As I said, Phase III, I think the government
can play an incredibly important role in acquiring and
integrating nanotech innovations into its agency needs and
missions rapidly, and to design with intent to do that on a go
forward basis, and then, ultimately, creating incentives for
the private sector to form long-term commercialization-oriented
capital. The stock market, we all know, drives companies to
short-term performance. We ought to think about how to create
new vehicles to enable the set of folks who are longer-term in
their thinking and have more patient capital to deploy that to
help grow the sector.
Mr. Nordan. To add to that, I absolutely agree with my
fellow panelists that there is an important and key role for
the Federal Government in bridging the chasm of death that we
have talked about.
The only point of caution I would add is that if you look
at the history of industrial policy, it is littered with
examples where state agencies encouraged the development of a
specific technology solution to a problem to their peril,
right.
The government of France, for example, put a great deal of
money into specifically minicomputers right at the time that
personal computers were beginning to usurp them, and that was a
bad choice. What I would encourage is not activity focused on
specific technology solutions, but on solving broad problems.
The National Cancer Initiative's nanotechnology effort is a
great example, where there are broad goals to come up with
noninvasive therapies, for example, or targeted agents, but no
specification to use specifically gold nanoshells or
dendrimers, or another technology platform. This is a place
where we can make some wiser decisions than perhaps some of our
international competitors have. If you look at Taiwan, which I
mentioned beforehand and works very closely with specific
corporations on specific solutions, one of the solutions they
are backing is magnetoresistive memory, right, which is one of
several forms of nanoenabled memory that could be much more
dense, much lower power, and nonvolatile. But it is probably a
bad choice. That technology solution could lose in the
marketplace to nanotube-based memory, or memory based on
organic porphyrin molecules. A wiser choice might be to create
incentives, and ATP may be one incentive structure, to solve
the problem without subsidizing or incentivizing a specific
solution.
Mr. Murdock. I was going to follow up briefly and say that
meta-theme, if you will, goal-oriented research centers,
translational research centers focused on very clear, well
established societal problems like cancer are one way that we
can simultaneously, again, captivate the imagination of our
youth, and get people drawn in, and make very specific progress
toward these goals, and it provides a forum, if you will, for
industry to effectively engage, rather than trying to sift
through everything, and figure out where the relevant research
that is taking place in cancer therapy.
Mr. Honda. Mr. Chair, if I may just ask you to look at the
bill, and wordsmith in ways that it would encapsulate what it
is that you just mentioned.
Mr. Kvamme. Well, I was just going to add, you know, I am
sure one of the difficult jobs you have where you sit, is
dividing the pie. You know, where do you spend the money? I
mean, it has got to be a very difficult job. We have that in
management every day. I would put education at the top of the
list. I would put programs, you know, again, we made some
recommendations along those lines, programs to encourage STEM
graduation at the top of the list.
The second thing I would do is I would return, if I could,
to the spirit of the '60s in federal procurement. The Federal
Government was a more risk-taking buyer in the days of Apollo.
I sold parts into the Apollo computer, and it was fun. MIT was
doing the design. I got to sit in the capsule in 1963. It was
exciting stuff. The Federal Government has become a very, very
cautious buyer. They should be--they are 20 percent of the
economy. Is 20 percent of the business that the other gentlemen
have talked about in the nano area being bought by the Federal
Government today? I seriously doubt it. They are a much, much
more conservative buyer, and at the end of the day, what you
need is customers, in any business. It is kind of fundamental.
As far as the government as an investor, it is not hard to
invest in good ideas. It is very hard to say no when the good
idea isn't panning out real well. I think the big problem with
a lot of government programs is they keep funding things that
ought to have been shot. In the venture business, we all have
closed-end funds, and you get, unfortunately, to say no when
things haven't worked out, because we are in the risk business.
It is a shame it is called venture capital. It ought to be
called risk capital. Because it is a risky business. And what I
have found, therefore, is that government investment is best
done in things like facilities. There is a finite number of
dollars involved in building a facility. In backing a corporate
enterprise, you need oversight that I think is beyond the scope
that is conceivable by government, because they--you just can't
say no appropriately, and those would be my comments, Mr.
Representative, and my representative, for a good while, by the
way.
Mr. Murdock. If I could pick up quickly on Floyd's comment
on facilities. The investment in facilities and infrastructure
is incredibly important, and I think the 21st Century Nanotech
R&D Act has done a phenomenal job that way, specifically--I am
from Chicago and the DOE, Argonne Center for Nanoscale
Materials there is going to be incredibly important to the--I
think that drives down, if you will, the capital intensity of
commercializing nanotechnology, which is an incredibly
important part of the solution, so that startups don't have to
acquire all that capital.
