Commercializing High-Temperature

Superconductivity

June 1988

NTIS order #PB88-246442

Foreword

Less than two years ago, superconductivity—total loss of resistance to electricity—could be achieved only at temperatures near absolute zero. Since the discovery of high-temperature superconductivity (HTS), research laboratories around

the world have pushed the temperature limits steadily upward, opening the way

to commercial applications with potentially revolutionary impacts. The scientific

race is becoming a commercial race, one featuring U.S. and Japanese companies,

and one that the United States could lose. Indeed, American firms may already

be falling behind in commercializing the technology of superconductivity.

Japanese companies have been more aggressive in examining possible applications of HTS, and what it might mean for competitive strategy. While payoffs on

R&D may lie a decade or more in the future, managers in Japan have been willing

to take the risks, Although a number of U.S. companies have also begun major efforts in HTS, most American managers, under pressure to show short-term profits,

have been more inclined to wait and see.

So far, the U.S. Government has supported the development of HTS in its traditional way—by putting money into R&D, mostly through the mission agencies. Federal agencies moved quickly to channel money to HTS when news of the discoveries broke. The breadth and depth of the response in government agencies and

Federal laboratories, and in the university system, shows the continuing vitality

of the scientific enterprise in the United States. Although Federal dollars will help

support a technology base that the private sector can build upon, the U.S. Government is not providing direct support for commercialization. Nor have we any policy or tradition for this kind of support—unlike countries such as Japan.

Postwar U.S. technology policy coupled R&D funding with indirect measures,

such as tax policy, to stimulate commercial innovation. So long as American companies remained well ahead of the rest of the world in technical skills and management ability, this approach proved successful. With the continuing decline in competitiveness across many sectors of the U.S. economy, it no longer seems good

enough,

The Senate Committees on Governmental Affairs, Energy and Natural Resources,

and Commerce, Science, and Transportation, together with the House Committee

on Science, Space, and Technology requested the assessment of which this report

is part. OTA’s Energy and Materials Program is also conducting a more comprehensive examination of the science and technology of high-temperature superconductivity, and the future research agenda, as the second part of this assessment.

Their report will appear in 1989.

OTA is grateful for the assistance provided by many people inside and outside

of government during the preparation of this report. Full responsibility for the contents rests with OTA.

. . . ///
High-Temperature Superconductivity Review Panel

Claude Barfield

American Enterprise Institute

Arden Bement

TRW, Inc.

Harvey Brooks

Harvard University

Kent E. Calder

Princeton University

Jeffrey Frey

University of Maryland

Jacques S. Gansler

The Analytical Science Corp.

Donald A. Hicks

University of Texas at Dallas

David A. Hounshell

Harvard Business School and

University of Delaware

Clifford K. Jones

Westinghouse Electric Corp.

Henry Kressel

E.M. Warburg, Pincus & Co., Inc.

Harry Kroger

Microelectronics &Computer

Technology Corp.

Ira Magaziner

Telesis

William D. Manly

Consultant

Edward Mead

E. I. du Pont de Nemours & Co.

Egils Milbergs

Institute for Illinois

Thomas A. Pugel

New York University

Maxine Savitz

The Garrett Corp.

David J. Teece

University of California, Berkeley

James Wong

Supercon, Inc.

Donald L. Wood

General Electric Co.

Many other people reviewed various drafts of this report. Special thanks are due to

H. Kent Bowen, Duane Crum, Simon Foner, Donald N. Frey, Henry H. Kolm, and

Alexis P. Malozemoff.

OTA appreciates and is grateful for the assistance and thoughtful critiques provided

by all the reviewers, none of whom, however, necessarily approve, disapprove, or

endorse this report. OTA assumes full responsibility for the report and the accuracy

of its contents.

iv
OTA Project Staff: Commercializing High-Temperature Superconductivity

Lionel S. Johns, Assistant Director

OTA Energy, Materials, and International Security Division

Audrey Buyrn

Industry, Technology, and Employment Program Manager

John A. Alic, Project Director

W. Wendell Fletcher, Deputy Project Director

Dorothy Robyn

Martha Caldwell Harris

Clare Delmar

Jane A. Alexander

Carollyne Hutter

Contributors

Gregory Eyring

Laurie Evans Gavrin

Joan Lisa Bromberg

The Laser History Project

Kenneth Flamm

Glenn R. Fong

Robert R. Miller

David C. Mowery

David Sheridan

Granville J. Smith, II

W. Henry Lambright, Maureen O’Neill Fellows, and Leslie A. Jones

Syracuse University

Administrative Staff

Edna M. Thompson, Administrative Assistant

Diane D. White, Administrative Secretary
Workshop on High-Temperature R&D in Japan and the United States, January 1988

Ronald H. Baney

Dow Corning

Fernand D. Bedard

U.S. Department of Defense

Justin L. Bloom

Technology International, Inc.

Roger W. Boom

University of Wisconsin

H. Kent Bowen

Massachusetts Institute of Technology

Richard C. Bradt

University of Washington

Donald W. Murphy

AT&T Bell Laboratories

Jeffrey Frey

University of Maryland

William Gallagher

IBM

Edward Mead

E.I. du Pont de Nemours & Co.

Charles T. Owens

National Science Foundation

Robert Pohanka

Office of Naval Research

Richard J. Samuels

Massachusetts Institute of Technology

Roland W. Schmitt

Rensselaer Polytechnic Institute

Joseph L. Smith, Jr.

Massachusetts Institute of Technology

Larry Smith

Microelectronics & Computer

Technology Corp.

Nancy J. Tighe

Microphage Systems Corp.

Theodore Van Duzer

Richard Harris

University of California, Berkeley

National Bureau of Standards Harold Weinstock

Young B. Kim

Air Force Office of

University of Southern California

Scientific Research

M. Brian Maple

University of California, San Diego
CONTENTS

Chapter 1: Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 2: Commercialization: Government and Industry . . . . . . . . . . . . . . . .

Chapter 3: Superconductivity in Japan and the United States . . . . . . . . . . . . .

Chapter 4: U.S. Technology Policy: Issues for High-Temperature

Conductivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 5: Strategies for Commercial Technology Development:

3

17

51

83

High-Temperature Superconductivity and Beyond . .................,,123

Appendix A: Glossary. . . . . . . . . . . . . . . . ..., . . . ..., . . . . . . ..., . . . . . ., , ..151

Appendix B: The Technology of Superconductivity . . . . . . . . . . ........,.,154

Index ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................,,...167

vii
Chapter 1

Summary
CONTENTS

Commercialization: Public and Private Dimensions . . . . . . . . . . . . . . . . . . . . .

High-Temperature Superconductivity: U.S. and Japanese Responses. . . . . . .

Principal Findings. . . . . . . . . . . . . . . . . .. .. . . . . . . . . . . .. ... ... ... .... .

Federal Funding for HTS R&D . . . . . . . . . ●

R&D and Commercialization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

HTS in the United States and Japan. . . . . . . . . . 0 . . . . . . . . . . . . . . . . . . . . . .

HTS and U.S. Technology Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

Federal Government Strategies . . . . . . . . . . . . . . . . . . . . . . . . .. . ... ......

Box

3

6

7

7

8

9

11

12

Box Page

A. The U.S. Position in Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chapter 1

Summary

During 1987, high-temperature superconductivity (HTS) became a symbol—of the new and

unexpected, of what was right and wrong in

U.S. science, technology, and industry, of U. S.-

Japan competition in high technology. In December of the preceding year, two scientists

at IBM’s Zurich research laboratory caught the

world’s attention with their discovery of superconductivity in the range of 35 to 40 ‘K (degrees

Kelvin, i.e., degrees above absolute zero)—

nearly double the record temperature for total

loss of resistance to electricity. Within 2

months, transition temperatures had doubled

once more—to over 90 “K—with near-simultaneous discoveries of a second family of ceramic

superconductors in the United States, China,

and Japan.

In March 1987, thousands of scientists

jammed a hotel ballroom in New York to hear

the latest findings—a meeting dubbed the

Woodstock of physics. The race to higher temperatures was on. With it came warnings that

the United States could lose out to foreign competitors in commercializing a technology with

potentially revolutionary impacts. Indeed, one

of the principal findings of this assessment is

that American companies may already have begun to fall behind. Japanese firms have been

much more aggressive in studying possible applications of HTS, and have more people at

work, many of them applications-oriented engineers and business planners charged with

thinking about ways to get HTS into the marketplace.

In the midst of the excitement, four congressional committees—the House Committee on

Science, Space, and Technology, and the Senate Committees on Governmental Affairs,

Energy and Natural Resources, and Commerce,

Science, and Transportation-asked OTA to examine a series of questions that ranged from

public and private sector responses to HTS

(here and abroad) to the advantages and disadvantages of a new Federal agency for supporting the development of commercial technologies.

This special report begins with a look at U.S.

strengths and weaknesses in technology development and commercialization (ch. 2), both in

general and for HTS. The analysis then goes

on (in ch. 3) to the strategies of U.S. and Japanese companies, as managers in each country

look ahead to the new opportunities. The fourth

chapter presents 20 policy options for congressional consideration; the context is U.S. technology policy as a whole, with HTS as a special case. Most of the policy options deal, in

one way or another, with the management of

the Federal R&D budget. Chapter 5, the last,

considers three broad alternatives for speeding commercialization.1

IApp. B, at the end of this report, summarizes the technology

of superconductivity, including prospective applications, with

estimates of time horizons for commercialization. (The glossary

in app. A includes many of the specialized terms that apply to

superconductivity.) OTA will follow this special report with a

more detailed examination of the science and technology of superconductivity, the research agenda, and potential applications,

to be published in 1989.

COMMERCIALIZATION: PUBLIC AND PRIVATE DIMENSIONS

U.S. competitiveness in both smokestack and

high-technology industries has been slipping

for years. Loss of technological advantage has

been one of the reasons (box A). On the face

of it, this seems paradoxical. The U.S. Government spends more on R&D than government

and industry together in Japan. Federal R&D

dollars help create a vast pool of technical

knowledge that the private sector (including foreign firms) can draw upon. Beyond this, U.S.

technology policies have relied heavily on indirect incentives for innovation and commercialization by industry.

This approach — leaving R&D priorities

largely to the mission agencies, trusting to in3
4

direct policies to stimulate commercialization— declining competitive ability across much of

worked well in the earlier postwar period, when the U.S. economy, it no longer works well

American corporations were unchallenged in- enough. In recent years, many U.S. companies

ternationally. On the evidence of steadily have had trouble turning existing technical
5

knowledge into successful products and processes, and getting new technology out of the

laboratory and into the marketplace (ch. 2).

Of course there is more to commercialization

than R&D and technology development. Government policies affect business decisions and

competitiveness, not only through technology

and science policy, but also through sectorspecific measures (e.g., Government funding

for the microelectronics consortium Sematech),

and regulatory and macroeconomic policies.

U.S. financial markets, for example, have been

steadily deregulated. Among the results: greater

pressures on industry for short-term investment

decisions.

OTA has examined the broad range of policy influences on U.S. competitiveness in many

other assessments. Here, the analysis focuses

on those linked more or less closely to technology itself. They fall into two groups:

● policies that affect innovation and commercialization directly, notably the Federal

R&D budget;

● those with indirect impacts.

Federal R&D helps create a technology base

that private firms draw on during commercialization. Sometimes companies start development projects because of new research results;

other times, they find they need critical pieces

of knowledge, perhaps from earlier R&D, to

complete a project, or to solve a manufacturing problem. Federally funded projects in lowtemperature superconductivity (LTS), for example, laid the foundation for applications of

superconducting magnets in medical imaging

equipment.

The second group of policies works indirectly-through incentives (or disincentives) for

private firms. Some of these policies reduce financial or technical risks, or increase rewards

for successful innovators. Tax treatment of capital gains, for instance, affects decisions by prospective entrepreneurs; R&D tax credits make

a difference for companies with profits that can

be offset. Other such policies work through

their influence on demand. Governments purchase military systems and computers, cars and

trucks, consulting and construction services.

Sometimes, they regulate prices or allocate production among suppliers (as the U.S. Government has done for years in agriculture).

With the knowledge base ever larger and

more specialized, the great majority of American firms, large and small, can no longer expect to be self-sufficient in technology. The pace

and complexity have simply outstripped their

ability to keep up. Industry depends more heavily than ever before on the huge Federal R&D

budget–$60 billion, about half of all U.S. R&D

spending. Nonetheless, the U.S. Government

has left most questions of R&D funding to the

mission agencies, with their focused interests

and immediate needs. While other countries

have crafted policies for direct support of commercial technologies, the United States has not.

policy makers here have argued that direct

measures lead to harmful economic distortions.

Instead, many say, deregulation—removing the

roadblocks to innovation—will tap reservoirs

of American ingenuity and entrepreneurial

vigor that would otherwise be stifled, But most

of the roadblocks have come down over the past

15 years, while U.S. competitiveness has continued to slip.

To be sure, Federal agencies are paying more

attention to the impacts of day-to-day decisions

on competitiveness than during the 1970s. Antitrust enforcement reflects global, rather than

simply domestic, competition. The national laboratories—particularly those overseen by the

Department of Energy (DOE)—have been seeking ways to work more effectively with industry. With recognition spreading that military

R&D spending may not offer the spinoffs and

synergies of earlier years, Congress has been

debating the merits of a change in direction for

technology policies. But it is fair to say that international competitiveness still plays a minor

role in U.S. policies compared with those of

countries that have learned to export as effectively as Japan, West Germany, or South Korea. The United States is still searching for

workable approaches to competing in a relatively open international economy, one in

which American companies no longer have big

advantages in technology or management skills.
6

HIGH-TEMPERATURE SUPERCONDUCTIVITY: U.S. AND JAPANESE RESPONSES

Why all the excitement over HTS? The media have held out the promise of more efficient

generation and transmission of electric power,

magnetically levitated trains, electromagnetic

launchers for space weaponry. Perhaps more

important, HTS-based electronics could eventually become building blocks for more sensitive medical diagnostic systems, and faster,

more powerful computers. The most important

impacts will probably be those that cannot yet

be anticipated–the point maybe facile, but it

is true.

Even at liquid nitrogen temperatures—far

below room temperature but far above the operating temperatures of older LTS superconductors—the prospects have attracted as much attention as any scientific development since the

laser or gene splicing. Although no one had

made a practical conductor or electronic device from the new materials, the Nobel Prize

committee gave its 1987 physics award for the

Zurich discoveries—the quickest in history.

Early 1988 saw the discovery of several more

families of HTS ceramics. Yet the ultimate

prize—superconductivity at room temperature—lies ahead, and no one knows whether

it can be achieved, even in theory.

Activity has been feverish on the policy front

as well as in the research laboratory. Within

a few months of the initial discoveries, Federal

agencies redirected $45 million in fiscal 1987

funds from other R&D to HTS (ch. 4, table 8).

The scientific breakthroughs prompted a dozen

bills during the first session of the 100th Congress, proposals ranging from study commissions to a national program on superconductivity. All reflected, in one way or another,

concern over commercialization.

The policy drama reached a peak in July 1987,

when President Reagan brought three ranking

cabinet officers to the Federal Conference on

Commercial Applications of Superconductivity; in an unprecedented appearance, he announced an n-point initiative for the support

of HTS (box B, ch. 2). In a similarly unprecedented move, the Administration closed

the meeting to all foreigners except representatives of the press. Although the President’s

message focused on executive branch actions,

he stated that the Administration would also

be proposing new legislation.

The following months brought a sense of anticlimax, with no sign of the promised legislative package. Questions of R&D funding then

came to the fore, as the end of the fiscal year

passed with no resolution of the budget impasse

between the President and Congress. Only at

the end of the calendar year—several months

into fiscal 1988—did Federal agencies know for

certain how much money they would have for

HTS R&D.

Taken together, Federal agencies will spend

nearly $160 million for superconductivity R&D

in fiscal 1988, over half ($95 million) on the new

materials (and the rest for LTS). The Department of Defense and the Energy Department

together account for three-quarters of the HTS

budget, and received most of the increase. DOE,

for instance, will have nearly twice as much

HTS money as the National Science Foundation (NSF). With NSF a primary patron of

university research, the government’s priorities seemed rather haphazard, given the great

strength of the Nation’s universities in basic

research. Most of the Federal HTS money will

go to government laboratories, contractors, and

universities that are well removed from the

commercial marketplace.

The President’s legislative package, which

reached Congress in February 1988, did not address R&D funding. Consistent with the Administration’s emphasis on indirect incentives for

commercialization, the package included provisions that would further liberalize U.S. antitrust policies, and extend the reach of U.S.

patent protection.

On the industry side, most American firms—

viewing payoffs from HTS R&D as uncertain

and distant—have declined to invest heavily (ch.

3). A few major corporations—e.g., Du Pont,
7

IBM, AT&T—are mounting substantial efforts.

A number of small firms and venture startups

have also been pursuing the new technology.

By and large, however, American companies

have taken a wait-and-see attitude. They plan

to take advantage of developments as they

emerge from the laboratory—someone else’s

laboratory—or buy into emerging markets when

the time is right. Unfortunately, reactive strategies such as these have seldom worked in industries like electronics over the past 10 to 15

years, while many American firms seem to have

forgotten how to adapt technologies originating elsewhere.

Corporate executives in Japan, in contrast,

see HTS as a major new opportunity—one that

could set the pattern of international competition for the 21st century. Japanese companies

have made substantial commitments of people

and funds, pursuing research and applicationsrelated work in parallel. Firms in more lines

of business are at work than in the United

States. Steel companies and glassmakers, as

well as chemical producers and electronics

manufacturers, are seeking new businesses,

ways to diversify. Japanese managers see in

HTS a road to continued expansion and exporting, and are willing to take the risks that follow from such a view.

For years, the claim was common that Japanese firms got a free ride from U.S. R&D. More

recently, Americans have realized that Japanese

corporations have no need to imitate or to be

followers; they have highly competent and creative technical staffs, fully capable of keeping

up or taking the lead in fields ranging from automobile design to gallium arsenide semiconductors, opto-electronics, and ceramics. Giving the Japanese the credit they deserve has

intensified U.S. anxieties over commercialization. Only in science—in basic research—do

Japan’s capabilities remain in question. For the

Japanese, HTS presents an opportunity to show

the world—and themselves—that they can be

leaders there too.

Companies like IBM and Du Pont—or Hitachi

and NEC—have R&D budgets exceeding a billion dollars. They have skilled engineers and

scientists to put to work on the technical problems of HTS, money to bet on new opportunities. But these firms are a small minority in both

countries, and the competition

on them alone.

will not depend

Photo credit: IBM

Conducting strips of HTS material

deposited on substrate.

PRINCIPAL FINDINGS

Federal Funding for HTS R&D

It would be hard to criticize the magnitude

of U.S. Government spending on HTS. Federal

agencies have about $95 million for HTS R&D

in fiscal 1988, more than twice the 1987 total.

Although little of this represents new budget

authority, the U.S. Government will spend more

this year on HTS than Japan’s Government has

budgeted for HTS and LTS together.

With the Administration seeking $135 million for HTS in fiscal 1989, current and proposed spending might seem more than enough

to support rapid commercialization. But totals

can be misleading. After all, the United States

spends far more on R&D than competing nations, yet U.S. industry has been unable to keep

a useful lead in technology. There are many

reasons, some of them having to do with the

allocation of R&D funds. Nearly 70 percent of
8

Federal R&D spending goes for national defense; some of this money helps build the technology base for commercial industries, some

does not. The story will be the same in HTS.

1. Of $95 million that the U.S. Government

has budgeted for HTS R&D during fiscal

1988, the Department of Defense (DoD) will

spend $46 million and DOE $27 million.

NSF is next at $14.5 million. No other

agency has more than about $4 million.

R&D funded by DoD and DOE will help support commercialization, but a dollar spent

by one of these agencies will probably buy

substantially less in terms of the Nation’s

technology base than a dollar spent by NSF.

A good deal of DoD’s R&D will go for

specialized applications in defense

systems—including the Strategic Defense

Initiative—with limited potential for commercial spinoffs; defense missions shape

even the basic research supported by the

Pentagon. DOE will distribute most of its

money to the national laboratories; relationships between DOE laboratories and

the private sector have begun to change—a

trend to be applauded—but the laboratory

system has yet to demonstrate the ability

to transfer technologies rapidly and effectively to the private sector. (See Policy Options 1,2,4 in ch. 4, and discussion in chs.

4 and 5.)

2. While the Federal R&D total for HTS may

seem impressive, little of it represents new

money. This was necessarily the case in

fiscal 1987, when agencies had no choice

but to redirect existing funds. For fiscal

1988, given the pressures on the Federal

budget, agencies have continued to take

money from other R&D categories to pay

for HTS. Congress may wish to examine

the trade-offs necessary at the agency level

to finance HTS R&D, and consider appropriating new money for fiscal 1989. (Options 1, 2, 3, 9.)

3. R&D priorities and funding decisions—

often made at relatively low levels in the

agencies—have major and lasting impacts

on commercialization. So do mechanisms

for inter-agency coordination. The pressures on the Federal budget make good

management of agency resources even

more important. (Options 1, 2, 3, 6, 8.)

But getting the most out of the Federal

investment in HTS R&D will take more

than inter-agency coordination and effective technology transfer. Successful commercialization will require continuity in

R&D funding so that people and organizations can plan ahead. The United States

will need graduate-level scientists and engineers educated in fields ranging from materials processing to the physics of electron

devices. Most of these people get their

training in university programs that depend heavily on Federal support. Likewise,

the national laboratories and Federal mission agencies must know where they are

going, and how much money they can expect along the way. Industry needs to know

whether and when it can look for new research results from Federal R&D. Multiyear R&D planning and budgeting for HTS,

on a trial basis, could help set patterns for

the future. (Options 2, 3, 4, 5.)

R&D and Commercialization

No one can say whether superconductivity

at room temperature will be possible in the near

future or in the distant future. Regardless of

progress in finding materials with higher superconducting transition temperatures, 5 to 10

years of R&D probably lie ahead before the technology base will be able to support substantial

commercial development.

Successful commercialization, in any case,

takes more than R&D. It depends on market

conditions—on a company’s ability to anticipate or create demand, and to exploit it. Linking engineering development, marketing, and

manufacturing—somethin g Japanese companies excel at—is crucial. So is management

commitment to the long term.

1. Processing and fabrication methods will

be critical for applications of HTS. American companies have fallen down in manufacturing skills across the board; the more

heavily process-dependent HTS turns out
9

2.

3.

to be, the more difficult it will be for U.S.

firms to keep up with the Japanese. A

strong processing emphasis in Federal R&D

could help compensate for low priorities in

American corporations, a major source of

U.S. competitive difficulty. (Options 2, 6,

15, 16 in ch. 4.)

The Defense Advanced Research

Projects Agency (DARPA) solicited zoo

proposals on HTS during the summer of

1987, hoping to have $50 million to spend

on processing-related R&D. When the final 1988 budget figures came down (in December 1987), DARPA found itself with

only $15 million. Nonetheless, even at this

lower level the program should be able to

make a substantial contribution to commercialization, if well managed and sustained over a number of years. (As this report went to press, the Defense Department

had just imposed a freeze on new outside

R&D, including this program.)

HTS R&D funded by defense agencies will

help American companies, but the potential for commercial spinoffs will diminish

as military requirements become more specialized and diverge from commercial

needs. The list of new technologies and

new industries that has emerged from

DoD-sponsored R&D is an impressive one:

computers; semiconductors; lasers; much

automated manufacturing know-how. Why

should things be any different with HTS?

Because both the United States and the rest

of the world have changed. The defense

sector has grown apart from the rest of the

U.S. economy; DoD money has less impact

as other countries focus more of their resources, both public and private, on commercial technologies. At the least, continuing attention to technology transfer from

defense contractors and Federal laboratories will be necessary to take commercial

advantage of DoD (and DOE) spending. (Options 11, 12, 13, 14, 15.)

Just as for technologies like microelectronics, commercializing HTS will require

contributions from many disciplines—

physicists, chemists, materials scientists,

electrical, electronic, and chemical engi4.

neers. Multidisciplinary research works in

industry because it must, but does not come

easily in universities (here or in other countries). Federal policies that help establish

multidisciplinary R&D within the university system will contribute to strong foundations for HTS and other technologies.

(Options 9, 10.)

NSF has embarked on a renewed attempt

to stimulate multidisciplinary R&D through

its program for Engineering Research

Centers, and its proposed Science and

Technology Centers. Consistent support

will be required for these centers to take

hold and become a permanent feature of

the R&D landscape.

HTS will demand a good deal of trial-anderror development (as was true in LTS).

With U.S. difficulties in commercialization

much more a matter of technology than science, Federal policies that increase support

for engineering research—even more, that

seek to redirect research and education in

engineering toward practical industrial

problems—could have substantial longterm significance. (Options 4, 5, 9, 19.)

HTS in the United States and Japan

Japan’s Government took the better part of

a year to shape its policy response to HTS—a

response that, when it emerged, looked not at

all like the highly centralized program some

Americans had expected. Much of the effort

has been directed at getting the three parts of

the R&D system—industry, the universities,

Japan’s national laboratories–to work effectively together. The Japanese see HTS as a test

case for their turn toward basic research, and

are giving it high priority. Moreover, lacking

energy reserves, they have strong incentives for

R&D (in LTS as well as HTS) promising savings in electric power consumption.

Japanese firms compete aggressively at home

and abroad; they get consistent government

support—for instance, from national laboratories that work effectively with the private

sector—but succeed in international markets

on their own merits. In some if not all indus-
10

tries, Japanese companies turn R&D into new

products and processes faster than American

firms. They target markets effectively, linking

R&D to market needs better than many U.S.

companies, and manage their factories at least

as well as they manage their R&D laboratories.

These strengths will pay off in HTS.

1.

2.

A few large American companies are putting substantial resources into HTS. But

the list is short: AT&T, IBM, Du Pont, a

few others. The financial criteria that drive

decision-making in American corporations

work against a technology like HTS— one

with uncertain prospects, and profits that

lie well in the future; the short-term view

fostered by U.S. financial markets could

put American companies behind the Japanese within 2 or 3 years, if they are not behind already.

A handful of small U.S. companies and

startups with venture funding have also

been moving into HTS. Although smaller

U.S. firms may well develop creative solutions to some of the practical problems of

the new technology, these companies do

not have the production and marketing capabilities necessary for a major role. They

will have a difficult time growing and competing with integrated Japanese multinationals.

American managers, by and large, believe

HTS should remain in the laboratory until

more scientific knowledge is in hand. They

emphasize the uncertainties—admittedly

great—and the lack of evidence promising

quick returns from R&D investments. To

them, uncertainty urges caution rather

than signifying opportunity. American

firms have not made commitments to HTS

that compare to those in Japan in terms of

scale (as indicated by people at work) or

scope (as indicated by people assigned to

applications-related projects).

Many American companies with the

technical skills and the money to pursue

HTS have taken a wait-and-see attitude.

Typically, they have a few people tracking progress in the field. Some of these

companies may be able to catch up and

3.

4.

compete when applications begin to appear. Others will be left behind.

Most Japanese managers believe HTS to

be closer to the marketplace than do their

American counterparts. Seeking growth

and diversification, they have assigned

more people to HTS than U.S. firms, and

may also be spending more money. The

Japanese have committed funds, not only

to research, but to evaluating prospective

applications. Executives there see HTS as

a vehicle for creating new businesses,

while Americans are more likely to view

it in terms of existing lines of business. And

if American managers have been reluctant

to commit resources to HTS, the Japanese

seem confident that investments now will

pay off—some time and in some way.

The Japanese could be wrong. In spending money on feasibility studies and engineering analyses, they may miss other

opportunities. But given the scale of current investments—in the range of $200 million dollars in each country (including both

government and industry R&D), small compared to overall corporate R&D spending—there is much to be said for taking the

risks. OTA’s analysis suggests that commercialization of HTS will proceed somewhat faster than many American managers

anticipate, though not so fast as many in

Japan expect. If this proves the case, Japanese companies could well come out ahead

in the race to commercialize HTS.

Japan’s Government will spend about $70

million for superconductivity R&D (high

temperature and low) in 1988.2 Although

ministries and agencies spent much of 1987

jockeying for position, Japan now has in

place a set of policies intended to compensate for the bottlenecks and weaknesses in

the country’s R&D system: universities

with only a few islands of excellence; national laboratories which, although some

‘Comparisons with U.S. Government spending must be treated

with caution: fiscal years in the two countries are 6 months out

of phase; Japanese budget figures leave out salaries for research

workers in universities; national defense has little influence in

shaping Japan’s HTS R&D.
5.

have enviable reputations, cannot claim the

breadth or depth of their U.S. counterparts.

If their system as a whole still shows

weaknesses, in superconductivity, Japan’s

R&D is broadly based and high in quality.

With R&D centered in major corporations,

government policies aim to strengthen the

infrastructure for developing HTS, and

stimulate greater cooperation and interaction among industry, universities, and the

national laboratories.

Japanese officials view international cooperation in HTS research as a potential complement to their country’s own efforts.

Much more than a matter of image, they

see in internationalization a means of stimulating creativity in Japan’s universities

and government laboratories. In turn, U.S.

industry stands to gain by testing Japan’s

willingness to open up its research system.

(Options 18, 19, 20 in ch. 4.)

HTS and U.S. Technology Policy

Japanese companies place high priorities on

technology as a competitive weapon; it is not

only in HTS that U.S. companies risk falling

behind. Business-funded R&D in Japan totals

2.1 percent of gross national product, compared

with 1.4 percent here. Fewer high-level

managers in American firms have technical

backgrounds; they may not fully appreciate the

role of R&D in business strategy and international competition. To executives fighting a

takeover, research may look like a luxury; after a merger, it may seem expendable.

Gaps in the U.S. technology base open where

neither Government nor industry has immediate requirements for R&D results. The very unexpectedness of the discoveries in HTS points

to the need for ongoing Government support

of long-term research. Failure by the private

sector to invest in generic R&D, much of it incremental, or in risky projects with potentially

big payoffs, throws more of a burden on the

Federal Government.

1. Many areas of science and technology, although vital for U.S. competitiveness, get

adequate financial support from neither

public nor private sources. American corporations have been turning away from

long-term, high-risk R&D–the kind of work

called for in commercializing HTS. Knowledge that could help American firms compete is not available when needed. Underinvestment has been most serious in fields

that lack glamour—e.g., manufacturing.

(Options 6, 7, 8, 15, 16 in ch. 4.)

Like industry, the Federal Government

spends most of its R&D dollars on development. Government money goes primarily for mission-oriented projects. When

Federal agencies pay for R&D on civilian,

commercial technologies, they have often

made poor choices—particularly when the

R&D goals are well removed from agency

missions. Without substantial changes in

U.S. technology policies, industry can expect only limited help from the Federal Government in the commercialization of HTS

and other new technologies. Recently, some

State Governments have been more active

than the Federal Government in stimulating industrial technology development.

(Options 6, 8, 15, 16, 17.)

Federal funding aimed at filling gaps between fundamental research and product/process development could help speed
12

utilization of new technologies, including

HTS. Funding for long-term, high-risk

projects with potential commercial applications could be even more important. But

policies during the 1980s have been moving in the opposite direction; with the

Administration cutting budgets for civilian applied research, the overall thrust of

U.S. technology policy has turned away

from support for commercial R&D. Instead, the Government has relied on indirect measures for stimulating industrial

innovation and technology development.

OTA’s analysis suggests that the indirect

approach, emphasizing measures such as

looser antitrust enforcement and stronger

patent protection, does not, by itself, go far

enough.

Direct support for commercial technologies

has never had a fair trial in the United States.

Indirect measures certainly have a place: for

example, incentives for corporate basic research could help U.S. competitiveness. So

could a supportive climate for cooperative R&D

ventures (and, perhaps, Federal cost sharing).

Even so, given that policies such as the R&D

tax credit (in place since 1981) have had little

apparent effect in filling the holes in the Nation’s technology base, it seems at least as important for the Federal Government to reconsider direct funding of applied industrial R&D.

When it comes to commercial technology development, the needs are two-fold:

● support for generic, pre-competitive technologies—those that can help a wide range

of companies compete more effectively,

without giving any one of them a big advantage; and

● support for long-term, high-risk projects.

Much of the generic R&D would be relatively

straightforward—incremental research with a

strong engineering focus. The long-term, highrisk thrust could be modeled to some extent on

the work DARPA undertakes for the military.

FEDERAL GOVERNMENT STRATEGIES

The last chapter of this report discusses three

strategies for commercialization. These strategies imply choices going well beyond the individual policy options referred to above and

discussed in detail in chapter 4–most of which

are discrete and relatively narrow.

The first of the three strategies—flexible response—the current, de facto approach, builds

on the proven strengths of the U.S. system.

These strengths include diversity in funding

and conducting R&D: NSF, with its mandate

for financing high-quality university research

regardless of field; defense agencies, with their

unmatched budgets; national laboratories,

reservoirs of skilled professionals.

Despite its acknowledged strengths, the flexible response strategy seems unlikely to provide adequate support for HTS. The funding

picture summarized above for HTS and discussed in detail in chapter 4 shows the drawbacks of the flexible response approach. Most

of the Federal dollars for HTS will go to mission agencies with little experience in commercialization—to DoD and DOE. NSF—primary

sponsor of untargeted university research in

science and engineering—has not had the

money to fund many of the highly rated

proposals it has received. No one in Government has an overview of Federal support for

HTS. Few mechanisms exist for debating and

determining priorities.

Congress could, of course, choose a more aggressive response to HTS—the second of the

three strategies analyzed in chapter 5. Three

elements set this strategy off from the current

approach:

●

●

more money to NSF for basic research on

HTS (and perhaps for one or more interdisciplinary university centers), an insurance policy against missed opportunities;

Federal Government cost-sharing in collaborative R&D programs organized and

guided by industry (with the Federal money

extending the R&D time horizons, ensur-
13

ing more support for generic work and

high-risk research); and

● a working group of experts drawn from

universities, industry, and Government to

help shape consensus on HTS R&D priorities, and make decisions on Federal costsharing.

This second strategy would direct Federal

funds into HTS R&D that might otherwise be

underfunded, and particularly into industry.

The added cost would be modest—$20 million

or $30 million per year, well spent, should make

a big difference.

The last of the strategies goes beyond HTS,

taking up the question of direct Federal support for commercial technology development.

As part of such a strategy, OTA considers the

merits of increased funding for engineering research, along with the advantages and disadvantages of a Federal technology agency.

The analysis emphasizes the problems of

defining an acceptable mission for such an

agency—one charged with supporting industrial technologies—and of avoiding specialinterest hand-outs. Without a mission statement

that can impose discipline over the agency’s

decisions, both day-to-day management and the

establishment of broad priorities pose real

difficulties. Nonetheless, a Civilian Technology

Agency might be able to provide useful support for commercialization if its activities were

centered on generic R&D, intended to fill holes

in the Nation’s technology base, and on a menu

of long-term, high-risk projects.

The three strategies in chapter 5 are by no

means exclusive of one another. As Federal policies shift in response to the new competitive

circumstances of American industry, and as

the science and technology of superconductivity continue to evolve, Congress and the

Administration—along with private industry—

will need to remain flexible and open to new

ideas. Technological innovation may demand

policy innovation. Uncertainty makes planning

difficult for both public and private sectors—

one of the reasons for a strategic framework

to aid in the many decisions that lie ahead.
Chapter

Commercialization

Government and Industry
CONTENTS

Page

Summary . . .

The Government Role , . . . . . . ., . ,

Support for Industry: Direct and Indirect . . . , . . .

R&D Funding and Objectives. . . . . . . ., . . . , , . . . .

Commercialization ● 

Four Examples . . ● ✌

Inputs to Commercialization: Technology and the

Strengths, Weaknesses, and Strategy . . . . . . . . . . . . .

Product/Process Strategies . . . +. . . . . . . . . . . . . . . .

, ...0....,. .

* *, ******.. ,

● .,.,*****, ,

● ✎☛✎☛☛✌✎ ☛

● ☛☛☛✌☛☛✌ ☛

● ☛✌☛☛☛☛✎ ☛

✎☛✌ ☛☛✎☛✎ ☛

✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎ ✎

✎✎✌ ,s .,. ,

.* ...*.* .

● ******* *

● ,* .*,** *

17

20

20

23

27

27

28

32

33

34

35

35

40

42

44

. .**..***,,*

. *.*...*.,*,

************

Marketplace

● 4********* *

. ,0 .99.,... ,

Research, Development, and Engineering: Parallel or Sequential? . . . . . . .

Commercializing HTS . . . . . . . ...........0.,,...,.0,.0,,,,,,..,,,.,, .

Microelectronics, and Other Precedents , *******,,**..*..***..*.****,

HTS Technologies . . . . . . ,,*, ***o*,***,**,*,.,

Concluding Remarks . . ,

Appendix 2A: R&D and Commercialization: Four Examples. . . . . . . . . . . . . .

Boxes

Box Page

B. The Reagan Administration’s Superconductivity Initiative . . . . . . . . . . . . . 24

C. The Discovery of High-Temperature Superconductivity ,.. .

D. Commercialization in Europe ● ,.,,

● ☛ ☛ 26

● * . 43

*,******

● ✎☛☛✎☛☛ ✌

Figures

Figure

1. U.S. Government R&D by Mission, 1988 . . . . . . . . . . . . . . . . . .

Page

. . 25

. . . 28

● ** 30

.. .,.00 0

.* ****. .

Systems

2. The Process of Commercialization. . . . . . . . . . . . . . . . . . . . . . .

3. Development Stages for Magnetic Resonance Imaging (MRI)

Tables

Table

1. R&D Budget by U.S. Government Agency, 1988 . . . . . . . . . . .

2. Distribution of Costs for Development and Introduction

of New Products and Processes . . . . . . . . . . . . . . . . . ... , . . . .

Page

, 25

32

● . . 36

38

● ☛☛☛☛☛☛ ☛

✎✎ ✎✌✎☛✎ ☛

3. U.S. ● ☛☛✌✎✌☛ ☛

4. U.S.

Strengths and Weaknesses in Commercialization . . . . . .

Advantages and Disadvantages in Commercializing HTS . . . . . . .
Chapter 2

Commercialization: Government and Industry

SUMMARY

The United States invents and Japan commercializes. So say some. Is it true? If so, this would

suggest not only that American companies fail

to capitalize on technologies developed here,

but that Japanese firms get a free ride on American R&D. Furthermore, if this has happened

in other industries and with other technologies,

it could happen with high-temperature superconductivity (HTS).

Has American industry really had that much

difficulty in commercialization—in designing,

developing, manufacturing, and marketing

products based on new technologies? Yes—in

some industries and with some kinds of technologies. In other cases—for example, biotechnology or computer software—American firms

continue to do better at commercialization than

their overseas rivals. Nonetheless, the competitive difficulties of American semiconductor

firms have long since shown that continuing

U.S. advantages in high technology cannot be

assumed. And sectors like consumer electronics demonstrate that, when it comes to engineering, if not science, Japan has been a formidable presence since the 1960s.

Commercialization is the job of the private

sector. Government plays a critical role in two

respects:

1. R&D funding. Federal agencies will spend

some $60 billion on R&D in 1988. Government dollars create much of the technology base that companies throughout the

economy draw on. In 1988, the U.S. Government will spend some $95 million on

HTS R&D. This is about as much as the

American firms surveyed by OTA say they

will spend on superconductivity R&D (LTS

as well as HTS) in 1988. (See ch. 3, box F).

2. The environment for innovation and technology development. A host of policies—

ranging from regulation of financial markets, to protection for intellectual property,

and education and training—affect commercialization by companies large and

small.

Private firms use scientific and technical

results—more or less freely available, including knowledge originating overseas—in their

efforts to establish proprietary advantages.

