3/02/2005

Investing in Nanotechnology

Nanotechnology is derived from the study of quantum mechanics. If you want to know more about quantum mechanics go to http://rugth30.phys.rug.nl/quantummechanics/. The word nano comes from the Greek word dwarf. Nanotechnology, however, is a new discipline that exploits the strange properties found in atoms in the world of quantum mechanics. Thanks to researchers, scientists are able to view atoms at an unimaginary small scale, called a nanometer. A nanometer is a billionth of a meter, or roughly the length of ten hydrogen atoms. At this new scale scientists are able to find new properties of molecules and this is the birth of nanotechnology. Scientist have already learned how to build nanoscale clusters of atoms into spheres, rods, helices, and even resembling flowers. A promising new addition is the carbon nanotube. The carbon nanotube is from a newly discovered form of carbon that is rolled into a cylinder, with the diameter of a nanometer. This carbon nanotube can be used as a sensor, a fuel cell, or to increase computer memory capacity. Scientists have also discovered a way to spin nanotubes into fibers to create the strongest polymers. Building on a nanoscale could change the way we manufacture as well as the way we live. From an inventory of raw materials (atoms) we could produce any type of product from scratch literally. This type of manufacturing, scientist believe, will be aided by nanobots small nanoscale robots producing everyday products. The American government has already spent $1.6 million in 2004 to fund the research and science associated with nanotechnology. So investors beware, we may see with nanotecnolgy a bubble much like the internet bubble in 2000. Also many firms added the name nano- to gain funding so fundamental research into these firms is necessary. If you want to learn more about nanotechnology and manufacturing go to http://www.zyvex.com/nano/.

3 comments:

scott said...

That is really interesting. I wonder what investors reactions will be to the technology. It obviously has a lot of potential, but it is as risky as investing in pharmaceutical companies. If they develop what they are working on it could be very profitable and if they don't investors, could lose everything. Technology has a way of changing the economic paradigm of the whole world. Microsoft and other computer technology was the greatest influence on the US economy in the 90s. We should look out for leading indicators in technology like this.

Dr. Tufte said...

-1 on Vincent's post for a poorly formatted link.

I'll concede the position that nanotechnology looks interesting. Unfortunately that doesn't answer the question about whether it is a viable technology, or what it will look like as the industry matures. Those are the issues that we need to go after in ManEc.

Right now, I think what is unclear about nanotechnology is how large the variable costs will be. The fixed costs in developing the technology are obviously huge.

If the variable costs end up being small, we'll end up with something like software - an industry dominated by firms with a monopoly over one application of the technology. Potentially those firms will make a lot of profit. But, it is really important to recognize that this isn't a guarantee of profits. Monopolists who don't make profits cease to exist, and their absence can be hard to spot. We are all monopolists in the production of novels, and most of us will always be (potential) monopolists who are absent from that industry because we wouldn't make any money in it. Nanotech firms may end up that way.

Alternatively, if variable costs are relatively high we may see nanotechnology being characterized by more than one producer, and industrial organization dynamics which permit profits in the short-run but not in the long-run. This is what has happened in robotics.

nanodots said...

From what I have heard, nanotechnology has a great potential of discovering new things. So, if you ask me, it's profitable to invest in this direction. But it will take some time to gain the money, because, as any other great discovery, it is at first rejected by the people.