In order to effectively use it, though, it is incredibly
important that we have, if you will, the operating funds as
well, because the startups do not have, necessarily have the
process know-how, or the skills, to make effective use of to
get the return on that investment in facilities and
infrastructure, we need to match it with operating funds to
provide services and get the utilization from the startup
community.
Chairman Inglis. Thanks. Mr. Akin.
Mr. Akin. Thank you, Mr. Chairman. This could be a question
for any of the witnesses. What is the role, I think you just
made reference, of venture capital in bringing the products of
nanotechnology research to the market? Do you think there is
enough venture capital investment available to nanotechnology
companies, and why? And then, what factors most influence
venture capital investment choices in nanotechnology?
Mr. Kvamme. Okay. I guess I am a venture capitalist, so I
have to take a first shot at that. Actually, venture capital
availability right now, in total is pretty good. I think we may
have, you know, we got into a mode that was kind of, during the
bubble, it was kind of nutso, but if you take a look at the
professional venture capital business, it has grown through
the, you know, and if you eliminate the bubble, we are back on
the curve that you would have projected from the early '90s, so
the total amount of venture capital that is being deployed, and
looks like it is being somewhat effectively deployed in the $20
billion a year range right now.
Now, obviously, that covers an extraordinarily wide range
of kinds of opportunities, nanotech being only one of many. And
I would say that, you know, and this is corresponding with what
some of the others have already said. Some firms are more
interested in this area, and others are not. There is one
problem that we faced on the Committee that you should all be
aware of. Some things are hard to call nanotech, because they
seem to meet the requirements, but this requirement that the
processes be different or not conceivable from the larger scale
is touchy. So, I am, for example, involved with a company in
layer transfer of silicon, very, very fine layers of silicon.
We don't call that a nanotech investment. I think some might,
but you know, right now, the level is relatively low.
I think there is an adequate amount of venture capital.
Venture capital is measured by one metric and one metric alone
by the investors. It is called internal rate of return, which
means you not only have to make hits, you have to make hits
that hit quickly, and sometimes, nanotech is not viewed that
way, as biotech wasn't in the early '80s.
Mr. Nordan. To give a bit more global perspective on the
same question. Right now, venture capital is notable in
nanotechnology by its absence, not its presence. Last year, by
our math, about $8.6 billion globally went into nanotech R&D.
Of that, $4.6 billion was government, $3.8 corporate R&D, and
this tiny slice, about two percent, $200 million of venture
capital. That number has declined in the course of the last
three years, from $385 million in 2002 to $200 million in the
last year. And is also highly, highly concentrated in a very
small number of companies.
We count about 1,200 nanotech startups globally. Of those,
as of the middle of last year, only 109 had ever received a
dime of institutional venture capital. Of those, only 10 had
done two rounds, and that money was, then, even further
concentrated in very specific sectors, about 40 percent in
health care and life sciences, mostly drug delivery, about 40
percent in electronics and IT, mostly novel forms of computer
memory, about one-sixth in materials, and then a tiny slice of
five percent in tools.
That number, over all of those years, is equivalent to
maybe around 1.4 to 1.7 percent of total VC dollars deployed.
Now, the reasons for this are good reasons. As Floyd mentioned
beforehand, there was a dramatic efflux of venture capital
money during the bubble. As a result, venture capitalists are
much more cautious. There are some other, more human factors
reasons as well. Venture capital firms tend to be dominated by
former successful entrepreneurs who invest in companies that
they know well. Because of that, they tend to be staffed with
folks who know electronics and who know life sciences very
well, but often don't have experience in materials, and find it
more difficult to be able to do due diligence on a materials
investment. That means that it is less likely that a nanotech
startup with a materials play is going to find a willing
audience within a venture capital company.
Now, what can be done at the federal level in order to
influence this? The levers are not terribly strong. I think
that the meta-theme that Sean has mentioned beforehand about
having goal-directed research would create a form of
validation, right, for venture capitalists, that there is
something here. There is a story here that is bigger than this
one company. The issue of permitting SBIR grants to be
allocated to venture backed companies is another lever that can
be pulled.
Mr. O'Connor. Yeah, I think, picking up on one of Floyd's
comments, I think what it is important to understand is----
Mr. Akin. Could I interrupt just a second.
Mr. O'Connor. Yes. Sure.
Mr. Akin. I want to make sure I am understanding what you
are saying. In answer to the question, what factors most
influence venture capital choices, I think I heard your
response is particularly the specific area of application.