Universities and national laboratories create

much of the science base. Some industrial research contributes to the storehouse of scientific knowledge. All three groups—universities,

government laboratories, industry—contribute

to the larger technology base (which includes

science but goes well beyond it).

Much technical knowledge remains closely

held–protected by patents, by secrecy (classification for reasons of national security, trade

secrets), or simply as proprietary expertise.

Much proprietary information resides in peoples’ heads, in organizational routines, management styles, as tacit know-how. Companies

also write down some of their organizational

knowledge: in product drawings and specifications; in process sheets, manuals, and computer

programs for running production lines and entire factories. The manufacturing skills that

helped Japanese semiconductor manufacturers

outstrip their American competitors depend

heavily on proprietary know-how, much of it

embodied in the skills of their employees—skills

that people often cannot fully articulate or

explain.

Commercialization of HTS will depend on

scientific knowledge, much of this available to

anyone who can understand it. It will also depend on know-how, hard-won learning and

experience—making good thin films, orienting

the grains in superconducting ceramics to increase current-carrying capacity. Knowledge

of markets will count too.

Government contributes directly through

support for the technology and science base.

17
18

Federal agencies may spend their HTS R&D

budgets wisely, or not. National laboratories

may transfer technologies to the private sectors quickly, or only after long bureaucratic

delays.

Government policies also affect commercialization indirectly. Patents and legal protection

of trade secrets help firms stake out proprietary technical positions. Education and training policies (and immigration policies) affect

the labor pool from which companies hire people who can understand the science of HTS,

envision new computer architectures based on

superconducting electronics, grasp the market

opportunities created by the new materials.

No one anticipated superconductivity at 90

or 125 0 K. No one can predict what will come

next. More likely than not, 5 to 10 years of

R&D—much of it supported by Federal agencies—lie ahead before HTS markets will have

much size or begin to grow rapidly. A few niche

products could come sooner. So could some

military applications. New discoveries could

change the picture radically. The ways in which

the Federal Government spends its R&D dollars matter right now. Policy makers may have

a bit more leisure to review the other channels

of policy influence on commercialization of

HTS. The stakes are high—for the private sector, and for government decisionmakers.

Potential for dramatic breakthroughs, coupled with great uncertainty, makes for difficult

decisions. OTA sees no reason to rule out the

possibility of room-temperature superconductivity (next month, next year). Room-temperature superconductivity—in a cheap material,

easy to work with—has almost unimaginable

implications. Companies with proprietary technical positions could reap huge rewards. The

risks of inaction are high; on the other hand,

progress could stall. High expectations and media hype could be followed by disillusionment,

difficulty in raising capital, inaction on the policy front. Biotechnology has already lived

through several such waves. HTS probably will

too.

Early applications of new technologies tend

to be relatively specialized, of modest economic

significance. The public may lose interest, financial markets downgrade the prospects. No

one can know, at this point, whether HTS could

turn out to be a solution in search of a problem.

The laser—invented in 1960—never seemed to

live up to expectations. And yet solid-state

lasers eventually made fiber-optic communications possible—an innovation with vast impacts

on a worldwide scale (including, for example,

a new source of competition for satellite communications systems). It was not that the possibilities went unrecognized.1 Prospective applications of the laser to eye surgery and optical

communications got immediate attention; but

while ophthalmologists quickly began using

lasers, little progress was made in communications for 15 years. It took, not only solid-state

lasers, but low-loss glass fibers to make optical

communications a reality.

In the early years of laser technology, no one

fully anticipated the possibilities for fiber-optic

communications networks; they snuck in through

the back door. The same could happen with

HTS. One of the tasks for public policy is to

bring stability to the early years of new technologies, building a base for later commercialization. Industry will not do this alone, absent

the potential for near-term profits.

OTA’s analysis suggests that commercialization of HTS will proceed somewhat faster than

many American companies expect, though not

as fast as the Japanese companies that have been

making heavy investments seem to anticipate.

(Ch. 3 outlines U.S. and Japanese business strategies toward HTS.) As American companies

move down the learning curves that mark out

accumulated knowledge and experience in

HTS, federally funded R&D will provide critical support for the technology base that all

firms—but particularly smaller companies—

draw from.

I“The Maturation of Laser Technology: Social and Technical

Factors,” prepared for OTA by J.L. Bromberg, The Laser History Project, under contract No. H3-521O, January 1988, pp. 7-9.

Theodore Maiman, who built the first laser in 1960, stressed the

communications possibilities—multi-channel capability, low cost

per channel—at the press briefing announcing his invention.
19

The analysis in this chapter leads to the following conclusions:

● Small, entrepreneurial firms will be well

placed to develop commercial applications

of HTS. The conditions are right: a new

science-based technology; synergistic links

with existing industries, including lowtemperature superconductivity (LTS) and

electronics; venture capital for good ideas.

But while small companies have been a major source of U.S. strength in high technology, few can assemble the financing, the

technological breadth, or the production

and marketing capabilities to grow as fast

as their markets.

● Larger American corporations may find

that they are starting out behind some of

their Japanese rivals. The new HTS materials are ceramics, Japanese firms have a

useful lead in both structural and electronic

ceramics. Some of this expertise will transfer to HTS. So will a good deal of knowhow developed for fabricating microelectronic devices—another field where Japanese firms have demonstrated themselves

to be at least as good and sometimes better than American companies.

● Processing and fabrication techniques will

be critical for commercialization. American companies have fallen down in manufacturing skills across the board; the more

heavily process-dependent HTS applications turn out to be, the more difficult it

will be for U.S. firms to keep up with the

Japanese.

● Product as well as process technologies

will demand much trial-and-error development. Japanese engineers and Japanese

corporations are good at this. American

companies are not. To the extent that commercialization of HTS depends on step-bystep, incremental improvements—bruteforce engineering–U.S. companies will be

in relatively poor positions to compete.

● R&D funded by the U.S. Government will

help American companies in commercializing HTS, but the spinoffs from defenserelated R&D may not be large or longlasting if military requirements become

●

highly specialized and diverge from commercial needs.

Indirect policy measures—intended to remove the roadblocks to commercialization

and increase the rewards for innovators

and entrepreneurs—can also help. But the

indirect approach alone will not be an adequate response to the coming international

competition in HTS.

What about U.S. commercialization in general—the backdrop for the statements above?

●

●

●

●

Mobility among scientists, engineers, and

managers has spurred rapid growth and

technological innovation in postwar U.S.

high-technology industries ranging from

computers and semiconductors (starting in

the 1940s and 1950s) to biotechnology (beginning in the late 1970s). Venture capital

for small, high-technology firms, likewise,

has been a consistent source of competitive strength, one that will continue to work

to U.S. advantage in HTS.

Many larger American companies have

pulled back from basic research and riskier technology development projects. Ease

in establishing new small firms compensates in part for these relatively conservative investment decisions; indeed, negative

decisions on proposed R&D projects sometimes spawn startups that go on to commercialize new technologies. Some of this

will probably happen in HTS.

With few American firms self-sufficient in

technology, a lack of long-term R&Din the

private sector, and managements that look

for home-run opportunities rather than

building technologies and markets step-bystep, the Federal Government has, by default, become a primary source of support

for technology development. As yet, agency missions do not reflect this new role.

Despite the onslaughts of foreign firms

since the late 1960s, many American companies have not yet made the changes in

their own organizations necessary to compete more effectively. Paying little more

than lip service to well-known engineering methods such as simultaneous prod-
20

uct and process design, they fail to give

manufacturing high priority. Neither managers nor engineers in the United States

have learned to take advantage of technologies originating overseas.

● Industry cannot justifiably blame the U.S.

Government for its failures. Compared

with most other industrial economies, U.S.

policies create a favorable environment for

innovation and commercialization.

The indirect policy approach the U.S. Government has traditionally relied on to stimulate innovation and commercialization worked

well for many years. Today, with foreign competition stronger than ever before, it seems time

to explore new directions. The Federal R&D

budget has grown rapidly over the postwar

period. Management practices in government

agencies, mechanisms for setting priorities, for

ensuring an adequate technology base, have not

kept pace.

The climate for innovation can always be improved, the barriers reduced. But the barriers

are low already, and limited scope remains for

policies intended simply to unleash American

industry to compete more effectively. Indeed,

the short-term perspectives of U.S. corporations, many of which have been unwilling to

keep pace with foreign investments in new technologies, stem in part from the removal of

another set of barriers—deregulation in U.S. financial markets.

Unless the United States learns to match the

kinds of supports for commercialization that

have proven effective elsewhere–topics treated

in more detail in later chapters—only small improvements can be expected. U.S. industry

could fall behind in HTS, and in the uses this

new technology will find.

THE GOVERNMENT ROLE

HTS is fresh from scientific laboratories, but

many commercial innovations begin with existing knowledge, gleaned from textbooks, design manuals, the schoolhouse of experience.

The work of commercialization centers on engineering: development of new products and new

manufacturing processes. Companies support

their development groups with marketing people, and in some cases with research. Sometimes new science is part of commercialization,

but not always.

The process may begin with an idea that is

old, but has never been reduced to practice because of gaps in the technology base. The automobile, the airplane, and the liquid-fueled

rocket all had to await needed pieces of technical knowledge. The Wright brothers learned

to steer and stabilize their flying machine. Despite years of trial and error (and centuries of

speculation), they were the first to find a way

around these technical barriers.

Superconductivity itself, discovered in 1911,

has a long history as a specialized field of

physics, and a shorter history—beginning about

1960—as a technology that private firms sought

to exploit. Appendix B, at the end of this report, summarizes the science and technology

of superconductivity at both low temperatures

(e.g., where liquid helium commonly provides

cooling) and high (above the boiling point of

liquid nitrogen).

Support for Industry: Direct and Indirect

What does this have to do with government?

Today, governments finance much of the R&D

that provides the starting point for commercialization. Companies everywhere start with this

publicly available pool of technical knowledge

in their search for proprietary know-how and

competitive advantage. Second, public policies

influence the choices companies make in financing their own R&D, and in using the knowledge available to them. Tax and regulatory policies encourage or discourage investments in

commercial technology development. Patents

create incentives, high capital gains taxes disincentives.
21

Smaller companies depend heavily on externally generated knowledge; many manufacturing firms with hundreds of employees have few

if any engineers on their payrolls. But if smaller

companies have the greatest needs, science and

technology move so fast today that big companies also rely heavily on government R&D.

Moreover, pressures for near-term profits have

forced many larger U.S. corporations away

from basic research. In the United States, a few

hundred large companies account for the lion’s

share of industry-funded R&D—three firms

(IBM, AT&T, General Motors) for more than

15 percent.

Half of all U.S. R&D dollars come from the

Federal treasury. The fraction is smaller in most

other countries, but in all industrial economies

public funds pay for a substantial share of national R&D. The reasons begin with health and

with national defense, but competitiveness has

been one of the rationales: the first government

research laboratories, established in the early

years of this century in Britain, Germany, and

the United States, were intended to help domestic industries meet foreign competition.

Foreign firms have access to many of the results of federally funded R&D, just as U.S. firms

can tap some of the technical knowledge generated with foreign government support. Governments seek to use technology policy to help

domestic firms compete, while commercial enterprises seek to take advantage of the world

store of technical knowledge. Technology policy begins with R&D spending—setting broad

priorities, making funding decisions at the

project level, agency management. Other tools

include intellectual property protection, which

can help domestic firms establish and protect

a technological edge. Of course, many countries also provide direct funding for commercially oriented R&D.

The U.S. Position in Technology

Past OTA assessments have examined U.S.

competitiveness in a number of industries, and

linked technological position with competitiveness; the most recent found signs of slowdown

in U.S. R&D productivity, as well as evidence

that newly industrializing countries have made

surprising gains in technology.2 Principal findings from these earlier assessments include:

●

●

●

●

Technology is vital for competitive success

in some industries (including services like

banking). In others, it may be secondary.

But in all or nearly all sectors, the technological advantages of American firms have

been shrinking for years. The United States

may be able to retain narrow margins in

some technologies. Parity will be the goal

in others. Regaining the advantages of the

1960s will, in the ordinary course of events,

be impossible.

In newer technologies, those that have developed since the 1960s, the Japanese have

been able to enter on a par with American

firms, and to keep up or move ahead. Examples include optical communications,

and both structural and electronic ceramics. European firms, in contrast with

the Japanese, have had trouble turning

technical knowledge into competitive advantage.

Today, U.S. military and space expenditures yield fewer and less dramatic spinoffs

than two decades ago. The U.S. economy

is vast and diverse. Defense R&D—increasingly specialized when not truly exotic—

cannot provide the breadth and depth of

support needed for a competitive set of industries.

Japan and several European countries

place higher priorities on commercial technology development than does the United

States. R&D spending by Japanese industry reached 2.1 percent of gross domestic

product in 1986, compared with 1.4 percent here.

Productivity, Innovation, Competitiveness,

Commercialization

Import penetration in steel and consumer

electronics, going back two decades, marks the

beginnings of the wave of concern over lagging

zzn~erna~jona~ competition h Services (Washington, DC: Office of Technology Assessment, July 1987), ch. 6. Also see “Development and Diffusion of Commercial Technologies: Should

the Federal Government Redefine Its Role?” staff memorandum,

Office of Technology Assessment, Washington, DC, March 1984.
22

U.S. productivity growth and competitiveness.

Commercialization is simply the latest catch

phrase for problems that are all of a piece. The

ongoing policy debate has centered on the

proper mix of policies in the United States,

where government has been reluctant to intervene as directly or as deeply in the affairs of

industry as, say, in Japan or France.

During the Carter Administration, an interagency task force, supported by a panoply of

private-sector advisory committees, labored for

18 months to produce a Domestic Policy Review of Industrial Innovation (DPR). The recommendations included:3

●

●

●

●

●

●

easier licensing of federally owned patents;

stronger ties between universities and industry;

help for small, entrepreneurial firms through

small business innovation research grants;

removal of unnecessary regulatory barriers;

signals to industry that antitrust policy did

not bar cooperative R&D;

tax incentives for R&D and innovation.

Plainly, the focus was on indirect policies. In

one form or another, most of these steps have

been taken.

Other recommendations of the Carter DPR,

dealing with direct support for technology development, were not implemented. After Congress passed the Stevenson-Wydler Technology

Innovation Act in 1980, the Reagan Administration declined to act on the central provisions

of the legislation, which called for a network

of Centers for Industrial Technology charged

with supporting commercial technology development.4

The Reagan White House began its own study

of the problems in mid-1983, creating a Commission on Industrial Competitiveness headed

by John Young, president of Hewlett-Packard.

When the Commission delivered its findings

a year and a half later, many of the recommendations were familiar: “balance” in regulations;

better labor-management cooperation; stronger

protection for intellectual property.5 Although

its leadoff recommendation called for a new

Department of Science and Technology (which

got a frosty reception from an Administration

committed to scaling back the Federal bureaucracy), the Young Commission, like the Carter

DPR, stressed the indirect influences of Federal policies on technology development. The

Commission helped turn the spotlight on technology transfer from the national laboratories,

and urged use of the tax system to encourage

private-sector R&D.

During the 1980s, then, the environment for

technology development continued to evolve

along the lines mapped out by the Carter DPR.

Congress included an R&D tax credit in the

1981 tax bill, and extended it—although at a

lower level-–in 1986. In 1982, Congress passed

the Small Business Innovation Development

Act, requiring Federal agencies to set aside 1.25

percent of extramural R&D budgets exceeding

$100 million for awards to smaller companies.

With the executive branch adopting a muchrelaxed enforcement policy for antitrust, the

National Cooperative Research Act of 1984 explicitly permitted certain forms of joint privatesector R&D, while limiting private antitrust

suits to actual (rather than treble) damages. The

Administration also began negotiations with

the governments of several foreign countries

‘For a brief summary, see J. Walsh, “What Can Government

Do for Innovation?” Science, July 27,1979, p. 378, together with

N. Wade, “Carter Plan to Spur Industrial Innovation,” Science,

NOV. 16, 1979, p. 800.

In addition to agency participants, several hundred people from

outside government took part in the Carter DPR; for the reports

of the private sector committees and subcommittees, see Advisory Committee on Zndustriid Innovation: Final Report (Washington, DC: Department of Commerce, September 1979).

4

Section 6 of the Stevenson-Wydler Technology Innovation Act

of 1980 (Public Law 96-480) directed the Secretary of Commerce

to “provide assistance for the establishment of Centers for Industrial Technology.” Section 8 extended this authority to the

National Science Foundation, The centers were envisioned as

supporting generic technologies at the pre-competitive stage—

those that could benefit many companies and industries. Commonly cited examples included R&D on welding processes, or

on steelmaking. See Implementation of P.L. 96-480, StevensonWydler Technology Innovation Act of 1980, hearings, Subcommittee on Science, Research, and Technology, Committee on Science and Technology, U.S. House of Representatives, July 14,

15, 16, 1981 (Washington, DC: U.S. Government Printing Office);

also International] Competition in Services, op. cit., pp. 364-365.

5Global Competition: The New Reality, vols. I and 11 (Washington, DC: U.S. Government Printing Office, January 1985). Most

of the 30 members of the Young Commission were businessmen.
23

where pirating of U.S. intellectual property has

been at its worst.

At the same time, Federal laboratories—

particularly those funded by the Department

of Energy (DOE)—were seeking tighter linkages

and better working relationships with private

industry. During the early 1980s, the Federal

laboratory system had come in for some rather

harsh scrutiny.’ An outside review panel (headed

by David Packard, one of Hewlett-Packard’s

founders and a former Pentagon official) called

for closer interactions with the private sector,

setting the stage for efforts still underway to

open up the laboratories and place their relationships with industry on a new footing (ch.

4). Meanwhile, State Governments began taking more active roles in technology policy.

President Reagan’s proposed Superconductivity Competitiveness Act (box B) continues

the stress on indirect policies. The draft legislation—which would further relax U.S. antitrust policy, while extending the reach of patent protection—would apply quite generally to

U.S. industry: there is little that is specific to

HTS.

R&D Funding and Objectives

If the weight of explicit shifts in U.S. technology policy during the 1980s has been on the

indirect side, the direct role of the Federal Government has also changed—though not in the

direction of support for commercial technology development. Government R&D has grown

under the Reagan Administration, but much

of the expansion has been for defense. Support

for commercially oriented R&D has lagged, and

in many cases been cut back.

%ee, for example, P.M. Boffey, “National Labs Reel Under

Criticism and Investigation,” New York Times, Aug. 24, 1982,

p. cl.

The Packard report, below, appeared as Report of the White

House Science Council Federal Laboratory Review Panel (Washington, DC: Office of Science and Technology Policy, May 1983).

For more recent perspectives, see F.V. Guterl, “Technology

Transfer Isn’t Working,” Business Month, September 1987, p.

44; and E. Lachica, “Federal Labs Give Out Fruit of More Research For Commercial Uses,” WaJ] Street ]ourna], Feb. 1, 1988,

p. 1.

Department of Defense (DoD) R&D went from

$20.1 billion in fiscal 1982 to $37.9 billion in

1988 (table 1). DoD R&D, plus the defenserelated portion of DOE spending (about half the

Department’s R&D), account for nearly 70 percent of all Federal R&D (figure 1); the great

majority consists of applied research and the

engineering of weapons systems.

As figure 1 suggests, the U.S. Government

has not paid much attention, relatively speaking, to R&D of interest to companies outside

the defense, aerospace, and health sectors. And

in the 1980s, Federal agencies have backed

away even further (e.g., from energy R&D). The

Reagan Administration has held that government has no business supporting commercial

technology development. Fundamental research,

yes, but anything more would be a subsidy—

unjustified and likely to create harmful economic distortions.

The basic research portion of the DoD budget does contribute quite directly to the Nation’s

store of commercially relevant technical knowledge. The Pentagon, for example, provides

nearly 40 percent of Federal support for university research in engineering.7 In constant dollars, however, DoD basic research (budgeted

at $892 million for fiscal 1988) remains at

roughly the same level as in 1967, while the total DoD R&D budget has been steadily expanding in real terms.

Based on 1987 obligations, the Federal R&D

budget breaks down as follows into the three

broad categories of basic research, applied research, and development:

Basic research . . . . . . . . . . . . . . . . . . . . ..$ 8.8 billion

Applied research. . . . . . . . . . . . . . . . . . . . 9.0 billion

Development . . . . . . . . . . . . . . . . . . . . . . . 38.7 billion

$56.5 billion

The National Science Foundation follows, at about 30 percent. Universities carry out half of all DoD-sponsored basic research. See Directions in Engineering Research: An Assessment

of Opportunities and Needs (Washington, DC: National Academy Press, 1987), pp. 46 and 63. Recently, the military has spent

a little more than 2 percent of its R&D budget on fundamental

research; 5 percent of private industry’s R&D total goes for basic

work.
24

Many agencies subdivide these categories Basic research itself covers a wide range of

further.8

activities. Some of this really is “untargeted”

science—work that could be called pure re8N0 figures for 1988 were available as this report was being search, Nobody expects that astrophysics or the completed. Distinctions between these categories are necessarily

arbitrary; for the Federal Government definitions, see Science

Indicators: The 1985 Report (Washington, DC: National Science 6.3 Advanced Development

Board, 1985), p. 221. DoD subdivides its R&D budget into six 6.4 Engineering Development

subcategories, designated as follows: 6.5 Management Support

6.1 Research 6.6 Operational Systems Development

6.2 Exploratory Development Several of these are further subdivided,
25

Table 1 .—R&D Budget by U.S. Government Agency,

1988”

Obligational Percentage of

authority total

(billions of Federal R&D

dollars) budget

Department of Defense

(military functions only)

Department of Health and

Human Services . . . . . .

Department of Energy . . .

National Aeronautics and

Space Administration .

National Science

Foundation . . . . . . . . . . .

. . $37.9 b 63.20/o

. . 7.2 12.0

. . 5.1 8.5

. . 4.8 8.0

. . 1.5 2.5

All others. . . . . . . . . . . . . . . . . 3.5 5.8

$60.0 100 ”/0

aExclud~~ $2 billion in obligations for R&D facilities.

%he three services expect to commit a total of $29.4 billion in fiscal 1988-$15.2

billion for the Air Force, $9.5 billion for the Navy, and $4.7 billion for the Army.

Adding in the rest of the DoD R&D budget (e.g., spending by agencies such

as the Defense Advanced Research Projects Agency) brings the total to $37.9

billion.

SOURCE: Special Analyses: Budget of the United States Government, Fiscal Year

1989 (Washington, DC: U.S. Government Printing Office, 1988), pp. J-3,

J-5.

Figure 1.— U.S. Government R&D by Mission, 1988

Environment,

natural

resources,

Energy, 2 %

National

defense,

68%

SOURCE: Federal R&D Funding by Budget Function, Fiscal Years 1987-1989,

NSF-813-315 (Washington, DC: National Science Foundation, 1988), p 4

Superconducting Super Collider will lead to results of much practical use in the foreseeable

future. Understanding is the motive.

Other projects, likewise defined as basic research for budgetary purposes, nonetheless

bear quite directly on agency missions. Almost

all the R&D funded by the National Institutes

of Health (NIH, part of the Department of Health

and Human Services) could be termed directed

research. NIH supports much fundamental science—e.g., in molecular biology—but it does so

with a view toward eventual improvements in

health care; many NIH-sponsored projects have

quite specific objectives such as a cure for

AIDS, or better understanding of the growth

of cancerous cells.

Likewise, DoD and DOE R&D serve agency

missions. Research in physics laid the foundations for nuclear weapons, with DOE inheriting much of the ongoing support for physics

from the Atomic Energy Commission. When

the armed services or the Defense Advanced

Research Projects Agency (DARPA) sponsor

work in the behavioral sciences, they seek insights into the responses of fighter pilots to sensory overloads, or knowledge that will help

make artificial intelligence a practical tool for

battle management.

Research carried on in industrial laboratories,

almost by definition, has a practical orientation. So does engineering research in universities and nonprofit laboratories. Plainly, distinctions such as that between untargeted and

directed research will always be arbitrary.

Nonetheless, such distinctions help in thinking about R&D and how it supports commercialization.

Within directed research, further distinctions

can be made. Incremental work, for example,

takes a step-by-step approach toward reasonably well-defined goals. The problems may be

technically difficult, but the territory has been

at least partially explored. Much of the work

on synthesis of new materials that laid the

groundwork for the discovery of HTS (box C)

falls in this category, as does the many years

of R&D aimed at improving the properties of

LTS materials.

84.754 () - 88 - 2 : QL 3

27

Most research serves the needs of govern- petition have driven the scientific enterprise

ment or industry. Military needs, social objec- at least since the end of the 19th century.

tives such as health care, and industrial comCOMMERCIALIZATION

Both industry and government support directed research. Promising results lead naturally into development. Research and development then go on in parallel, with research

outcomes suggesting new avenues for development, and problems encountered in development defining new research problems.

While the U.S. Government has a long tradition of support for basic research and missionoriented R&D, it usually leaves pursuit of commercial technologies to the private sector. This

policy worked well for many years. For instance, continued development of fiber-reinforced composite materials–lighter and with

greater stiffness, strength, and toughness than

many metals—builds on a technology base that

has been expanding at a rapid rate since the

1950s. 9 The primary stimulus came from the

military, where composites found their first applications in missiles, later in manned aircraft.

penetration into commercial aircraft followed.

When it comes to technologies where Federal agencies have been less active, U.S. firms

have often fallen behind. Although the U.S.

Government has spent several hundred million

dollars for R&D on structural ceramics since

the early 1970s (app. 2A, at the end of the chapter), the effort has been a small one compared

with fiber composites. Japan, meanwhile, has

established a useful lead in structural (as well

as electronic) ceramics. In semiconductors,

American firms established a commanding lead

during the 1950s and 1960s, when military

procurement provided much of the demand (ch.

4). In later years, as production swung towards

civilian markets, Japanese firms closed the gap.

BAdvanced Materials by Design: New Structural Materials

Technologies (Washington, DC: Office of Technology Assessment, June 1988).

Four Examples

In addition to summarizing Federal programs

on ceramics, appendix 2A outlines the evolution of the video-cassette recorder (VCR)—a

quite different case from any of those mentioned so far. The appendix also reviews the

development of magnetic resonance imaging

(MRI) systems, a relatively new product of the

medical equipment industry, and LTS magnets.

Magnets wound with niobium-titanium alloy—

the most widely used LTS conductor—find uses

not only in MRI, but in scientific research.

The examples in appendix 2A illustrate something of the range and complexity of commercialization. Sometimes government R&D support is critical (LTS magnets), sometimes nearly

irrelevant (the VCR—although much of the

underlying technology of magnetic recording

did benefit from ongoing government-sponsored R&D). Sometimes governments try to

push a technology, to little avail (ceramics for

gas turbine engines). For MRI, the major policy impacts had little to do with R&D: commercialization depended on regulatory approvals,

as well as Medicare and Medicaid payment

policies.

The starting point may be new science, creating new opportunities (MRI, LTS magnets),

or it may be the prospect of a huge market if

development problems can be solved (VCRs).

Inter-firm competition may be intense and international (MRI, VCRs), or it may be largely

irrelevant (LTS magnets, where much of the

work was undertaken within Federal laboratories).

Government agencies supported R&D on LTS

magnets as part of larger, ongoing programs:

high-energy physics research, nuclear fusion.

Development of niobium-titanium wire for these

magnets has been mostly a matter of painstak-
28

Photo credit: University of Kansas Medical Center

Magnetic resonance image of human face.

ing engineering. Federal funds paid for much

of the work.10

The U.S. Government pushed structural ceramics technologies for different reasons. Most

recently, DOE has supported work on ceramics

for gas turbine engines, hoping to overcome

their efficiency limitations; with greater fuel

economy (and low enough manufacturing costs),

the hope was that turbines could compete with

gasoline and diesel engines for automotive applications. While these objectives are consistent with DOE’s mission, there has been little

pull from the marketplace.

@’Superconductive Energy Storage,” vol. IV, DOE/ET/26602-

35, Final Technical Report, January 1976 to October 1981, prepared by the Applied Superconductivity Center, University of

Wisconsin-Madison, for the U.S. Department of Energy, July

1983, ch. III.

Inputs to Commercialization:

Technology and the Marketplace

Product or process development—whether

adapting LTS magnet technology for medical

imaging systems, or generic techniques for

computerized process control to steelmaking—

depends on at least two inputs from outside the

development group itself. The first of these is

knowledge drawn from the technology base,

including science, engineering, and shopfloor

know-how (figure 2). The second input is knowledge of markets—what potential customers

want and need. Steelmaker may improve their

process control systems because their customers want better formability, which requires

more precise control of melt chemistry. The

purchasers of steel maybe seeking to provide

Figure 2.—The Process of Commercialization

SOURCE: Office of Technology Assessment, 19SS.
29

their own customers with products (automobile fenders, dishwashers) that have betterlooking painted surfaces.

R&D and Marketing

Innovations follow their own paths. Figure

3 summarizes the later stages for MRI—those

after initial research and feasibility demonstration. Science came first, the complete chronology beginning in 1936 with theoretical predictions of the underlying phenomenon of nuclear

magnetic resonance. Experimental demonstrations followed a decade later, with the first twodimensional images (e.g., of a wrist) in 1973.

Heavy continuing involvement by physicians

and scientists made MRI something of an exception. Normally, commercialization is a job

for engineers, supported on the one side by

knowledge flowing from the technology and science base, and on the other by information on

customer, wants, needs, and perceptions.

Much of the early work in HTS will be undertaken by multidisciplinary groups including physicists, chemists, materials scientists,

and ceramists, along with electrical, chemical,

and mechanical engineers. The known HTS

materials are oxide ceramics—brittle and difficult to work with. Learning to use them means

drawing where possible on past R&D—work undertaken earlier and for other purposes on

structural and electronic ceramics, as well as

processing, fabrication, and design techniques

from microelectronics.

As applications come into view, companies

will call on marketing tools ranging from feasibility studies (which may include detailed projections of manufacturing costs) to consumer

surveys. Technical objectives shift as prospective markets emerge; some firms use “technology gatekeepers” to help match research results

and market needs. This is an area where U.S.

and Japanese strategies in HTS contrast

markedly, with Japanese companies much

quicker to begin thinking about applications

and the marketplace (see ch. 3).

Judging market prospects can be harder than

judging prospects for technical progress. Furthermore, market prospects often depend on

technological capabilities. Early efforts by Matsushita and Toshiba to design VCRs for household use failed: production costs were high;

recording times were short. Not many people

would pay upwards of $1000 for a machine

limited to 30 minutes per cassette. But improvement was steady. RCA’s VideoDisc died in the

marketplace in part because the company miscalculated the speed with which VCR manufacturers could reduce their costs to match

RCA’s target price (initially, $500 at retail). RCA

also underestimated the weight consumers

would place on off-the-air recording capability, and, failing to grasp the implications of rapidly growing rentals of videotapes, prohibited

rentals of its discs.

HTS Markets

It is too early to reach many conclusions

about markets for HTS. The more obvious highcurrent, high-field applications—magnets, electric generators, coil and rail guns for the

military—have all been analyzed for feasibilPhoto credit: Argonne National Laboratory

HTS wire, flexible before firing,
30

Figure 3.—Development Stages for Magnetic Resonance Imaging (MRI) Systems

I

1

Technical analyses

Preliminary design,

Commercialization

● Primarily aimed at developing the technology of MRI and, learning to use it (establishing effkacy, subject safety, etc )

•*pdm~~ aimed at tearing prototype MRI syetem

SOURCE: Baaed on Haalti Tactuwbgy Caaa Sfudy 27: Nuclear Magnetk Rtbsomrrcu knagkrg Tachrmbgy (kfhahington, DC (Mce of Technology Assessment, September

19S4), ch 4

ity, but no one knows much about making practical wire, cables, or current-carrying tapes

from the new materials (app. B). These will need

higher current densities than yet in view.

Good thin film fabrication methods, the precondition for applications to sensors and electronics, will probably be easier to achieve. Even

so, as of mid-1988, there had been no public

announcements of reproducible HTS Josephson junctions (JJs). Many of the technical questions on which practical applications depend

will not be answered until R&D groups learn

to fabricate JJs easily.

Later sections of the report discuss these technical matters in more detail. Here the point is

simply that, until the technological prospects

come into sharper focus, it will be impossible

to do more than speculate about markets. And

even then, uncertainty will remain high. No

one—scientists, engineers, marketing special-
31

ists, science fiction writers—can predict with

much accuracy how a new technology like this

will eventually be applied. Nor can potential

customers say what they might want, or be willing to pay, if they cannot imagine the possibilities. It is the unexpected that will probably have

the greatest impact.

Success and Failure

What makes for success or failure in the marketplace? Product and process engineering,

marketing skills, luck, sometimes research results. No one has a recipe, any more than a recipe for room-temperature superconductivity.

Costs are central for some products, but for

others — MRI is one — competition revolves

around non-price features. Many hospitals will

readily pay a premium of several hundred thousand dollars for an MRI system with superior

imaging performance. At the same time, small

private clinics or rural hospitals make up a

niche market for which a number of manufacturers have designed low-cost systems.

Products may come out too late or too early.

A company may fall behind its competitors and

never get much market penetration. Early innovators in the semiconductor industry have

sometimes failed and sometimes succeeded.11

The pioneer minicomputer manufacturer, Digital Equipment Corp., whose PDP-8 established

this part of the market, went onto become the

second largest computer firm in the world, On

the other hand, the microcomputer pioneers—

Altair, Imsai, polymorphic Systems—disappeared. Toshiba invented helical scan recording but the company ended up licensing Sony’s

Betamax technology (which itself has lost much

ground to VHS).

Cost and Risk

As firms move further along the development

path, mistakes become more costly. Only one

often projects launched at the R&D stage ever

l~see, for example, lrlter~~tiOrA Competitiveness in Electronics

(Washington, DC: Office of Technology Assessment, November

1983), “Appendix C: Case Studies in the Development and Marketing of Electronics Products, Semiconductors: The 4K Dynamic

MOS RAM,” pp. 524-531.

brings in profits. Before reaching the marketplace, half of all R&D projects fail for technical reasons; poor management or financial

stringencies kill two or three more. Of those

that do enter production, some never earn

enough to cover development costs.

The vast majority of project budgets go for

product engineering, process design and development, tooling and production start-up, and

test marketing. Introducing an MRI system

means investments of $15 million and up for

R&D alone; pilot production and field trials require much larger financial commitments. Seldom does research account for more than 10

percent of total project outlays, although the

distribution of costs varies a good deal from

project to project and industry to industry. The

distribution also varies between the United

States and Japan.

As table 2 shows, Japanese companies (for

the industries and time period examined) spent

a bit less on R&D than the average American

firm, and much less on manufacturing startup

and product introduction. They budgeted more

in gearing up for production—on facilities, tooling, and special manufacturing equipment (a

difference that may also reflect higher projected

volumes). Japanese firms no doubt have lower

startup costs because they invest more in frontend process development. Yet a substantial

difference remains. Adding the percentages for

tooling and equipment to those for manufacturing startup gives a total of 40 percent for the

U.S. companies, 54 percent for the Japanese.

The greater proportion of total project expenses

for tooling and equipment reflects the higher

priorities Japanese managers place on manufacturing as an element in competitive strategy.

Such priorities will make a difference in commercialization of HTS, which will depend critically on process know-how. U.S. firms have

underinvested in process technology for years—

one reason for competitive slippage in industries ranging from steel to automobiles to electronics.
32

Table 2.—Distribution of Costs for Development and Introduction of New Products and Processesa

Percentage of total project cost

Research,

development Prototypeor Tooling and Manufacturing Marketing

and design pilot plantb

equipment startup startup

U.S. companies . . . . . . . . . . . . . . . 26940 17% 23% 17% 17%

Japanese companies . . . . . . . . . . . 21 16 44 10 8

asuw~y figureS from 1 g~ for 50 matched pairs of u,S, and Japanese firms, The total of 100 included ~ chemical companies, 30 machinery, 20 eleCtriCd and electronics,

and 14 from the rubber and metals industries. bFor cases of ~roduCt develo~rnent, the costs are for prototyping; for process development, they include investments in pilot plWltS.

NOTE: Totals may not add because of rounding.

SOURCE: E. Mansfield, “The Process of Industrial Innovation in the United States and Japan: An Empirical Study,” unpublished seminar paper presented Mar. 1, 1988

in Washington, DC.

Competitive Advantage

What does it take to use technology effectively? The examples mentioned above, and

others, point to the following common factors:

● Appropriate use of technology and science,

new and old—whether a company generates the knowledge internally, or gets it

elsewhere. Much of the science base for

HTS will be available to everyone. To establish a competitive advantage, companies

will have to develop proprietary knowhow, and do it ahead of their competitors.

● Effective linkages between engineering

and marketing. Customers for many of the

early applications of HTS—in military systems, electronics, or perhaps energy storage—will be technically astute. Marketing

will count, but not so heavily as for consumer products.

● Effective linkages between product development groups and manufacturing—a

point already stressed for HTS.

Ž Managerial commitment to risky and uncertain R&D projects. The next chapter explores this dimension more fully for HTS.

What are the conditions under which American firms have trouble in commercialization—

in the effective utilization of technical knowledge, new or old? Under what circumstances

do American firms perform best? Effective policies depend on the answers to such questions.

Generally speaking, OTA assessments have

found the problems to be most acute when it

comes to applications of existing technology

by firms in older industries—and particularly

when it comes to shopfloor manufacturing technologies. In the earlier years of high technology, the United States had potent competitive

advantages: entrepreneurship and venture capital; a decentralized science infrastructure with

many centers of excellence both inside and outside the Nation’s universities; flexible labor

markets, with high mobility among engineers,

scientists, and managers. These strengths have

begun to wane. In many industries, Japanese

companies are out-engineering American

firms. Even in high technology, the Japanese

have been able to move quickly from the laboratory to the marketplace. The days when U.S.

companies could take their time in commercializing R&D are past.

STRENGTHS, WEAKNESSES, AND STRATEGY

What does the discussion above (and in app. problems they failed to anticipate. Powertrains

2A) imply for U.S. abilities in commercializa- , wore out quickly in long-distance driving. Comtion? The first point is simply that taking a new panics like Honda found themselves trying to

product into the marketplace is always diffi- sell cars with fenders that would rust through

cult. In their efforts to penetrate the U.S. mar- after one or two northern winters. Federally

ket, Japanese automakers suffered from many mandated recalls were frequent.
33

Product/Process Strategies

Japan’s automakers overcame these difficulties. They redesigned their products to suit U.S.

needs and tastes, establishing deserved reputations for quality and reliability. They built

strong dealer organizations that helped them

understand American consumers. In contrast

to European manufacturers, the Japanese began developing vehicles specially tailored to the

U.S. market—small pickup trucks, four-wheel

drive vehicles, sports and luxury models. Most

were variants on products sold in Japan and

other foreign markets, but a few—such as Nissan’s Pulsar—were designed primarily in the

United States to appeal to Americans.12

Japan’s automakers learned many lessons

from their American rivals, and learned them

well. The credit goes to the industry, which benefited from government policies, but not nearly

so directly as, say, Japanese computer manufacturers. In the past several years, with their

upmarket moves and new brand names, Japan’s

automakers have taken another leaf from Alfred

Sloan: in turning their automobiles into highfashion products, they have introduced new

models much more quickly than American or

European firms—a necessary capability for implementing such a strategy.

Design/development/tooling cycles for Japanese automakers have shrunk to little more than

half those in the United States; Honda’s model

cycle is down to 40 months, while American

firms take 5 or 6 years.13 U.S. automakers have

‘2J, Yamaguchi, “Quick-change open-top car matches closed

coupe in body rigidity, ” Automotive Engineering, February 1987,

p, 167.

When Toyota models got poor ratings on U.S. crash tests, the

company quickly made design changes that upped their scores—

L. McGinley, “Car Crash Rankings: Safety Guide Or Numbers

That Don’t Add Up?” Wa]] Street ~ournal, Dec. 1, 1987, p. 39.

la’’ Honda’s R&D Mastermind,” Automotive Industries, November 1987, p. 52, More generally, see H. Takeuchi and 1, Nonaka,

“The new new product development game,” Harvard Business

Review, January-February 1986, P. 137; J. Bussey and D.R. Sease,

“Manufacturers Strive To Slice Time Needed To Develop Products, ” Wall Street ~ournal, Feb. 23, 1988, p. 1; R. Poe “American

Automobile Makers Bet On CIM To Defend Against Japanese

Inroads,” Datamafion, Mar. 1, 1988, p, 43; K.B. Clark and T.

Fujimoto, “Overlapping Problem Solving in Product Development,” working paper, Harvard Business School, April 1988,

Part of the Japanese advantage may come simply from putting

looked to computer-aided engineering to narrow the gap. The Japanese, however, appear

to succeed through quite conventional approaches to engineering development, carefully

managed. Certainly they do not have the lead

in such computer-intensive techniques as numerical analysis of vehicle structures, aerodynamic modeling and simulation, or analytical predictions of vehicle ride, vibration, and

handling.

The high-fashion, product differentiation

strategy is new for Japanese companies only

in the automobile industry. It is one the Japanese have used in the past in cases like consumer electronics and motorcycles. Successful targeting of markets—whether for consumer

goods, for capital equipment (machine tools),

or for intermediate products (semiconductor

chips)—has been a hallmark of Japan’s competitive success.14

As discussed in the next chapter, Japanese

companies have already put a good deal of effort into thinking about new applications of superconductivity; they may well locate some of

the possible market niches before American

firms. The Japanese have often carved out substantial markets by starting from small niches;

large, integrated Japanese firms have been more

more engineers to work: GM, Ford, and Chrysler employ a total

of 30,000 engineers, Toyota, Honda, and Nissan more than

40,000—J, McElroy, “Outsourcing: The Double-Edged Sword, ”

Automotive Industries, March 1988, p. 46.

While it takes much longer for American firms to introduce

new products in some industries, according to a recent survey,

the U.S.-Japan difference in design and development times does

not hold across the board—E. Mansfield, “The Process of Industrial Innovation in the United States and Japan: An Empirical Study, ” unpublished seminar paper presented Mar. I, 1988

in Washin@on, DC. Professor Mansfield’s survey does show that

Japanese companies were generally much quicker than American firms when product development efforts began with licensed

technologies. Moreover, Japanese firms willingly absorb substantially higher costs to shorten their development cycles.

W% the Japanese approach to product planning and marketing, see J.K. Johansson and I. Nonaka, “Market research the Japanese way,” Harvard Business Review, May-June 1987, p. 16;

P. Marsh, “The ideas engine which drives Japan, ” Financial

Times, May 29, 1987, p. 14; P. Marsh, “why research is in the

driving seat,” Financial Times, June 2, 1987, p. 12; C. Lorenz,

“ ‘Serum and Scramble’—the Japanese Style, ” Financial Times,

June 19, 1987, p. 19; P.S. Leven, “Repatriate product Design,”

Across the Board, December 1987, p. 39; C. Rapoport, “How

Honda research runs free and easy, ” Financial Times, Feb. 16,

1988, p. 10.
34

aggressive than their American counterparts

in pursuing specialized products, including advanced materials. Japanese companies are willing to start with small-volume production and

grow with their markets—a strategy likely to

prove successful in HTS, indeed one that may

prove necessary.

How do companies based in Japan do so well

at defining and attacking market segments, particularly in countries foreign to them? Most Japanese companies do use market research techniques, although table 2 showed they spend less

on this than American companies. As some

U.S. firms also realize, the best marketing research often remains as informal today as it was

50 years ago—a matter of good judgment from

within the company more than consulting

firms, focus groups, and consumer surveys.

Japanese firms in many industries have also

capitalized on the quality of their goods. Lagging quality not only leaves customers unhappy,

it raises manufacturing costs. Quality and reliability problems have plagued American industries ranging from automobiles to semiconductors. Careful control of the production process

will be necessary for fabricating the new HTS

materials, as it is for high-technology electronic

and structural ceramics, or for integrated

circuits.

The primary point is this: by the 1960s, American firms had come to think of their skills in

engineering and marketing as far and away the

best in the world. If this was true then, it is true

no longer. Many U.S. companies have not yet

faced up to the need to do better. Others periodically rediscover such well-known management and engineering practices as simultaneous engineering, design for production, or

quality engineering, but fail to follow through

with actions that institutionalize them. Some

still look to techniques like quality circles for

miracle cures.

Research, Development, and Engineering:

Parallel or Sequential?

Simultaneous engineering means nothing

more than tackling product and process development in parallel, with overlapping responsibilities in design and manufacturing groups,

if not a fully integrated approach. Simultaneous engineering may be hard to achieve in a

modern American corporation, but in principle is nothing but common sense. A hundred

years ago, technology was simpler and no one

had discovered any need to separate design and

manufacturing.

The chain can be extended back to research.

But given the uncertainties that accompany the

search for new knowledge, and the high costs

of downstream development, many U.S. executives have come to view research, development,

and product planning as sequential processes.

Only when consistent, verifiable, and potentially useful results begin to emerge from the

laboratory do American companies think about

incorporating engineers into the effort. Even

at this point, research may remain separated

from development: the scientists pass along

their findings, but the two groups continue to

work independently. Under these circumstances, the entire process can become almost

purely sequential—running from applied research to product planning and development

to manufacturing engineering, with little

overlap.

Technology-based Japanese companies, in

contrast, have developed simultaneous or parallel processes to a high level. Many are now

busy integrating backward into research–a task

they see as necessary for commercializing high

technologies like HTS. Already, they do a better job of responding to design and marketing

requirements through incremental, applied research.

Japanese managers, moreover, tend to be optimistic about research in general and about

HTS specifically (ch. 3). Perhaps because they

mix development and engineering personnel

into project groups at an early stage, the belief

seems pervasive that useful results of one sort

or another will inevitably emerge from HTS

R&D. Japanese managers have strong convictions on these matters. They believe it wrong

to think about technical developments as proceeding more-or-less linearly from basic research to applied research, then to development

and product design, and finally to process engi-
35

neering. More to the point, they are acting on

these beliefs in HTS.

American managers know just as well that

many of the steps should take place in parallel.

But for reasons ranging from trouble in learning to manage parallel processes effectively (one

reason for longer product development cycles),

to the characteristics of U.S. financial markets,

they do not always act on this knowledge, When

it comes to HTS, American managers have been

relatively cautious; they want to see results from

the laboratory before taking the next step.

COMMERCIALIZING HTS

There is a bright side. The United States retains major sources of strength in commercializing new technologies. Table 3—which

draws heavily on past OTA assessments of

competitiveness—summarizes advantages and

disadvantages of U.S. firms. Table 4 outlines

the implications for HTS. Later chapters expand on many of the points in these two tables,

particularly where the Federal Government has

policy leverage.

Table 3 has a simple message: the United

States has a number of areas of advantage, coupled with several serious handicaps. Those

handicaps—emphasis on short-term financial

paybacks, low priorities for commercial technology development and for manufacturing—

have put U.S. firms at a severe disadvantage

in competing with Japan. Some of the consequences can already be seen in HTS.

On the other hand, American firms have often

been successful—at least in the past—when new

science has led to new products and new industries, especially where fast-growing and

volatile markets promise rich rewards (table 3,

factor 1). American companies perform less

well, and often poorly, at incremental innovation—more-or-less routine improvements to existing products and processes. These kinds of

problems have been much more prevalent in

steel than in chemicals, in machine tools than

in computer software, in automobiles than in

commercial aircraft.

Most of the success stories came in the years

before U.S. industry had much to worry about

from international competition. Table 4 summarizes the lessons that past performance and

events thus far hold for HTS, and compares the

strengths and weaknesses of American companies with those in Japan. Some of the U.S.

entrants will be new companies, started specifically to exploit HTS and staffed by people

with strong credentials in related fields of science and technology. Other firms will move in

from a base in LTS. Both kinds of companies

should be able to respond effectively to the problems and opportunities that emerge in the early

years of HTS—with good ideas and a strong

science base, together with venture capital and

entrepreneurial drive, leading to success in specialized products and niche markets.

The picture could change as the technology

stabilizes and financial strength becomes more

important. When production volumes increase,

manufacturing capabilities will grow more important. Companies will have to carefully tailor

products to emerging markets, and find capital for expansion. U.S. industries that flourished

as infants have run into difficulty as competitors—primarily the Japanese—caught up and

pulled ahead in the race to capitalize on new

approaches to factory production or new knowledge concerning electron devices; in the years

ahead, the biotechnology industry could stumble, just like the semiconductor industry.15

Microelectronics, and Other Precedents

A decade ago the semiconductor industry still

seemed a bastion of U.S. strength. The Japanese were nibbling at the margins, no more.

Today, the Federal Government finds itself putting money into the new consortium Sematech,

trying to help American firms regain a technological lead lost seemingly overnight.

15s0 far, however, there has been little sign of such slippage.

See New Developments in Biotechnology: U.S. Investment in

Biotechnology (Washington, DC: Office of Technology Assessment, July 1988).
36

Table 3.—U.S. Strengths and Weaknesses in Commercialization

U.S. strengths U.S. weaknesses Comments

Factor 1. Industry and market structure: market dynamics.

In the past, U.S. firms performed well in rapidly

growing industries and markets, especially

during the early stages in R&D-intensive industries.

American companies have had trouble coping

with slow growth or contraction. Although new

technologies promising greater productivity

might improve competitive Performance in inOther countries frequently look to public policies to help companies and their employees

adjust to decline.

dustries like steel, ’corporate executives frequently choose to invest in unrelated businesses. Where foreign firms might take a more

active approach to managing contraction,

American companies sometimes let troubled

divisions struggle along, without new invest.

ment, until profits disappear. Then they shut

the doors.

Factor 2. Blue and gray collar labor force.

High labor mobility helps American companies Many development projects depend on crafts- In the past, U.S. wage rates worked to the disattract the people they need. men who can fabricate prototypes and modify advantage of American firms, while creating inthem quickly based on test results and field ex- centives for investments in R&D and new manperience. In some U.S. industries, shortages of ufacturing technologies that could raise

skilled Iabor—e.g., technicians, modelmakers productivity. Today, international differences in

—have begun to slow commercialization. labor costs are less of a factor than in the

U.S. apprenticeship programs have been in de- 1970s.

cline. Vocational training reaches greater fractions of the labor force in nations like West Germany; large Japanese companies invest more

heavily in job-related training for blue- and gray.

collar employees than do American firms.

Factor 3. Professional and managerial work force.

Mobility among managers and technical pro- American companies underinvest in process

fessionals has stimulated early commercial- (as opposed to product) technologies. This is

ization in high-technology industries. New part of a bigger problem: too many managers

products have reached the marketplace more and engineers in the United States avoid the

quickly because people have left one company factory floor:

and started another to pursue their own ideas. ● for managers, marketing or finance has been

Deep and well-integrated financial markets— the road to the top.

e.g., for venture capital—have helped. s engineers—schooled according to an applied

science model—have been insensitive, not

only to role of manufacturing, but to the significance of design and marketing. Put simply, the engineering profession has divorced

itself from the marketplace, and the needs

and desires of potential customers (particularly when it comes to consumer products).

Compounding these problems, many American

companies underutilize their engineers. Finally,

many U.S. firms provide little support for continuing education of their technical employees.

Managers and professionals in the United

States sometimes place individual ambition

over company goals. Competition among individuals may make cooperation within the organization more difficult (e.g., between product

engineering and manufacturing).

More upper level managers in Japanese and

West German firms have technical backgrounds than in the United States; they appear

more sensitive to the strategic significance of

manufacturing, and in at least some cases to

new technological opportunities.

Factor 4. Industrial Infrastructure (also see Factor 6 below).

American companies can call on a vast array of U.S. competitiveness in capital goods like ma- At present, the independent computer software

vendors, suppliers, subcontractors, and service chine tools has slipped, compounding the prob- and services industry is perhaps the preemifirms for needs ranging from fabrication of pro- Iems in manufacturing technology. nent illustration of U.S. infrastructural strength.

totypes to financing, legal services, and mar- Arms-length relationships between American

keting research. Few other countries have a firms and their vendors and suppliers may not

comparable range Of capabilities so easily be as conducive to commercialization as the

available. a

relationships found in Japan (relations which

might be classified as close and cooperative,

or perhaps with equal accuracy as coercive and

dependent).

% the importance of specialty firms for the U.S. microelectronics industry, particularly those supplying semiconductor manufacturing equipment, see h’rterrrat/orra/

CornpetWveness In Electrons (Washington, DC: November 19S3), PP. 144-145. On sewice inPuts, see Irrternatlonal Conwet/t/on In Services (Washington, DC: July

I@~, pp. 32-34 and 55-57.
37

Table 3.—U.S. Strengths and Weaknesses in Commercialization—Continued

U.S. strengths U.S. weaknesses Comments

Factor 5. Technology and science base (also

U.S. strength in basic research—both science

and engineering—has been a cornerstone of

commercialization.

The national laboratory system is a major resource, although one that has not been turned

to the needs of industry.

Multidisciplinary R&D—essential in industrial

(and government) laboratories–has been the

exception rather than the rule in American

universities. Foreign university systems, however, have probably been even worse at multidisciplinary research.

see Factor 7 below).

U.S. strength in basic research has not always

been matched by strength in applied research,

nor in the application of technical knowledge.

The Nation depends heavily on a relatively small

number of large corporations for industrial R&D

and the development of new commercial technologies. When R&D is not close enough to anyone’s interests, gaps open in the technology

base. Moreover, U.S. firms seem to be falling

behind in their ability to move swiftly from the

R&D laboratory to the marketplace. Diffusion

of technology within the U.S. economy has been

a persistent and serious problem.

American engineers and their employers have

often remained unfamiliar with technologies developed elsewhere, reluctant to adopt them.

This reluctance is evident, for instance, when

it comes to rules of thumb and informal procedures—sanctioned by experience if not by

scientific knowledge. Examples include shopfloor practices for job scheduling and quality

control.

The science base and technology base are not

identical. The latter spreads much more

broadly, encompassing, for instance, the intuitive rules and methods—many of them tacit

rather than formally codified—that lie at the

heart of technological practice. The semiconductor and biotechnology industries have both

sprung from scientific advances. But the theoretical foundations for each remain relatively

weak. As a result, progress depends heavily on

experience and empirical know-how—again,

part of the technology base but not the science

base.

Japanese and German firms give commercial

technology development higher priorities. Governments in these countries also give more consistent support to generic, pre-competitive

R&D.

Factor — ---- 6. The business environment for innovation and technology diffusion (also see Factor 7 below).

Clusters-of-knowledge and skills such as found

in the Boston area, or Silicon Valley, help speed

commercialization. While some of this entrepreneurial vitality can be linked to major research universities, other regions have become

centers of high-technology development even

though lacking well-known schools like MIT or

Stanford.

The size and wealth of the U.S. market, and the

sophistication of customers—especially business customers—work to the advantage of innovators; indeed, foreign companies sometimes come to the United States simply to try

out new ideas.

Many American firms seem preoccupied with

home runs—major breakthroughs in the

marketplace—unwilling to begin with niche

products and grow gradually.

Poor labor relations sometimes slow adoption

of new technology. Reluctance among American engineers and managers to learn from

shop-floor employees hurts productivity and

competitiveness.

Companies in other parts of the world may be

somewhat more willing to cooperate in R&D.

Linkages between universities and industry

could be stronger, but nonetheless probably

function better in the United States than

elsewhere.

Business and consumer confidence encourage

innovation and rapid commercialization. Over

the past few years, business confidence appears to have ebbed somewhat–a casualty of

Federal budget deficits, trade imbalances, rapid

exchange rate swings, and the evident inability

of the Government to address these issues. At

the same time, the political stability of the

United States remains a major strength.

Factor 7. The policy environment for innovation and technology development.

The United States h-as a deeply rooted commitment to open markets and vigorous competition. (So does Japan, when it comes to domestic markets and domestic competition.) With

widespread economic deregulation since the

early 1970s—pIus a tax system and financial

markets that reward entrepreneurs—startups

and smaller companies have often been leaders

in commercializing new technologies.

Purchases by the Federal Government have

stimulated some industries, particularly in their

early years. Examples range from aircraft and

computers to lasers and semiconductors.

A broad range of other U.S. policies—e.g.,

strong legal protections for intellectual property-helps companies stake out and exploit

proprietary technological positions.

Deregulated U.S. financial markets bear some Many government policies act on commercial iof the blame for the risk aversion and short-term zation indirectly. Industries have evolved in

decisions common in American business. different ways in different countries, in part beSometimes U.S. regulatory policies delay com- cause of these influences:

mercialization. Examples include approvals for • Along with antitrust, financial market

drugs and pharmaceutical products. regulations—e.g., rules covering holdings of

stock in one company by others—affect the

extent of vertical “and-horizontal integration.

● Tax policies—treatment of capital gains, R&D

and investment tax credits—influence corporate decisions on investments in new products and processes.

● Antitrust enforcement helps set the environment for inter-firm cooperation in R&D.

. Trade protection can reduce the risks of new

investment, thereby stimulating commercialization. On the other hand, protected firms

may grow complacent and decline to invest

in new technologies.

● Technical standards sometimes act to speed

the adoption of new technologies. If premature or poorly conceived, however, they can

impede commercialization.

● Education and training have enormous long

run impacts on commercialization and competitiveness.

SOURCE: Office of Technology Assessment, 1988.
38

As yet, no one knows very much about the

technical problems that will have to be overcome in commercializing the new superconductors. Still, parallels have begun to emerge.

In microelectronics, product and process knowhow are closely tied.16 This will also be the case

in HTS, where the companies that move down

learning curves the fastest will reap competitive advantages.

Semiconductor firms must grapple with difficult technical problems in the heat of fierce

competitive struggles: understanding the effects

of purity and defect population in the silicon

IeInternatjona] competitiveness in Electronics, OP. cit., ch. e.

As the example of Trilogy Systems illustrates, firms must be able,

not only to design, but to build new types of devices; Trilogy

had to abandon its planned line of computers after finding it

could not fabricate the wafer-scale integrated circuits required.

crystals with which production begins; process variables for the steps in diffusion or formation of oxide layers. Costs depend on yield—

the fraction of functional chips produced. Both

yield and quality depend on the design of the

chip as well as control of the manufacturing

process. With the technology of semiconductor devices ahead of the underlying science,

chip designers and process engineers must proceed on a largely empirical basis as they work

toward ever denser and more powerful circuits.

New applications of HTS will likewise require

tailoring of material properties on a microscopic scale, probably without much theoretical guidance.

Companies in the semiconductor industry

must solve problems today so they can compete in the marketplace tomorrow. HTS is not

Table 4.–U.S. Advantages and Disadvantages in Commercializing HTS

U.S. advantages U.S. disadvantages Comments

Factor 1. Industry and market structure; market dynamics.

New science and technology make for condi- At some point, financing constraints may make Past U.S. successes in high technology came

tions under which American firms should be it difficult for startups and smaller U.S. compa- when international competition was a minor

able to commercialize quickly and compete ef- nies to continue in HTS on an independent ba- factor. Foreign firms have now proven they can

fectively. sis. Mergers may be necessary for growth. move quickly from the R&D stage to the market place.

Mergers or other arrangements driven by

financing needs sometimes help, sometimes

hurt. Ties with larger companies may stifle innovation. In biotechnology, linkages between

small firms and larger companies have helped

with regulatory approvals and process scaleUPS. American semiconductor firms, however,

have seldom been willing to sacrifice their independence for new capital—one reason they

have fallen behind large, integrated Japanese

competitors.

Factor 2. Blue and gray collar labor force.

Some American companies start with a core of Japanese companies with ceramics businesses So far, few American ceramics firms have been

employees having experience in low-tempera- can draw on larger numbers of people with rele- prominent in HTS R&D.

ture superconductivity (LTS). A portion of these vant skills. These employees will help give Jaskills will translate to HTS. At the same time, pan a head start in certain kinds of HTS R&D–

given that the new HTS superconductors are e.g., mechanical behavior, processing and fabrifundamentally different materials—ceramics cation. Japanese firms also have many workers

rather than metals—a wide array of quite differ- with extensive and transferable experience in

ent skills will be needed. Some of the skilled microelectronics.

employees may come from related industries,

including electronics.

Factor 3. Professional and managerial work force.

Managers, engineers, and scientists moving Decisionmakers in American companies, large At least initially, HTS startups will have

into U.S. HTS companies from industries like and small, may not be willing or able to make managerial staffs with strong technical backmicroelectronics will bring new insights and long-term commitments to HTS-related R&D, grounds. Some larger U.S. firms with the renew ideas. particularly more basic work. sources to compete in HTS-related markets
39

Table 4.—U.S. Advantages and Disadvantages in Commercializing HTS—Continued

U.S. advantages U.S. disadvantages Comments

Processing and fabrication will pose difficult

technical problems, of a sort that American

companies have not been very good at solving.

Much of the R&D needed to develop HTS will

be empirically-based engineering, with heavy

doses of trial and error. Japanese companies

do very well at this kind of development, often

better than their American counterparts.

may chose other investments because managers fail to understand the technology or recognize the opportunities.

Managers with previous experience in LTS may

tend to err on the side of conservatism. On the

other hand, HTS has had more than its share

of exaggerated publicity already. A cautious

view of HTS, born of past experience in LTS,

could prove realistic.

Factor 4. Industrial infrastructure (also see Factor 6 below).

The generally strong U.S. infrastructure for high When it comes to the science and technology Japan’s HTS infrastructure exists mostly inside

technology should be an advantage in HTS. of ceramics, specifically, the U.S. infrastructure large, integrated companies. In the United

is weak. American HTS companies with States, startups will have to rely heavily on help

ceramics-related technical problems may have from outside. The US. approach has advantrouble finding help. tages in flexibility and creative problem-solving,

while Japan’s reliance on internal resources

creates reservoirs of skills and expertise that

will be very effective over the longer term.

Factor 5. Technology and science base (also see Factor 7 below).

Despite lack of attention to ceramics compared Military and civilian applications of HTS will di- In 1966, U.S. engineering schools granted 3700

with Japan, the United States has a relatively verge rapidly, limiting the spillover effects from PhDs—but only 14 in ceramics.

strong base in materials R&D. DoD R&D spending. Without major policy shifts, Federal agencies

In the early years of HTS development, the de- will fund little R&D that directIy supports comfense emphasis of federally supported R&D will mercialization. Nonetheless, the United States

work in some ways to the U.S. advantage. Fund- is beginning to address the problems of transing from the Department of Defense (DoD) will ferring federally funded R&D to industry.

help train engineers and scientists, and may American companies will probably be at a dissupport the development of some dual-use HTS

technologies (e.g., powerful magnets). DoD advantage for years to come in solving the

support for processing R&D could be especially

manufacturing-related problems of HTS. To

important.

make progress here, American scientists and

engineers—including those engaged in univerA number of national laboratories have the re- sity research—must be willing to spend more

sources, including specialized equipment, to of their time working on industrial problems

help with the technical problems of HTS. (even if the scientific and university communities continue to view practical work as less than

fully respectable). Without substantial efforts

in manufacturing R&D, some American companies could be forced into partnerships with Japanese firms simply to get access to processing know-how.

Factor 6. The business environment for innovation and technology diffusion (also see Factor 7 below).

U.S. markets should prove receptive to new

products based on HTS. Some foreign companies could find they need an R&D presence

here simply to keep up.

With Japanese firms starting on a par with

American companies, know-how from abroad

may prove essential for keeping pace. Many

American companies have been unable or unwilling to reach useful technology transfer

agreements with Japanese firms. Lack of experience in doing business with the Japanese

could become a significant handicap in HTS.

University-industry relations in the United

States seem to be following patterns similar to

those in biotechnology, with strong and

productive linkages developing.

Small U.S. firms have begun devising strategies

for commercializing HTS. Many larger American firms with the resources to compete in

HTS, however, seem to be adopting a wait-andsee attitude.

Factor 7. The policy environment for innovation and technology development.

So far, the U.S. policy approach seems con- After the initial announcement of the Adminis- While Federal procurements helped the U.S.

ducive to entrepreneurial startups in HTS. tration’s 1 l-point superconductivity initiative, semiconductor industry get off the ground in

There is little indication that the 1966 changes little was heard for 7 months—a long time in the 1960s, poor experience with demonstration

in U.S. tax law—which increased rates on cap- such a fast-moving field. Budgetary uncertain- projects in energy and transportation has

ital gains—have choked off funds for HTS ties, moreover, delayed decisions on Federal soured prospects for some kinds of policy

startups. R&D funding well into the 1966 fiscal year, ham- options that otherwise might provide stability

pering progress in universities, industry, and and support for HTS during a long period of

the national laboratories. gestation.

Some companies continue to express concern

that U.S. antitrust policies will limit opportunities for consortia and other forms of joint R&D.

However, OTA has not learned of any case in

which U.S. antitrust enforcement has in fact

stopped firms from cooperating in R&D.

SOURCE: Office of Technology Assessment, 1988.
40

yet at this stage. There is no market. The race

is still a scientific race. But if HTS lives up to

expectations, some of the history of microelectronics may be replayed.

Commercialization, indeed, may begin with

specialized electronic devices—perhaps very

sensitive detectors of electromagnetic signals,

or high-speed digital circuits (app. B). HTSbased devices maybe used in conjunction with

semiconductors. Other parallels are nontechnical—matters of industrial structure, corporate decisionmaking, and public policy. Relatively small U.S.-based semiconductor firms

find themselves competing with vertically integrated Japanese multinationals, enterprises

with far more money and manpower. These

same Japanese firms have made heavy commitments to HTS R&D. Government policies for

HTS in Japan, while far removed from the (false)

stereotype of industrial targeting, show many

familiar features: notably, pragmatic attention

to bottlenecks that might slow commercialization by Japan’s very aggressive private sector.

The Japanese firms that have made so much

progress with electronic and structural ceramics will be well placed when it comes to fabricating wires, cables, tapes, and other forms of conductors made from the new HTS materials.

Learning to make practical conductors from

the new materials—for the circuitry inside computers, or for electrical windings in generators

or energy storage systems—will require a great

deal of trial-and-error development. Japanese

companies do well at this kind of engineering.

Some of the specific skills in ceramics processing they have developed will transfer, just

as will some of their skills in semiconductor

processing. American firms, in contrast, have

fallen down badly in processing and manufacturing skills over the past two decades.

HTS Technologies

Appendix B outlines prospective applications

of HTS (table B-l), including estimated time

frames for commercialization (table B-3). Early

applications of HTS will be highly specialized—

military equipment, niche markets on the commercial side (perhaps in scientific apparatus,

or for nondestructive inspection). Japanese

firms will provide strong competition from the

beginning.

High-Current, High-Field Applications;

Electrical Machinery and Equipment

Japan’s lack of energy resources means strong

motives for commercializing HTS in order to

conserve electrical power. Even though superconductivity offers relatively small efficiency

increments (because large-scale conventional

equipment is highly efficient already), Japanese

companies may make more rapid progress than

American firms in superconducting motors and

generators, as well as transformers and energy

storage systems. Similar forces are at work for

magnetically levitated trains, where the motivation comes from a heavy existing commitment to fixed-rail passenger transportation—

natural in a small and crowded nation like Japan. Summarizing:

●

●

●

●

Both the United States and Japan start from

a roughly equivalent experience base in

LTS motors and generators, but the Japanese have more work underway at present,

and will probably pull ahead when and if

suitable HTS conductors become available.

Each country has one or more active LTS

energy storage projects (large superconducting rings in which electrical current

circulates indefinitely, to be withdrawn

when needed). With SDI funding, two U.S.

firms are designing a prototype ring that

would quickly dump the stored energy into

powerful lasers. Japan’s R&D has been

directed at storage for electric utilities,

where discharge rates will be much lower.

While the U.S. effort will yield some lessons for utilities, design trade-offs will bias

the prototype—and the knowledge gained

from it–towards the quick-discharge military application.

DoD R&D aimed at coil and rail guns and

other high-power, high-field applications

(e.g., ship propulsion) could strengthen the

generic technology base in HTS, helping

commercial industries indirectly.

When it comes to possible applications

such as magnetically levitated trains, the
41

United States starts out behind, having

halted R&D in 1975 (see box K, ch. 3). However, it is not yet clear that HTS would offer much advantage here.

● In medical electronics—e.g., MRI—the

United States has a substantial lead in

know-how and experience, one that should

persist (although LTS might again continue

to be the technology of choice for some

time).

Pursuing most of these applications will demand technical resources and experience, as

well as financing, on a scale beyond that of the

small, entrepreneurial firms that emerged in

the early years of LTS, and those being started

today to exploit specialized HTS applications.

If big U.S. companies prove reluctant to move

into markets for electric power equipment—and

smaller entrants cannot—integrated foreign

producers will probably take the lead, internationally and perhaps in the U.S. market.

Superconducting Electronics

Progress in thin films for electronics should

be more rapid than for the conductors needed

in high-power applications. When it comes to

electronics, the Japanese will probably benefit

to some extent from R&D on Josephson-based

computers; government and industry in Japan

continued work on JJs for computing after U.S.

companies dropped most of their own activity

(see box J in the next chapter).

Josephson junctions, however, function only

as two-terminal devices, weak amplifiers at

best. No one knows how to make useful threeterminal devices like transistors from superconducting materials. A practical three-terminal

superconducting device, even one restricted to

liquid helium temperatures, could open up a

broad range of opportunities. Whether this will

be possible is an open question. JJs also make

for highly sensitive detectors of infrared and

other electromagnetic radiation. LTS sensors—

and in the future perhaps HTS sensors (e.g.,

for satellites, where passive cooling should keep

operating temperatures below the transition

temperatures of the new materials)—have potentially important military applications. As a

result, DoD has funded a good deal of R&D over

the years on these devices, as well on superconducting components for very powerful computers. AS DoD R&D increasingly focuses on

HTS, some of its work—perhaps in sensors—

will contribute to commercial spin-offs.

Japanese companies will prove able competitors over the long run in both devices and systems applications of HTS. In their efforts to

catch up with IBM and other U.S. computer

firms, Japan’s integrated manufacturers—several of which make chips, computers, and

telecommunications hardware—have been

spending heavily on R&D for years. They are

seeking a technological window that would

help them overtake the United States in hightechnology electronics, and particularly in

computers—a field where American firms remain broadly superior. The Japanese see HTS

as a possible window.

Smaller American firms will probably find

electronics markets attractive. Hypres, for example, founded by an ex-IBM physicist after

the computer manufacturer scaled back its LTS

JJ computer project in 1983, introduced a very

high-speed LTS-based data-sampler in 1987.

The company hopes its experience base will

give it advantages in HTS. Other small LTS

specialists also plan to move into HTS by building on their past work with the older materials.
42

CONCLUDING

The next chapter looks in some detail at corporate strategies toward HTS in the United

States and Japan. European countries, too, have

excellent science and engineering capabilities

in both private and public sectors. But longstanding problems in capitalizing on these

strengths suggest that European firms will not

be able to keep up in the race to commercialize

HTS. Box D summarizes the reasons.

Companies everywhere look for proprietary

advantages from R&D—patentable inventions,

expertise they can protect through trade secrets.

Semiconductor companies, for example, each

have their own process technology. Much of

the information is closely held; some of it is embodied in the skills of their employees. In LTS

as well, proprietary know-how helped small

companies stake out positions in the manufacture of wire and in specialized electronics.

The Japanese developed a great deal of proprietary technology in commercializing the

VCR. The story is one of Japanese success in

innovation—engineering design and development, market research, mass production manufacturing. But in related markets like personal

computers there is little evidence of slippage,

despite many past predictions of a Japanese

takeover. Nor have the Japanese been able, for

instance, to move from success in high-density

memory chips to microprocessors. U.S. leads

in computer software, or biotechnology, may

have narrowed in the last 5 years, but not by

much. Japan’s bet on structural ceramics may

not pay off; the technical problems of achieving reliability in very brittle materials could

prove too difficult.

Scientific knowledge and technological understanding–not the same–interact throughout such development efforts. Sometimes new

science leads to new technology. This has been

the case in superconductivity, beginning with

its discovery in 1911, but especially since the

1960s. In other cases, demand for new technology spurs scientific advance. Much military

R&D works this way.

Corporations are more likely to invest their

own money in R&D, and take the risks of commercialization, if they expect rapid market

growth. Government policies can reduce these

risks. Trade protection does so, along with financial subsidies, and government purchases

of a company’s products. Strong legal protections for proprietary technology make R&D

more attractive. Some governments go so far

as to give financial help to customers for new

technologies (computers and industrial robots

in Japan). But with new knowledge eventually

becoming available everywhere and to everyone, those who use it fastest and most effectively will come out ahead in international competition.

U.S. industry has been falling behind in the

use of new technical knowledge, in part because

of slow product development cycles. In many

fields, the Japanese are not only doing a better

job of engineering than their American rivals,

they are doing it faster. Speed in moving from

research to production and the marketplace will

be a major factor in competitive success in HTS,

just as in industries like automobiles or semiconductors. American firms have also had trouble as production volumes rise, and been poor

at incremental product/process improvements.

Their production capabilities enabled Japan’s

semiconductor manufacturers to establish

themselves in world markets and compete successfully with American firms that had the lead

in many of the functional aspects of circuit design. Many of the manufacturing techniques

needed for HTS electronics will be similar to

those for semiconductor devices (and ceramics).

Still, at the level of R&D and product development teams, Japanese firms do not seem to

operate in greatly different fashion from successful American companies. The differences

that do exist are important, however:17

ITK. Imai, I. Nonaka, and H. Takeuchi~ “Managing the New

Product Development Process: How Japanese Companies Learn

and Unlearn,” The Uneasy AIJiance: Managing the ProductivityTechnology Dilemma, K.B. Clark, R.H. Hayes, and C. Lorenz

[eds.) (Boston, MA: Harvard Business School Press, 1985), pp.

372-373. Also see the “Commentary” by J.L. Doyle, p. 377.
43

●

●

American firms tend to proceed through narrow technical expertise; Japanese coma more analytical and sequential approach, panics staff their development groups with

one of narrowing down the alternatives. greater numbers of generalists, including

Japanese firms operate in a looser style, people from sales and marketing. They may

with more room for trial-and-error. also involve the firm’s suppliers.

product development groups in the United • Japanese companies use product developStates rely more heavily on engineers with ment groups as a device to break down
44

some of the rigidities in their corporate

cultures—e.g., the seniority system—and

to create a place where creativity can flourish. Many American firms would like to

think they don’t suffer from such problems,

but probably do.

At the same time, all of the attributes of Japanese product development efforts can be found

in some American firms. It is the more successful Japanese firms that are visible in the United

States: we seldom hear about the failures.

HTS poses difficult technical challenges. Japanese companies will, no doubt, solve some of

the purely technical problems before American

firms. Japanese companies will also do well at

scaling up HTS manufacturing processes. Some

will succeed in defining profitable markets. In

short, they will prove highly capable and competitive in HTS. And while many large U.S. corporations have been turning away from longterm, high-risk R&D—the kind of work that will

be called for in commercializing HTS–-the Japanese are making a major effort to show the

world they can be as creative and innovative

in science as they are in technology. It would

be a grave mistake to assume that American

firms will have a head start in HTS because of

U.S. skills in research. The suddenness of the

turnaround in microelectronics should have

pounded home the message that both industry

and Government will need to do things differently in the future.

APPENDIX 2A: R&D AND COMMERCIALIZATION: FOUR EXAMPLES

Ceramics for Heat Engines1

The U.S. Government has spent perhaps $300 million since the early 1970s pursuing ceramic engines.

Much of the money has gone for applied research

and development on components, and for demonstrations. Success has been elusive.

Over the past two decades, advanced ceramics

have come into widespread use in electronics, as

well as for specialty applications such as wear parts

and cutting tools. Ceramics hold their strength at

high temperatures much better than metals, but are

brittle. If reliable ceramic combustors and rotor

blades could be made for gas turbines, operating

temperatures could be raised, making possible

smaller, lighter, and more efficient powerplants.

Increased Automobile Fuel Efficiency and Synthetic Fuels (Washington, DC: Office of Technology Assessment, September 1982), pp. 144-

145; T. Whalen, “Development Programmes–USA,” Proceedings of the

First European Symposium on Engineering Ceramics, Feb. 25-26, 1985

(London: Oyez Scientific and Technical Services Ltd., 1985), p. 177; K.H.

Jack, “Silicon Nitride, Sialons, and Related Ceramics,” High-Technology

Ceramics: Past, Present, and Future, W.D. Kingery (ad.) (Westerville, OH:

American Ceramic Society, 1986], p. 259; Ceramic Technology for Advanced Heat Engines, Publication NMAB-431 (Washington, DC: National

Academy Press, 1987); J. Zweig, “Deja vu–yet again,” Forbes, NOV. 16,

1987, p. 282; “Case Studies of ‘Flagship’ Technology,” prepared for OTA

by W.H. Lambright and M. FeUows, Syracuse Research Corp., under contract No. H3-5565, Dec. 31,1987, ch. IV; R.P. Larsen and A.D. Vyas, “The

Outlook for Ceramics in Heat Engines, 1990-2010: Results of a VVorldwide Delphi Survey,” Paper No. 880514, prepared for the 1988 International Congress, Society of Automotive Engineers, Detroit, Feb. 29-Mar.

4, 1988; Advanced Materials by Design: New Structural MateriaJs Technologies, op. cit., ch. 2.

possible defense applications include stationary

power units and engines for tanks, trucks, and

cruise missiles (ceramic components may never be

reliable enough for manned aircraft).

In 1971, DoD’s (Defense) Advanced Research

Projects Agency embarked on a ceramics R&D program, funding mission-oriented work of interest to

the Army and the Navy on ceramic gas turbines,

as well as research into design methodologies for

brittle materials. The DARPA program continued

into 1977, with funding that averaged slightly over

$10 million annually. The Army continued some

ceramic engine work thereafter, but DOE (then the

Energy Research and Development Administration,

ERDA) soon emerged as the primary source of support for applications-oriented ceramics R&D.

The ERDA program, in which NASA also participated, aimed at a gas turbine engine for trucks,

seeking better fuel economy. Gas turbines make

more sense for trucks than for passenger cars,

which operate most of the time at light loads, where

turbines give poor fuel economy. However, the focus on truck engines did not last. In 1980, responding to a high-level political call for the “reinvention

of the automobile,” DOE created a new program—

one that would demonstrate small gas turbines for

passenger vehicles. Initially funded at $20 million

annually, the incoming Reagan Administration

sought to scale the effort back (along with other

energy R&D); lobbying by industry contractors

helped keep things going.
45

Recent Federal spending (for all structural ceramics R&D) has averaged about $50 million per year

(figure 2A-1), but the turbine programs appear to

have moved prematurely into development and

demonstration, before establishing an adequate

technology base, Industry cost sharing has been

relatively low; companies that saw more value in

the work presumably would be willing to kick in

money at a higher level.

Rather than turbines, Japanese firms have put

much of their effort into piston engines, both gasoline and diesel. While brittleness is a serious problem in ceramics for piston engines, it is easier to

deal with than in highly stressed rotating blades.

Moreover, ceramics can be introduced incrementally, substituted for a few parts in an otherwise conventional design.