There are certain favored areas, such as you said medicine
particularly, and that is part of what is driving it.
Mr. Nordan. Well, I would turn this back to Floyd, but in
observation of these companies, the human resources, the
knowledge that they have tends to be in those domains, in life
sciences and electronics, typically not in materials. That
drives selection. But the overarching factor, as Floyd
mentioned, IRR is the metric that matters. IRR comes down to
risk, and nanotechnology investments are viewed as more risky,
because to date, there is not a strong track record of exit. In
an early period, right, you do not have the pot of gold at the
end of the rainbow to go on. You have the rainbow itself, and
you are going to assume there is something at the end. There
are companies that have gone public, and done IPOs based on
nanotechnology. They have not strongly identified themselves
with nanotech. Inacon, which went out last year, was pitched as
a life sciences company, for example.
Mr. Akin. Thank you. I am sorry. I didn't mean to interrupt
you.
Mr. O'Connor. Not a problem. Just to pick up on those
thoughts. I think what is important to understand in this field
is it is a longer cycle of commercialization than most. If you
compare nanotechnology to enterprise software, for example, it
is not even comparable. It is a generally six to seven year
cycle. In our case, on some of our commercialization of carbon
nanotubes, it has been 15 years since early '90s, when we
worked on this, and have roughly 150 patents. So, it is not
something that happens overnight, and because of that, to
answer your question, you get into the risk/reward scenario.
Many VCs will be reluctant to get into it. I think, similar to
what Mr. Nordan was saying, they may not know this area, and
then, lastly, the whole concept of how do you exit? I think big
companies will start looking at opportunities to potentially
buy, but I don't think you have seen the IPO opportunities peak
up as much, which is what is going to motivate a venture
capitalist to get liquidity.
Mr. Akin. Thank you very much. I guess I was looking at it
partly from the numbers of how much. You had almost been cut in
half in three years, how much venture capital would come in. I
was trying to figure out what is driving some of that.
Mr. Murdock. Well, one point to raise on that, that number
is rising this year. Obviously, the jury is still out, but in
one week of this year, I believe the second week of March, $66
million, equivalent to a third of the entire investment last
year, went into three companies, Nantero, Nano-Tex, and
Nanomix. The reason for this is that the bets that were placed
in nanotechnology, the initial bets on startups, were made in
2001 and 2002, and a large number of bets that were relatively
small bets at a time, right, were made. Many of those companies
are gone now, but those that are surviving are now doing series
C and D rounds, further on, which tend to be bigger rounds of
investment than the As and Bs that start companies, and as a
result, seeing companies like the ones that I have mentioned
reach a later part of their lifecycle, they are attracting more
funding. That is causing money that has been deployed to raise.
Our estimate, based on year to date, is probably we are
looking at around $350 million, similar to the levels of 2002
in the course of this year.
Mr. Akin. Thank you, Chairman.
Chairman Inglis. Mr. Sherman.
Mr. Sherman. Thank you, Mr. Chairman. Thanks for allowing
me to participate in these hearings, even though, as a Member
of the Full Committee, I am not a Member of this subcommittee.
It was interesting to hear the conversation about the
industrial policy nature of what we are doing. I certainly
agree with Mr. Kvamme that education is important. That
wouldn't even be thought of as industrial policy. I know the
comment is made well, China is using government money to
subsidize this area. But keep in mind, let us say you are a
Chinese entrepreneur. You get government money. You develop
technology and then you decide to move to Switzerland for tax
reasons, or you decide to move the jobs to India for cheaper
labor. You would be sent to a reeducation camp. Now, that is
one way to work industrial policy. I have yet to see how the
U.S.. . . I mean education, obviously, the benefit is to the
student, and the student is staying here. But I have yet to see
how, short of reeducation camps, we could work out something
with business entrepreneurs so that these benefits--these are
highly risky. It is not enough to say well, you invest a
billion dollars, and look, you got 10,000 jobs. Because you are
probably going to lose the billion dollars. You take that kind
of risk and it hits, we should have a million jobs. Well, maybe
not. Maybe it is a heads, we lose, tails, India wins or
Switzerland wins, depending upon whether it is tax policy or
cheap labor that drives things.