Some of the technical problems of structural ceramics overlap those that will be encountered in

commercializing HTS ceramics. A stronger basic

research effort in ceramics, rather than the demonstration projects of recent years, might have put

the United States in a better position to commercialize the new superconductors.

Video-Cassette Recorders*

Beginning in the 1950s, and through the following decade, half a dozen and more Japanese companies raced to develop low-cost VCRs. Commercialization meant solving a long chain of tough

engineering problems, so that VCRs could be

produced cheaply with the features consumers

wanted.

Helical scan video-tape recording technology–

first patented by Toshiba (table 2A-1)—became a

critical feature in VCRs, although Toshiba itself

never capitalized on its early lead in helical scanning. Matsushita entered pilot production first, in

1973, but shortly withdrew, deciding its technology was not good enough. Two years later, nearly

20 years after the U.S. firm Ampex built the first

21nternational Competitiveness in Electronics, op. cit., pp. 70, 119-123,

and 186-187; R.S. Rosenbloom, “Managing Technology for the Longer

Term: A Managerial Perspective,” The Uneasy Alliance: Managing the

Productivity-Technology Dilemma, op. cit., p. 297; R.S. Rosenbloom and

M.A. Cusumano, “Technological Pioneering and Competitive Advantage:

The Birth of the VCR Industry,” California Management Review, vol.

XXIX, summer 1987, p. 51.

Figure 2A-1.-- Federal Funds for Structural Ceramics R&D

—

—
46

Table 2A-1.—Chronology of Video-Tape

Recorder Developments

1951

1953

1954

1956

1958

1962

1969

1970-71

1971

1971

1972

1973

1975

1976

1988

R&D begins at RCA.

RCA demonstrates fixed head scanner.

Toshiba files patent applications for helical

scanning; prototype follows in 1959. (Earlier

U.S. and European patents were never reduced

to practice.)

Ampex introduces broadcast model videotape

recorder (VTR) with rotating scanning heads.

(VTRs use reel-to-reel tape, rather than

cassettes.)

Several Japanese firms, including Sony and

Matsushita, embark on R&D directed at VTRs

for consumer markets; RCA drops its work on

consumer model VTRs.

Sony introduces its first helical-scanning VTR,

intended for institutional markets (business and

industry, schools); JVC follows in 1983.

Sony announces first video-cassette recorder

(VCR), replacing reel-to-reel tape with a

cartridge.

Ampex Instavideo camera/recorder system

shown in prototype form—never marketed

because of production problems.

Sony U-Matic marketed for institutional use at

$1000.

RCA resumes VTR R&D, drops out again in

1974.

JVC develops prototype of its VHS system.

Matsushita enters pilot production with a

consumer VCR, but withdraws after a few

months.

Sony introduces Betamax for home use.

JVC brings VHS recorders to market.

Sony to begin selling VHS machines alongside

its lagging Betamax system.

SOURCES: W.J. Abernathy and R.S. Rosenbloom,“The Institutional Climate for

Innovation in Industry: The Role of Management Attitudea and Practices,” The 5-Year Outlook for Science and Technology 1981: Source

Mater/a/s, Volume 2, NSF 81-42 (Washington, DC: National Science

Foundation, 1981), p. 407; R.S. Rosenbloom, “Managing Technology

for the Longer Term: A Managerial Perspective,” The LJneasy A//iance:

Managing the Productivity-Technology Dllenrma, K.B. Clark, R.H.

Hayes, and C. Lorenz (eds.) (Boston, MA: Harvard Business School

Press, 1985), pp. 317-327; R.S. Rosenbloom and M.A. Cusumano,

“Technological Pioneering and Competitive Advantage: The Birth of

the VCR Industry,” California Management Review, vol. XXIX, summer 1987, p. 51.

broadcast recorders (the size of a closet and selling

for $50,000), Sony’s Betamax opened the consumer

market.

That an American firm produced the first videotape recorders for broadcast applications was close

to irrelevant. The Betamax represented the fourth

generation of Sony’s engineering development—

the seventh generation if the company’s earlier industrial and institutional models (e.g., the U-Matic,

which appeared in 1971) are included. Japanese

companies, competing fiercely with one another,

persisted with the VCR for years, in the face of many

disappointments.

It may be true in a narrow sense to say that the

United States invented the videotape recorder and

the Japanese commercialized it. But in fact, some

15 companies — American, Japanese, European—

demonstrated 9 different technical approaches to

home video in the early 1970s. It took many years

of money and manpower commitments by Japanese

companies to win the race, and a great deal of highly

creative engineering—focusing on manufacturing,

as well as product design. Once the VCR became

a commercial reality, competition centered on cost

reduction, better image quality (where manufacturers of magnetic tape made major contributions),

and longer recording and playing times.

Firms like Zenith and RCA—which now put their

labels on foreign-made machines—never pursued

consumer VCRs with the doggedness of the Japanese. After about 1980, no American company

could have entered without some sort of breakthrough—a product that would have opened a new

round of competition. The Japanese were simply

too far down the learning curve. South Korean firms

were in a different position: with wage rates well

below those in Japan, they had potential cost advantages. When the Japanese refused them licenses,

Korean firms developed their own VCRs.

The essential ingredients in Japanese success?

First, willingness to make long-term investments in

risky and expensive product development efforts.

Second, the manufacturing capability to massproduce precision electro-mechanical components

such as the helical read-write heads that proved a

key in turning the video-tape recorder into a household product. Commercialization of the VCR exemplifies the kind of incremental improvement and

market-oriented engineering that the Japanese have

been so good at.

Is the VCR story exceptional? Not really, and certainly not in the context of consumer electronics,

an industry that had stagnated in the United States

by the mid-1970s. Price competition in traditional

products like color TVs was fierce, imports were

flooding the marketplace, and the stronger U.S.

firms like RCA and GE were diversifying into other

lines of business.

Still, the risks did not stop RCA from investing

in the VideoDisc.3 Indeed, the VideoDisc was a bold

3M. B.W. Graham, RCA and the VideoDisc: the business of research

(Cambridge, UK: Cambridge University Press, 1986]. The company ultimately lost more than half a billion dollars.
47

choice. If successful, it would have given RCA a

unique product—something that none of its Japanese rivals had. In contrast, pursuit of VCR technology would have meant competing in a class of

products that the Japanese plainly would be able

to build cheaply and well. RCA managers knew

from experience in color TV production how difficult this would be, particularly given the Japanese

strategy of attacking consumer electronics markets

worldwide (whereas RCA’s consumer sales had

been confined to the U.S. market).

MRI Systems4

Magnetic resonance imaging has been the biggest

market for conventional superconducting technologies over the past few years. In 1987, two dozen

companies worldwide sold a total of 500-plus MRI

systems to hospitals and clinics. At roughly $2 million each, industry sales came to perhaps $1 billion.

Both production and sales are concentrated in the

United States. Commercialization took many years,

following research showing that nuclear magnetic

resonance (NMR)—a discovery made by physicists

—could be a powerful tool for medical diagnosis.

To construct an MRI image, the patient must be

placed within a strong magnetic field—commonly

produced by an LTS magnet. A computer processes

the resulting NMR signals, creating an image the

physician can examine (like an X-ray). MRI provides

better contrast and resolution, particularly for the

brain and spinal cord, than competing diagnostic

imaging techniques, including ultrasound and CT

scanning.

During the middle 1970s, more than a dozen companies in the United States, Europe, and Japan began working to commercialize MRI. Some dropped

out along the way. Others were bought by stronger

firms, or merged with competitors. Japanese companies entered late, and have not been very active

outside their home market.

European firms led the way in engineering development. The British company EMI built the first

prototype in 1978, and Bruker, a West German

manufacturer, followed the next year. Both these

companies had prototype systems operating in clinical settings by 1981. Shortly thereafter, EMI

decided to leave the medical equipment business,

and sold its technology to a competitor. By the end

4Health Technology Case Study 27: Nuclear Magnetic Resonance Imaging Technology (Washington, DC: Office of Technology Assessment,

September 1984]; “Superconductive Materials and Devices, ” Business

Technology Research, Wellesley Hills, MA, September 1987, pp. 38-50.

of 1983, eight firms had commercial prototypes

available—three American companies, four European, and one based in Israel,

Early in design and development—e.g., during the

stage labeled alternative conceptual design in figure 3 (earlier in the chapter)—each firm faced decisions on its magnet system. The alternatives—

permanent magnet, resistive (non-superconducting), superconducting—carried advantages and disadvantages in terms of factors such as initial and

operating costs, as well as field characteristics like

strength and stability. Most companies chose LTS

magnets, with several pursuing conventional magnet designs in parallel. Because the design of the

magnet affects image quality—a central concern in

purchasing decisions by hospitals–feedback from the

clinical studies and clinical testing stages (figure

3 played a vital role in refining prototype designs.)

This brief description illustrates, first, the ways

in which research may enter the commercialization

process. In this case, the R&D ranged from nuclear

physics (the NMR phenomenon itself), to the medical studies demonstrating that MRI could be a valuable diagnostic tool, to computerized signal processing and superconducting magnet design,

MRI systems emerged as viable commercial products in 1984. It was only then that designs stabilized and production became relatively routine, at

least in the leading companies. It took 38 years to

go from scientific discovery (experimental verification of NMR) to marketplace success. Commercialization in the sense of engineering development

spanned the years 1977 to 1984.

Regulatory approvals were an early hurdle. The

U.S. Food and Drug Administration spent several

years evaluating the new technology. Manufacturers had to estimate the effects of third-party

payment policies on market growth: Would Government agencies responsible for Medicare and

Medicaid give a quick okay to the new technology?

Or would they delay? How about the big insurance

plans like Blue Cross/Blue Shield? In fact, hospitals were not generally reimbursed for MRI services until late in 1985. Furthermore, with MRI

systems costing several million dollars, State government certificate-of-need approvals became a

precondition for many sales.

U.S. firms did not have the initial lead. Nonetheless, they quickly emerged in the forefront as the

technology moved out of the laboratory and became

a practical tool for medical diagnosis. A major reason for U.S. success was simply that this country

is the biggest market in the world by far for medical equipment. That the U.S. economy is the world’s
48

largest and most diverse is both an advantage and

a disadvantage for American firms. They are at

home here, but their domestic markets are a magnet for foreign firms—who may be willing to lose

money in the United States for the sake of learning

and experience.

Designing and developing a new product from

scratch, as in the case of the first MRI systems, represents a major corporate commitment. An all-new

product takes much more time and money than the

incremental redesigns, improvements, and new

models that come later and constitute most of the

routine work of product/process development. The

all-new product (or manufacturing process) will

also, in the ordinary course of events, depend more

heavily on new knowledge—e.g., research results.

Feedback from the R&D laboratory and the marketplace remain important even for routine development work, however. Once the medical community

accepted MRI, competing firms quickly began differentiating their products through stress on image

quality, good service, and reliability.

LTS Magnets5

Federal R&D, much of it for high-energy physics

experiments and research into nuclear fusion, underlies development of the LTS magnets found in

MRI systems. Wound with cable made from niobiumtitanium alloy filaments embedded in a copper matrix, and cooled with liquid helium, the magnet accounts for up to a quarter of the cost of an MRI

system.

‘D. Larbalestier, et al., “High-field Superconductivity,” Physics Today,

March 1986, p, 24; L. Hoddeson, “The first large-scale application of

superconductivity: The Fermilab energy doubler, 1972 -1983,” Historical

Studies in the Physical and Biological Sciences, vol. 18, 1987, p. 25; “Superconductive Materials and Devices,” op. cit., pp. 33-61; “Technology

of High Temperature Superconductivity,” prepared for OTA by G.J. Smith

11 under contract No. J3-21OO, January 1988; “Government’s Role in Computers and Superconductors,” prepared for OTA by K. Flamm under contract No, H3-6470, March 1988, pp. 56ff. Also see app. B.

Until MRI markets began to grow, most superconducting magnets were custom-designed for scientific equipment. The late 1960s saw the first major

application of niobium-titanium, a bubble chamber

built at Argonne National Laboratory. A much

larger federally supported project—the Tevatron

particle accelerator, completed in 1983 at the Fermi

National Accelerator Laboratory—consumed more

than 30,000 miles of niobium-titanium wire for its

nearly 1000 magnets. Most of the wire came from

Intermagnetics General Corp. (IGC), established by

several former General Electric employees in 1971.

IGC and other small, specialized firms had begun

moving into LTS as major corporations—Westinghouse as well as GE—withdrew, finding that market growth did not live up to their expectations. Development of the processing techniques for LTS

magnet wire was a lengthy and complex task, one

that would have taken much more time without the

demand provided by the Tevatron. Private firms

drew on the publicly supported technology base,

and also helped to extend it, as they developed the

know-how needed for manufacturing LTS wire and

cable (the Fermi Laboratory designed and built the

magnets internally).

It took many years to raise the critical current densities of niobium-titanium wire to the levels needed

for the Tevatron and for MRI. The task hinged on

the relationship between fluxoids (each of which

contains a magnetic flux quantum)—a matter of

physics—and the microstructure of the wire.

Through careful microstructural control–specially

tailored sequences of wire drawing and heat treatment—metallurgists and materials specialists were

able to create fine dispersions of second-phase particles. These particles pin the fluxoids, keeping them

from moving, The pinning can raise the critical current density—hence current carrying capacity—by

10 times or more. R&D aimed at optimizing the processing technology began in the late 1960s, and still

continues, with engineering development guided

by theoretical understanding.
Chapter 3

Superconductivity in Japan 

and the United States
CONTENTS

Summary ● .,, ,, ,...... .

Corporate Strategies ● .

R&D and Business Planning in the United States , , . . . . . . . .

U.S. Strategies in High-Temperature Superconductivity . . . . .

Japanese R&D ● 

Japanese Strategies in High-Temperature Superconductivity .

U.S. and Japanese Strategies Compared. . . . . . . . . . . . . . . . . . .

Japan’s HTS Initiatives ● 

Government Resources for Superconductivity . . . . . . . . . . . . .

Who Has the Lead Role, Government or Industry? . . . . . . . . .

Rivalry or Cooperation? The Internationalization of Japanese

Superconductivity R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Concluding Remarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Boxes

Box

E.

F.

G.

H.

I.

J.

K.

L.

R&D in U.S. Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Superconductivity R&D in U.S. Companies, . . . . . . . . . . . . . .

Venture Startups in HTS .*.**.* ● .,*.*.* ● **...** *,***. ,

Superconductivity R&D in Japanese Companies . . . . . . . . . . .

HTS R&D at Nippon Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Josephson Junction Computer R&D: From the United States

Japan’s Magnetically Levitated Train Program . . . . . . . . . . . .

.* **,**,

● ✎☛☛☛☛☛ ☛

✌✎ 0..,, ,

.. ...0, .

● *****. .

.,, ...0 ,

● . . .

. . . . . . . .

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,** * ● * . *

.. ..,.. 6

.* *..*, .

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● ☛✎☛☛✎✌ ☛

to Japan

,. ..,,,.

Prospects for U.S.-Japan Cooperation in Superconductivity R&D . . . .

Tables

Table

5. R&D Funded by Business and Industry. . . .

6. Major Japanese Government Programs and

in Superconductivity. . . . . . . . . . . . . . . . . . . .

. .....,.,..,.....,.,. .

Activities

● ☛☛✎✎✎✎✎☛✎✌☛✌✎☛✌✌☛✎✎✌✎ ✎

Page

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68
Chapter 3

Superconductivity in Japan and the United States

SUMMARY

The first 10 weeks of 1988 saw the discovery

of two more copper-oxide based superconducting materials—one with bismuth as a critical

ingredient, the other thallium. These two compositions—both with critical temperatures in

the range of 100 degrees Kelvin—joined those

containing rare earth elements (e.g., lanthanum,

yttrium) that scientists around the world had

been studying for a year. Laboratory resources

had been heavily committed to the yttriumbarium-copper-oxide family–the so-called 1-2-3

superconductors —and the scientists had been

making good progress in improving current

densities and learning to make thin films. Then,

all of a sudden, two entirely new compositions—equally complex, five elements in each,

partially understood structures and phase diagrams. Two new worlds to explore. Heaven for

the scientist (though more sleepless nights). Hell

for the businessman.

Business planners and government strategists–at General Electric and Sumitomo, MITI

and the Pentagon—now faced still more choices.

Superconductors came in at least three

varieties:

1. The old, low-temperature superconducting

(LTS) materials–metal alloys like niobiumtitanium, well understood but calling for

cooling to near liquid helium temperatures

—might still remain the material of choice

for some applications. Very sensitive detectors of enemy submarines or brain

waves might have to be operated at liquid

helium temperatures in any event, to get

noise levels down.

2. The 1-2-3 ceramics—brittle, not very stable, but with properties that people had begun to understand.

3. The latest high-temperature superconducting (HTS) compounds—those containing

bismuth or thallium–still a mystery, but

potentially easier to work with and perhaps

having better combinations of properties

than the 1-2-3s.

Then there is the fourth category—everything

as yet undiscovered.

With no theory, only enlightened empiricism

to guide the search, not even the biggest laboratories can explore all the possibilities.

Choices must be made, priorities set, resources

allocated. For a company, 50 people working

on HTS means 50 people who cannot work on

other projects that might, in the long run, be

equally important.

This chapter is about those choices, and how

they are made, in U.S. and Japanese companies, and in Japan’s Government. Chapters 4

and 5 deal with the choices facing the U.S. Government.

Corporate managers in the United States and

Japan look at the world differently. In seeking

strategies for profits and growth, they make

different kinds of choices, set different priorities, because they operate in contrasting economic, political, and social environments. Companies that do business on a global scale—IBM,

Du Pont, Nippon Steel, Hitachi–may have much

in common in their view of the world, but there

are important differences between them as well.

It may be a cliché to say that Japanese firms

put more weight on growth and market share

than on short-term profits, but it is true, and

it makes a difference in R&D strategies, business plans—the entire array of competitive

choices. The U.S. startups, financed with venture capital, that sprang up during 1987 have

no counterparts in Japan. Nor do the small LTS

specialists mentioned in the preceding chapter. Japan’s joint government-industry R&D

projects—a fixture of that country’s industrial

and technology policies—have no counterparts

here.

Business planners must decide how many

people and how much money to put toward superconductivity. They must decide how to

spend that money, and what kind of people to

assign. Is it too early to think about applica51
52

tions? Does it make sense to continue exploring LTS technologies? Managers in the United

States and Japan have made diverging choices:

●

●

●

●

A few large American companies are

pumping substantial resources into HTS.

But many other U.S. firms—organizations

with the resources to pursue HTS if they

wished—have taken a wait-and-see attitude. They may have a few people working on HTS R&D, but mostly just to keep

track of the technology.

Most of the effort in the United States is

going toward research. American managers believe HTS should remain in the laboratory until more scientific knowledge is

in hand.

Perhaps a dozen large, integrated Japanese

multinationals—manufacturers not only of

electrical equipment and electronic systems, but of ceramics, glass, and steel—

are pursuing multi-pronged R&D strategies

in superconductivity. As in the semiconductor industry, these resource-rich companies could prove potent rivals for smaller

American firms hoping to stake out a position.

Japanese companies are conducting research but also thinking about applications.

They are putting more effort than U.S.

firms into thinking through what HTS

might mean for the company’s strategy. In

general, managers in Japan believe that

HTS is closer to the marketplace than do

American managers. They also see HTS

as a means of creating new businesses,

while American managers are more likely

to view it in the context of their existing

business. The breadth of the Japanese effort substantially exceeds that of the United

States.

Managers in the larger American companies

believe that if HTS takes off, they will be able

to catchup or buy in. Japanese managers want

CORPORATE

What place does R&D have in the strategies

of American firms? How do managers think

to move down the HTS learning curve in real

time. They believe that advantages established

now will last. Scientists, managers, and venture capitalists involved in the HTS startups

in the United States believe the same thing, but

they are few, small, and weak compared with

the Japanese companies.

Taken as a whole, the U.S. approach—driven

by the need to show financial paybacks in the

short term—could leave American industry behind Japan within a few years. Such an outcome is not assured. HTS could languish in the

research laboratories. Or HTS could evolve like

the laser industry—never quite matching the

expectations of the enthusiasts, driven heavily

by military needs, lacking the revolutionary impacts of the computer or the semiconductor

chip.

On the other hand, HTS could grow and

spread and expand like the digital computer.

Computers—especially the microprocessors

and single-chip microcomputers found in

microwave ovens and TV sets, banking machines and machine tools, Chevrolets and

767s—have penetrated innumerable products

and manufacturing processes. The same could

eventually happen with HTS technologies.

American companies, by and large, have

taken the conservative view; Japanese companies have taken the optimistic view. If technical developments in HTS proceed as swiftly

over the next 2 or 3 years as they did during

1987, then Japanese companies that have been

laying the groundwork for commercialization

will be in a stronger position.

Superconductor fever has swept through

Japan’s Government too, with ministries vying

with one another for the lead in policy. The picture has now stabilized, but 1987 saw many actors seeking center stage—and few signs of the

coordinated, monolithic policy machine that

some Americans still think of as Japan, Inc.

STRATEGIES

about HTS? How does the business culture in

the United States differ from that in Japan? Ef-
53

fective government policies depend on an understanding of the attitudes and practices of

managers, the forces that condition their decisions. As it happens, there is substantial truth

to the commonplace observation that Japanese

managers take a longer view than Americans.

This difference shows up in R&D decisions on

HTS.

For years, American firms have been criticized for short-sightedness.1 Managers are under pressure from Wall Street and institutional

investors (pension and mutual funds, insurance

companies) to show high and increasing quarterly earnings. Failure to do so can lead to a

loss in stock values, and vulnerability to hostile takeovers. Jobs and egos are on the line, so

the argument goes; few chief executive officers

or division heads can survive many mediocre

quarterly reports.

Techniques used by American managers for

evaluating investment alternatives—discussed

in the next section—reinforce the pressures to

sacrifice long-term opportunities for short-term

profits. Instead of investing in R&D that will

increase their firm’s storehouse of proprietary

know-how, managers cut R&D to reduce costs.

Instead of investing in new plant and equipment to increase productivity and flexibility,

I More than a dozen years ago, an experienced U.S. R&D manager wrote that “ . . . the root cause of the present and future

decline of U.S. technological prominence is a temporal mismatch

between the natural pace of innovation and the time horizon

of most U.S. industrial corporations . . . . this root cause is overlooked by the managers of major U.S. industries because they

have a warped set of values’ ’–R.D. Dean, Jr. “The Temporal

Mismatch—Innovation’s Pace vs Management’s Time Horizon,”

Research Management, May 1974, p. 12.

A recent survey of nearly 140 U.S. companies found “greater

emphasis on near-term lower-risk results-oriented work” in their

R& D–’’Trends in the Chemical Industry,” Results of the MarchMay, 1987 Survey of ACS Corporate Associates. (ASC is the American Chemical Society. The survey covered corporate members

from other industries as well.)

For 1988, the National Science Foundation has forecast the

lowest rate of real, inflation-adjusted growth in R&D since 1977.

Even the Electric Power Research Institute, financed by regulated utilities, evidently feels many of the same pressures as publicly owned corporations. According to the Institute’s president,

“We now must clearly demonstrate that there is value in what

we are doing and that it falls in an acceptable business time frame,

This is a remarkable difference from when we started” [1973]–

“EPRI’s New President Looks to the Future,” New Technology

Week, Feb. 1, 1988, p. 8.

they slash payrolls, keep the old equipment running while spending no more than absolutely

necessary on maintenance, and move labor-intensive production offshore or to the Sunbelt.

Rather than putting money into core businesses,

managers diversify (from steel to real estate,

from manufacturing to services), buy up other

companies rather than build their own, and

seek paper profits. The picture may be a caricature, but it has a good deal of truth in it.2

How have these pressures affected corporate

decisions on HTS? What other factors enter into

R&D decisions? How, specifically, do U.S. managers view HTS compared with their Japanese

counterparts? The next section of this chapter

examines the R&D strategies of American firms.

Later sections turn to Japan.3 The findings in

brief:

●

●

American managers have been notably

more reluctant to commit resources to HTS

—a technology with highly uncertain prospects. They view profits as lying well in

the future.

Japanese executives, in contrast, seem confident that investments now will pay off–

some time and in some way. Their view

of the future is quite a different one from

that of American managers.

These contrasting views reflect the business

environments and investment climates in the

two countries—indeed, the entire complex of

factors that affects management decisions.

2A typical example: Tektronix, a leading manufacturer of instrumentation and computer work stations, will fire 1,000 whitecollar employees “in a bid to boost earnings. ” When the company announced that it would close down some R&D projects,

and scale back its marketing and sales staff, a stock market analyst said, “They’re addressing the right issues.” See J.P. Miller,

“ Tektronix Plans To Dismiss 6 percent Of Its Workers, ” Wall

Street Journal, Mar. 7, 1988, p. 12.

sMost of the information on company views of HTS comes

from interviews in the United States and Japan during late 1987

and early 1988, and from surveys of U.S. and Japanese firms.

The U.S. National Science Foundation, through its Tokyo office, conducted the survey of Japanese companies for OTA.
54

R&D and Business Planning

in the United States

Funding Decisions

American firms approach R&D much like any

other investment. With some exceptions, a decision on individual R&D projects or divisional

R&D budgets will be viewed in the same light

as a decision to invest in new production equipment, acquire another company, or sell the

firm’s Manhattan headquarters and move to

New Jersey. Box E describes the process.

R&D carries higher risks than many other corporate investments, in the sense that outcomes

are less certain. Moreover, the projects with

the greatest uncertainty tend to be those with

longer payback periods. As explained in box

E, such projects must promise exceptionally

large rewards, or the investment money will

go elsewhere.

Research that loses out in private corporations might nonetheless benefit the country as

a whole. If no one company can reap the rewards, none may invest. That is why the Reagan Administration has continued relatively

liberal funding for basic research, even though

cutting back on more applied work. Companies

do little basic research because, from their perspectives, it does not pay. But the social returns

from a portfolio of such investments can be

great.

R&D Management

American companies normally engage in

R&D to support existing business activities, or

those that have emerged from reasonably careful planning exercises. Even the two remaining giants of U.S. corporate research—IBM and

AT&T—seek, in their own quite different ways,

to guide and manage R&D in support of overall corporate goals.

Oriented toward results, American executives see corporate R&D as an activity to be

guided by the firm’s overall objectives. Only

rarely do they look to R&D as a means of uncovering wholly new business opportunities.

When they do, they tend to seek home runs (like

the Xerox copier or Polaroid photography)

rather than the incremental advances that have

a central place in Japanese corporate strategies.

Du Pont would dearly love another product

like Nylon, and Intel another invention with

the impact of the microprocessor, but who

knows where these might come from? Inventions cannot be planned, and no company will

spend much money on an unguided search.

Furthermore, in big organizations with ample

R&D budgets, projects that might be exciting

technically can get lost in the corporation’s

grand strategy. Even though they might promise high rates of return, if the overall market

looks relatively small, a big company may not

be tempted. Low-temperature superconductivity provides a number of examples, and HTS

will probably bring more.

Most firms give their R&D managers latitude

in initiating work on their own, hoping for results that will eventually contribute to the bottom line.4 Individual managers, moreover, do

not always follow corporate policy. Workinglevel people bootleg research that might not be

approved higher up. Top management normally lets project leaders and departmental

managers follow their own judgment, so long

as not too much money is involved. Star researchers, likewise, may be left alone to pursue their hunches and intuitions (which is how

HTS was discovered in IBM’s Zurich laboratory). A few companies let people spend some

fraction of their time–usually small–following

personal research interests.

Such policies tend to be pursued for reasons

of morale. They help create a more comfortable environment for industrial scientists, a more

academic setting. If the results bring in money

for the company, this will normally be viewed

as a lucky accident; in most U.S. firms, most

R&D scientists and engineers work within carefully managed groups, on projects that corporate management first approves and then

monitors.

qThis latitude seems increasingly circumscribed. For instance,

many U.S. research managers must take such decisions as

whether to spend, say, $250,000 to join an R&D consortium, all

the way to the top of the management hierarchy. See “Roundtable: Physics Research In Industry,” Physics Today, February

1988, p. 54.
55

5 7

These practices follow quite naturally from

accepted business practices in the United

States. They are part of the received wisdom—

wisdom that says the rare inventive genius will

in any case strike out on his or her own, founding a new company to exploit whatever is really

new.

U.S. Strategies in High-Temperature

Superconductivity

As the survey results in box F indicate, at least

28 American companies are spending at the

level of $1 million or more on superconductivity

R&D. On the average, they have nearly 20 professionals at work. Many of the companies

working in HTS have LTS experience. During

1987, most of HTS R&D went toward understanding the 1-2-3 ceramics, and toward processing-related work. The high proportion of scientists compared to engineers reflects the basic

character of the research.

A number of American companies, big and

small, have been conducting R&D on superconductivity—and perhaps producing LTS wire

or magnets—for two decades or more. Some

attempted to commercialize LTS products, later

to scale back or abandon their work. In the

1970s, LTS-based Josephson junctions (JJs) excited considerable interest in U.S. electronics

and computer companies. The enthusiasm

faded, and much of the U.S. work was eventually dropped. (The Japanese persevered with

JJs, as discussed in box J, later in chapter.) In

other cases, companies like GE—with its line

of medical imaging equipment incorporating

LTS magnets (ch. 2)—have gone onto become

major forces in the marketplace. Still, some of

the Americans with experience in LTS view

the new ceramic superconductors with considerable skepticism. Earlier disillusionment may

have affected the current strategic posture of

some American firms.

Indeed, many U.S. R&D managers feel it is

too early even to think about applications of

HTS. They think much more research will be

needed to characterize the new materials.

Moreover, they believe that commercial payoffs

are likely to be in the distant future. Media hype

has had little influence on them, These views

affect funding for HTS R&D.

But if research in HTS is called for, who, on

the American side, will do it? With few exceptions, U.S. industrial R&D laboratories avoid

science. Their job is to support the operating

units. U.S. industrial research grew rapidly during the early 20th century—led by companies

like GE (which established a corporate R&D facility in 1900), Du Pont (which followed in

1902), AT&T (1911), and Eastman Kodak (1912),

But decline has set in, for reasons that range

from corporate decentralization to the shortening of time horizons. Today, few American

corporations pursue much basic research with

their own funds. Thus, when American managers state that HTS belongs in the laboratory,

they often mean someone else’s laboratory.

Two strategic scenarios, then, encompass

most American firms:

1. The first includes the companies that have

taken a careful look at how HTS might affect their businesses, assuming continuing

advances in the technology. Such assessments often entail a complete review of the

firm’s product lines—a process some firms

have begun by revisiting earlier evaluations

of LTS.

At this stage, such an assessment is no

easy task, given the uncertainties. No one

can predict which of the new families of

Photo credit” Westinghouse

Rotor for prototype LTS generator

~[4_r/54 f - ?IR - j : ’21, i
58
59

materials might prove most useful, what

kinds of problems the design of practical

magnets or Josephson junctions might

bring, whether three-terminal devices will

emerge (ch. 2)—much less the costs.

There is a second problem, one creating

even more uncertainty. Will somebody discover superconductivity at room temperature this year? Next year? In 2050? This

makes all the difference for any economic

evaluation. In fact, most U.S. companies

have based their assessments on liquid nitrogen operating temperatures—an assumption leading to relatively pessimistic

evaluations except for quite specialized applications. The typical view goes something like this:

●

●

●

●

The primary need is for materials

characterization, work that can be carried out (and is) at literally hundreds of

academic, government, and corporate

laboratories around the world.

Our company could spend a lot of money

on HTS without much chance of a breakthrough. Even then, the research would

probably not result in proprietary advantage.

In any case, the first applications are

likely to be in defense systems, where

cost constraints are less severe.

Under these circumstances, the best

strategy is to hedge the company’s bets

by tracking the science and technology

worldwide, without investing heavily.

Such a strategy implies willingness to

alter course if someone else makes a major breakthrough (not necessarily in operating temperatures—a big increase in critical current densities might be enough for

at least some U.S. firms). These companies

—many of them currently spending at the

$1 million to $5 million level (box F), and

with perhaps a dozen people assigned to

HTS—will keep a core group at work. But

they are not ready to jump into the HTS

R&D race.

2. The second strategic scenario includes

those companies, most of them large, with

strength in research and the ability to pursue HTS R&D on a significant scale. The

list is short: AT&T, IBM, Du Pont. Bellcore,

Westinghouse, GE, and a few others might

be added, along with several major defense

contractors.

Here, the presumption that HTS should

remain in the laboratory is not a bar. Of

course, not even IBM or AT&T can do

everything; these companies too face the

choice of investing money and manpower

in HTS or in alternative R&D projects. But

HTS exerts a powerful attraction, not only

on working scientists, but on those who

manage research. Finally, for some of these

companies, success in HTS R&D could

have pervasive impacts on their businesses.

In a company like IBM, which already

maintains a portfolio of equally uncertain

R&D—most with far less potential impact

—HTS quite naturally gets a high priority.

A few American firms, then, have 50 or

60 people assigned to HTS, and some work

underway that verges on development.

There is also a third group, not large, consisting of startups with venture financing (see box

G), plus other small firms.

Government money for R&D could pull a few

more American firms into HTS R&D. But much

of this money will go for defense projects. Even

in companies that include military or space divisions along with other operations—as IBM,

AT&T, and many other large corporations do—

the two sides of the company normally operate largely separated from one another (ch. 4).

In summary, most U.S. companies have

adopted a wait-and-see attitude toward HTS.

They may have assigned a group of people to

monitor developments. Perhaps they conduct

research on a small scale. But few major U.S.

firms have placed superconductivity among

their top R&D priorities. The others see good

reasons for their decisions, of course. Risks and

uncertainties are high; judgments differ. But

if HTS develops more rapidly than they anticipate, few U.S. companies will be able to respond as quickly as the aggressive Japanese

firms that have already begun laying groundwork for commercialization.
60

Japanese R&D

As in the United States, the R&D strategies

of Japan’s corporations flow from more general managerial attitudes. In important respects,

Japanese executives exhibit decisionmaking behavior that differs from that here. As noted in

the preceding chapter, U.S. and Japanese management styles also show many similarities, particularly in high-performing companies, but

some strategic choices that make sense in an

American context may be incompatible with

Japanese views.

Corporate Research in Japan

Patterns of industrial R&D have been changing rapidly in Japan. American firms, accustomed to advantages in technology, must also

adapt—perhaps to being first among equals. Japanese firms have a tougher job. They are trying to catch up and take the lead—and trying

to do so with people and organizations that,

until recently, started by licensing and adapting foreign technologies. s This takes money,

and Japanese industry has been willing to spend

it.

Table 5—showing the rapid rise in businessfunded R&D in Japan–demonstrates the strength

of that commitment. Japanese firms see technology development as a key ingredient in com5

See International Competition in Services (Washington, DC:

Office of Technology Assessment, July 1987), ch. 6.
61

Table 5.—R&D Funded by Business and Industry

Business-funded

R&D expenditures

1981 1983 1986a

United States:

Billions of dollars . . . . . . . . . . . $35.9 $43.2 $58.2

As percentage of all

U.S. R&D . . . . . . . . . . . . . . . . 50.0 % 50.0% 49.8%

Japan:

Billions of yen . . . . . . . . . . . . . . Y 4364 Y 5451 X 7000

Billions of dollars . . . . . . . . . . . $19.8 $22.9 $41.6

As percentage of all

Japanese R&D. . . . . . . . . . . . 72.9% 75.9% 77.8%

aEstimated.

SOURCE: International Competition in Services (Washington, DC: Office of Technology Assessment, July 1987), p 205

petitive strategies. While business-funded R&D

in the United States has been going up almost

as fast in real terms, the overall lead of the

United States in private sector R&D stems simply from the greater size of the American economy; on the average, Japanese firms spend substantially more on R&D as a percentage of sales.

In earlier years, major Japanese corporations

began by scanning the world for technology,

often with the aid of Japan’s large trading companies, as well as the government. When possible, they set one potential source for technology against another to minimize licensing costs.

Japanese companies followed with engineering excellence, highly developed manufacturing systems, and carefully targeted marketing

strategies—often competing aggressively at

home before launching their export drives.

But the world has changed for Japanese companies. In many technical fields, they have

reached parity with the West. American and

European firms, in any case, are much more

wary of licensing than even 10 years ago. There

is little more for Japan to assimilate. Japanese

firms must either wait for new ideas to appear

elsewhere or step up their own research. Even

for companies not pressed by increasing competition from newly industrializing countries

like South Korea, the first choice is a recipe for

disaster at home. Thus Japan’s major corporations are working hard to generate new technical knowledge.

This search for proprietary technologies

means more basic research.6 As American companies turn away from relatively fundamental

work, Japanese firms are turning toward it.

Many American R&D managers give the Japanese little chance of accomplishing much, at

least over the next 5 or 10 years. They view

Japan’s culture–and the organizational environment in Japanese firms—as hostile to creative research. Many Japanese would agree.

Their engineers may be superb at painstaking

product development efforts, but, at least

according to the stereotype, research demands

individuality and creativity—qualities discouraged in Japan.

This stereotype is greatly exaggerated: a

closer look suggests that creativity in engineering—something the Japanese have amply demonstrated—differs little from creativity in research and in science. In fact, U.S. scientists

and R&D managers directly involved in HTS

research give their Japanese counterparts high

marks for their work. Moreover, in related fields

like ceramics, the Japanese already have the

lead in commercialization.7 While Americans

still see Japan as lagging generally in science,

Wee, for instance, S.K. Yoder, “Japanese Launch Bid to Lead

the World in Pure Science,” Wall Street )ournal, June 3, 1987,

p. 26, Also P. Marsh, “The search for some home-grown heroes,”

Financial Times, July 6, 1987, p. 15, which quotes Tokyo University’s Professor Shoji Tanaka, Japan’s best-known superconductivity expert, as follows: “For a long time the Japanese people

had the feeling they were behind in science. But now the inferiority complex is starting to vanish. We do have a relatively inflexible university system. But . . . young people are changing

and will force their professors to adopt different ideas. ” In searching for creative scientists and engineers to staff their research

laboratories, Japanese companies are hiring more women and

foreigners—M. Kanabayashi, “An Acute Shortage of Engineers

Threatens Japan’s Research Goals,” Wall Street )ourna], Oct. IS,

1985, p. 32; “Poor lab facilities hamper plan to attract foreign

researchers,” Japan Economic Journal, Apr. 16, 1988, p. 5.

Industry and government in Japan have put considerable emphasis on the life sciences in their overall drive for research excellence. See Commercial Biotechnology: ArI International Ana)-

ysis (Washington, DC: Office of Technology Assessment, January

1984), pp. 505-510. Later sections of this chapter discuss government policies in support of basic research in Japan.

‘High-Technology Ceramics in Japan, Nh4AB-418 (Washington, DC: National Academy Press, 1984); Ceramic and Semiconductor Sciences in Japan, 1987, PB 88-122478 (Washington, DC:

Department of Commerce, 1987); Advanced A4ateria]s by Design: New Structural Materials Technologies (Washington, DC:

Office of Technology Assessment, June 1988).
62

there is no basis for complacency—and certainly not when it comes to superconductivity.

Time Horizons

How about the longer term view that Japanese managers reputedly take? This stereotype

holds up–as can already be seen in HTS. The

reasons begin with notions of success and failure that differ substantially between the business cultures of the United States and Japan.

In the United States, management perceptions

of the factors that determine the value of a firm’s

stock heavily influence decisions. When surveyed, U.S. managers rank profits (as measured

by return on investment), and increase in share

price, as their primary objectives. Japanese executives also view return on investment as important, but put it below another goal—market

share—which appears no better than third in

rankings by American managers.8

Furthermore, Japanese companies need not

worry too much about the price their stock commands, given the way Japan’s financial markets work. Equity remains less important than

debt in corporate financing, and new stock issues are the exception in raising funds. The

now-standard—and often oversimplified—arguments concerning costs of capital also come

into play here; plainly, on a present value basis, or indeed almost any reasonable criterion,

lower costs of capital in Japan make long-term

projects more attractive.9

Japanese companies, then, typically use

different decision rules in evaluating investment alternatives. Managers in Japan see R&D

as a means for maintaining or increasing market share, both at home and abroad, with market share a necessity for holding on to a com8J.C. Abegglen and G. Stalk, Jr., Kaisha: The Japanese Corporation (Tokyo: Charles E. Tuttle, 1987), pp. 176ff.

While decision criteria in Japan certainly differ from those here,

there is little consensus in the Weston the extent to which Japanese firms rely on financial measures—or, more precisely, on

what kind of measures they use, and for what purposes. See,

for example, “Part Two Discussion Summary,” The Llneasy Alliance: Managing the Productivity-Technology Dilemma, op. cit.,

p. 283.

ozn~erna~jon~ competitiveness in Electronics (Washington, DC:

Office of Technology Assessment, November 1983), ch. 7.

petitive position in dynamic markets. Japan’s

rapid postwar economic growth, and success

in exporting, has made market share the top

priority; when sales are expanding rapidly,

grabbing as big a share as possible, and holding on to it, become the key to profits.

The emphasis on growth reflects a belief

among Japanese executives that only large companies can remain financially viable in international competition. Japanese industry has

spawned few of the entrepreneurial startups

so much a part of the scene in U.S. high-technology industries—although many policymakers in Japan would like to create a place for

them.

Other factors and practices reinforce the view

that growth is all-important. Larger Japanese

companies historically have attempted to provide “lifetime” employment for a portion of

their work force. Managers continue to view

this as an obligation, and growth makes it easier to sustain employment. Layoffs tend to be

seen as evidence of management failure, rather

than—as in the United States—a consequence

or symptom of economic downturn. This sense

of obligation helps shape corporate goals and

managerial behavior. Where American executives would slash payrolls, Japanese companies

will often accept lower profits.

What does this mean for R&D? A continuous

search for new products and new markets, including those that might not fit very comfortably into ongoing operations. Where American

companies look to R&D to support existing businesses, Japanese companies are just as likely

to see it as a means of creating new businesses.

Where American firms look for home-run opportunities, their Japanese counterparts have

been more willing to start small and grow new

businesses gradually.

Government-Industry Relations

The antagonism with which so many U.S.

corporate managers view government also contrasts with typical Japanese attitudes. American

managers feel, by and large, that the Federal

Government’s role should be tightly circum-
63

scribed. Wherever possible, economic matters

should be left to the private sector.

Later sections of the chapter describe how

government and business in Japan have worked

together to promote HTS. Here, the point is simply that Japanese executives have relatively

comfortable working relationships with government. Japanese managers tend to feel that employees of their government are competent and

deserving of respect, even when they disagree

vehemently on matters of policy.

Managers in Japan pay attention to goals and

objectives announced by the Ministry of International Trade and Industry (MITI), or the Ministry of Finance. This does not mean they will

necessarily follow the paths that MITI or other

ministries attempt to lay down. Contrary behavior is common. On the whole, Japanese executives would prefer to go along with government, while working to mold policy in ways

they regard as desirable.

R&D Management

Traditionally, Japanese R&D has focused on

engineering—product/process development,

rapid transfers to manufacturing. Despite the

engineering perspective, managers put less

weight on short-term outcomes, and show more

willingness to invest in projects that will not

yield positive cash flows until well into the future. Japan’s national goal of technological independence pushes companies in the same

direction.

Personal opinions by managers carry great

weight—especially when the advocates of particular projects enjoy high standing as researchers or managers. One man’s recommendation

can lead to a major new R&D project in Japan—

something that would be highly unusual in an

American company.

Competition among Japanese firms combines

with cultural characteristics to yield another

contrast with the United States. Japanese companies tend to emulate one another; when one

begins research in a field like HTS, others follow. Few executives will risk letting a direct

competitor engage in R&D without investigating the subject themselves. Similarly, companies are uncomfortable at the thought of closing down a research program that others are

continuing. For such reasons, Japanese firms

spend a good deal of effort tracking their competitors’ day-to-day R&D efforts. American

companies, which tend to look to R&D for

means of differentiating themselves, show more

interest in products soon to hit the market.

Finally, given the way Japanese firms make

decisions, it should be no surprise to learn that

they stick with R&D efforts once begun. One

executive commented in an OTA interview, “In

Japan, we continue research projects unless

persuasive reasons are mustered against them.

In the United States, I get the feeling that

projects are cancelled in the absence of good

arguments supporting continuation. The difference is subtle, but important. We tend to be optimistic on research results; you tend to be pessimistic.” Such attitudes may be remnants of

an earlier time, when success came easier. Still,

they contribute to the persistence that has been

so important to Japan’s accomplishments in

commercialization.

The typical Japanese approach to R&D carries disadvantages as well as advantages. With

little systematic guidance for comparing one

project to others, and subject to the influence

of strong personalities, Japanese firms risk bad

decisions. This weakness could become more

important in the future; given their lack of experience in managing fundamental research—

particularly if companies follow one another

down blind alleys. But for now, the freer hand

that Japanese managers have in allocating resources to long-term, high-risk projects is a notable strength.

Japanese

Japanese

mously, see

Strategies in High-Temperature

Superconductivity

R&D managers, almost unaniHTS as a revolutionary technology, one that promises radical change. Skepticism, common in the United States, has been

rare in Japan. Implicit in some Japanese views,

explicit elsewhere, has been the assumption

that room temperature superconductivity is not
6 4

far away. (Otherwise, even the more optimistic Japanese scientists and engineers see the potential as relatively limited.)

A corollary follows: Japanese executives believe that HTS will be a major battleground for

international competition over the next two or

three decades.10 All those interviewed by OTA

believed that Japan would have to depend on

home-grown technologies in the future. It follows that early exploitation of HTS holds a rare

opportunity. Japanese managers—in sharp contrast to their U.S. counterparts—have little

doubt that HTS will be a central element in competitive strategies.

Not surprisingly, then, commitments in Japan

—as indicated by industrial employees assigned

to superconductivity R&D—substantially exceed those here. Box H, based on a survey of

Japanese firms conducted for OTA by the U.S.

National Science Foundation (NSF), reveals the

following contrasts with the United States:

● Although reported budgetary outlays by

U.S. industry exceed those in Japan (at $97

million compared with $90 million), Japanese firms reported 900 people working on

superconductivity (versus 625 here).

● Total Japanese R&D spending on superconductivity for 1988—industry plus government—should exceed $160 million, U.S.

spending $250 million. Such comparisons

must be treated with caution, however. The

company surveys are incomplete, the fiscal years for the two governments are 6

months out of phase, and the exclusion of

some salaries from the Japanese Government budget figures makes the estimate for

Iosixty percent of 167 Japanese companies responding to a mid1987 survey expected a $2o billion world superconductivity market by 2000–’’Superconductor Industry Survey Conducted,”

JPRS Report–Science & Technology, Japan, JPRS-JST-87-068-

L, Foreign Broadcast Information Service, Oct. 29, 1987, p. 1

[translated from Nikkei Sangyo Shindmn, July 28, 1987]. Electronics applications were ranked most promising, followed by

energy storage, and then by a variety of other electric power

applications. Nearly 85 percent of those responding to a different survey foresaw applications of room temperature superconductors in industrial equipment by 2010–’’Waga kuni ni okeru

Gijutsu Kaihatsu no Hoko ni kansuru Chosa” [Survey of Trends

in Technology Development in Japan], no. 4, Kagaku Gijutsucho

[Science and Technology Agency], 1987, p, 12.

●

Japan low by some unknown amount. Finally, spending levels say nothing about the

outputs of R&D. Given all these uncertainties, the contrast in numbers of industrial

employees takes on the greatest weight.

Japanese firms are emphasizing prospective applications more heavily. Many companies in Japan are continuing to invest

in LTS projects, most of them heavily developmental. They have more engineers assigned to superconductivity R&D than the

American firms.

The strength of the Japanese commitment is

visible not only in numbers of people, but in

the range of businesses represented among the

companies that have begun to invest. HTS R&D

spans glass and ceramics, shipbuilding and

steel, in addition to microelectronics, computers,

consumer electronics, and electrical equipment.

The Japanese firms can nonetheless be

grouped into two classes:

1.

2.

Some have relatively extensive experience

in LTS. This group includes manufacturers

of superconducting magnets (e.g., for medical imaging systems). A number have been

involved in Japan’s magnetically levitated

train project (see box K later in this chapter). Toshiba, Mitsubishi Electric, and

Hitachi have all built and tested prototype

LTS generators. Sumitomo Electric, Japan’s

leading producer of wire and cable, supplied superconducting wire for many of

these projects. Sumitomo is also Japan’s

(and the world’s) leader in small synchrotrons—which may emerge as a critical technology for production of next-generation

integrated circuits. Finally, a number of

Japanese firms have continued to pursue

R&D on LTS Josephson devices, with highperformance computers in mind (see box

J, later in the chapter).

Others, new to superconductivity, began

their research programs only after the discoveries in Zurich, Houston, and Tokyo.

Some view HTS as important for existing

businesses; others seek diversification. The

first group includes electrical equipment

manufacturers and other suppliers of cap-
65

●

●

●

IBy May 19SS, 4!# j~ , M had j@ned f$l%C @e Ml members+epwt Memwtmdum 41S5, Tokyo Office of the U.S. National *~~ pom#atiun# * $3,1-. m$yayreac%ed dy 25 of thwe, and an even mwller fraotion (5 of 45) of aaaociate members. For soma

of thtwe compasdee, ofwmree, _*@~@ MY b @ new WCM of R&D, with Mtle internal a~tity. AR currency aonvemione in tbfr hex, aa dttawhere in the chapter, have been made at 130 yen to the dollar.
66

ital goods. It also includes steelmaker,

who have begun speculating, for instance,

that magnetic levitation of strand-cast

products could lead to better surface quality and higher yields (box I). The steelmaker are also trying to diversify, along

with glass companies and shipbuilders. All

these industries are in decline; opportunities for diversification and continued growth

hold great attractions in Japan.

Regardless of industry, many Japanese firms

are pursuing research and applications development in parallel fashion.ll They have basic

work underway, mostly in characterization,

and people searching for materials with better

properties. Development projects include work

on thin films and efforts to fabricate wires. In

these activities, the Japanese are proceeding

much like their counterparts at the leading U.S.

industrial laboratories.

Japanese efforts differ in one major respect

from those in the United States. Many firms

in Japan have groups at work on feasibility

studies and exploratory “what if” exercises.

(Government programs, treated later in the

chapter, show the same thrust.) These groups

have a specific task: to think about possible

commercial applications. In some cases, the efforts have already been carried to the stage of

IIAs Sumitomo Electric Vice President Nakahara explains it,

Japanese companies and other research organizations should

pursue basic research and applications on “parallel tracks” to

ensure cross-fertilization of efforts—Choc/endo to wa IVanka

what is Superconductivity], Nihon Keizai Shimbunsha, 1987,

p. 91.

preliminary designs and marketing analyses.

The work is highly speculative, of course, but

the Japanese believe it will help prepare for

commercialization. Only a few U.S. companies

have begun similar efforts.

U.S. and Japanese Strategies Compared

The Japanese see applications coming relatively quickly. When queried in the spring of

1987, scientists and research managers in Japan called for more basic research in their country, and efforts to develop applications based

on patents filed in the United States.12 Like

Americans, they viewed superconductivity as

largely a research enterprise for now—with the

research laying groundwork for commercial

competition that would come soon, perhaps as

soon as one to three years. In essence, Japanese companies are pursuing a three-pronged

R&D strategy: 1) basic research; 2) development,

aimed mostly at processing; and 3) product

planning and market evaluation. The last of

these carries the gravest potential consequences

for U.S.-Japan competition. If technical developments in HTS proceed as rapidly over the

next two or three years as during 1987, Japanese firms will be in better positions to move

toward commercial applications than American companies.

If U.S. firms wait to think about product and

process developments until the research results

IZ’’Chodendo Busshitsu: Nichibei Gokaku no Kaihatsu Kyoso”

[Superconducting Materials: Japan and the U.S. on a Par in Competition for Development], Nikkei Sangyo Shimbun, May 12,1987.
6 7

Box I.—HTS R&D at Nippon Steal

Why did the largest steel producer in the world put 40 people to work on HTS in February 1987?

Nippon Steel may be the leader in market share, but its sales have been declining—partly the result

of structural changes in the Japanese economy, leading to declining demand for steel, and partly a

consequence of greater competition in international markets. Company strategists have two major

tasks: 1) finding ways to make steel more cheaply, thereby helping the company compete in its primary if shrinking businesses; and 2) identifying new opportunities. Superconductivity fits both objectives.

Planners see Nippon Steel as bringing three primary technical strengths to HTS. First, the company has always designed much of its own production equipment. It has process engineering skills,

not only for making steel, but for titanium and other metals as well. Second, the firm has expertise

in wire manufacture-a technology that could turnout to be important as HTS matures. Finally—and

most important-Nippon Steel has worked hard over the years to develop technical capabilities in

ceramics. Originally, most of this work was in refractories for furnaces. More recently, the company

has sought to diversify into high-technology ceramics, and also into silicon production for the semiconductor industry. To the extent that the new superconducting materials will demand expertise in

ceramics and other advanced materials, Nippon Steel believes it will be well-placed.

None of these perceived strengths may turn out to be sufficient to place the firm in the forefront

of HTS. Nippon Steel’s executives might be grasping at straws. Nonetheless, the company has looked

with some care at 50 or more potential applications of HTS. Some of these analyses have been taken

to the point of comprehensive feasibility studies. For example, company engineers have evaluated

the prospects for continuous strand casting using superconducting magnets to confine and float molten steel, followed by in-plant materials handling

are in, they may lose out competitively. Japanese

companies will already have thought through

those steps, weighed the potential problems,

considered alternatives—perhaps anticipated

some of the follow-on technical work and even

begun to pursue it. The Japanese approach

probably costs more —some R&D groups will

pursue false trails, companies may be paying

the salaries of too many people working on

also based on magnetic levitation.

overlapping projects—but the eventual rewards

could more than make up for this. Japanese

managers find it strange that American companies believe they can track a technology’s development, waiting for the right time to begin

product development, without actively and aggressively pursuing that technology in their

own laboratories. (Of course, many Japanese

firms did just this not so many years ago.)

JAPAN’S HTS INITIATIVES

Many countries are pursuing HTS research,

but talk of a superconductivity race has focused

on the United States and Japan.13 Sumitomo’s

many hundreds of patent applications, for example, have drawn widespread attention. The

13See, for example, “Two Different Cadences in the Superconductor Race,” Washington Post, May 20,1987, p. Al; “U.S. ‘Leading Slightly’ in Superconductor Race, ” Japan Economic Journal, June 13, 1987, p. 15.

This section is based in part on interviews with government

officials in Japan during the fall of 1987. For background on Japrace is certainly a real one in terms of science.

Laboratories around the world confirmed superconducting behavior in the thalium-based

materials in a matter of hours.

anese industrial policy, see International Competitiveness in Hectronics (Washington, DC: Office of Technology Assessment, November 1983), pp. 413-422.

On patenting, below, see S.K. Yoder, “Rush to Exploit New

Superconductors Makes Japan Even More Patent-Crazy,” WaZl

Street Journal, Aug. 27, 1987, p. 18.
68

Preoccupation with Japanese efforts is hardly

a surprise, given Japan’s huge trade surplus

with the United States, and the longstanding

view by some that Japanese companies have

been getting a free ride from American research.14 Press reports have suggested that Japan is taking off in superconductivity, with government agencies in the lead.15

MITI asked for 3.5 billion yen (about $27 million at 130 yen to the dollar) for superconductivity in fiscal 1988, well above the previous

year’s level (550 million yen, $4.2 million). (Japanese budget figures do not include breakdowns

for high- and low-temperature superconductivity.) But the image of a government-coordinated, crash program in HTS is false. The policy

environment for superconductivity remained

in flux in Japan during 1987. The difference

is this. After the middle of the year, the outlines of Japanese Government policies began

to solidify. By early 1988, they had taken shape.

U.S. policies, in contrast, remain in a state of

considerable disarray.

Government Resources for Superconductivity

In Japan, four principal agencies have competed with one another for resources to support

HTS (table 6): the Science and Technology

Agency (STA); MITI; the Ministry of Education (Monbusho); and the Ministry of Transport. Key players in government, industry, and

universities have been seeking to get into the

superconductivity game, looking for money and

the authority to expand their programs.

Much of the substance of Japanese industrial

and technology policies emerges from behind

the scenes, the product of long-standing ties

among government officials, corporate executives, and, in a case like HTS, senior professors in the leading universities. A host of advilqThiS perception is m exaggeration. See ]nternatjona] Competition in Services, op. cit., pp. 202-203.

]5For example, ‘ton one hand, companies vie to beat each other

to the patent office and marketplace. But at the same time, archrivals join forces on certain tasks when speed is essential and

the research is risky. And the MITI orchestrates it all.” See S.K.

Yoder, “Superconductivity Race Shows How Japan Inc. Works,”

Wall Street Journal, Aug. 12, 1987, p. 6. The same article calls

superconductivity a Japanese “obsession. ”

Table 6.—Major Japanese Government Programs and

Activities in Superconductivity

Science and Technology Agency (STA):

●

●

●

●

Multicore Project ‘- - -

Nine laboratories and other government organizations participating in work on theory and database development,

materials characterization, processing, and technology

transfer. The lead laboratories are the National Research

Institute for Metals (NRIM, with work on theory, databases,

thin films, and a superconducting generator) and the National Institute for Research on Inorganic Materials (materials synthesis and new material development, crystal

structure determination, microstructure control).

Japan Atomic Energy Research Institute

R&D on superconducting magnets and applications.

Japan Research Development Corporation

Primarily measurement work.

New Superconductivity Materials Research Association

(Forum)

Primarily information exchange.

Ministry of International Trade and Industry (MITI):

● Electrotechnical Laboratory (ETL), plus other MITI facilities

R&D on superconducting electronics (e.g., Josephson

devices), as well as new materials (including superconducting polymers).

● Moonlight Project

Superconducting generator.

● Support for Technologies Needed for Research and Processing

Thin film fabrication techniques; low temperature processing of bulk materials.

. Research Associations

(See text.)

. International Superconductivity Technology Center (ISTEC)

Ministry of Education (Monbusho):

● University research support

Examples: Professor Tanaka’s group at Tokyo University,

working particularly on new materials; Professor Muto’s

work on theory at Tohoku University; support for the Ceramics Center at Tokyo Kogyo University.

Ministry of Transportation:

● Support for the Magnetically Levitated Train project at the

Railway Technical Institute

SOURCE: Office of Technology Assessment, 1988.

sory committees, reports, and budget proposals

also contributed to the rise of superconductivity

on Japan’s policy agenda. The statements of the

Council for Science and Technology—an advisory group chaired by the Prime Minister and

including the directors of MITI, STA, and other

major ministries—are typical. In August 1987

the Council issued a report on superconductivity calling for “hybrid” basic research, involving experts from many fields. Japan’s national laboratories should promote cooperation

with industry and universities, and reward in-
6 9

dividual excellence, the Council urged, envisioning HTS R&D as a major step in improving

Japan’s creative research capabilities.

STA and the Multicore Project

Each agency is independently pursuing these

broad goals. In the summer of 1987, when HTS

became the focus of attention worldwide, STA

set up a Committee for the Promotion of Research and Development of Superconducting

Materials. The nine members represent the major STA laboratories, the Japan Research Development Corporation, and the Interministerial

R&D Division of the STA Research and Development Bureau. The Committee’s report stressed

the many unknowns concerning superconductivity, and recommended a high priority for

basic research–not surprising, given the STA

mission. 16

Highlighting the role of government, particularly STA, the Committee urged that Japan’s

national laboratories, already credited with significant contributions in HTS, accelerate their

efforts even more. While emphasizing the need

for research, the members also advocated preparations for commercialization of new products. Their report touches on opportunities for

international cooperation, recommending that

Japan’s joint government-industry R&D programs be opened to foreign participation, and

that Japan seek to make a global contribution

to HTS. At the same time, the Committee underscored the importance of making research

results from STA laboratories—of which there

are five—widely available.

The STA Committee sees these laboratories,

and the agency’s new Multicore Project, as the

bridge between university science and corporate applications. Companies and universities participate through the New Superconductivity Materials Research Association, which

had about 130 members at the end of 1987. The

Multicore Project, with a budget of more than

2 billion yen (about $16 million) for fiscal 1988,

aims to strengthen the capabilities of STA labI“’’New Developments in Superconducting Materials R& D,”

Science and Technology Agency, Tokyo, Sept. 21, 1987.

oratories in HTS, and to speed transfer of research results to industry.17

A number of STA laboratories will get more

money for HTS—notably the National Research

Institute for Metals (NRIM), which plans a major thrust in materials characterization. NRIM

scientists discovered the bismuth oxide HTS

composition in January 1988. The National Institute for Research on Inorganic Materials and

the Atomic Energy Research Institute will get

most of the rest of the STA money. Nine laboratories in total will participate in the Multicore Project, with “core” research work going

on in each.

Given this decentralized approach (no physical relocations are planned), STA will rely on

a steering committee with representatives from

industry and universities, as well as government, for coordination. The steering committee’s job will be a difficult one, the more so if—as

STA officials hope—MITI laboratories can also

be pulled into the Multicore Project. At present,

however, MITI has its own quite independent

plans.

MITI Programs

A recent report by the Advisory Committee

on Superconductivity Industrial Technology

Development, made up of representatives from

industry and universities, reflects the perspective of MITI—to Western eyes, the most visible agent of Japanese industrial policy .18 Like

STA, the MITI committee sees the government

role as one of helping industry make use of research results from the national laboratories

and universities. But MITI goes further in adITChodendo Zairyo Kenkyu Muruchikoa Projekuto 63 nendo

Kisan Yokyu Sokatsuhyo [Budget Request for Multicore Project

for FY1988]; also “Superconductor R&D to Industrial Application,” JPRS Report-Science& Technology, Japan, JPRS-JST-88-

007-L, Foreign Broadcast Information Service, Mar. 11, 1988,

p. 100 [translated from Nikkan Kogyo Shimbun, Jan. 1, 1988].

The Multicore name signifies that multiple organizations form

the core of the project, emphasizing the thrust toward coordination and reorientation rather than an all-new initiative. The

project accounts for about two-thirds of STA’S fiscal 1988 budget request for superconductivity, which totals 3.1 billion yen.

(Japan’s fiscal year begins in April.) STA has also sought funding for a superconducting generator project.

Iechodendo sangyo (lijutsu Kaihatsu Kondankai (1988).
70

vocating national projects, not only for R&D

on the new materials, but for applications in

electronics and electrical machinery. Box J

notes the Ministry’s support for Josephson computing technologies—a field where Japan began by following the path laid down by IBM

and other U.S. companies, then persisted after

American firms cut back their efforts.

A good portion of MITI’s 1988 superconductivity budget will go toward applications. Examples include a new project on thin films and

Josephson devices, part of the “Technologies

for Next Generation Industries” program of the

Agency for Industrial Science and Technology

(AIST is part of MITI). The Ministry’s 70

megawatt (MW) generator project, based on

LTS technology and also scheduled for more

than $10 million—a hefty slice of the 1988 MITI

superconductivity budget—follows several

years of feasibility studies. Motivated in part

by the search for energy savings, goals for the

8-year project range from improvements in

methods for processing superconducting wire

to construction of a complete prototype.19 Officials say that HTS technologies will be utilized

if available.

Late 1987 saw a major step for the 70 MW

generator project, the formation of a research

association (kenkyu kumiai). As is typical of

Iochodendo Hatsuden Kanren Kiki-Zairyo Gijutsu no Fizabirite

Chosa Kenkyu, March 1987. The original proposal, advanced

in 1985, was much more ambitious, calling for a 200 MW generator to be built in 5 years.

Photo credit: IBM Corp.

Memory cells in experimental Josephson junction

integrated circuit chip

these research associations—central mechanisms of Japanese technology policy—MITI not

only helped with the planning, but will assist

with administration and furnish ongoing financial support. Likewise typical of MITI projects,

the research association brings together participants with a range of technical strengths,

and companies from different industries: the

members include two cryogenic engineering

firms, the Fine Ceramics Center, the Central

Electric Power Research Institute, and a number of major electric power and electronics

firms. MITI sees its role as supporting industry not only by creating incentives for applications-related R&D, but by spurring productive

interactions among firms and industries that

might not otherwise collaborate.

MITI, like STA, also runs its own laboratories. The Electrotechnical Laboratory—which

has won worldwide respect for its research-–

has been involved in superconductivity since

the middle 1960s, when the laboratory began

R&D on LTS magnets for MHD (magnetohydrodynamic) power generation under the Moonlight Project. More recently, ETL has attracted

particular notice for its work on niobium-based

Josephson devices (box J). ETL’s overall 1987

budget came to $57 million; like many organizations in the United States, the laboratory was

able to reprogram funds internally for HTS during 1987; MITI will get $2.5 million for ETL

research on the new superconductors in 1988.

The laboratory has several groups, and about

40 people in total, working on superconductivity (the ETL research staff numbers 560).

The Ministry seeks to involve private corporations in its efforts through mechanisms ranging from research associations to advisory

boards and symposia. Industry is MITI’s major constituent, and the Ministry’s HTS programs will follow patterns laid down over the

years for supporting other industries and other

technologies-e. g., semiconductors, computers,

biotechnology.

The Ministry of Education

The Monbusho, which supports university

research, has a larger R&D budget than any

other arm of the Japanese Government. Sup-
71

Box J.-Josephson Junction Computer R&D: From the United States to Japan1

The pursuit of a Josephson-based computer has taken quite different paths in the United States

and Japan since the early 1970s. Josephson devices provide the fastest electronic switches known,

hence—in principle-the fastest digital computers. Because they are Superconducting devices, with

very little power dissipation, JJs can be packed tightly together. Theoretically, therefore, a computer

built with JJs could be very compact, as well as extraordinarily fast and powerful.

U.S. Efforts

Three U.S. corporations pursued JJ R&D for computer applications: AT&T, IBM, and Sperry Univac

(which later merged with Burroughs to form Unisys). Each made significant contributions to the JJ

technology base. Beginning in the 1960s, more than 10 years of research at AT&T’s Bell Laboratories

produced a much better understanding of the physics of JJs. IBM went much farther, building a prototype of the circuitry for a complete computer, as well as exploring fabrication methods for JJ logic

and memory chips. Sperry concentrated on JJs made from refractory materials such as niobium and

niobium nitride (instead of the lead alloy used by IBM), and developed processing methods for highperformance, all-niobium circuits.

All three companies had scaled back or abandoned their JJ projects by the early 1980s–each for

its own reasons. AT&T terminated the Bell Laboratories program in 1979 after deciding that the technical hurdles to practical applications were formidable. Sperry abandoned its effort to develop a JJ

computer in 1983, after closing its Sudbury, Massachusetts, research center, the focus of the work.

(JJ research by Sperry’s Defense Systems Division, aimed at sensors, continued.)

IBM, with the most ambitious program, was spending about $20 million annually by the early

1980s, with the National Security Agency (NSA) providing about $5 million of this. Although NSA

urged continuation, IBM drastically scaled back its effort in 1983, ending pursuit of a working computer, after its Yorktown Heights Laboratory was reorganized and the JJ work came under new management. Logic chips based on IBM’s experimental production technology performed adequately,

but the memory did not; the new management team estimated that improving the memory chips would

add another 2 years to the schedule. By that time, management reasoned, continuing progress with

more conventional silicon and/or gallium arsenide chips would make it hard for a JJ-based machine

to offer compelling advantages in speed or processing power.

Before ending its JJ program, IBM came close to an agreement with Sperry for joint development

of Josephson technologies. IBM had the most advanced. designs but was struggling to fabricate them,

while Sperry had proven processing technologies. The agreement was almost 18 months in the making, and had apparently cleared the antitrust hurdle after the NSA proposed taking the project under

its wing. But the agreement was never consummated because Sperry’s management decided to decentralize its R&D among its operating divisions, and reassigned its JJ computer group to the Defense

Systems Division--a reassignment that key technical employees declined.

*Much of fhe information in thia box is based on interviews. Also see A.L. Robinstm, “New Superconductors for a Supercomputer,” Science,

Jan. 1, 1S82, p. 40; A.L. Robinson, “IBM Drope Superconducting Computer Project,” Scfence, Nov. 4, 1983, p. 492; “JTech Panel Report on

Opto-& Microelectronics,” Japaneee Technology Evaluation Program, Science Applications International Corp. under contract No. TA-83-SAC02294 from tbe U.S. Department of Commerce, May 1985, $action 11; “Govemrnent’s Role in Computers and Superconductors,” prepared

for OTA by K. Flamn under contract No. H3-6470, March 1988, pp. 47-52.
72

port for superconductivity is relatively new,

however, going back only to 1984. In 1987,

Monbusho funded 41 mostly small projects on

superconductivity at Japanese universities, with

spending totaling $4.3 million.20 For fiscal 1988,

Monbusho spending on superconductivity will

ZODaigaku Kankei ni okeru Chodendo Kenkyu no Tsuishin ni

tsuite [Concerning Support for Superconductivity Research in

Universities], Monbusho. The Ministry of Education’s figures

for support of university R&D normally exclude salaries, which

are paid out of other accounts. (Other Japanese Government agencies typically include salaries in their published R&D budget

figures, just as in the United States.)

reach about $14 million. Although the Education Ministry has placed superconductivity at

the top of its list for greater support, it ranks

third behind MITI and STA in its 1988 budget

for direct support of superconductivity.

In addition to the many small projects it

funds, Monbusho provides much of the support for a few large programs headed by internationally known scientists. For instance,

Professor Shoji Tanaka’s group at Tokyo University will receive more than $700,000 during

1988. Professor Tanaka (who recently retired
73

from the university to direct research at MITI’s

International Superconductivity Technology

Center, ISTEC), has also been awarded a 3-year

grant of $1.6 million for “Specially promoted

Distinguished Research.” Professor Yoshio

Muto, at Tohoku University, whose group has

been designated one of 30 priority research

projects, will get more than $2 million over the

3-year period 1988-1990. These large universitybased efforts generally include participants

from a number of universities, selected by the

lead professor.

Taking university research as a whole, the

scope in Japan is narrower than in the United

States, and the quality substantially lower. Japan has fewer centers of excellence, and a more

rapid drop-off in quality as one moves down

the scale. The best institutions in Japan are very

good. There simply are not that many of them.

Superconductivity, however, has been an exception. Before the discoveries in HTS, the field

had been something of a backwater. Interest

had been declining in the United States, more

so than in Japanese universities. Recently,

American scientists have given the Japanese

high marks for research in superconductivity.

Tokyo, Tohoku, and Kyoto Universities have

been getting about three-quarters of Monbusho

superconductivity funding. Some of the research groups at these schools—e.g., Tokyo

University’s in superconductivity—are on a par

with the best in the world. And even in their

less known schools, the Japanese excel at some

kinds of work—notably painstaking empirical

research. Most important, R&D in Japan’s universities is improving rapidly, in part because

of the efforts of the younger faculty members

trained in the United States.

The Ministry of Transport and the Maglev Train

Japan’s magnetically levitated (maglev) train

project—box K—which has been underway for

two decades, is scheduled to get more than $4

million during 1988 from the Ministry of Transport, which oversees the effort. While current

prototypes use LTS magnet systems for both

suspension and propulsion—and a relatively

small fraction of the program’s funds go toward

superconductivity R&D—the engineers leading

the project hope that HTS materials can eventually be incorporated.

The maglev program typifies the kind of longterm, continuing effort—in this case beginning

in the 1960s—that Japanese decisionmakers expect will pay off in eventual commercialization.

Although maglev R&D supported by the U.S.

Government ended in 1975, the Japanese have

persevered. To Japan, the linear motor car has

become a symbol of indigenous technology development.

Summarizing the Government Role

As the many different programs mentioned

above suggest, the scene has changed rapidly

in Japan. Major ministries involved in superconductivity R&D steered more money to HTS

during 1987, and have substantially higher

budgets for 1988. A superconductivity city has

even been proposed, where research would be

centralized and applications tested.21 Increases

in government spending send unmistakable signals to industry, as well as to the universities

and national laboratories.

Japanese industrial policy works primarily

through incentives. Ministries seek advice from

zINo agency has linked itself with the proposal, which seems

to be a trial balloon—’’Superconductivity City Project, ” Science

and Technology in Japan, November-December, 1987, p. 43.

Photo credit: Japan External Trade Organization

Japan’s prototype linear motor car, a magnetically

levitated train.
7 4
75

business leaders in the early stages of policy

development. The processes through which

officials in government and the private sector

interact, and informal encouragement of industry efforts by government, arguably play a role

at least as important as direct financial support.

Government funding for R&D projects tends

to be modest; consistently, private industry has

paid for three-quarters or more of all Japanese

R&D, compared with about half in the United

States (table 5).

At the same time, public funds for the maglev

train provided a stimulus for companies like

Sumitomo Heavy Industries to build their experience base in superconductivity and related

problems in cryogenic engineering. Japanese

companies participate as members of consortia formed by MITI to undertake projects such

as the 70 MW generator. In the Japanese view,

such projects leverage public investment, helping break technological bottlenecks and diffuse

results to industry. Companies participating in

Japan’s government-sponsored R&D efforts normally contribute about half of the project

funding.

When it comes to basic research, the government share is about 50 percent in Japan, versus

two-thirds here. As pointed out earlier in the

chapter, many leaders in business, government,

and universities in Japan are pushing for improvements in basic research, seeking greater

creativity and originality. Because of budget

pressures, Government support for basic science has been growing at an annual rate of only

3 percent, slower than the overall rate of R&D

growth in Japan. Thus the government share

of basic research funding has been declining.

As the yen rises relative to the dollar, Japanese spending, when translated into dollars, appears more impressive. Calculated at exchange

rates current at the end of 1987, direct Japanese Government support for superconductivity—exclusive of salaries—seems likely to be

about $70 million during 1988. Budget figures

in Japan do not break out LTS and HTS, but

a good portion of the total will no doubt support ongoing work with low-temperature materials. Funding increases have been sharp,

coming after a period of relatively low spending on superconductivity (leaving aside such

projects as the linear motor car, where superconductivity is a means to an end). In fiscal

1986, for example, MITI spent about $2 million on LTS technologies. And set against overall Japanese Government R&D support—itself

relatively small compared to corporate R&D—

superconductivity remains a minor item.22

MITI’s 1988 HTS budget exceeds that of the

other agencies, but it would be a mistake to conclude that MITI is tightly coordinating Japan’s

superconductivity policies. In OTA’s interviews, MITI officials argued that, at this stage

in the development of HTS, competition among

ministries and research groups should be seen

as healthy. STA staff, meanwhile, hopes that

MITI laboratories will eventually join the Multicore Project—while conceding that this is unlikely in the near term.

Who Has the Lead Role,

Government or Industry?

Westerners often misconstrue relationships

between government and industry in Japan.

MITI and other ministries may try to influence

corporate decisions, but Japan’s Government

does not issue directives to industry. A more

accurate picture of Japanese policymaking sees

government-industry interactions based on

processes of “reciprocal consent’’—continuing

discussion and negotiation.23 Corporate leaders

are heavily involved in building consensus and

helping shape government programs. HTS will

be no exception.

In superconductivity, industry has influenced

government policies through frequent meetings

with ministry officials. At least a third of the

members of MITI’s Advisory Committee on Superconductivity Industrial Technology Development come from the private sector. More

than a hundred Japanese corporations belong

to the STA’s newly formed Shin Chodendo

22The Japanese Government budget for all science and technology activities totals 1,700 billion yen for fiscal 1988—about

$13 billion. See Report Memorandum #147, Tokyo Office of the

U.S. National Science Foundation, Feb. 5, 1988.

z3R,J,Samuels, The Business of the Jzqmnese State (Ithaca, NY:

Cornell University Press, 1987).
76

Zairyo Kenkyukai [New Superconductivity Materials Research Association], best known as

the superconductivity forum.

The forum, chaired by Dr. Shinroku Saito,

serves as a “window” between corporate members (who pay an annual fee of about $1,000)

and the universities and national laboratories

involved in the Multicore Project. According

to the director of STA’s Research and Development Bureau, the forum will hold workshops

and symposia, undertake “brainstorming” in

support of the Multicore Project, and encourage

cooperation in research, both domestically and

internationally. Many participants, including

Dr. Saito, also advise other ministries; thus the

forum helps build linkages within the Japanese

Government.

The Fine Ceramics Center (FCC) illustrates

a different mechanism. Government and industry have both provided money for an extraordinarily well-equipped laboratory in Nagoya,

with participating companies sending scientists

and engineers. In contrast to some other MITIsponsored R&D efforts, many of which have

had staffs viewed as second rate, the FCC appears to have attracted highly qualified people.

The companies continue to pay their salaries,

and they help transfer technology from the

Nagoya laboratory back to their employer.

When it comes to Japan’s national laboratories, opinions differ as to whether corporations give more than they receive. For instance,

at the National Research Institute for Metals,

which normally hosts a half-dozen people from

industry who work alongside NRIM scientists,

laboratory officials contend that they have been

ahead of industry in at least some areas of superconductivity. Organizations like NRIM also

let contracts to companies, including large corporations (New Japan Steel, Toshiba). While laboratory managers view contract research as a

mechanism for helping industry, the companies

—which make little profit on such work—tend

to see it as part of their contribution to the larger

national effort.

In the future, government scientists may have

a chance to spend time working in corporate

laboratories—some of them much better

equipped than government facilities—but so far

this has been rare. Legal provisions, only recently relaxed through new legislation, have

limited such arrangements.

Direct cooperation in research between companies and universities has likewise been

limited. This is also changing, however. Professor Tanaka recently had 10 scientists from a

group of private companies working in his

Tokyo University laboratories. The Monbusho

reports a total of 300 cooperative projects linking universities and companies during 1987,

11 of them (all with Monbusho sponsorship) in

superconductivity. 24 In some contrast to efforts

in the United States, many of which seek to

push universities into doing industrially relevant work (see the next chapter), rhetoric in Japan stresses cooperation in projects of interest to both sides.

Japanese leaders, like those in many countries, view ties among universities, industry,

and government as weak. Statements on science and technology policy continually highlight the need for more effective working relationships. Industry tries to help by donating

equipment to the universities, but professors

worry aloud that industry will steal their best

research workers. At the same time, senior

professors typically help steer their graduates

to particular companies, helping build long-

-lasting informal communications networks.

Professional societies and study groups also

bring people together, providing opportunities

for working-level scientists and engineers from

industry, government, and the universities to

share information. In this respect, they replicate the function of high-level advisory committees involving senior professors, corporate

executives, and ministry officials.

Recent changes in the law—for instance, making it easier for faculty members to consult—

encourage interactions with industry, but many

Japanese officials think further steps will be

needed. Broad success in basic research would

seem to demand such cooperation. Given the

Z“’Sangaku Ittai e Hirogaru Koryu” [Expanding Exchange Between Industry and Universities], Nihon Keizai Shirnbun, Jan.

20, 1988, p. 1,
77

slow growth in the government R&D budget,

the industry role is a critical one; superconductivity promises to be a prime test case.