But I want to shift to something completely different, an
issue that I have bored my colleagues on this committee with
for a while. And that is the issue of enhancing human
intelligence or developing artificial intelligence. Now, the
National Nanotechnology Initiative has provided funds, and I am
pleased to see that roughly four percent of that money is going
towards looking at some of the concerns that people have about
nanotechnology, health and environment, the toxicity of some
nanoparticles. And that is all well and good, but the statute
that we passed--and this is really a question as to whether any
of us serving on an authorizing committee are just wasting our
time--we know the appropriators are there every year to make
sure that what they put in the statute is adhered to, and if
not, then, you don't get the money for the next year. But there
are those who think that those of us on authorizing committees
are wasting our time. And the statute makes it clear that
program activities are to include the potential, studying the
potential use of nanotechnology, or the societal impacts of the
potential use of nanotechnology in enhancing human
intelligence, and developing artificial intelligence which
exceeds human capacity. Later, in Section 5, those two matters
are to be reported on back to Congress, and I wonder if Mr.
Kvamme could tell us what the Administration is doing to carry
out that part of the mandate of the bill.
Mr. Kvamme. Well, we tried to look at that, and because
clearly, I think the general sense of our counsel, at least,
was that we are not interested in, what was that famous book,
Prey. You know, we are not interested in creating Prey animals.
As a matter of fact, we were somewhat concerned that that----
Mr. Sherman. Yes, but the language I was able to get in the
statute had nothing to do with Prey.
Mr. Kvamme. I understand that. Yeah.
Mr. Sherman. And----
Mr. Kvamme. The enhancing aspect is what I am getting at.
As you will see in our report, we actually have an example,
though, of things that hopefully will work better to enhance
medical improvements, the screw that we talk about, for use in
medical applications, that is more capable of becoming, or
being like bone material, we think is an important
contribution.
Mr. Sherman. If I can interrupt, because I have got one
more question.
Mr. Kvamme. And maybe I am on the wrong track.
Mr. Sherman. Okay. The law says look at the societal
impact----
Mr. Kvamme. Yeah.
Mr. Sherman.--of creating a half-human, half-enhanced
technologically, chip-enhanced human brain, and a new species
that may or may not consider itself human. Your response is we
are developing a new screw that might be used in brain surgery.
Mr. Kvamme. Yeah.
Mr. Sherman. You are supposed to be looking at the societal
problems, and you are looking at the technological capacity.
Mr. Kvamme. I guess it somewhat depends upon your
definition of the word enhanced, okay?
Mr. Sherman. Well, but the statute is you are supposed to
look at the societal problems----
Mr. Kvamme. Yeah.
Mr. Sherman.--caused by----
Mr. Kvamme. Yeah.
Mr. Sherman.--levels of intelligence beyond those of anyone
in this room, with the possible exception of the chairman. And
your response is we don't want to study the societal problems
of doing it. We want to study how to do it.
Mr. Kvamme. I don't intend that to be my response.
Mr. Sherman. Okay. Then what has been funded to look at the
potential societal and ethical implications of developing new,
intelligent species?
Mr. Kvamme. Well, there are a number of studies that you
are probably aware of that--and workshops in that particular
area--one of them hasn't taken place yet. This summer, NSF has
a workshop relative to that, a Center for Society, and in our
study, we spent a full day on these types of matters. We did
not see, and maybe we should have looked more deeply, we did
not see that at this point in time, the societal applications,
such as creating half-humans, to use your example, were going
on. We are trying----
Mr. Sherman. Well, it is obvious it is not going on now.
Mr. Kvamme. Yeah.
Mr. Sherman. These sections were not designed to become
operative only a year before it was technologically possible.
For a species to decide whether it wants to go out of business
should take more than a year, and you would think that a
statute that says look at a societal problem should not mean
well, don't do anything as long as the technology is more than
a year away. Again, I think you are illustrating the point that
those of us on our authorizing committees are not really in a
position, in writing statutes, to actually affect
Administration policy.
Mr. Kvamme. That is very possibly true.
Mr. Sherman. Then, you want our support, you want our
authorization, you will ignore those provisions of the statute
we put in----
Mr. Kvamme. No, no, no, no, no. I did not say that, sir.
Mr. Sherman. Well, you just said it is quite possibly true
that those of us on authorizing committees, even when
successful in getting our language into authorizing bills, will
find that our provisions will be ignored, cannot be enforced
through the appropriations process. That was the theory I
started off with.
Mr. Kvamme. You are, unfortunately, putting words in my
mouth that are not accurate, sir. The answer I am trying to
give you is the following. I am saying that we have looked at
that. We interpreted that statute in a way that apparently you
do not interpret it. We ought to get clarification on your
interpretation.
Mr. Sherman. Well, I wrote it, so maybe you should. Thank
you.
Mr. Kvamme. Thank you.
Chairman Inglis. Perhaps, if you want to add any comments
on that in writing, we are happy to receive them.
Mr. Sherman. Fine.