As noted earlier in the chapter, many Japanese companies–Sumitomo Electric is a good

example—have been expanding their basic research efforts, while also pursuing parallel programs of applied R&Din HTS. The new opportunities have pushed many firms toward more

basic work—which they see as the necessary

preliminary to commercialization—and sensitized them to the importance of university science. Even so, a major reorientation of Japanese R&D toward fundamental research will

require institutional, cultural, and political

shifts. The university system is widely viewed

as hierarchical and stifling, offering inadequate

incentives to bright young researchers. Change

has begun, but it is not clear how far it will go

or how deeply it will penetrate.

Rivalry or Cooperation? The Internationalization

of Japanese Superconductivity R&D

International cooperation in HTS has been

a central theme in pronouncements by government officials in Japan. MITI has opened its

HTS programs to foreign companies. The STA

states that it will promote international collaboration under the Multicore Project. In addition,

the Key Technology Center–sponsored by MITI

and the Ministry of Posts and Telecommunications—has provided financial support for foreign engineers and scientists who wish to work

in Japan. Finally, the Ministries of Foreign Affairs and Education have announced a postdoctoral fellowship program that will bring recent

graduates of overseas universities to Japan for

research. Possibilities for U.S.-Japan cooperation in HTS also exist on an agency-to-agency

basis. The U.S. National Bureau of Standards

and ETL have been exchanging scientists for

a number of years. Both have informally expressed interest in cooperation on HTS-related

standards.

Why the stress on “internationalization”?

There are two major reasons:

● The United States, along with other nations, has been pressing Japan to make a

●

greater contribution to global welfare—one

commensurate with the size of the Japanese economy and Japan’s technological

capabilities (box L). Among other things,

this implies a greater commitment to science—the fruits of which should benefit

all—and to the transfer of technologies to

other parts of the world. Opening Japanese

research institutions to greater foreign participation would be a first step. In many

official policy statements—including those

on HTS—Japan has pledged to take such

actions.

More than just altruism, internationalization would-serve Japan’s interests as well.

Foreign scientists and engineers will help

invigorate Japanese laboratories, encouraging new approaches to research, and breaking down some of the traditions which—

particularly in the universities—seem roadblocks to creativity. Japanese leaders also

realize that they may have to open their

own doors to retain access to R&D from

other countries. With science and technology holding the keys to continuing economic growth in the 21st century—a firm

belief in Japan—internationalization can

be viewed as a strategic and economic imperative.

The stress on international cooperation does

not signify any slackening in Japan’s efforts to

develop indigenous technologies. The Japanese

view it as a complement to these efforts—far

more than a matter of image, it is an intrinsic

element in Japan’s strategy for competing in

a world of intensifying global rivalries.

So far, as box L indicates, rhetoric has overshadowed results. MITI’s pitch for international collaboration focuses on the International Superconductivity Technology Center,

established in January 1988. ISTEC, which gets

financial support from MITI, will be located

near Tokyo on a site formerly owned by Tokyo

Gas. More than 85 Japanese companies have

signed on as founding members. Although the

initial fee for full members is about $800,000,

with annual charges of about $100,000, the costs

are considered donations and earn the companies tax benefits. Associate members, who pay
78
7 9

much less, will not be able to participate in research or have immediate access to R&D results, but simply to ISTEC publications and

symposia.

ISTEC plans not only to conduct research in

its own facilities, but to support R&D in other

institutions, review and evaluate research for

its members, and carry out feasibility studies

on applications of HTS. To benefit from full

membership, foreign companies would need

Japanese-speaking employees, skilled in relevant technologies, on site in the ISTEC laboratory. As of May 1988, no foreign companies had

joined as full members, although several had

signed on with associate status.

Are American companies missing a bet by

not joining ISTEC? For smaller firms, the costs

pose a major barrier. But a number of U.S. companies with R&D operations in Japan could certainly afford them. Some form of jointly sponsored membership—e.g., through an industry

association, or a joint venture such as Microelectronics & Computer Technology Corp.–

might also be possible. If ISTEC yields impacts

comparable to past MITI-promoted R&D efforts

—e.g., the very large-scale integrated circuit

project of the late 1970s—then participation

could pay off. Even if the results in terms of

research outcomes prove meager, active participation helps keep tabs on the competition.

This, after all, has been a primary motive for

Japanese firms to join in such group efforts.

CONCLUDING REMARKS

The U.S. business culture differs from that

in Japan, R&D strategies in American companies tend to be driven by hard-headed calculation of risks and rewards—which does not encourage aggressive commitments to HTS. Most

U.S. firms hope that someone else will do the

fundamental research. Many American executives feel uncomfortable with this short-term

approach, sometimes defensive. But they see

little choice, given the way U.S. financial markets operate.

Japanese executives work in a society and an

economy with a different set of traditions and

rules. They too must worry about profit levels,

but these are not the most important influence

on their behavior, Japanese managers think first

about growth and market position. Furthermore, they are acutely aware that they can no

longer depend on technologies from the United

States and Europe. Managers in Japan are attempting, often with some fumbling, to increase

their firms’ research capabilities, seeing this as

one road to continued expansion.

Given the differences in attitudes and in approach to R&D, HTS has stimulated contrasting responses. As a generalization, large Japanese companies have more people at work on

HTS, doing a greater variety of things. Japanese managers see HTS as a technology of paramount importance for global competition in the

1990s and beyond. U.S. executives might agree,

but they also see the risks and uncertainties

more starkly. They believe commercial products are farther off—that HTS will remain in

the laboratory for some years to come.

Thus, most U.S. R&D efforts could be described as selective and probing. In contrast,

most of the Japanese efforts are relatively broad,

with people already assigned to think about applications. In pursuing their strategies, Japanese companies are studying superconductivity

now as a potential commercial technology.

American companies are not. The Japanese

companies could be wasting their time and

money. At this point, no one knows. But if the

pace of discovery in the future matches that

of the past year, Japanese companies will be

better positioned.

In the United States, some of the first HTS

applications may well come from small, startup

firms–financially weak, and likely to face

difficulties in growing. The pattern is clear in

biotechnology, where startups have had to link

with larger companies to proceed with com-
80

mercialization. Thus far, of course, the startups

are outnumbered by big American companies

like Du Pont and IBM. In Japan, the large, diversified, and financially strong companies have

the field largely to themselves.

These Japanese firms are poised to move

quickly into production and marketing, on a

worldwide scale if they choose. In the past, this

asymmetry in industrial structure has had

powerful impacts—e.g., on competition in microelectronics, where American firms have fallen

behind for reasons that include lack of financial muscle. It remains to be seen how the story

will unfold in biotechnology—or in HTS.

In the United States, cooperation between

Government, industry, and the universities

tends to be ad hoc, motivated by particular circumstances. There is no indication that HTS

will be an exception. Japanese companies compete intensely with one another, but are nonetheless quite capable of cooperating on projects

judged to be in their interests, especially when

MITI or government agencies seek to foster

these projects.

Japanese Government funding for R&D in superconductivity will not match spending by the

U.S. Government (although the exclusion of salaries from some of the Japanese budget figures

makes comparisons difficult). Including both

LTS and HTS, the U.S. Government will spend

more than twice as much in fiscal 1988. More

important, however, Japanese firms have many

more people at work on HTS than American

firms. Companies commercialize, and companies in Japan have stronger commitments to

superconductivity.

Neither country has a coordinated national

initiative. Both seek to promote cooperation

among universities, industry, and national laboratories. While business and government in

Japan do not always find it easy to cooperate,

they do exchange views and work toward consensus. And, if Japan’s policy cannot be described as a coordinated plan, policy directions

have been debated much more thoroughly than

here. By the beginning of 1988, policy objectives in Japan had been reasonably clearly defined. They show a clear recognition of specific needs and specific problems impeding

commercialization, and the Japanese Government aims to help solve them.
Chapter 4

U.S. Technology Policy: Issues for

High-Temperature Superconductivity
CONTENTS

Page

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Government Support for HTS R&D..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Funding Levels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Defense-Related R&D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

HTS R&D in the Energy Department Laboratories. . . . . . . . . . . . . . . . . . . . . 99

Other Mission Agencies: NBS and NASA... . ........................101

NSF and the University Role. . . . . . . . . . . . . ............................102

Disciplinary Boundaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..........102

NSF Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....................103

Technology Transfer: The Federal Laboratories . .......................110

New Rules for the Laboratories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...110

Transferring HTS R&D . . . . . . . . . . . . . . ..............................111

Laboratory Personnel 112

Cooperative R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................113

State Programs and Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....114

Technology Interchange With Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..115

Participation and Monitoring, . . . . . . . ...............................115

Language Training; Fellowships in Japanese Laboratories . .............116

Technical Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .............117

Foreign Access to U.S. Technology . ................................11 7

Concluding Remarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............118

Boxes

B o x Page

M. Coordinating the Federal Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

N. DoD and Postwar High-Technology Development . . . . . . . . . . . . . . . . . . . . 96

0. Multidisciplinary Research in American Universities. . ...............105

P. Reciprocity in Flows of Technology and Information. . . . . ............118

Figure

Figure Page

4. National Science Foundation Research Support . ..................,..104

Tables

Table Page

7. Summary Guide to Policy Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

8. Federal Funding for HTS R&D... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

9. Issue Area I: Funding Levels and Priorities for Federal R&D . . . . . . . . . . 88

10. Department of Defense Funding for HTS R&D . . . . . . . . . . . . . . . . . . . . . . 94

11. Energy Department Funding for HTS R&D . . . . . . . . . . . . . . . . ., ...,...100

12. National Science Foundation Funding for HTS R&D . ................103

13. Issue Area II: Strengthening Interactions Among Universities, Industry,

and Government .****** ● ******* ● ******. ● m.***** .*.***** ● .***.*. ● 108

14. Issue Area HI: Technology Interchange with Japan . ...............,.116
Chapter 4

U.S. Technology Policy: Issues for

High-Temperature Superconductivity

SUMMARY

The preceding chapter discussed company

strategies toward high-temperature superconductivity (HTS) in the United States and Japan,

as well as the policies of the Japanese Government. The question now becomes: How can

U.S. Government initiatives help American

companies with commercialization? Both this

chapter and the next deal with Federal policies

and what they mean for HTS. Both also go beyond superconductivity, taking up broader issues that affect commercialization and competitiveness,

Many of these policy issues are matters of

ongoing concern to Congress and the executive branch: the Federal R&D budget and its

management; the health of university research;

technology transfer from national laboratories

to industry. Table 7 provides a guide to some

20 policy issues and options discussed in this

chapter; tables 9, 13, and 14, which follow later,

give more detail. As a glance at table 7 makes

clear, many of the issues and options have relevance that goes far beyond HTS. By the same

token, many of the policy questions important

for HTS can only be understood in the broader

context of U.S. technology policy.

Federal agencies will spend some $60 billion

on R&D this year (ch. 2). Industry will spend

about as much, with private firms also conducting more than half the Government-funded total under contract. All companies that use technology live to some extent off the publicly

financed storehouse of technical knowledge.

The path to commercialization begins with this

technology base.

The overall size of U.S. R&D expenditures—

more than twice as much as Japan, and far more

than any of the Western European nations—

presents something of a paradox. How is it possible, given spending on science and technology exceeding $125 billion, that the United

States has a problem in technology? Why

doesn’t American industry have what it needs

to compete? The question has two kinds of answers, both partially true. The first is that technology is not, in fact, the problem—that difficulties in commercialization and competitiveness

lie elsewhere. The analysis in chapters 2 and

3 indicated that technology is part of the

problem—though far from the whole problem.

The second answer is that not enough of the

R&D money goes toward commercially relevant

technology development.

Any analysis of the Federal role in commercialization must begin with a look at how the

Government spends its $60 billion:

●

●

●

Nearly 70 percent goes for defense, up from

57 percent at the beginning of the Reagan

Administration. The United States devotes

a much larger share of total R&D outlays

for military projects than most other countries. Defense gets less than 5 percent of

the Government R&D budget in Japan.

Much of the Federal money—this year,

about $20 billion—goes to the 700-plus national laboratories. For the most part, these

laboratories do not have a good track record in transferring technology to civilian

industry. While recent initiatives by Congress and the Administration have sought

to strengthen interactions between the laboratories and industry, the process of

change is just beginning.

Outside of defense, aerospace, and health,

Federal agencies spend little on applied research and development. Given the shortterm orientation of most of the R&D paid

for by private industry, a wide gap often

separates basic research and commercial

technologies —a gap that neither Government nor industry has been filling.

83
84

Table 7.—Summary Guide to Policy Options

Issue area Option Relevance

1. Funding Levels and Priorities for Federal R&D (see

Table 9 for details)

A. Funding Levels for HTS

● New money, agency priorities . . . . . . . . . . . . . . . . . .

B. Continuity of Funding

● Multi-year benchmark plan. . . . . . . . . . . . . . . . . . . . .

● Two-year funding trial . . . . . . . . . . . . . . . . . . . . . . . . .

C. National Science Foundation Budget

. Overall NSF budget increase. . . . . . . . . . . . . . . . . . .

● Funding for university laboratory equipment . . . . .

D. Weaknesses in the Industrial Technology Base

● Review of U.S. technology base . . . . . . . . . . . . . . . .

● Basic research tax credit . . . . . . . . . . . . . . . . . . . . . .

E. Setting Priorities for Federal R&D

● Strengthen the Office of Science and Technology

Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Il. Strengthening Interactions Among Universities, Industry, and Government (see Table 13 for details)

A. University-Industry Interactions; Multidisciplinary Research

● Funding for NSF centers . . . . . . . . . . . . . . . . . . . . . .

• Postdoctoral fellowships . . . . . . . . . . . . . . . . . . . . . .

B. Government-Industry Interactions: Technology

Transfer and Joint R&D

●

●

●

●

●

●

●

Oversight on technology transfer from the national laboratories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pilot program for transfers of HTS technology

resulting from DoD-sponsored R&D . . . . . . . . . . . . .

Technology transfer demonstration projects . . . . .

Personnel exchanges . . . . . . . . . . . . . . . . . . . . . . . . .

Cooperative R&D with industry. . . . . . . . . . . . . . . . .

Sharing costs with private R&D consortia . . . . . . .

Support for State Government initiatives . . . . . . . .

Ill. Technology Interchange with Japan (see Table 14

for details)

• Seed grant for office in Japan to monitor developments in HTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

● Research participation and language training . . . .

Ž Japanese technical literature. . . . . . . . . . . . . . . . . . .

1 . . . . .

2 . . . . .

3 . . . . .

4 . . . . .

5 . . . . .

6 . . . . .

7 . . . . .

HTS

HTS, but potentially

broader

HTS, could be

broader

general

general

ail commercial

technologies

general

8 . . . . . general

9 general

10 : : : : : general

11 . . . . . general

12 . . . . . HTS, but potentially

broader

13 . . . . . general

14 . . . . . HTS could get

special attention

15 . . . . . HTS, but potentially

broader

16 . . . . . HTS, but potentially

broader

17 . . . . . general, but HTS

could get special

attention

18 . . . . . HTS

19 . . . . . general

20. . . . . HTS, but potentially

SOURCE: Office of Technology Assessment, 1988.

At present, the Federal Government maybe

spending as much on HTS as the private sector. The agencies expect to spend $95 million

on HTS in fiscal 1988. OTA’s industry survey

(ch. 3) found that 55 U.S. firms plan to spend

about $97 million on superconductivity R&D

(LTS as well as HTS) in 1988.

While $95 million sounds like a lot, nearly

half will go for military projects. Department

of Defense (DoD) objectives shape R&D goals

even at the level of basic research. Nonetheless, much of the fundamental understanding

of HTS that results from DoD-sponsored research will support the overall technology base
85

for HTS. Moreover, the Defense Advanced Research Projects Agency (DARPA) has emphasized processing in its HTS R&D; this work

should yield commercial spinoffs.

In general, however, civilian and military

technologies have been diverging, as DoD’s

needs grow ever more specialized. This pattern

is already evident in HTS, where prospective

applications include passive shielding for protection from nuclear radiation, or sensors for

the Strategic Defense Initiative (app. B). Moreover, in a period of tight budgets, DoD decisionmakers—from project and program managers

to laboratory directors and Under Secretaries—

scrutinize the R&D budget to make sure that

immediate military needs get the highest priority. Basic research suffers in such periods,

along with other work that might be of use on

the civilian side of the economy.

The Department of Energy (DOE) and its laboratories will get the lion’s share of the nonmilitary funding—nearly 30 percent of the Federal total. Ten DOE laboratories may have more

to spend on HTS in 1988 than NSF will distribute to the Nation’s universities. DOE’s basic research, like that of DoD, will help support the

technology base. As for commercial technology,

the laboratories are trying to develop new cooperative ties with U.S. industry. However, it

could take years for effective working relationships to develop; in the absence of such relationships, DOE R&D may not make a major contribution to commercial technology development.

The National Science Foundation (NSF) share

of the HTS R&D budget, going almost entirely

for university research, declined from 25 percent of the Federal total in 1987 to 15 percent

in 1988. The universities do get some funding

from DOE and DoD (especially through the

basic research programs of the Air Force and

the Navy). But the allocation of Federal R&D

funds seems out of balance, given the great

strength of American universities in basic research.

Continuity of funding over the next 5 to 10

years will be just as important as the level and

allocation in any one year (Options 1, 2, 3). The

Federal budget for HTS is really nothing more

than the cumulation of agency decisions and

appropriations. Both Congress and the Administration could benefit from a better sense of

the overall dimensions of the Federal effort, so

that priorities could be weighed rather than simply emerging at the end of the yearly budget

process. A benchmark, multi-year funding plan

for HTS, which could be adjusted periodically

(not at alla rigid blueprint), would help in making good decisions. Congress might also choose

to experiment with multi-year authorizations

and 2-year budgeting. These steps could help

avoid too much duplication in agency R&D

(some overlap can be desirable), as well as cuts

in other needed R&D to provide money for HTS

(little of the Federal total represents new money

specifically appropriated for superconductivity).

Many fields of science and technology vital

for competitiveness do not get adequate research support; technical knowledge that could

help American firms compete is not available

when they need it. Often, the underinvestment

is most severe in fields that lack glamour and

the promise of immediate payback (examples

range from materials synthesis to corrosion and

wear)—just those likely to suffer when more

money must be found for an exciting new opportunity like HTS. Given the constraints on

the Federal budget, any decision to begin filling some of these gaps by spending more on

civilian R&D must begin with good information and a government-wide perspective, matters addressed in Options 6 and 8.

Commercializing HTS will require multidisciplinary R&D—physicists, chemists, materials

scientists, and engineers. NSF can play a vital

role in supporting multidisciplinary research

in universities, where such work has seldom

caught on (Options 9 and 10). While the Reagan Administration proposed doubling the

Foundation’s budget over a 5-year period, Congress gave NSF very little increase for fiscal

1988. Sustained growth in the NSF budget will

be needed if the agency is to increase its support of traditionally underfunded areas, including engineering research—a critical priority for

competitiveness.
86

If the Federal laboratories, in their turn, are

to provide much help in commercialization,

they will need to make sustained commitments

to working with the private sector (Options 11

through 17). Congress, in several recent laws,

has stressed the need for closer linkages between

the laboratory system and industry. Agency

responses have been mixed. With experience

limited, it might be prudent for the DOE laboratories to adopt an experimental approach,

beginning with pilot projects, rather than plunging into a full-fledged program of cooperative

endeavors. Personnel exchange programs could

also help shift the culture of the laboratories;

scientists and engineers working in the laboratory system need to understand how industry

functions and how the marketplace works if they

are to help in commercialization.

Chapter 3 outlined Japan’s proposals for international cooperation in HTS research. So

far, American firms have not responded with

much enthusiasm. Options 18, 19, and 20 suggest steps the Federal Government could take

to help industry and professional groups test

Japan’s openness to foreign R&D participation,

and to monitor Japanese technical developments.

Given the importance of person-to-person contact in technology transfer, early steps should

include language training for U.S. engineers

and scientists, so they can work inside the Japanese research system.

Although the analysis that follows covers a

broad range of issues related to HTS, it does

not pretend to be a comprehensive discussion

of U.S. technology policy. Nor do the 20 policy

options address all the problems identified in

earlier chapters—short-term decisionmaking in

U.S. industry, for example. This chapter has

a more modest aim: examining alternatives for

managing the Federal R&D budget to more effectively support the Nation’s commercial technology base without detracting from agency

missions. Most of these are incremental policy adjustments; chapter 5 looks at more comprehensive alternatives.

GOVERNMENT SUPPORT FOR HTS R&D

Funding Levels

Funding for HTS R&D has grown dramatically since the end of 1986; table 8 gives the

best available estimates.1 It is hard to criticize

the totals; indeed, the increases shown in table

8 seem generous in a time of budgetary pain.

Although little of the money represents new

budget authority, in 1988 the U.S. Government

will probably spend more on HTS alone than

Japan’s Government will spend on HTS and

LTS together. The 1988 total approaches the

ILow-temperature superconductivity (LTS) has shared in the

expansion. For years, DOE and DoD have funded LTS projects

such as energy storage and superconducting machinery (e.g.,

for ship propulsion–Appendix B). Federal spending for LTS increased from $40 million in fiscal 1987 to $84 million in 1988.

Agency requests for LTS in the 1989 budget come to about $83

million. (Both the 1988 and 1989 figures include Strategic Defense Initiative (SDI) contract work on superconducting magnetic energy storage.)

recommendation—$100 million—of a National

Academy of Sciences (NAS) panel.2

But the totals do not tell the whole story. HTS

could remain in the laboratory for many years.

During much of this time, the Federal Government will remain a primary source of R&D

funds. Effective support for commercialization

will require stability in Federal funding, attention to priorities, and good management of

agency budgets.

In their fiscal 1988 budgets for HTS, some

agencies fared much better than others. DOE

and NSF spent roughly equal amounts on HTS

in 1987; the Energy Department will have more

than twice as much this year, while NSF’s in-

~“Research Briefing on High-Temperature Superconductivity,”

Committee on Science, Engineering, and Public Policy, National

Academy of Sciences, Washington, DC, 1987, p. 19. The panel,

noting that corporate funding might add a comparable amount,

termed this” . . . a good beginning in addressing the challenges

and opportunities offered by the new materials. ”
87

Table 8.–Federal Funding for HTS R&D

Fiscal year budget (millions of dollars)

1987 1988 1989

(actual) (estimated) (requested)

Department of Defensea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19. 0 $46.0 $63. 0

Department of Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5 27.2 38.7

National Science Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7 14.5 17.2

National Bureau of Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8b

9.3

National Aeronautics and Space Administration . . . . . . . . . . . . . . . . . . 4.2 6.7

Bureau of Mines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1 0.1 0.1

$44. 9 $94. 8 $135. 0

awOrking figures, subject to change.

bExcludes$lsO,Ooo correlated work.

SOURCE: Preliminary agency data and budget estimates provided to the Subcommittee on Superconductivity of the Committee on Materials, May 1988

crease is only 25 percent. NSF officials have

said they have received many more highly-rated

proposals on HTS than they can support in fiscal 1988. Meanwhile, the DOE laboratories—

which typically get nearly two-thirds of the Department’s basic research funds—may have

more money for HTS than NSF will provide

the Nation’s universities.

The NAS panel emphasized the need for new

money for HTS to avoid cuts in other, perhaps

comparably important, R&D. When the excitement over HTS reached a peak early in 1987,

the fiscal year was well underway. Thus almost

all the 1987 funding came through redirecting

of dollars originally allocated to other research.

In many cases, scientists and engineers with

Federal contracts and grants took the lead in

this process, seeking approval from agency contract monitors to move into HTS.

Faced with little growth in R&D budgets, most

agencies have had little choice but to continue

pulling money from other fields to pay for HTS.

The National Bureau of Standards (NBS)–with

a budget that grew 16 percent from 1987 to

1988— is probably alone in being able to fund

its HTS work without sacrifices elsewhere.

In a period of tight budgets, when there may

be no way to avoid sacrificing one kind of research to pay for another, good decisions on

priorities within and across agencies become

more important than ever. Doing a better job

of formulating R&D budgets could help identify conflicts earlier, and perhaps ease their

resolution. For HTS, stability over time will be

as important as next year’s R&D totals. a

At present, most of the funds for HTS come

from the general R&D authorizations of the

agencies. Rather than this piecemeal approach,

Congress could take a broader look at the Federal effort in HTS, and provide overall guidance, through such mechanisms as a single

piece of legislation that would provide multiyear authorizations of appropriations, defining

the responsibilities in HTS for each agency.

This approach is discussed in more detail in

table 9 (Option 1). It carries dangers: for example, possible micromanagement by Congress.

On the ether hand, if implemented in too weak

a form, the effort could end up as little more

than a paper exercise, with little or no influence on the actual allocation of HTS R&D support across the agencies.

As a further step, Congress could direct the

Administration to prepare a multi-year estimate

of funding expectations for HTS R&D (see Option 2 in table 9). Some of the proposals on HTS

before the 100th Congress–e.g., H.R. 3217, as

sIn a well publicized episode, a recent NSF effort to reduce

uncertainty in university research programs backfired. Managers

in the Foundation’s Materials Research Division, expecting a

substantial funding increase in fiscal 1988, made too many longterm commitments during 1987, When the Federal budget was

finally approved, and the money was not there, NSF cut back

on ongoing multi-year grants (which are conditional on availability of funds) in order to support some new starts. See “Statement on Funding Levels for the Division of Materials Research, ”

National Science Foundation, Mar. 3, 1988.
88

Table 9.–issue Area 1: Funding Levels and Priorities for Federal R&D

Issue Options for Congress Advantages Disadvantages

A. Funding Levels for HTS

On the surface, Federal funding for HTS

R&D seems generous–$95 million for fiscal 1988. The difficulties lie beneath the

surface:

● Little of the total is new money. Few

agencies got the increases in their R&D

budgets they had planned on for fiscal 1988. They have taken money for

HTS from other research.

. Universities have had difficulty in lining up funds. Ten DOE laboratories

may well get more for HTS during fiscal 1988 than NSF will have for all the

Nation’s universities.

. The Administration is requesting a

hefty increase for HTS–to $135 million in 1989–and is calling for a substantial rise in non-defense R&D. If

Congress pares back the R&D budget

to accommodate other needs, the new

money issue, along with allocations of

R&D funds among the agencies, could

be central issues, not just for HTS, but

for R&D generally.

B. Continuity of Funding

HTS could easily require a decade or more

of steady R&D support before a technology base adequate to support commercialization emerges, with a continuing

need for Congress and the executive

branch to assess funding levels, as well

as allocations across agencies–e.g.,

support for processing R&D, and whether

it is adequate to support commercialization.

Stop-and-go funding has been a common

problem for U.S. science and technology

policy–and a serious one–in part because of year-by-year budgeting for Federal R&D. A period without newsworthy

research results could lead to a dry spell

in HTS R&D budgets.

C. National Science Foundation Budget

Despite the Administration’s announced

objective of a doubling in the NSF budget between 1988 and 1992, the Foundation’s fiscal 1988 appropriation grew by

only 6 percent (compared with a request

of 17 percent). NSF has had to postpone

increases in funding for multidisciplinary

R&D centers and for research in engineering, traditionally underfunded.

Laboratory equipment in many American

universities is inadequate for either

research or teaching.

OPTION 1. Provide a legislative framework

defining the overall Federal commitment

to HTS–for example, a single bill providing specific multi-year authorizations for

HTS R&D by agency. The authorizations

would signal the congressional appropriations and budgeting committees, as well

as the agencies, concerning the relative

shares of funds for HTS R&D to be given

to each agency.

OPTION 2. Direct the Administration to

prepare a multi-year estimate of Federal

funding expectations for HTS R&D. This

might be a rolling 5- to 10-year plan,

directed at commercial (rather than military) applications, and intended to be revised periodically (not a rigid, inflexible

set of research targets). Private sector input could be built into the process.

OPTION 3. Direct the Administration to experiment with a 2-year funding cycle for

HTS–possibly beginning with a pilot program at NSF. (Section 201 of Public Law

100-119 encourages congressional committees to experiment with multi-year

authorizations and 2-year appropriations. )

OPTION 4. Consider substantial increases

in the NSF budget over the next few

years. Budget increases along the lines

of President Reagan’s proposal for a doubling of the Foundation’s budget over 5

years would permit NSF to double or triple its funding for engineering research

–to the $400 million to $500 million

level–without sacrifices elsewhere.

OPTION 5. Appropriate substantially more

money to NSF–an added $100 million or

more per year–for equipment grants to

the Nation’s universities for both research

and teaching.

A single framework for funding decisions

could help keep Congress aware of potential imbalances among the R&D agencies.

Multi-year authorizations, along with the

multi-year planning exercise discussed in

Option 2, and the experiment in multi-year

funding discussed in Option 3, could help

make the point to universities, the laboratories, and to industry that Congress intends

to sustain the Government’s commitment to

HTS over time.

As a mechanism for helping policymakers gain perspective on annual budget

proposals, multi-year estimates should be

useful both to Congress and the agencies.

The effort could improve agency coordination, limit overlap in R&D funding, improve the quality of scientific and

technical advice to Federal agencies, and

reduce the likelihood that money for superconductivity will come at the expense

of other needed R&D. If successful for

HTS, the approach might become a model

for other fields.

Uncertainty over funding for HTS during

1987 and early 1988, and particularly

over the prospects for new money, made

it hard for research groups in government, universities, and industry to plan,

and delayed some projects. Such problems cannot be totally avoided in a fastmoving field like HTS. But a 2-year budget cycle would help keep R&Don a steady

course.

More money for engineering would be a

major step, not only in commercializing

HTS, but in supporting U.S. industrial

competitiveness across the board. NSF

will spend $171 million on engineering

research in fiscal 1988, only 10 percent

of the agency’s research budget.

Gifts from the private sector can help, but

the problem is far too big to be solved in

this way alone. Government action would

help improve the Nation’s technological

capabilities,

Congressional guidance could turn into

micromanagement of Federal R&D, or

pork-barreling.

Without proper oversight from upper levels in the Administration, such an exercise could turn into an agency wish list,

with little utility for making tough budget

decisions. Moreover, any effort to develop

a government-wide perspective would

probably be seen by some as top-down

planning–threatening agency autonomy

and flexibility. Multi-year budget estimates, finally, would probably have limited utility unless the agencies supported

the concept–which few do now.

In the absence of improvements in

mechanisms for establishing R&D priorities, a 2-year budget cycle would do little to overcome the fundamental

budgeting problems posed by competition

for limited funds, To some extent, a

2-year cycle might reduce the flexibility

of the system, with potentially serious

consequences in periods of rapid technological advance.

Given the size of the Federal budget

deficit, a significant increase for one

agency could well come at the expense

of others. The increases in civilian R&D

included in the President’s fiscal 1989

budget request–$300 million for NSF,

$400 million for DOE, $2.5 billion for

NASA–cannot be accommodated within

the framework agreement worked out between Congress and the Administration

in late 1987 unless Congress adjusts

other budget items downward.

Unless accompanied by an overall increase in NSF’s budget (see Option 4),

more funds for equipment could cut into

the Foundation’s research budget.
89

Table 9.—Issue Area 1: Funding Levels and Priorities for Federal R&D—Continued

Issue Options for Congress Advantages Disadvantages

D. Weaknesses in the Industrial Technology Base

Despite the size of the U.S. R&D budget, -

gaps open in the technology base where

neither industry nor government provide

support. Prior OTA assessments have

pointed to some of the problems; many

more certainly exist. The first step toward

a solution is to characterize the weaknesses more fully

American companies conduct relatively little basic research. Under the Tax Reform

Act of 1986 (Public Law 99-514) companies get a more favorable tax credit for

basic research they fund in universities

than for work performed internally. Both

the general R&D tax credit and the basic

tax credit for work sponsored at universities expire at the end of 1988.

E. Setting Priorities for Federal R&D

Competition for Federal R&D dollars

seems bound to grow more intense, with

conflicting demands between big science

and small, defense and civilian R&D, and

basic research and more applied work.

Establishing priorities and sticking to

them–e g , weighing the pros and cons

of expenditures such as required for a Superconducting Super Collider, or the National Aerospace Plane–requires a

government-wide perspective. This is the

job, in principle, of the Office of Science

and Technology Policy (in the Executive

Office of the President).

OPTION 6. Request a detailed review of Given the budget deficit, it is more im- Studying the problem without taking

the U.S. technology base by the National portant than ever that R&D decisions be steps to solve it would accomplish little,

Academies of Science and Engineering. based on sound analysis, Less glamSuch a review might encompass: orous. less visible fields tend to suffer

●

●

funding levels for both basic and ap- most in such periods, with harmful implied research across the broad range pacts that show up only in later years,

of scientific and technical disciplines when the damage has been done.

important for industrial competitiveness, with particular attention to actual and potential bottlenecks and to

technical fields (like manufacturing)

that historically have been underfunded;

processes for setting research priorities and determining funding levels within and across Federal agencies.

OPTION 7. Permit a separate tax credit for

basic research conducted within the firm.

To have much impact, an in-house

research credit would have to be as

favorable as current rules applying to basic research paid for by industry but conducted at universities, and more favorable

than tax credits for internal R&D under the

1986 tax act, A basic research credit

could supplement the overall R&D tax

credit if Congress decides to make it permanent for 1989 and beyond. If Congress

lets the existing credit expire, a special

provision might be crafted-perhaps on

a trial basis–for basic research within industry.

OPTION 8. Give the Office of Science and

Technology Policy access to the staff

resources and advisory processes needed, not only to monitor science and technology issues in the agencies, but to

assume an effective decisionmaking role

within the executive branch.

A basic research credit for work within

the firm would create stronger incentives

for attacking technical problems that fail

to excite much interest in universities.

A strengthened OSTP would permit the

Executive Office of the President to develop and articulate priorities for science

and technology–backed up with analytical depth and detail that have not been

possible, given the Office’s current staff

(about 30) and budget (about $1.9

million).

Creating new tax credits runs counter to

the spirit of tax reform, while enforceable

guidelines for basic research could be

difficult to define,

OSTP will have little influence unless the

President wants it to, Lacking this, congressional action to strengthen the Office

would make little difference,

SOURCE: Office of Technology Assessment, 1988.

introduced—would direct the executive branch

to provide, on a one-time basis, a Federal program plan for superconductivity, including estimated funding levels by agency for a five-year

period. H.R. 3217 would assign the overall

responsibility to the Executive Office of the

President, with roles for the Office of Science

and Technology Policy and the National Critical Materials Council. It provides for consultation with the mission agencies, as well as

universities and industry. The proposal would

also create a more formal structure for coordination among agencies, (Box M discusses interagency coordination of HTS R& D.) Any effort

to develop Government-wide estimates risks being seen as top-down planning—threatening

agency autonomy, professionalism, and flexibility. Nonetheless, viewed as a mechanism for

helping policymakers gain perspective on annual R&D budget proposals, multi-year estimates could be useful both to Congress and to

the agencies.

84-754 0 - 88 - 4 : QL 3

91

With Congress appropriating money annually for research programs that may go on for

years, the ups and downs in R&D funding have

also stimulated frequent proposals for multiyear authorizations and/or appropriations. 4 A lthough Congress has been reluctant to move

in this direction, growing concern over the budget process as a whole has led to discussion of

a two-year budget cycle. As a more modest step

toward a longer-term perspective on R&D decisions, Congress could experiment with multiyear funding in a single agency—perhaps NSF

(Option 3). The experiment might be undertaken by programs in, say, the engineering

directorate or the materials research division—

both of which support HTS.

Neglect by Government and industry of commercial R&D has slowed the passage of technology from laboratory to marketplace, harming U.S. productivity and competitiveness. Less

glamorous fields, particularly in engineering,

seldom attract funding commensurate with

their potential economic significance. Chapter

2 stressed U.S. underinvestment in processing

R&D; other examples include materials synthe4

For discussion of some of the possible mechanisms, see U.S.

Science and Engineering Base: A Synthesis of Concerns about

Budget and Policy Development, GAO/Reed-87-65 (Washington,

DC: U.S. General Accounting Office, March 1987), pp. 22-34.

sis (box C, ch. 2).5 For such reasons, and despite

the huge U.S. investment in R&D, the technology base no longer seems adequate to support

a competitive set of industries.

In government, lack of mechanisms for setting priorities, coupled with stop-and-go funding for some kinds of R&D, have contributed

to the problems. Gaps and holes in the technology base emerge particularly in fields that

Federal agencies— DoD, DOE, NASA (the Na-

*On the lack of R&D in construction technologies, see International Competition in Services (Office of Technology Assessment,

July 1987), pp. 138-144. Other examples include:

●

●

●

●

●

●

Direct reduction of iron to steel.

Railway technology. (Given the importances of rail transportation for the Nation’s economy, support has been woefully inadequate compared to, say, aeronautical engineering.)

Process control models for the fabrication of microelectronic

devices.

Theoretical foundations for software engineering. (Better

understanding could lead to greater productivity in programming, helping break a major bottleneck in U.S. industry.)

Fundamental understanding of combustion processes. (Environmental pollution from stationary powerplants, burning

of solid wastes, and automotive engines costs the United

States billions of dollars each year. Lack of a research base

in combustion—in terms of thermodynamics, chemical kinetics, fluid mechanics, heat transfer—makes it difficult to

develop inherently clean combustion processes.)

Corrosion and wear. (These processes, so familiar and pervasive as to seem inevitable, have economic costs measured

in billions of dollars annually; wear, in particular, has never

attracted much scientific attention or research support.)

Also see Directions in Engineering Research: An Assessment

of opportunities and Needs (Washington, DC: National Academy Press, 1987].
92

Photo credit: Argonne National Laboratory

HTS superconducting wire, ready for testing.

tional Aeronautics and Space Administration)—view as too far from their missions, and

that, in the view of corporate managers, will

not yield financial returns in the short or

medium term. Among the other causes: relatively low levels of support for engineering research, and Federal R&D programs that have

often gone astray when not tightly linked to

agency missions.

Congress could begin to enlarge the pool of

commercially-relevant technology by appropriating additional funds to NSF, allowing the

Foundation to expand its support for engineering research without taking money from other

areas (Option 4). NSF’s mission embraces the

strengthening of the Nation’s science and engineering base; yet its current spending on engineering research ($171 million) does not amount

to three-tenths of a percent of the overall Federal R&D budget.

Congress might also provide additional

money to NSF specifically for laboratory equipment. Equipment in the Nation’s engineering

schools averages 20-30 years old; a quarter of

it cannot even be used.6 An additional $100 million annually, to supplement NSF’s current

spending of $250 million a year—would help

(Option 5).

NSF ranks no better than fifth in R&D spending among Federal agencies. Any search for

a broad solution to the problems in commercial technology will have to look beyond NSF

and the university research it sponsors. Given

the pressures on the Federal budget, a realistic

first step might be to identify the weaknesses

in the existing technology base, and begin establishing priorities for allocating the limited funds

available. Congress could ask the National

Academies of Sciences and Engineering to begin this task (Option 6).

As a complementary measure, aimed at encouraging American firms to undertake more

fundamental research, Congress might consider changes to the Research and Experimentation Tax Credit.7 At present, industry finances

only a fifth of all U.S. basic research. Federal

agencies—which pay for two-thirds (universities fund the remainder)—do not set priorities

based on commercial relevance. Giving companies greater incentives to conduct work inhouse would help focus basic research on industrial needs.

Congress could institute a special basic research tax credit for work conducted within

8P. Doigan and M, Gilkeson, “Engineering Faculty Demographics: ASEE Faculty & Graduate Student Survey, Part II,”

Engineering Education, January 1987, p, 212. The National Research Council suggests that an increase of $3o million or more

for engineering equipment alone would be appropriate—

Directions in Engineering Research: An Assessment of Opportunities and Needs, op. cit., pp. 50-51. Also see “Scientific Equipment for Undergraduates: Is It Adequate?” staff paper, Science,

Education, and Transportation Program, Office of Technology

Assessment, Washington, DC, September 1986.