Chairman Inglis. We are going to go with another brief
round of questions, three minutes. We are going to reset the
clock for three minutes. We are actually going to stick to the
clock this time. We were rather generous in the last time, but
Ms. Hooley had some questions, and I had one quick question for
Mr. Kvamme.
Very interesting discussion you were having about siting of
sophisticated plants, and the incentives, relative to being in
China, let us say, as opposed to being in the United States. If
you were sitting up here, and trying to figure out, devise
strategies on how to keep a manufacturing base here in the
U.S., besides the education component, which we have discussed
this morning, what else would you advise us to do, to make it
so that that decision that you were talking about earlier would
come the other way, and you would site one of those very
sophisticated nanotechnology plants in the U.S., rather than in
China?
Mr. Kvamme. Tax policy. It is, plain and simply, tax
policy. And countries have to be competitive.
Chairman Inglis. Income tax policy, or property tax policy?
Mr. Kvamme. No, corporate tax policy. It has to be
competitive. Now, obviously, you can't compete with every
little knick and knack that somebody is going to incentivize
you with. Look at how our states compete with one other for
siting. That plant that I mentioned was a fight between Texas
and New York, frankly, as I understand the details. And I don't
understand all the details on that.
So, just take that example, and move it to the corporate,
to the country level, and I think I am hoping that in the new
look at this, this revision of the tax policy, we will look at
our global competitiveness at the corporate tax level. Because,
frankly, we are not very competitive right now.
Now, by the way, on the positive side, why did those folks
stay here, with $3 billion? Why did they stay, at a $1.3
billion cost? They were afraid of IP, that many of us
mentioned. They were afraid it would leak, and so, they decided
it was worth $1.3 billion to stay here, for that reason. Well,
that is not a bad reason, so, having a very strong IP
protection thing, obviously, is a contributor.
Do you have to get equal to the other guys? I don't think
so. I just think in most cases, $1.3 billion out of $3 billion
makes a huge difference.
Chairman Inglis. May I ask you a quick followup in 30
seconds?
Mr. O'Connor. Sure, if I may. From a Motorola perspective,
most of our nanotechnology research and development, almost all
of it, is here in the U.S., for a number of reasons. Close to
facilities. And I think, really, the early applications for
what we are seeing. I agree with Floyd on the concept of tax
and just the incentives on trying to make sure we are
incentivizing the proper type of development in this area, is
for us a big issue.
Chairman Inglis. Ms. Hooley.
Ms. Hooley. Thank you. I will also try to do a quick
question. Thank you all for this wonderful discussion that you
have given us today. Really appreciate your comments.
Dr. Cassady from Oregon State was here in May, and
suggested the need for a DARPA-like organization to support
nanotechnology development efforts that are closer to
commercialization of products and processes. Opinion on that.
Needed, not needed, okay?
Mr. O'Connor. I will start quickly with an answer.
Ms. Hooley. Okay.
Mr. O'Connor. Absolutely. It would be great. Some of our
best innovations are via DARPA programs in our different areas.
We have had great success with it. It is a good example of
collaboration between government and the private industry, and
a lot of good successes. And I think that would be a very
worthwhile initiative.
Mr. Kvamme. I think the first step is to, as we have been
referring, rapidly look to use nanotechnology within the
existing agencies, the mission-driven programs like DARPA, the
6.2, 6.3 funding, et cetera, NIH--down the line, energy, et
cetera. There may very well be a good role for looking across
those, creating that pot of funds that looks for synergies that
will not be realized in any one agency.
Ms. Hooley. Okay.
Mr. Kvamme. I would say that in the '70s and '80s, when I
had a lot of involvement with DARPA, by the way, they were good
at saying no.
Ms. Hooley. It is always nice to have someone who can do
that.
Mr. Kvamme. Yeah. They would cut off projects. They are an
example that is contrary to what I said before.
Ms. Hooley. Thank you.
Chairman Inglis. That is all. I want to thank the
witnesses. I appreciate you taking the time to testify. I thank
the Members for participating, and the hearing is adjourned.
[Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]
Appendix 1:
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Answers to Post-Hearing Questions
Responses by E. Floyd Kvamme, Co-Chair, President's Council of Advisors
on Science and Technology
Questions submitted by Representative Bart Gordon
Q1. The National Research Council of the National Academies of Science
reviewed the National Nanotechnology Initiative (the NNI) and issued a
report in 2002 (Small Wonders, Endless Frontiers) that included a
number of recommendations. On the basis of the PCAST's more recent
review of the NNI, could you comment on how the initiative has
responded to the following NRC findings and recommendations:
Q1a. The NRC stressed that the NNI should provide ``strong support for
the development of an interdisciplinary culture'' since nanoscale
science and technology involves research at the convergence of many
different disciplines. Did you find evidence that this is happening,
and do you judge the mix of federal funding among awards for
individuals, small groups, and large multi-disciplinary groups about
right?