‘Introduced in 1981, the credit was reduced from 25 percent

of qualifying R&D expenditures to 20 percent in the 1986 Tax

Reform Act. On its effectiveness, see International Competition

in Services, op. cit., p. 364. Current law allows companies more

favorable tax treatment for support of basic research at universities or other qualified R&D organizations than for work carried out at their own facilities,
93

industry (Option 7). Assuming that Congress

extends the existing R&D tax credit, now set

to expire at the end of 1988, or makes it permanent, basic research conducted internally could

be given more favorable treatment than other

qualifying R&D.

Finally, Congress could ask the Academies

for recommendations on an R&D strategy aimed

specifically at strengthening the Nation’s commercial technology base (as noted in Option 6).

Such an exercise might help OSTP carry out

its policy and planning functions—including

legislative mandates that the office has had

limited success in fulfilling. As discussed under Option 8 in table 9, OSTP may need strengthening if it is to be an effective arbitrator among

agencies and interest groups seeking Federal

R&D funds. In a period of intense competition

for scarce dollars, a Government-wide perspective is needed more than ever in setting and

enforcing priorities.

Defense-Related R&D

Funding Patterns

DoD has been supporting superconductivity

R&D for more than three decades because of

the potential applications in military systems.

In this light, the dominance of DoD in Federal

support for I-ITS (shown earlier in table 8)

should be no surprise; much of the work is a

natural follow-on to earlier sponsorship of LTS

R&D.

The three services, together with DARPA and

the Strategic Defense Initiative Organization

(SDIO), maintain their own programs–with the

DARPA and SDIO efforts the biggest by far (table 10). Three-fourths of DARPA funds, and a

high proportion from SDIO, go to industry.

DARPA states that as much as 60 percent of

the processing R&D contracts currently in negotiation could go to firms that are not traditionally part of the defense industry. As for the

services, about two-thirds of their HTS R&D

funding is currently going to universities; if

HTS follows the typical pattern for basic research in the services, this fraction may eventually decline somewhat (universities perform

about half the 6.1 (basic) research paid for by

the services, with government laboratories and

industry sharing the remainder).

DARPA’s widely publicized processing initiative accounts for nearly all that agency’s 1988

total of $18 million. With no R&D facilities of

its own, DARPA will support processing-related

work in industry, universities, and laboratories

overseen by other agencies. The primary objective: speeding development of fabrication

techniques for HTS coatings, thin and thick

films, wires and other conductors. DARPA officials view the effort as a natural extension of

the agency’s ongoing program in manufacturing technology for advanced ceramics. After

receiving about zoo proposals during the summer of 1987—responses to a solicitation that

assumed funding of up to $50 million for 1988

—the agency announced in January that some

16 companies and 4 universities had been selected to enter into contract negotiations. When

DoD placed a temporary freeze on some of its

outside R&D (including DARPA’s) in May 1988,

nearly all of the contracts remained to be

awarded. The freeze was in effect when this

report went to press in June 1988.

SDIO’s HTS R&D—second to DARPA’s in

funding–focuses on relatively near-term applications. The organization works closely with

the services and other agencies, looking to

“technology insertion working groups” for advice on where to direct its R&D dollars. Like

other parts of DoD, SDIO contracts extensively

with industry. In addition to HTS, the organization funds considerable work on LTS—for instance, a design competition on magnetic energy

storage for powering large lasers, budgeted at

$11 million currently and $13 million for fiscal 1989.

R&D sponsored by the services reflects their

missions. Much of the Air Force effort goes

toward possible applications in electronics,

funded (principally through the Air Force Office of Scientific Research) in universities and

the Air Force’s own laboratories. The Office

of Naval Research is likewise putting most of

its current HTS money into basic research (6.1).

While the Army also has a program underway,

the level is low (as expected, given that the
94

Table 10.-Department of Defense Funding for HTS R&Da

Fiscal year budget (millions of dollars)

1987 1988 1989

(actual) (estimated) (requested)

Army . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1. 0 $2. 0 $3. 0

Navy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 7.0 9.0

Air Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 7.0 8.0

Defense Advanced Research Projects Agency (DARPA) . . . . . . . . . . . . . . . . 4.0b

18.0 20.0

Strategic Defense Initiative Organization (SDIO) . . . . . . . . . . . . . . . . . . . . . . . 5.0 12.0 23.0

$19.0 $46.0 $63.0

aworking figures, subject to change. DoD also spends substantial Sumson low-temperature superconductivity.

Dlncludes$2 minion from the Balanced Technology lnitiativO.

SOURCE: U.S. Department of Defense, April 1988.

Army traditionally funds relatively little R&D

compared to the other two services). Each of

the services has formed internal working groups

to coordinate its effort.

lmplications for HTS

With DoD paying for nearly half the government’s HTS R&D, the obvious question follows:

What does this mean for commercial development, and for the civilian side of the economy?

In the past, Federal dollars for both R&D and

procurement provided much of the impetus for

vibrant commercial industries—aircraft, computers, microelectronics.

At the same time, as summarized in box M,

DoD’s very success in driving technology forward has led to a split between military and

civilian applications, with defense systems

growing steadily more specialized. Some would

claim that military spending has undermined

U.S. industry—distorting the technological enterprise by diverting the best and brightest engineers and scientists from civilian industries,

skewing university research (and, through the

research interests of faculty, university curricula), and turning companies aside from the costdriven discipline of the marketplace. In this

view, rather than providing fertile ground for

spinoffs, DoD support for HTS might divert resources from commercialization.

Indeed, there seems little reason to expect that

spinoffs from DoD funding for HTS will have

impacts as significant as those that spurred

earlier high-technology industries. Since the

1950s and 1960s, technology transfer from the

military to the civilian side of the economy has

slowed, for reasons that include the expanding curtain of secrecy surrounding DoD and

its contractors. With military systems growing

steadily more esoteric, it would be unwise to

rely on DoD support for HTS as a substitute

for civilian R&D. This does not mean that DoD

R&D cannot be a valuable complement.

Two broad questions will determine the effects of DoD spending on the commercial

prospects for HTS: 1) What are DoD’s objectives with respect to HTS, and how do they compare with commercial needs? and 2) How much

money will go to generic R&D, and thus offer

potential for commercial spillover regardless

of ultimate system requirements?

In mid-1987, a DoD working group examined

the R&D that would be needed to exploit HTS

in military systems. The working group, in an

options paper described as a “map of the territory” rather than a “predetermined itinerary,”

concluded that an aggressive program to bring

HTS to the point of military-specific applications would cost about $500 million over a 5-

year period. 8 The working group’s options paper, which assumes that technology, not money,

8“Superconductivity Research and Development Options: A

Study of Possible Directions for Exploitation of Superconductivity in Military Applications, ” U.S. Department of Defense,

July 1987. Summary figures for the 5-year program plan, totalling

$506 million, appear on pp. 122 and 123. In the first 3 years (fiscal 1988 to 1990], the working group called for $293 million—

twice the $150 million DoD expenditure mentioned in the President’s July 1987 superconductivity initiative, and far more than

defense agencies are likely to spend over this period, judging

from preliminary budget figures.
95

would be the limiting factor, discusses R&D in

several broad categories:

● materials characterization, including efforts to find HTS compositions with higher

transition temperatures;

● processing R&D;

● small and large scale applications and demonstrations.

While there are no signs that the 5-year spending plan will go forward as outlined in the working group’s report, the budget estimates provide a baseline for considering DoD’s view of

prospects and priorities in HTS. Sixty percent

of the 5-year total would go for applications—

$306 million. processing–which holds more

potential for commercially relevant R&D results

—would get $129 million, or 25 percent; the options paper allocates $71 million for materials

characterization, equally generic. The breakdown by budget category paints a similar picture: basic research (6.1) accounts for 29 percent of the total, compared to 38 percent for

exploratory development (6.2), and 33 percent

for advanced development (6.3A). Viewed either way, basic research and generic R&D

would get a substantial share of the resources,

as befits a new technology.

Most but not all of the applications work

would be of interest primarily to the military.

Examples include infrared sensors, detectors

for submarines, and electromagnetic coil/rail

guns. Some applications projects might generate commercial spinoffs: electronic devices for

digital systems; motors, generators, and other

electrical power equipment. (As discussed in

app. B, these applications could, in principle,

be implemented with LTS technology; indeed,

even were HTS reduced to practice, LTS might

provide superior performance.)

Still, superconducting motors and generators

for military applications, to take one example,

will differ fundamentally from those for civilian applications. DoD’s interest stems largely

from the advantages that superconducting

motor-generator sets could have for ship propulsion and on board aircraft. Such propulsion systems would offer new freedom in packaging

the major systems within a ship’s hull; for submarines, in particular, there would be more

room for weapons. Compact design becomes

a primary design criteria. For civilian power

generation, in contrast, greater efficiency is the

objective, with size (and weight) of little import.

From a design standpoint, superconducting

generators for the military and for electric utilities would have relatively little in common.

Only in the most general sense would knowhow from one transfer to the other.

Processing technology will be particularly important for HTS. Wire manufacture and fabrication received little emphasis in LTS R&D until

becoming a bottleneck to applications. Years

were then spent learning to produce niobiumtitanium wires and windings with the needed

properties. A similar experience in HTS could

put U.S. firms behind, given that processing

is an area in which Japanese firms will undoubtedly excel. Here, DARPA’s processing program

should help. Many of the processing and fabrication methods ultimately developed will be

similar regardless of end-application, and DoD

officials have frequently stated that results will

remain unclassified to the extent possible. (In

part for such reasons, H.R. 3024, the proposed

National Superconductor Manufacturing and

processing Technology initiative, would give

DARPA a lead role in the Federal Government

for processing-related work. The 100th Congress had taken no action on this bill, which

assigns subsidiary roles to DOE, NSF, and NBS,

as OTA’s report went to press.)

DoD work aimed at high-performance computers, where applications will depend in part

on thin-film fabrication capabilities—e.g., for

Josephson junctions–could likewise have positive impacts on the civilian economy. Not only

DARPA, but the National Security Agency has

traditionally supported work aimed at highperformance computing (box N).

If DoD were to follow a spending plan something like that outlined by the working group—

i.e., roughly half a billion dollars over five or

six years—civilian industry would surely benefit from some of the technology developed. Despite the stress on applications—noteworthy,

given the relative pessimism of U.S. industry

97

Finally, DoD also funded a considerable amount of visionary research-one of (D)ARPA’s jobs.

Here, the military mission did not always dictate R&D objectives, or even provide much guidance:

(D)ARPA supported work in artificial intelligence and the behaviorial sciences inthe absence of nearterm military applications.

Military and Civilian Technologies: Diverging Objectives

During the Vietnam years, defense R&D growth slowed; DoD has never built its support for generic

technology development back to pre-Mansfield Amendment levels. (The Mansfield Amendment, part

of the military authorization bill for fiscal years 1970 and 1971, sought to tie DoD R&D more closely

to defense needs.) Meanwhile, military high technology moved steadily away from civilian high technology. In the face of pressures from the Pentagon, DARPA too has turned toward projects for which

it can more easily demonstrate military relevance, and steered a greater fraction of its funding to

traditional defense contractors.4

As computers, for example, proliferated on the civilian side of the economy, prices dropped and

the government role as primary customer declined. Computer firms took more of the R&D burden

on themselves, adapting their products to the needs of banks, insurance companies, and manufacturing firms. Even so, defense agencies have continued to support both basic research and high-risk,

high-cost development projects—work that could have major impacts in the future; as noted in chapter 3 (box J), the National Security Agency provided partial support for IBM’s research on superconducting computer components. Military demand also continues to provide substantial support for

supercomputer manufacturers.5

In semiconductors, the story is similar. Military procurements accounted for about half of all

U.S. production in 1960. By the middle 1970s, the military had become no more than a minor customer for all except the most highly specialized chips; today, military sales run at less than 10 percent

of the U.S. market, In 1979, the Pentagon found itself forced to create the VHSIC (Very High-Speed

Integrated Circuit) program, an effort to take advantage of advances on the commercial side of the

industry, where applications had long since outrun those in military systems.

The Pentagon likewise provided much of the early R&D support for lasers—in the early 1960s,

twice the industry’s own spending—and today continues to pay for most of the work on high-power

lasers. 6 Military R&D, including fundamental research, has been conducted primarily in DoD’s own

laboratories, or those of its contractors, not at universities. As customers, the services have sought

laser rangefinders for tanks—the first significant application on the defense side-and beam weapons. Civilian applications, meanwhile, began with eye surgery.

Today, the growing divergence between military and commercial technologies is visible in at least

three ways:

CDARPA has weathmod a number of thaee cy cka-tolerarwe for vtiionary research followed by a turn bwktoward applications, engineering, and hardware. See Targeting the Cbnpter, op. cit., p. 190; &dao “The Advanced Reseamh Pr@acts AS$IW% 1S88-1974,” Richard J. Barber

Associataa, Washington, IX, Deoemk 1975.

W. Koameteky, “%percomputere and IWional E%@: M@@nins U.S. preemi-ce in ~ Eme@%I 1-D’S Su@rcomP~~ers: A KeY

to U.S. Scientific, Tedmdogkxd, and &duut?&J Pmm&w@@, @ K&kknd and J,H. poo~ (ads.] (P&w Y@rk Praeger, 1987), P. 10.

@“The Maturation of Laser Technology; Social and Technical Factors,” prepared for OTA by J.L. Bromberfg, The Laser History Project,

under contract No. H2-521O, January 1988; R.W. Seidel, “From glow to flow: A history of military laser research and development,*’ op. cit.

7Advanced Materials by Design: JVew Structund MateriaZs Twhnologies (Washington, DC: Office of Technology Assessment, June 1988).

l%ose on the commercial side of the aircraft industry envision an airplane that could fly halfivay around the globe in z hours, reaching speeds

of Mach 5 (i.e., 5 times the speed of sound). DoD aces the NASP as a possible launch vehicle for SDL among other things, and the military

version would have to reach Mach 25.
98

—the options paper calls for a lot of money in the gap will grow: DoD has requested $63 miltotal, and a hefty infusion of funds for the more lion for HTS in fiscal 1989, much less than the

generic work. working group’s recommendation. With funds

tight, defense agencies normally preserve their

But DoD will almost certainly not have this applications programs as best they can; they

much money for HTS, as table 10 indicates. The will have to continue with materials characterifiscal 1988 total--$46 million--is well under the zation and processing to support downstream

$68 million called for in the options paper, and development in HTS developments, but the
99

temptation will be to go no further into basic

work than absolutely necessary.

9

The final point is this. R&D management in

any mission agency entails a continuous series of large and small decisions. These deal with

such matters as funding levels and priorities,

research targets, intramural versus extramural

projects, contract and program managers constantly weigh alternatives for expenditures ranging from a few thousand dollars to many millions. Broad objectives are set at upper levels;

people lower down make their choices guided

by these objectives (though often with considerable autonomy). But at all levels, D o D

decisionmakers— from program managers to

laboratory directors and the Under Secretary

for Acquisition (who has overall responsibility

for DoD R&D)—have their eyes on military

needs, not those of the civilian economy. This

is their job. Directives from outside the Pentagon may influence these day-to-day decisions,

but not by much.

HTS R&D in the Energy Department Laboratories

DOE laboratories have actively sought major roles in HTS, typically for reasons including diversification beyond their primary missions. As table 8 indicated, DOE’s budget for

HTS R&D exceeds that of NASA, NSF, and NBS

combined; table 11 gives the allocation within

the Department. If usual patterns prevail, twothirds or more of DOE’s basic research dollars

will be shared among DOE’s nine multiprogram

laboratories (the “National laboratories”) and

a number of more specialized research facilities,

The Energy Department and its predecessors

have been the patron of big science in the Federal Government since the days of the Manhattan Project. While the Federal Government

owns the DOE laboratories, most are operated

under contract—some by universities, some by

private corporations.

10 The laboratories have

a collective budget well into the billions, and

employ about 15,000 scientists and engineers,

Several have strong foundations in superconductivity, stemming from years of work on LTS

magnets for high-energy physics and fusion research, along with projects such as Brookhaven’s

10-year effort on superconducting power transmission. By one estimate, DOE has spent $100

million on LTS R&D over the last two decades,

in addition to $200 million for purchases of materials and equipment. Given this history, and

the Department’s responsibilities for energy

R&D, it is no surprise that the laboratories have

garnered the majority of non-DoD Federal dollars for HTS.

A number of the laboratories have excellent

equipment for synthesizing and characterizing

the new HTS materials. They have physicists,

chemists, and engineers with the skills and experience to contribute to the science and technology base for HTS. But while many of these

laboratories produce excellent science (as well

as mission-oriented weapons development),

they have little experience in helping industry

‘The technical objectives of DoD 6.1 basic research are commonly shaped to considerable extent by military needs. DoD’s

own options paper notes:

while DOD will surely benefit significantly from efforts of other

organizations (DOE, NSF, DoC, NASA) in areas of materials

characterization, theory, and search for high-transition-temperature materials, it is essential that DSRD [Defense Superconductivity Research and Development] itself include substantive activity in these areas. Much of the remainder of DSRD activity is so

highly applications driven that DSRD characterization, theory,

and search activities are essential as a means to provide focus

in directions of greatest perceived impact on DoD applications.

weight considerations are paramount in many DoD applications

(as in those of NASA), and DoD has other stressing requirements

related to mechanical and thermal shock, as well as to radiation

hardness, all of which dictate that DoD-specific characterization

investigations be pursued.

“Superconductivity Research and Development Options: A Study

of Possible Directions for Exploitation of Superconductivity in

Military Applications,” op. cit., pp. 19-20.

IOEight multiprogram national laboratories have gotten most

of the DOE funds for HTS. These laboratories. and contractors

as of 1988, are:

Laboratory

Argonne

Brookhaven

Lawrence Berkeley

Oak Ridge

Pacific Northwest

Lawrence Livermore

Los Alamos

Sandia

Contractor

University of Chicago

Associated Universities, Inc.

University of California

Martin Marietta Energy Systems, Inc.

Battelle Memorial Institute

University of California

University of California

Sandia Corp. (a subsidiary of AT&T

Technologies)

Livermore, Los Alamos, and Sandia are weapons laboratories.

Single-program DOE laboratories active in HTS include Ames

Laboratory [operated by Iowa State University) and the Solar

Energy Research Institute (operated by the Midwest Research

Institute).
100

Table 11.– Energy Department Funding for HTS R&Da

Fiscal year budget (millions of dollars)

1987 1988 1989

(actual) (estimated) (requested)

Office of Energy Research

Basic Energy Sciences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

High Energy&Nuclear Physics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Defense Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Office of Conservation & Renewable Energy

Energy Storage & Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Energy Utilization Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Office of Fossil Energy Advanced Research &

Technology Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10.2 $15.1 $16.7

0.2 0.2 0.3

1.6 6.7 6.7

0.2 4.4 12.9

0.1 0.4 2.0

0.2 0.3 0.2

$12.5 $27,2 $38.7

aExCluding the De~artmentls Small Business Innovation Research Program. DOEcurrently spends more on LTSR&Dthanon HTS—$28.5miIIiononLTSinfiscal 1987,

S39.5million in 1988. lnfiscal 1989, the Department isseeking $52 million for LTSR&D (afigure that excludes $34 million forprocurement of materlalsandcomponents)

NOTE: Totals may not add because of rounding.

SOURCE: U.S. Department of Energy, 1988.
101

commercialize new technologies. DOE plans

to require the laboratories to involve industry

and the universities in their HTS work to a

greater extent than usual; for DOE’s R&D to

have impacts on commercialization commensurate with the Department’s budget allocations, these efforts will have to succeed.

In 1988, more than half of DOE’s HTS budget—$15 million of $27 million total—will be

channeled through the Basic Energy Sciences

program (B ES, table 11). While some BES funds

go to universities and to industry, most of the

program’s HTS work during 1987 was undertaken within the laboratory system—a pattern

that will probably continue.11 BES has established two joint programs in HTS, each involving three laboratories. Under an arrangement

worked out in 1987, Argonne, Ames, and Brookhaven will concentrate on processing R&D for

bulk materials, while Oak Ridge, Los Alamos,

and Lawrence Berkeley will work primarily on

materials synthesis, thin films, and electronic

devices. The Administration’s 1989 budget request would give BES a 10 percent increase for

HTS.

Another DOE office—conservation and renewable energy—will spend nearly $5 million

in fiscal 1988 for R&D related to possible electric power applications. Initial activities included a number of feasibility studies, including a jointly funded effort with the Electric

Power Research Institute examining possible

end uses. If the president’s 1989 budget is

adopted, conservation and renewable energy

could find its HTS budget tripling. Most of this

would go to the office’s energy storage and distribution group. In April 1988, DOE announced

that it would provide relatively small sums to

10 DOE laboratories (eight of the multiprogram

facilities, Ames Laboratory and the Solar Energy

Research Institute) for work related to electric

IiThe Division of Materials Sciences, which controls most of

the money for HTS within BES, spent 63 percent of research

funds totaling $155 million within DOE’s own laboratories during fiscal 1987. About 35 percent went to universities (including

support for graduate student research at national laboratories),

and 1.8 percent to industry. See Materials Sciences Programs:

Fiscal Year 1987, DOE/ER-0348 (Springfield, VA: National Technical Information Service, September 1987), p. F-3. These figures

do not include $15.5 million in equipment funds.

energy storage and distribution. Future funding under this program will depend in part on

the ability of the laboratories to involve industry and universities.

As table 11 shows, the only other DOE program with significant funding for HTS engages

in defense R&D. Most of this work—budgeted

at $6.7 million for 1988, with next year’s request

at about the same level—takes place at the three

weapons facilities.

The sections of this chapter dealing with technology transfer consider DOE’s prospective

contributions to commercialization of HTS—

for instance, the likelihood of productive collaborative efforts between the Department’s laboratories and private industry. If cooperative

arrangements and rapid technology transfers

to industry are to flourish, the laboratories will

have to change in style and culture. Table 13,

later in the chapter, includes a number of specific policy options for accelerating this shift.

Other Mission Agencies: NBS and NASA

For more than three decades, the National

Bureau of Standards, part of the Commerce Department, has been engaged in research on LTS

materials. President Reagan’s superconductivity initiative gave NBS the responsibility for

establishing a superconductivity center focusing on electronic applications. While NBS’s

technical achievements have been impressive

—e.g., a precision voltage standard incorporating 19,000 Josephson junctions—the Bureau is

small compared to many other Federal laboratories, and superconductivity a minor part of

its work. The NBS appropriation for 1988 included $2.8 million for HTS projects (table 8)

on measurement methods, standard reference

materials, and devices for measuring weak magnetic fields. The Administration seeks a major

increase for NBS—to $9.3 million—for fiscal

1989.

The National Aeronautics and Space Administration’s HTS R&D will aim at eventual applications such as remote sensing, power and
102

propulsion, and space communications.12 In

space, simple passive cooling systems could

keep the new materials below their transition

temperatures. As a result, HTS holds considerable interest for NASA. At the same time,

space missions demand very high reliability,

thus painstaking development and testing; deployment on an actual mission is probably

many years in the future. In some contrast to

the other major R&D agencies, NASA has not

rushed into HTS; the agency’s R&D is still in

the planning stages.

NASA reprogrammed some $4.2 million for

HTS during fiscal 1988—mostly for feasibility

studies (table 8), and is seeking twice as much

for 1989. The preliminary program plan cited

above calls for spending $48 million on HTS

over the period 1988-94. Even at this level, however, it seems unlikely that NASA R&D would

have much impact on commercialization of

IZNASA Technology Program Plan: High Temperature f%per- HTS: mission requirements are apt to be too

conductivity Technology, Preliminary Program Plan, Vol. Z, Na- specialized.

tional Aeronautics and Space Administration, Feb. 3, 1988.

NSF AND THE UNIVERSITY ROLE

The National Science Foundation is a mission agency too, but its responsibilities differ

greatly from those of DoD, NASA, or DOE. The

NSF mission: to support research because this

is in the public interest (for reasons including

economic growth and competitiveness). Almost

all NSF’s research dollars go to the university

system, which the United States depends on

far more than other industrialized economies.

NSF expects to spend $14.5 million in fiscal

1988 on HTS—table 12. With only a few U.S.

companies putting much effort into basic research, many of the preliminaries to commercialization of HTS will take place on the Nation’s campuses.

Are the universities up to the job? In the short

run, the answer is plainly yes. But the work of

commercialization will go on for years, and as

it shifts from research toward applications, a

set of perennial problems in engineering research, and in university/industry relationships,

could hinder the process. These problems stem

from the inhospitality of universities to multidisciplinary research, and the differing goals

of university and industry R&D.

Disciplinary Boundaries

Many of the Nation’s universities have strong

if often small HTS research efforts. As HTS

technology moves ahead, multidisciplinary

R&D will be essential. Progress will depend on

the physics community—e.g., for theoretical

guidance and an understanding of the ways in

which structure, particularly at the atomic level

(crystallography, flux pinning sites) determines

properties (critical current densities). Chemists

will add their skills, particularly in materials

synthesis and characterization, as well as in

processing. Materials scientists will have the

job of understanding microstructural and substructural effects (grain boundaries, twins, dislocation structures), and of linking these with

processing (e.g., thermal-mechanical sequences). Materials engineers will develop

processing techniques that yield the needed

structures (hence properties) at reasonable

costs. Design of electronic devices will fall

mostly to electrical engineers and physicists.

Electrical and mechanical engineers will develop high-power/high-field applications—e.g.,

for energy storage systems. Each group has its

own language, its own assumptions and preconceptions, its own world view.

To the lay person, science and technology

may seem all of a piece. They are not. In private firms, multidisciplinary groups function

effectively because they must—otherwise the

company would not be able to compete. Over

the past decade, American companies have

worked hard at this, as they have faced up to

the loss of technological advantages in world

competition. Firms like IBM and AT&T—leaders

in HTS R&D—have been seeking better ways
103

Table 12.–National Science Foundation Funding for HTS R&D

Fiscal year budget (millions of dollars)

1987 1988 1989

(actual) (estimated) (requested)

Directorate for Mathematical and Physical Sciences:

Materials Research $8. 0 $10.0 $12.0

Chemistry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 0.4 0.6

Physics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 2.3 2.4

Engineering Directorate: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.9 2.2

$11,7 $14.5 $17.2

NOTE: Totals may not add because of rounding

SOURCE: National Science Foundation, 1988.

of moving new technology from the research

laboratory, through development, and into production. The steady advance of technical knowledge—which inevitably entails greater specialization and fragmentation—only makes this

more difficult. The job is one for management,

and a continual struggle.

Universities find it even more difficult to accommodate such work, lacking the imperatives

of the corporation. Specialization and fragmentation begin on campus. Indeed, disciplinary

boundaries account for some of the technology

gaps noted earlier in this chapter. No one undertakes needed R&D because no group of engineers or scientists looks on the problems as part

of its territory (welding, wear, ceramic processing). HTS will probably face some of these

kinds of problems.

NSF Centers

Federal agencies have tried to encourage interdisciplinary research in the universities,

using the carrot of R&D money, but funds for

programs like NSF’s Engineering Research

Centers (ERCs) remain small compared to those

for single-investigator projects. Figure 4 shows

the trends over three decades at NSF. Individual project support remains at about 70 percent

of the NSF total—well above the level of the

mid-1960s. 13 Still, NSF-sponsored research

IsAbout 13 percent of NSF’s fiscal 1987 budget went for multidisciplinary research centers—Department of Housing and Urban Development–Independent Agencies Appropriations for

1988, Part 4, hearings, Subcommittee on HUD-Independent Agencies, Committee on Appropriations, U.S. House of Representatives (Washington, DC: U.S. Government Printing Office, 1987),

p. 74.

centers could number 80 or more by the middle 1990s, if the Foundation gets the budget increases it has been seeking.

Currently, about one-fifth of the NSF engineering budget goes for the ERCs, the first of

which were established in 1985. In the Foundation’s 1988 spending plan, the ERCs account

for $33 million ($15 million less than NSF originally sought) of the $171 million allocated to

engineering. 14

The ERC’s are relatively small and focused—

e.g., on Optoelectronic Computing (University

of Colorado). Annual funding levels have

ranged from $1.5 million to $3.5 million. While

NSF expects many proposals for HTS centers

in the future, superconductivity does not fall

within the purview of any of the 14 ERCs approved through the end of 1987. Indeed, this

group of 14 includes only one center in the area

of materials (and it is scheduled to lose its NSF

support)--perhaps because the Foundation also

funds about a dozen interdisciplinary MaterilqIn the first z years of the program, the Foundation approved

11 ERCs (expending $27.7 million, with industry, States, and

localities more than doubling the NSF contribution). Current

plans call for up to 18 ERCs by the end of 1989. Under the program, NSF agrees to support centers for up to 11 years, with

evaluations after 3 and 6 years. The Foundation recently announced it will discontinue support for two of the initial centers,

following their 3-year reviews. For further background, see The

New Engineering Research Centers: Purposes, Goals, and Expectations (Washington, DC: National Academy Press, 1986), and

Educating Scientists and Engineers: Grade School to Grad School

(Washington, DC: Office of Technology Assessment, June 1988),

ch. 3.

On NSF’s proposed S&T centers, below, see Science and Technology Centers: Principles and Guidelines (Washington, DC: National Academy of Sciences, 1987); also C. Norman, “NSF

Centers: Yes, But . . . “ Science, July 3, 1987, p. 21.
104

Figure 4.—National Science Foundation Research Support

100

90

80

70

30

20

10

0

1960 1965 1970 1975

SOURCE: National Science Foundation, 1988

als Research Laboratories (MRLs) under a separate program (see box O).

As discussed in box O, ARPA (later DARPA)

—which, over the years, has financed a good

deal of work in superconductivity–originally

sponsored the MRLs. Five of the MRLs have

moved into HTS research, with $3.5 million of

NSF’s 1988 support for HTS going toward these

activities.

The MRLs represent an early attempt by the

Federal Government to change the ground rules

for university research; the ERCs, along with

NSF’s proposed Science and Technology (S&T)

centers represent the latest. Announced by

President Reagan in his 1987 State of the Union

Message, the S&T centers could eventually become the largest NSF program for interdisciplinary research support. Universities submitted

more than 300 proposals after this program was

announced (plus a comparable number of planning proposals), a third of them in the general

area of materials (and some of these on superconductivity). Given the slow growth in its budget, discussed above (table 9, Option 4), the

1980 1985 1990

Foundation has not yet found money for the

S&T centers. In February, the Administration

announced that none would be funded during

the 1988 fiscal year. Instead, the Administration will seek a one-time appropriation of $150

million in fiscal 1989 to fund 10 to 15 S&T

centers for 5-year periods. If Congress provides

the money for these centers, it is possible that

one or two of those approved by NSF might

have a focus on superconductivity.

Funding for the Industry/University Cooperative Research Center program—well on the

way to proving its worth—has been flat in recent years. Nor has the ERC budget grown as

NSF had hoped. As discussed under Option 9

in table 13, additional funds will be needed to

expand the center programs. Growth in these

programs will not have much impact on HTS

unless one or more of the proposals that would

focus on superconductivity wins the competition for funds. While Congress could direct NSF

to launch a center specifically for HTS, this

would bean unfortunate precedent, given that

the Foundation has traditionally avoided tar-
105

107
108

geted R&D. (Chapter 5 discusses a number of

alternative approaches.)

Some academics have feared that increases

in funding for centers and other multidisciplinary programs would come at the expense of

single-investigator and small-group research.

While a legitimate concern, figure 4 shows that

the relative shift has been small. Without growth

in the NSF budget, competition for limited

funds will intensify. Independent research must

be preserved. Even so, it would seem prudent

to risk erring on the side of support for the new

multidisciplinary centers, rather than on the

side of a continuation of traditional funding

patterns.

There are other ways as well to foster a multidisciplinary environment in the university system: for example, federally funded postdoctoral

fellowships could be designed to encourage

scientists and engineers planning academic

careers to to move laterally into related fields—

e.g., from chemistry to materials, from electrical engineering to solid state physics (Option

10).

Table 13.—lssue Area II: Strengthening Interactions Among Universities, Industry, and Government

Issue Options for Congress Advantages Disadvantages

A. University-industry interactions; Multidisciplinary Research

Commercialization of HTS requires multidis- OPTION 9. Congress could:

ciplinary R&D, To do a better job of training people who can help American firms

compete, universities will need to encourage

multidisciplinary research and teaching.

Federal agencies, notably NSF, have been

increasing support for multidisciplinary

research, but have had limited funds to accomplish this,

Most of the incentives in American universities reward those who pursue conventional

research careers; few encourage faculty

members to cross disciplinary boundaries.

. Provide full funding for NSF to launch its

proposed interdisciplinary Science and

Technology centers. The Foundation

seeks a one-time appropriation for fiscal

1989 of $150 million to support 10 to 15

centers for 5 years.

● Appropriate funds at the $5 million or

above Ievel for NSF’s Industry/University

Cooperative Research centers over each

of the next several years, ensuring that

the newer centers do not overshadow this

program. Congress might also consider

renewed support for the industry/University Cooperative Projects Program.

Ample continuing support for NSF’s Engineering Research Centers, provided

evacuations indicate they are effective, also

seems appropriate.

OPTION 10. Direct NSF, along with other

agencies that fund postdoctoral fellowships,

to establish programs specifically for scientists and engineers who chose to move to

a related field for a year or more of research.

B. Government-industry interactions: Technology Transfer and Joint R&D

Over the past few years, Congress has OPTION 11. Conduct early oversight on the

enacted several pieces of legislation intend- responses of major R&D agencies—

ed to encourage transfer of technology from particularly the Departments of Defense and

Federal laboratories to industry. These pro- Energy–to recent laws and executive

vide a framework for reform, with decen- branch actions aimed at speeding technoltralized decision-making at the laboratory ogy transfer and commercialization of fedIevel. While some of the laboratories have erally funded R&D.

responded enthusiastically to the new laws,

it is not clear that the agencies–especially

at higher levels—have embraced this

mandate,

More support for multidisciplinary research

and teaching could help train engineers and

scientists to do a better job of bridging the

gaps between research and design, development and production, R&D and marketing.

Not only will this be vital for competitiveness in HTS, it is vital throughout the U.S.

economy.

According to the National Research Council,

such fellowships ‘‘would facilitate communication among disciplines and ‘seed’ the

faculty with individuals who are experienced

in the cross-disciplinary approach. ‘d

The oversight process could help Congress

determine whether further changes in the

legislative framework are needed. Matters

that might be examined include:

● Whether to require that Federal agencies

issue regulations for implementing the provisions of the Federal Technology Transfer Act of 1986, The law does not require

agencies to issue implementing regulations; indeed, it specifies that they shall

not delay implementation until rules are issued. But the situation is a new one for

industry too, and lack of guidelines may

discourage them from approaching the

laboratories,

Without a corresponding increase

in NSF’s overall budget (see Option 4 in Table 9), money for

centers could come at the expense of individual and small

group research–one of the outstanding strengths of the American university system.

Without complementary changes

in the university environment,

such moves might hurt the career

prospects of those accepting fellowships.

Reforms take time to implement,

It may be too early to get an accurate reading of agency

responses to the new rules for

technology transfer, The oversight

process itself could mean that

responsible officials spend time

answering inquiries that otherwise would go into improving

transfer processes.

aD/reCt/on3 in Enginwring ReSearch: An ASSeS~ment of @poflun/t/es and Needs (Washington, Dc: National Academy press, 1987), p. 67.
109

Table 13.—lssue Area II: Strengthening Interactions Among Universities, industry, and Government-Continued

Issue Options for Congress Advantages Disadvantages

Technology transfer may get few resources

and little attention when it is not viewed as

part of the agency’s own mission, For HTS,

effective transfer mechanisms could be especially important, DoD, with more money

to spend on this technology than other

agencies, has fewer reasons for working

hard to transfer R&D results to commercial

(non-defense) industry

Demonstration projects could help Identify

better methods for transferring technologies

to industry, but little funding has been available. The same is true of demonstration projects involving R&D cooperation between the

national laboratories and industry.

If the national laboratories are to transfer

technologies to industry effectively, many

more laboratory employees will need to understand industrial needs and marketplace

realities While industrial (or university)

scientists can arrange to work in a Federal

laboratory with little difficulty, the primary

need is for movement in the other direction–from the laboratories to industry.

DOE’s national laboratories are seeking a

major role in helping U.S. industry commercialize HTS, but as yet have limited experience in cooperative R&D with the private

sector, Working out R&D arrangements that

suit industry’s needs without detracting

OPTION 12. Direct DoD, working with DOE

and the Federal Laboratory Consortium for

Technology Transfer, to use on a trial basis an intermediary or adjunct organization

for transfer of HTS technology to nondefense firms. The intermediary would need

to have well-established working relationships with the private sector, and strong

motives for making the transfer process

function effectively.

OPTION 13. Appropriate or allow more

money to be set aside for the Federal

Laboratory Consortium for Technology

Transfer to undertake three or more demonstration projects on technology transfer

and/or R&D cooperation over the next year

or two. Projects with outcomes relevant to

several agencies would be most useful. Possibilities include:

. pilot programs at the State level (see Option 17 below);

● development of guidelines, and trials, involving intermediary organisations (see

Option 12 above),

● preparation and testing of a technology

transfer training program for laboratory

(and industry) employees.

OPTION 14. Authorize and encourage temporary exchanges of technical personnel

(and sharing of personnel), as well as

cooperative R&D projects between industry

and the national laboratories. HTS could get

special attention.

Alternatively, Congress could create a

broader exchange program to send engineers and scientists from national laboratories to private corporations for periods of

6 months to 2 years. One hundred fellowships per year would begin reaching enough

laboratory employees to make a difference.

Laboratory engineers and scientists could

be required to work on problems of mutual

interest, with the Government paying half

their salaries and maintaining pension eligibility benefits.

OPTION 15. Direct DOE to encourage an experimental approach to cooperation with industry, As the Department’s laboratories

establish pilot centers for HTS R&D, and engage in other collaborative efforts with industry and universities, each center could

● Actions taken by the laboratories to improve institutional support for technology

transfer through personnel policies and

provisions for royalty sharing with

inventors,

. Effects of agency mission on the course

of technology transfer. Congress might

also ask DoD and DOE how, specifically,

their procedures will apply to HTS.

● The success of the Federal Laboratory

Consortium in living up to its mandate under the 1986 Act.

Given DoD’s funding Ievels for HTS R&D,

transfers to the civilian side of the economy

could have substantial impacts on commercialization. Once R&D results were approved

for transfer by DoD, the intermediary could

take on the job of working with industry,

minimizing interference with the primary missions of DARPA, SDIO, and the services.

Regardless of the mechanism chosen, an

HTS technology transfer program could be

viewed as a demonstration—with high visibility and potential relevance for other technologies.

The FLC received about $700,000 during

1987 under a set-aside specified in Public

Law 99-502, with only 5 percent available for

demonstration projects, Additional funds for

demonstrations–perhaps $300,000 per

year–would begin to address the need.

Such a program would serve a need largely

unmet–giving laboratory employees handson industrial experience, thereby speeding

commercialization. Fellowships could be

made available to laboratory personnel on a

competitive basis.

Temporary assignments in universities would

not serve the same purpose, nor would programs that focus only on bringing industry

people into the laboratories. Cost sharing by

companies would help ensure that the laboratory fellows worked on commercially relevant

problems.