A1a. During its review of the NNI, PCAST met with representatives from
the federal agencies that fund research under the NNI as well as with
investigators at research institutions around the country. Based on
these interactions, I and other PCAST members found that in fact the
initiative recognizes the need for and strongly supports an
interdisciplinary culture in order to promote advancement in
nanoscience and nanotechnology. In addition, I tended to rely on my
personal experience from the beginnings of the semiconductor industry
when interdisciplinary activity was crucial to gaining a full
understanding of all the different aspects of semiconductor research.
Nanotechnology discovery will have similar traits. Your question,
however, prompted me to look in greater depth into the means by which
the NNI supports interdisciplinary research. They include:
National Science Foundation (NSF) Nanoscale Science
and Engineering Centers (NSECs) are required to involve
multiple departments and multiple research institutions, as
well as industry partners. Each NSEC is focused on a research
problem that cannot be addressed practically by single
investigators or small groups. Each NSEC typically receives
$2.5 million/year for five years, with an option for an
additional five years. Currently active are 14 NSECs with
participation by over 30 universities across the country. NSF
will announce two new NSECs, one focused on societal issues and
one on nanomanufacturing, before the end of this fiscal year.
NSF Nanoscale Interdisciplinary Research Teams
(NIRTs) involve researchers from 3-5 different disciplines
within one or more research institutions. Each NIRT receives
approximately $1-$2 million over four years. During the period
from FY 2001 through FY 2005, over 250 NIRTs will be created.
Additional information about both NSECs and NIRTs can be found
on the NSF website at http://www.nsf.gov/erssprgm/nano/.
The Department of Defense (DOD) Multidisciplinary
University Research Initiatives (MURIs) are required to involve
researchers from more than one discipline and often include
multiple universities. Since FY 2001, the DOD has awarded
nearly 40 MURI grants that are focused on nanotechnology
research. Each MURI receives on average $1 million/year for
three years, with an optional two year extension.
The Institute for Soldier Nanotechnologies (ISN) is
an interdepartmental research center at MIT. Established in
2002 by a five-year, $50 million contract from the U.S. Army,
the ISN's research mission is to use nanotechnology to
dramatically improve the survival of soldiers. The ISN brings
together researchers from 10 different departments and supports
more than 100 students and post-doctoral fellows.
The DOD also supports interdisciplinary research at
its in-house laboratories. One example is the Naval Research
Laboratory Institute for Nanoscience, which supports multi-
disciplinary research critical to the Navy's mission. The
Institute is housed in a new state-of-the-art facility that
provides the highly controlled environmental conditions and
advanced equipment that is often required to perform nanoscale
research.
The Department of Energy (DOE) is constructing five
Nanoscale Science Research Centers (NSRCs), co-located with
major x-ray and neutron facilities at Oak Ridge National
Laboratory, Argonne National Laboratory, Lawrence Berkeley
National Laboratory, Sandia National Laboratories (jointly with
Los Alamos National Laboratory), and Brookhaven National
Laboratory. The NSRCs are under construction (the Center for
Nanophase Materials Science at Oak Ridge National Laboratory is
nearing completion and will begin accepting users in early FY
2006), and will be operated as user facilities for the broad
research community with multi-disciplinary staff support. The
facilities are designed specifically to bring together
laboratory staff from a variety of fields and disciplines in
order to better serve the user community and to foster
interdisciplinary in-house research.
In 2002, NASA established four University Research,
Engineering and Technology Institutes (URETI) using a model
that is similar to the NSF NSECs. Each NASA institute receives
approximately $3 million/year for five years, with a possible
five year extension. All four institutes are implemented as
consortia and all place a special emphasis on the union of
biology and nanoscale technology in order to address NASA's
particular requirements.
More recently, the National Cancer Institute (NCI) of
the National Institutes of Health (NIH) released its Cancer
Nanotechnology Plan. The Plan includes programs and activities
that are aimed specifically at bringing physical and computer
scientists together with biologists and cancer researchers to
develop nanotechnology for diagnosis, detection, and treatment
of cancer. In addition to funding (beginning this fiscal year)
interdisciplinary research teams at several Centers of
Nanotechnology Cancer Excellence, NCI is creating, along with
the National Institutes of Standard and Technology (NIST) and
the Food and Drug Administration (FDA), the Nanotechnology
Characterization Laboratory to develop critical capabilities
for accelerating the transition of nanomaterials into clinical
applications. More information about the Cancer Nanotechnology
Plan can be found at http://nano.cancer.gov.
The above are just a few examples that illustrate the strength and
breadth of the NNI's support for multi-disciplinary research. Moreover,
the fact that agencies such as NSF are only able to fund a small
percentage of the proposals for multi-disciplinary research that pass
peer review indicates that an interdisciplinary ``culture'' has taken
hold across the university research community. The role of the NNI in
establishing such an interdisciplinary culture was specifically noted
by the most recent outside review of NSF programs.
While a substantial portion of funding now goes to support large
centers, the majority ( 80 percent at NSF) of funding for nanoscale
research is for individual investigators and small research teams. The
NNI is cognizant of the need to maintain a balance among these funding
mechanisms and the members of PCAST believe that the current mix is
appropriate.
Q1b. The NRC criticized the initiative for having too little
information sharing among the agencies during program planning and
execution and for a lack of willingness by the participating agencies
to co-fund large research programs. Did your review find any evidence
of stronger collaboration among the federal agencies, and are there
examples of joint agency funding of large research projects?
A1b. PCAST found that the agencies are working in a coordinated fashion
to advance the goals of the initiative. The Council noted in particular
the following mechanisms and activities that are the result of joint
planning or execution by the agencies.
Strategic Plan. The National Science and Technology
Council's Nanoscale Science, Engineering, and Technology (NSET)
Subcommittee is the interagency body that coordinates and
manages the NNI. As called for by the 21'' Century
Nanotechnology Research and Development Act (the Act), in
December 2004 the NSET Subcommittee released an updated
strategic plan identifying the goals and priorities of the
initiative as a whole, and activities across the Federal
Government by which to achieve those. The plan also describes
the relationship between the participating agencies and the
areas of research (program component areas) and the areas of
application. Subgroups of the NSET Subcommittee have been
formed to further coordinate work within the PCAs identified in
the plan.
Annual Budget Supplement. Also in accordance with the
Act, the NSET Subcommittee prepared a supplement to the
President's FY 2006 Budget, in which is outlined the activities
taking place across the Federal Government. The report
emphasizes in particular numerous interagency planning,
coordination, and collaboration efforts that will support the
FY 2006 budget priorities.
Regular Interagency Meetings. The NSET Subcommittee
meets monthly and many of the subgroups that have been formed
to address specific areas that benefit from interagency
attention also meet regularly. Current subgroups include:
Nanotechnology Environmental and Health Implications
(NEHI) Working Group provides for exchange of
information among agencies that support nanotechnology
research and those with responsibilities for protecting
health and the environment, worker safety, etc. The
NEHI Working Group is working to identify and
prioritize research needs to support science-based
regulatory decision-making. Its members include
representatives from the Environmental Protection
Agency, Food and Drug Administration, National
Institute for Occupational Safety and Health, National
Institute of Environmental Health Sciences, Department
of Agriculture, Department of Energy, Department of
Defense, National Science Foundation, Occupational
Safety and Health Administration, Consumer Product
Safety Commission, and National Institute of Standards
and Technology.
Nanotechnology Innovation and Liaison with Industry
(NILI) Working Group promotes the development of
nanotechnology for practical benefit and the transfer
of NNI research results to commercial products and
services for public use. Under the NILI Working Group
are a number of liaison groups, also known as
Consultative Boards for Advancing Nanotechnology
(CBANs), made up of NSET Subcommittee members and
representatives from particular industry sectors,
including the semiconductor and chemical industries.
The CBANs provide channels for exchange of information
relating to the industries' nanotechnology needs and
nanotechnology research results.
Global Issues in Nanotechnology (GIN) Working Group
was formed relatively recently to track nanotechnology
activities globally, to identify opportunities for
international collaboration on nanotechnology R&D, and
to provide joint agency input to balance U.S.
Government commercial, diplomatic, and security
interests within nanotechnology activities on the
international level.
Nanotechnology Public Engagement Group (NPEG) is
developing strategies for informing the public about
nanotechnology and for getting input from the public
regarding benefits of particular interest and risks of
particular concern.
Numerous examples of multi-agency support for
nanotechnology R&D can be found in the FY 2006 NNI Supplement
to the President's Budget. Those include:
A solicitation jointly funded by EPA, NSF, and NIOSH
for research on environmental, health, and safety
implications.
A cooperative effort to develop appropriate test
methods among the National Cancer Institute (NCI), the
National Institute for Standards (NIST) and Technology,
and the Food and Drug Administration (FDA). These tests
will be used by researchers at the NCI Nanotechnology
Characterization Laboratory to test nanomaterials and
nanostructures that have potential application for the
detection, diagnosis, and treatment of cancer.
Even where programs are not funded jointly, where
appropriate, agencies have combined program reviews in order to
better share the results of individually funded projects in a
particular area.
Q2. The NRC recommended the creation of programs for the invention and
development of new instruments for nanoscience. Has this recommendation
been addressed by the initiative, and in general, what level of
priority did you find that the NNI assigns for this purpose?
A2. PCAST found that the NNI has recognized the need for increasingly
powerful instrumentation for the visualization, measurement, and
characterization of new nanomaterials and nanostructures. Specific
activities include:
Leading-edge nanotechnology measurement research,
including development of instrumentation, is a core mission of
NIST. With its Advanced Measurement Laboratory now operational,
the agency appears well-equipped to remain at the forefront in
this area.
NSF's program within Mathematical and Physical
Sciences Division aimed specifically at instrumentation
research and development.
The National Nanotechnology Infrastructure Network
(NNIN) is a 13-university network that supports both research
on state-of-the-art tools and methods for synthesis and
characterization and user facilities for the use of advanced
instrumentation by the broader research community. In the first
three quarters of FY 2005, over 7,500 users have benefited from
NNIN facilities and expertise.
DOE is funding the development of a next generation
Transmission Electron Aberration-corrected Microscope (TEAM) to
allow for even greater capabilities for visualization and
characterization at the nanoscale. The TEAM project supports
efforts at Argonne National Laboratory, Brookhaven National
Laboratory, Lawrence Berkeley National Laboratory, Oak Ridge
National Laboratory, and Frederick Seitz Materials Research
Laboratory at the University of Illinois at Urbana-Champaign.
Q3. The PCAST report notes that an important role of the Federal
Government in the development and commercialization of new technologies
is an ``early adopter'' customer. How is the National Nanotechnology
Initiative helping mission agencies to identify opportunities to
develop and use products that arise from federal nanotechnology
research under the NNI?
A3. As the PCAST report has just issued, there has not been time for
the initiative to take steps to address this recommendation, however,
PCAST will be interested in and will be monitoring how the initiative
does so.
Q4. An important potential obstacle to commercialization of
nanotechnology will be environmental, health, and safety concerns. Does
PCAST find the current level of funding in the National Nanotechnology
Initiative sufficient to address this set of issues adequately?
A4. As part of its review, PCAST convened a panel of experts in
environmental, health, and safety (EHS) of nanomaterials from
government, industry, and academia to assess this very question. The
panel's input, along with information from the agencies led PCAST
members to conclude that the initiative is giving appropriate priority
and funding to this important area. Activities aimed at addressing EHS
concerns, including research to understand the effects of
nanomaterials, have increased within agencies such as the National
Institute for Occupational Safety and Health (NIOSH), EPA (which
shifted its emphasis for new grants from environmental applications to
EHS implications), and the National Institute of Environmental Health
Sciences (NIEHS). NSF has listed environmental implications as a
specific focus area for its nanoscience research program since the
initiative's inception in FY 2001.
PCAST noted that in addition to the funding that is being spent on
R&D with a primary purpose of understanding EHS implications of
nanomaterials (nearly $40 million requested in the FY 2006 Budget),
there is also underway considerable research on applications and in
fields such as metrology that is related to and advances our
understanding of EHS implications. Furthermore, agencies such as EPA
and FDA are devoting substantial other resources other than research
funds to assess risks and take appropriate steps to protect the public
and the environment.
Agencies are also engaged in international activities related to
EHS concerns, including standards development for accurate and reliable
measurement and characterization of nanomaterials. These and other
efforts to understand the EHS effects of nanotechnologies are the
concern, and the responsibility, of all nations that are investing in
the development of new nanomaterials. As our report notes, the United
States invests approximately 25 percent of the total amount spent on
nanotechnology R&D by all governments. PCAST hopes that other countries
also are investing in EHS R&D and that all countries will cooperate to
share the results of these efforts and, to this end, PCAST members have
visited with their European counterparts to promote such open
cooperation.
Finally, our report also indicated that the primary area for
immediate concern is in the workplace, where nanomaterials are being
used or manufactured and where the greatest likelihood for exposure
exists. While the Federal Government will play a role in addressing
occupational safety, industry must also provide leadership in the
research and development of safe products and in maintaining a healthy
workplace and a clean environment. Clearly, the sharing of research
results among government and industry stakeholders will contribute to
our collective knowledge and will benefit everyone.
Appendix 2:
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Additional Material for the Record