An experimental approach would help the

laboratories learn to work with industry without consuming a disproportionate share of

HTS research dollars, Trying a number of

different approaches implies learning from

the results, hence provision for evaluation;

Transfers from DoD might come to

be viewed as substitutes for R&D

funding by civilian agencies, to

the possible detriment of commercial technology development,

Each technology transfer situation

is unique, putting limits on the

lessons to be learned, Nor can a

cookbook approach to technology

transfer function effectively.

Such a program carries risks of

conflict of interest, as well as the

appearance of subsidy, Moreover,

the laboratories might find industry hiring away some of their more

valuable people. Some firms

might fear they could lose control

over proprietary technology.

Relying too heavily on cooperation

between the laboratories and industry, particularly to the exclusion of other policies for speeding

commercialization, would be a

mistake. There is a second dan-
110

Table 13.—lssue Area II: Strengthening Interactions Among Universities, Industry, and Government—Continued

Issue Options for Congress Advantages Disadvantages

from broader laboratory missions could require considerable experimentation

Under the right circumstances, collaborative R&D–involving several private firms in

pre-competitive projects–could be an efficient mechanism for building the HTS technology base. Yet the time horizons of

industry consortia are unlikely to be that

much longer than those of individual firms

State Governments have a broad range of

economic development tools at their disposal. In addition to the direct funding for

R&D that some have provided, States could

help commercialize HTS through programs

that accelerate the diffusion of research

results to industry. At present, however,

linkages between State Governments and

national laboratories within their borders

tend to bead hoc and not very well established.

be designed somewhat differently, even

though all were charged with aiding in commercialization

OPTION 16. The Federal Government could

make funds for HTS R&D available on a

cost-sharing basis to industry consortia,

provided the funding agency determines

that public money will serve to extend the

R&D time horizons.

OPTION 17. Congress could:

● Provide small planning grants to the

States for strengthening R&D-based economic development initiatives, including

grants for the evaluation of existing programs, H may take 5 years or more for

States to put new programs in place;

planning grants available now could

mean better capabilities at the State level when HTS technologies begin moving

out of the laboratory,

● Fund several State Government pilot

projects embodying different approaches

to the transfer and commercialization of

federally-funded HTS R&D (conducted in

universities as well as national laboratories).

. Direct Federal agencies to give greater

weight to support from State Governments in evaluating proposals for

university-based R&D centers, and other

proposals where commercialization is a

major objective.

to succeed, the laboratories will have to be

self-critical Approaches that worked for HTS

could be adopted elsewhere.

Cost-sharing of longer-term R&D would address a critical problem for U.S. competitiveness. The Federal contribution could involve

provision of facilities (e.g., at a national

laboratory) and/or temporary assignments of

personnel to a consortium, in addition to

financing,

Strengthened capacities in the States to assist smaller businesses in commercializing

innovative technologies would complement

Federal SBIR (Small Business Innovation

Research) programs, particularly Phase Ill efforts, Planning grants could also help the

States find ways of bridging the gap between

Phase I and Phase II awards.

ger as well: DOE and the laboratories might find it difficult to shut

down cooperative projects that

proved ineffective, or were no

longer needed

Any project involving Federal

funding would be subject to the

vagaries of the budget process.

Unless Government, as well as industry, lengthened its time

horizons, money could be wasted. On the other hand, costsharing, once started, might be

difficult to stop–even if, in time,

the justification vanished.

Few State programs have been

evaluated by independent parties;

little is known about the approaches that work best

Federal assistance could end up

favoring States that might need

help the least–e g , those that

already have well-developed

programs

SOURCE: Office of Technology Assessment, 1988

TECHNOLOGY TRANSFER: THE FEDERAL LABORATORIES

Much of the Federal funding for HTS R&D for commercialization until they have proven

is going to government laboratories—mostly fa- themselves.

cilities run by DoD and DOE, but also to NBS

and NASA research centers. These laboratories

differ in missions, in their historical ties with New Rules for the Laboratories

industry, and in operating arrangements. While

NBS has long had good relations with indus- For many years—as congressional hearings

try, and DoD laboratories often work closely and an accumulation of studies pointed to the

with military contractors, few Federal labora- large fraction (said to be 90 percent) of federtories have accomplished much in commerciali- ally owned patents never licensed or otherwise

zation. This has not, after all, been one of their commercialized—the U.S. Government has

tasks. Whether the laboratory system will be sought to stimulate commercial use of publicly

able to contribute much beyond a general funded R&D. Since 1980, Congress has enacted

strengthening of the HTS technology base a series of laws intended to give industry greater

remains an open question. Certainly it would access to the laboratory system, and to speed

be a mistake to rely heavily on the laboratories transfers of technology to the private sector.
111

As a result of patent law changes in 1980,

small businesses, non-profit organizations, and

universities can gain title with relative ease to

inventions they make in the course of R&D paid

for by Government. In 1984, Congress extended

this statutory policy to contractor-operated laboratories, including several DOE facilities. (The

statutory policy does not extend to weapons laboratories, or DOE laboratories operated by

large, for-profit businesses, although the

Administration has initiated changes here as

well.) The most recent step, the 1986 Federal

Technology Transfer Act, seeks tighter links

between government-operated laboratories and

industry. This law:

● provides clear authorization for government-owned and -operated laboratories to

enter into cooperative R&D with private

firms.

● Gives the Federal Laboratory Consortium

on Technology Transfer (FLC) a statutory

charter. About 400 laboratories, representing 11 agencies, belong to the FLC, which

was organized to facilitate use of federally

developed technologies.

15

● provides for agencies to return licensing

income to the originating laboratory, and

requires that at least 15 percent of royalties or other income go to the employees

responsible.

● Directs laboratory directors to consider

technology transfer activities in performance evaluations and promotions, and to

include it in job descriptions.

The 1986 Act decentralizes many administrative responsibilities, giving substantial discretion to the laboratory directors. Beyond

these statutory changes, President Reagan’s

April 1987 Executive Order 12591, on facilitating access to science and technology, establishes guidelines for all the laboratories.

While many of the laboratories have expanded their technology transfer activities over

the past several years, the pace of change at

the agency level has often been slow. Moreover,

‘

s

’’ Strategic Plan: 1988-1992,” Federal Laboratory Consortium

for Technology Transfer Administrator, Fresno, CA, October

1987.

the discretionary authority given to laboratory

directors in the 1986 Act applies only to government-operated laboratories, not to contractor-operated facilities like DOE’s. To help determine whether further policy modifications

might be needed, Congress could conduct oversight on the responses of the mission agencies

to the 1986 Technology Transfer Act, other recent changes in the law, and to Executive Order 12591 (Option 11, table 13).

Transferring HTS R&D

While a new framework for technology transfer exists, it is far from clear that industry and

the laboratories will be able to forge effective

partnerships for commercializing technologies

like HTS. Many of the formal barriers have

come partway down, but the culture of these

700-plus institutions insulates them from industry and marketplace. The laboratories also differ greatly in style and tradition. Some stress

engineering, others research for the sake of research. Policies with much to recommend for

a DOE facility maybe irrelevant for NIH, while

conflicting with DoD security requirements.

Technology Transfer from DoD

Much of the Federal funding for superconductivity passes through DoD, which operates

more than 70 laboratories, a pattern that will

probably continue. While defense agencies

work hard at transferring technologies to military contractors, diffusion to the civilian side

of the economy poses special problems. These

begin with the frequent requirements for secrecy,

and end with the likely reluctance of the Pentagon to accept such a burden as a major ongoing responsibility.

In authorizing an HTS program for fiscal

years 1988 and 1989, Congress instructed DoD

(and DOE, when its laboratories receive DoD

funds) to give special attention to transfers of

technology to the private sector.16 Apparently,

~esection 218 of the National Defense Authorization Act fOr

1988 and 1989 (Public Law 100-180) earmarked $60.56 million

annually for 2 years for a DoD program on HTS. Congress appropriated only $15 million for fiscal 1988 under this provision,

which went to DARPA for initial funding of its processing R&D

effort, described earlier in the chapter.
112

DoD intends to use existing mechanisms to implement the requirements of the Defense Authorization Act, rather than establish procedures specifically for HTS. While current

practices may suffice for transferring HTS technologies to defense industries, they will probably be less effective for transfers to firms on

the civilian side of the economy. Instead, it

might make sense to assign the task of working with non-defense firms to an intermediary

organization (Option 12).

A number of arrangements seem feasible.

Several DOE laboratories—including Argonne,

Oak Ridge, and Ames—have set up adjunct

organizations to handle technology transfer.

DoD could contract directly with an existing

organization—e.g., a not-for-profit R&D laboratory like Battelle. An intermediary charged exclusively with transferring technical knowledge

to commercial enterprises could play a useful

role during the stages of technology development and commercialization processes that are

not germane to DoD’s mission.

Demonstration and Evaluation

Technology transfer has significance going

beyond HTS. So does cooperation in R&D between industry and the national laboratories.

But both in the laboratories and at middle and

upper ranks in the agencies, commitment to

meaningful change has not always been visible. Information about what works would help;

successful demonstration projects could have

considerable impact (Option 13). The FLC has

the authority to conduct demonstrations, but

its set-aside funds from the agencies paid for

only one such project during 1987.

Making technology transfer function effectively and efficiently will demand systematic,

empirically-based analysis of transfer processes

(including cooperative R&D), and of subsequent

impacts on innovation and commercialization.

Demonstration projects without critical evaluation of results may not accomplish much.

Laboratory Personnel

People transfer technology much more effectively in person than through reports, and they

do so best when they work together (rather than

in meetings). Transferring HTS technologies

from the national laboratories means: 1) bringing people from industry into the laboratories

to work on HTS, perhaps through cooperative

R&D projects; and 2) sending people from the

laboratories to industry so they can learn what

commercialization is all about. In the short run,

the first of these steps has much to offer for

HTS. The second step is necessary for lasting

changes in the culture of the laboratories, and

for long-run success in better integrating the

laboratories into the Nation’s R&D infrastructure. Because of possible conflicts with DoD

missions, personnel exchanges have greater potential attraction at DOE (non-weapons) laboratories.

The laboratory system attracts many highly

competent people with more interest in research than in the practical problems of

industry—no surprise, given that commercialization has not been a mission of the laboratories. Some people join a laboratory precisely

because they have no wish to work on industrial problems. They may be highly capable

professionals, dedicated to research, but even

if motivated to work with industry, laboratory

employees may not know how—through lack

of exposure to corporate life and the realities

of the marketplace.

Agency policies have been broadened in recent years, so that many Federal employees can

do consulting (on their own time), or take leaves

of absence to work in industry. Both these steps

will make a difference. So could a program of

temporary appointments sending laboratory

personnel to the private sector (Option 14). Although industry employees can come to the laboratories quite easily, flow in the other direction will have more impact in changing the

laboratory culture. Congress could explicitly

authorize and encourage fellowships and/or exchanges. Several of the HTS bills introduced

in the 100th Congress authorize industrial fellowships at Federal laboratories, but not fellowships that would send laboratory employees to industry. Others have tied personnel

exchanges to cooperative R&D programs. The

need is a broad one: there seems no necessary
113

reason to tie personnel exchanges either to cooperative R&D or to HTS.17

Cooperative R&D

Cooperative research bringing together laboratory employees with those from industry—

and perhaps from universities—offers another

way to integrate the laboratories more effectively into the Nation’s technological infrastructure. The possible arrangements serve needs

ranging from efficiency—avoiding too much

duplication —to lengthening industry’s time

horizons, as discussed in the next chapter (see

box R on collaborative R&D). The discussion

below focuses on HTS–e.g., approaches such

as the proposed National Laboratory Cooperative Research Initiative Act, S. 1480 in the 100th

Congress. 18

DOE has itself moved toward closer cooperation with industry. In April 1988, the Secretary of Energy designated three national laboratories—Los Alamos, Argonne, and Oak Ridge—

as superconductivity pilot centers. The pilot

center approach, including expedited procedures for contracting and project approval, and

transfer of intellectual property rights, had been

initially proposed by Los Alamos, which had

been asked by the Secretary to explore mechanisms for cooperative ventures.

DOE user facilities have begun attracting the

attention of private firms: the Department’s

figures show 1600 industrial visits in 1987, compared with 260 in 1981.19 But collaborative

~TThe president’s Commission on Executive Exchange, in response to the April 1987 Executive Order, has been working on

a small-scale plan for exchanges of technical personnel between

industry and Federal laboratories. Industrial participants will

probably be limited to relatively large companies that can afford to share the administrative expenses, as well as picking up

part of the costs of the exchange. Contractor-operated laboratories may not be covered—thus excluding most DOE facilities.

InIntroduced in 1987, S. 1480 also includes provisions for cooperative R&D on mapping the human genome and semiconductor manufacturing. The bill, in its original and modified versions (Senate Amendment 1627, introduced in March 1988) would

direct the Secretary of Energy to establish cooperative centers

at DOE national laboratories for HTS R&D, and give the laboratories greater autonomy in negotiating agreements with private

companies and universities.

leThe Ig87 estimate comes from DOE’s Laboratory Management Division, that for 1981 from the statement of Dr. James

projects with industry, though on the rise, involved just 57 companies and R&D valued at

about $110 million during 1987 (for the multiprogram laboratories). Given this so-far modest showing, Congress might direct DOE to take

an explicitly experimental approach to cooperation with industry (Option 15). Rather than

a full-scale effort, structured trials could help

industry and the laboratories find ways of working together while avoiding unrealistic expectations and the danger of steering too many

HTS R&D dollars to untested programs. Pilot

projects could take a variety of forms: firms

might work with the laboratories singly or in

groups; potential rivals could choose to pursue

pre-competitive projects jointly; firms with similar R&D objectives, though in different businesses, could cooperate, along with those having supplier-customer relationships.

Industry will have to take much of the initiative if the DOE laboratories are to aid in commercialization of HTS. Companies must be willing to search out areas of expertise in the

laboratory system, and seek to take advantage

of them—contributing a substantial share of

project funds. If Federal dollars cover too high

a fraction, the company may no longer feel it

has a stake in outcomes; projects can stray from

the needs of commercial technology development. The laboratories might also find that the

only companies working with them were those

with few prospects for commercial success, and

little choice but to take whatever help DOE

might offer.

At the same time, while few firms are likely

to make substantial financial commitments

without guarantees of influence over research

goals, industry cannot have too much control,

else planning horizons will shorten: unless cooperative projects have riskier and/or more

generic R&D objectives than companies would

pursue on their own, there is little justification

for Government participation. These considerDecker at the Joint Hearing on Technology Transfer before the

House Committee on Science and Technology and the Subcommittee on Energy Research and Development of the Senate

Energy and Natural Resources Committee, Sept. 4, 1986 (Washington, DC: U.S. Government Printing Office, 1987), p. 22.
114

ations suggest projects that last 3 to 5 years or

more, with industry cost sharing in the range

of 40 to 60 percent.

It might also be appropriate for Federal agencies to share costs with industry-based collaborative R&D ventures (Option 16—also see

ch. 5). The justification? Longer time horizons.

While national laboratory participation might

sometimes be desirable, there seems no reason

to make this a precondition.

Regardless of final policy decisions on cooperative R&D, mechanisms for evaluating differing approaches, and disseminating the results

—and not just the success stories—will be needed.

The approaches emerging could have relevance

going well beyond superconductivity.

State Programs and Approaches

Over the past decade, many States, in the

name of economic development, have established programs for supporting high-technology

businesses. Some already support HTS.

Among the more visible initiatives:

●

●

●

●

●

advanced technology centers intended to

attract and work with high-technology industry;

centers of excellence at state-supported

universities (several—e.g., at the University of Houston and the State University

of New York at Buffalo—have been established in superconductivity);

small business innovation research programs, patterned after those at the Federal

level (adopted quite recently by half a dozen

States);

technology extension services, intended to

help companies attack technical problems

and diffuse know-how to industry;

financial assistance for start-up firms and

small businesses.

Many State governments have also established

advisory commissions and councils on science

and technology.

The variety and innovative nature of State

programs also mean that some of the undertakings have been fragmentary. Few States have

comprehensive efforts. The New York State Science and Technology Foundation, and Pennsylvania’s Ben Franklin Partnership, have been

among the more extensive. Still, State governments have some tools to call upon for aiding

HTS technology transfer and commercialization that are not available to the Federal Government. They also have compelling motivations—jobs and income.

OTA has previously suggested that Federal

matching funds for State programs such as technology extension services could be appropriate.20 Additional possibilities (Option 17) include small planning grants to the States for

strengthening R&D-based economic development initiatives. Pilot projects might include

a demonstration program for State technology

extension services, as provided for in S. 907

(incorporated in the omnibus trade bill passed

by Congress but vetoed by President Reagan

in May 1988).

This option could complement existing Federal Small Business Innovation Research (SBIR)

programs. Under the Small Business Innovation Development Act of 1982, Federal agencies must allocate 1.25 percent of extramural

R&D budgets exceeding $100 million for SBIR

awards:

●

●

●

Phase 1 contracts provide up to $50,000

for demonstrating the merit of an idea.

Under Phase II, agencies may award up

to $500,000 for taking Phase I concepts to

the pre-prototype stage.

In Phase III, companies can proceed with

development using non-federal funds, or

seek non-SBIR money from Federal

agencies.

‘“’’ Development and Diffusion of Commercial Technologies:

Should the Federal Government Redefine Its Role?” staff memorandum, Office of Technology Assessment, Washington, DC,

March 1984, pp. 10 and 48.

Precedents for assistance to the States include Federal funding during the 1960s and early 1970s for strengthening State and

local capacities in dealing with issues of technology and science.

At the time, these efforts were primarily focused on “public

technology” —e.g., the direct needs of State and local governments, rather than economic development and business needs.
115

SBIR money has gone in the past for LTS re- ness advisory services, some of which offer

search; Federal agencies, including DoD and assistance in applying for Federal SBIR grants.

DOE, are currently evacuating well over 100 planning grants could help the States go furSBIR proposals for HTS awards. ther in complementing the Federal effort. Con-

. .

So far, half a dozen States have established gress might also consider raising the Phase I

small business innovation research programs ceiling from $50,000—which buys relatively little today—to, say, $100,000. of their own. Many States operate small busiTECHNOLOGY INTERCHANGE WITH JAPAN

President Reagan’s superconductivity initiative speaks of reciprocal opportunities for the

United States and Japan to cooperate in R&D.

The Japanese Government’s pronouncements

on HTS also stress international cooperation—

e.g., foreign participation in government-sponsored superconductivity projects such as the

New Superconductivity Materials Research Association, and the International superconductivity Technology Center (ISTEC, ch. 3).

If nothing else, Japan has sought to respond

to criticism that its research system has been

closed to foreigners. But agencies of the Japanese Government also have quite concrete benefits in view—notably, new perspectives and

new ideas that could strengthen Japan’s capabilities in basic science. More than symbolism,

international cooperation could help the Japanese reach their own objective—a more creative R&D system. The Japanese also realize that

they risk loss of access to research from the

United States and other countries if they do not

open up their own laboratories.

New developments in HTS will continue to

come from Japanese laboratories. American

companies —as well as individual scientists and

engineers—stand to gain from participating in

cooperative projects, but only in full partnership with Japanese companies and Japanese scientists. More than direct benefits are at stake.

Hands-on involvement in Japanese R&D will

help Americans–as organizations and individuals—understand how the Japanese compete

so effectively.

Participation and Monitoring

As this report was being completed, no U.S.

firm had agreed to join one of Japan’s cooperative projects as a full member, although a few

had become affiliates. American companies, at

this point, feel that the costs are too high—and

not only the fees (full membership in ISTEC

runs about $800,000). To benefit from full membership, a company would have to assign one

or more highly competent professionals—fluent

in Japanese—to the cooperative project. Scientists with relevant skills and experience are rare

in both countries. American firms would be

reluctant to send one of their best people to Japan, even if they had someone who spoke the

language. (Evidently, few U.S. subsidiaries in

Japan have not had much success in hiring toprank engineers and scientists.)

For smaller U.S. firms, especially those without Japanese affiliates, any form of participation may be difficult to justify. If U.S.-based

professional societies or trade associations

were permitted to join Japan’s governmentsponsored projects, spreading the costs, American industry could gain better access to Japanese HTS R&D. Alternatively, a number of

American firms might form a joint venture for

such purposes as monitoring HTS R&D in Japan, keeping members aware of opportunities

for individuals as well as companies, and helping transfer technology to the United States.

The U.S. Government could support such an

effort, perhaps by helping finance an office in

Japan, or as part of a larger program such as

NSF’s Japan Initiative (see Option 18 in table

14). Federal support for such an office would

build on precedents including aid provided by

the Commerce Department in 1984 to the American Electronics Association for a trade office

in Tokyo.

Some American companies already operate

Japanese affiliates primarily as listening posts,
116

Table 14.—lssue Area Ill: Technology Interchange with Japan

Issue Options for Congress Advantages Disadvantages

Smaller U.S. companies may not have the

resources to keep up with fast-breaking

developments in Japan. While the Japanese have offered foreign firms opportunities to participate in governmentsponsored cooperative projects, the

response to date has been tepid. A joint

venture or an organization such as a

professional society or trade association

might be able to spread the costs and help

American industry gain access to Japanese HTS R&D.

Few technical professionals in the United States have the language skills or inclination to take temporary appointments

in Japanese laboratories—the most direct

means for transferring technology and

know-how from Japan to the United

States, and a necessary step in improving American understanding of Japan’s

research system.

No more than a tiny fraction of U.S. scientists and engineers will learn Japanese in

the near future, leaving an ongoing need

for prompt translations of Japanese scientific, technical, and business publications–including informally circulated

“gray literature. ”

OPTION 18. Provide a seed grant to a

professional society or trade association

for an office in Japan to monitor developments in HTS, with funds sufficient to

operate the office for perhaps 5 years. A

non-profit organization such as the American Institute of Physics, the American

Chemical Society, or the Federation of

Materials Societies should bean acceptable vehicle in Japanese eyes.

OPTION 19. Monitor progress in implementing NSF’s Japan Initiative, appropriating additional money if U.S. funds–

together with contributions from Japan–

cannot sustain all components of the

program.

OPTION 20. Direct the Department of

Commerce, as part of its responsibilities

under the Japanese Technical Literature

Act of 1986 (Public Law 99-382), to establish a program specifically for gathering, evaluating, and disseminating

information on Japanese science/technology and business activities as they relate

to HTS. The effort might be viewed as a

model for improving the effectiveness of

Commerce’s programs on Japanese information. For insightful evaluations of technical efforts in Japan, Commerce will

probably need help from Federal agencies

with greater expertise in engineering and

science.

SOURCE: Office of Technology Assessment, 1988.

just as the Japanese maintain technology centers in the United States. The Japanese should

be willing to allow group participation by American firms in information-exchange activities

such as the New Superconductivity Materials

Research Association. Moreover, there is no

reason why a corporation setup as a joint venture should not qualify to join ISTEC.

Language Training; Fellowships

Laboratories

in Japanese

If the United States is to make better use of

R&D conducted in other countries, more Americans will have to seek and take temporary assignments in foreign laboratories. At present,

One way or another, the United States

should take the Japanese up on their

offers to cooperate in HTS research. In

addition to serving as liaison to forums

like the New Superconductivity Materials

Research Association, a professional society or trade organization could help

screen the latest scientific and technical

information in Japanese, identifying HTS

research reports for translation and distribution. This function could complement

the current effort, quite small, by the

Commerce Department under the Japanese Technical Literature Act (see Option

20 below).

To take advantage of R&D opportunities,

and Japanese technical know-how, more

Americans need, not only language training, but experience working In Japan.

Access to foreign scientific and technical

information has become increasingly important as U.S. technological advantages

have diminished. In the past, technical

translations from German and Russian

have been more common than from

Japanese.

Japan might gain more than the United

States from cooperation in HTS. Much of

the U.S. work will take place in universities, where it will be relatively open; much

of Japan’s work will take place in industrial laboratories.

Sending more engineers and scientists to

Japan, and funding language training for

professionals, will be only small steps forward, Longer-term needs begin with language training in U.S. primary and

secondary schools.

Translations and technical evaluations will

need substantially higher funding levels

to accomplish much. During fiscal 1987,

Commerce reprogrammed $300,000 to

implement the Japanese Technical Literature Act; in 1988, the Department plans

to reprogram $500,000 for this purpose.

An aggressive effort on HTS alone could

well consume most or all of this. Screening and evaluation of technical information is particularly important, but

expensive. To this point, U.S. companies

have shown little interest in Japanese

technical and scientific literature.

few U.S. engineers or scientists have the right

combination of technical qualifications, language skills, and motivation to work in Japan

(in part because they may feel that their employer—and the U.S. labor market as a whole—

will not reward them for learning Japanese and

spending time there). As many as 7,000 Japanese engineers and scientists are currently at

work in the United States—in government facilities, as well as universities; perhaps 500

Americans work in Japanese laboratories.21

Japan offers research fellowships for foreigners under the sponsorship of its Key Technol21E. LaChiCa, “U. S., Japanese Negotiators Deadlocked on Tapping Each Other’s Technology,” Wall Street Journal, Jan. 22,1988.
717

ogy Center, as well as the Ministries of Foreign

Affairs and Education. Given the paucity of language skills within the U.S. technical community—and such less tangible but no less substantial barriers as difficulty in finding employment

for husbands or wives—not many Americans

have sought out these opportunities. Cultural

differences and high living costs create obstacles particularly for more senior American

engineers and scientists, including those in

R&D management positions.

NSF’s Japan Initiative, launched in 1988 with

an allocation of $800,000 from the Foundation’s

budget for bilateral programs, is designed to

encourage more Americans to take advantage

of research opportunities in Japan. The program offers fellowships for language training,

as well as financial support while in Japan.

Japan’s Prime Minister Takeshita, moreover,

has announced that that his government will

give NSF $4.8 million to finance work in Japan

by U.S. researchers, With this offer, near-term

funding for the Japan Initiative seems adequate.

NSF is seeking $1.6 million for the program in

fiscal year 1989; Congress might monitor

progress in implementing the program, and

appropriate additional money if U.S. funds (together with contributions from Japan) cannot

sustain all its elements (Option 19). Congress

might also wish to consider greater Federal

assistance to American schools and universities for language training.

Technical Information

Most U.S. scientists and engineers necessarily will continue to rely upon translations

for technical information from Japan. Congress

could direct the Commerce Department to expand its small program for translations of Japanese technical literature under the Japanese

Technical Literature Act, perhaps appropriating funds specifically for information on HTS

(Option 20). A professional society or trade

organization (as discussed under Option 18),

in addition to serving as liaison to organizations like the New Superconducting Materials

Forum, could help screen the latest scientific

and technical information on HTS.

While major scientific findings from Japanese

laboratories normally see publication in English or another Western language, less of the

Japanese engineering literature is translated.

Moreover, Japan produces a large volume of

“gray literature”—company, university, and

government reports, as well as other informal

documents not widely circulated. The gray literature, hard to acquire outside Japan, often includes important technical and business information.

Foreign Access to U.S. Technology

The U.S. Government has signaled Japan and

other nations that it may restrict outflows of

information from Federal HTS research. The

July 1987 Federal conference, at which President Reagan announced his superconductivity

initiative, was itself off-limits to representatives

of foreign governments. In the private sector,

the Council on Superconductivity for American

Competitiveness limits its membership to U.S.

corporations and citizens. One title of the Administration’s proposed Superconductivity

Competitiveness Act, sent to Congress in February 1988, would permit agencies to withold

scientific and technical information requested

under the Freedom of Information Act under

some circumstances.

The scientific community has long argued

that restrictions on information exchange harm

its enterprise, and can only be justified on strict

grounds of national security. But the question

for HTS is rather different. Proposals such as

the Administration’s seem to assume that the

United States is far enough ahead in HTS to

have something to protect. OTA has found no

evidence supporting such an assumption. Lacking a decisive lead in the R&D race, measures

seeking an equitable two-way flow with countries such as Japan have much more to recommend them. Of course, the threat of embargoes

on scientific and technical information helps

keep the pressure on other nations to provide

access to their own research systems (box P).
118

CONCLUDING

In the months following the initial breakthroughs in superconductivity, the U.S. Government moved quickly to redirect R&D support. The growth in funding–from virtually

nothing in fiscal 1986, to $45 million in 1987,

and $95 million in fiscal 1988—demonstrates

the responsiveness of the system. Yet there are

real reasons for concern: lack of new money

for HTS; the possibility of a reaction against

continuing high levels of R&D spending unless

exciting new results keep coming in; heavy de

facto reliance on DoD and DOE to generate

technology that industry can commercialize.

Budget uncertainties in the R&D agencies,

which lasted well into the current fiscal year,

put many federally funded projects on hold,

slowing U.S. progress.

Defense-related spending—centerpiece of the

Federal R&D budget since World War II—leads

to major new commercial products or processes

less frequently than in earlier years. The reasons include a drop in support for both generic

and high-risk, long-term R&D relative to the

overall DoD R&D budget, as well as growing

isolation of the defense sector of the economy.

Meanwhile, funds for applied research that

would fill the gap between basic science and

the short-term projects conducted by industry

have been cut back: the U.S. Government spends

little money on work that would strengthen the

foundations for commercial industries.

At present, DoD has roughly half the Federal

money for HTS. The field is new, still in the

research stages. Much DoD-sponsored R&D

over the next few years should yield broadly

useful results. Thus DoD’s ample resources

could become a major asset in commercializing HTS. But the Pentagon will begin steering

dollars to support mission-specific applications

as soon as these are in view—indeed, may already be doing so.

When it comes to the Department of Energy,

which is getting 30 percent of the Federal funds,

the primary questions concern the ability of the

national laboratories to forge new cooperative

relations with industry. The laboratories are

changing. But the system is a big one, burdened

with inertia; commercialization has not been

a significant mission. It will take a major departure from business as usual for the laboratories

to have much impact on commercialization of
1 1 9

—

HTS (which is not to say that when the next

set of opportunities comes along, the DOE laboratory system may not be in a better position

to respond).

The Federal Government pays for about twothirds of the R&D carried out on the Nation’s

campuses, chiefly through awards to individual faculty members, Given the short-term orientation of most business-funded R&D, the NSF

budget for HTS is particularly critical. Policies

aimed at breaking down some of the disciplinary barriers in American universities, and creating environments where truly interdisciplinary

research could flourish, would help broadly in

the commercialization of this and other technologies.

The R&D budget is not the whole of technology policy. Nor is technology the only ingredient in successful commercialization. All of

the policy options covered in this chapter, taken

together, would be no more than a first step

in addressing the competitive difficulties of

American industry. Still, the money Federal

agencies spend on R&D, the ways they spend

it, their efforts to transfer technologies to

industry—actions taken every day by more than

a dozen agencies—have enormous long-run impacts. When companies search for competitive

advantages through proprietary technology,

they draw continually on this publicly funded,

publicly available technology base. More effective interactions among the major players in

the R&D system—industry, the national laboratories, universities—would speed the generation of technical knowledge, and, perhaps more

importantly, its use.

In a time of budgetary stringencies, mechanisms for establishing R&D priorities across the

agencies become more critical than ever. This

is perhaps the single most important point

raised in this chapter. To maintain its competitiveness, the United States must generate today

the technical knowledge that industry will depend on tomorrow, For HTS, this means, not

only effective mechanisms for setting R&D priorities, but stability and continuity in funding.

These needs imply another: a strategic view of

the ways in which federally funded R&D can

spur economic growth and competitiveness—

the subject of the next chapter.
Chapter 5

Strategies for Commercial Technology

Development: High-Temperature

Superconductivity and Beyond
CONTENTS

Page

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................123

Strategy l: Flexible Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........128

The Current Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........128

Strengths and Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......129

Strategy 2: Unaggressive Response to HTS . ..........................132

A Larger Role for NSF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ...........132

Industrial Consortia with Federal Cost Sharing . ......................133

A Working Group on Commercialization. . ................,..,.......137

Strategy 3: A Federal Technology Agency—Three Alternatives . .........,138

An Umbrella Agency for Science and Technology . ...................140

Higher Priorities for Technology and Engineering . ...................141

An Agency for Commercial Technology Development . ................142

Concluding Remarks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .............147

Boxes

Box Page

Q. Strategy: Key Ingredients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124

R. National Laboratories or Universities?. . ............................131

S. Collaborative R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............135

T. Aggressive Support for Commercialization: Other Possibilities . ........139

U. An Advanced Technology Program . . . . . . . . . . . . . . . . . . . . . . . .........143

V. An Advanced Civilian Technology Agency, as Proposed in S.1233 .. ...144

W. Project Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................146

Table

Table Page

15. Desirable Features in a Federal Agency for the Support of

Commercial Technology Development. . . . . .........................147
Chapter 5

Strategies for Commercial Technology Development:

High-Temperature Superconductivity and Beyond

SUMMARY

Together, a collection of government actions

constitutes a strategy, just as the actions of a

corporation’s upper management constitute a

strategy. De facto strategies, though hardly unheard of in business, are more common in government. indeed, to some, the very notion of

strategy implies a measure of loss in one of the

primary strengths of U.S. technology policies—

the flexibility of Federal agencies, their ability

to respond quickly to new circumstances,

Regardless of approach for promoting commercial development of high-temperature superconductivity (HTS)—and regardless of whether

the approach is called a strategy—success will

require diversity in sources of funding and in

the R&D programs that Government money

supports, Earlier chapters stressed the uncertain in prospects for HTS. With several agencies involved, good ideas will get a hearing—at

the Defense Advanced Research Projects Agency (DARPA), if not the Department of Energy

(DOE) or the National Science Foundation (NSF).

Duplication, in any case unavoidable, can spur

competition. Continuity, likewise, will be important. To encourage U.S. industry to take a

longer view, the Federal Government must do

so itself (a need addressed by several of the policy options in ch. 4).

In keeping with continuity and stability in

funding, any strategy for HTS should avoid high

visibility. If policy makers or the public look to

Federal programs for near-term breakthroughs,

disillusionment will follow. Technological advance cannot keep up with expectations fed by

the media.

The Federal Government will have to let mar -

ket forces drive HTS technology as much as

possible. Historically, governments have done

a poor job of trying to anticipate what markets

will demand, if not the course of technological

evolution; picking R&D fields ripe for major

technical advance is one thing, picking winning commercial applications quite another.

Policies that pull technologies into the marketplace in more subtle ways—e.g., through government procurement—can work, especially in

conjunction with R&D funding designed to

push the technology along. Market pull coupled

with technology push—in a policy environment

that encourages collaboration among industry,

universities, and Government—will help speed

commercial technology development. Box Q

discusses these and other operating principles

in more detail.

This chapter considers three approaches

through which the Federal Government might

foster commercialization of HTS:

●

●

Flexible response, Strategy 1—the current,

de facto U.S. policy–grows naturally out

of postwar U.S. technology policy. Characterized by strong support for basic science and for mission-oriented technology

development, direct measures for supporting commercial technology development

find little place.

An aggressive response, Strategy 2, would

differ in three major ways from current policies. First, NSF would have more money

for HTS—in essence, an insurance policy

to make certain that good ideas for basic

research have a shot at funding. Second,

the Federal Government would share in the

costs of private sector collaborative R&D

ventures. The rationale: more work within

industry on long-term, high-risk HTS R&D.

Third, a working group of experts from

industry, universities, and government

would be assembled to decide which collaborative R&D proposals were worthy of

support, and to otherwise advise on policy measures,

123
124

Box Q.--Strategy: Key Ingredients

Disagreements over strategies for technology development reflect differences of opinion over technical questions (How long will it take to develop flexible conductors made from the new superconductors?) and over market conditions (What applications will be most attractive at liquid nitrogen temperatures?), as well as over matters of political preference (Is it proper for government to support

commercial technology development directly?). Some policies—e.g., support for basic research—find

nearly universal support. So do some of the other ingredients that would find a place in almost any

strategy for supporting HTS:

Diversity in sources of R&D support. No one knows what new discoveries may emerge in superconductivity, where they will come from, or when. A portfolio of research makes more sense

than one or a few centers of excellence; so do multiple sources for contracts and grants.

Continuity in support, over a period that could easily be a decade (as emphasized in ch. 4).

A judicious balance of technology push and market pull. Technology push via R&D support

works best when accompanied by policies such as government purchases and demonstration

projects that help pull high-risk, high-cost technologies into the marketplace. Overall, however,

government should let industry drive technology as much as possible.

Measures that encourage collaboration among universities, industry, and Government.

Diversity

Many sources of support, and many centers for R&D, may mean duplication of effort, but that

is not necessarily bad. Overlap breeds competition and helps ensure that no path goes unexplored.

There is another side to diversity. Accountability can suffer: if everyone is responsible for HTS, then

no one is fully accountable. Still, lacking an overriding goal—sending a spacecraft to Mars, or building a magnetically-levitated (maglev) rail system along the Eastern seaboard—where is the need for

centralized responsibility? Development of HTS is a broad objective, and also a fuzzy one: the technology cuts across the missions of a number of agencies.

NSF funds research proposals rated highly on grounds of their promise in advancing science

and technology; the subject of the research carries less weight. Not without controversy, the process

nonetheless has found wide acceptance. But when it comes to projects in the mission agencies, decisionmakers do not always see eye-to-eye on what should be supported. In the early days of computer

technology, visionary projects such as Whirlwind and ILLIAC were as fiercely opposed by one set

of agencies as they were favored by those paying the bills; U.S. computer technology would not have

advanced so quickly had any one agency been solely responsible.1

Continuity

In reality, diversity is seldom a problem in the decentralized U.S. system–it comes naturally.

The more common problem is continuity. Stop-and-go decisions have bedeviled U.S. technology policies, as chapter 4 makes clear. Congress passes the Stevenson-Wydler Act, but a new Administration

does not fully implement it. The executive branch seeks to double the NSF budget over five years,

but Congress does not appropriate the funds.

If there is a secret to Japanese technology policy, it lies in continuity-stability in commitment

and financing, without rigidity. Publicly-funded R&D programs in Japan, many of which have enhanced the competitiveness of Japanese industry although budget levels have been modest, often begin with an 8- or 10-year planning horizon. R&D priorities change over the course of the maglev train

program (ch. 3) or the fifth-generation computer project as results come in and new directions open.

Budgets may change too. But sharp reversals are rare. A decade-long time horizon stands for all to

see as a demonstration of commitment by both government and industry. R&D sponsored by the U.S.

Government often lives from one budget cycle to the next; the consistency seen in Japanese policies

“’Government’s Role in Computers and Superconductors,” prepared for OTA by K, Flamm under contract No, H36470, March 1988, pp. 9-27.
125

has few precedents, even in defense (just as few American firms have shown the persistence in product development that led to export successes like video-cassette recorders for the Japanese).

In the United States, the spectacular success of a few flagship efforts like the Manhattan Project

and Apollo left a trail of unrealistic expectations. NSF’s RANN program (box O, ch. 4) sprang from

the notion that the technical expertise needed to put men on the moon could be turned, almost as

directly, to social problems. Operation Breakthrough, the Department of Housing and Urban Development’s effort to revolutionize the technology of residential construction, grew from the same soil.

RANN came and went in half a dozen years, Operation Breakthrough even more quickly.

HTS will be equally vulnerable. The public’s expectations have been raised by a year and a half

of scientific discoveries, a Federal conference featuring the President and three cabinet officers, and

a Nobel Prize—all accompanied by ample media coverage. In the absence of steady progress, public

support may wane; the painstaking and laborious work needed to turn science into useful technology

spawns few headlines.

Low Visibility

In the United States, publicly-supported R&D programs have generally been more successful, and

more durable, when they avoid high visibility.2 Apollo was the exception, not the rule. If policy makers

or the public look to a Federal HTS program for immediate technological or commercial triumphs—in

the extreme, as a flagship in the international competitive struggle—they will be disappointed. A highvisibility, crisis-driven program such as the synthetic fuels initiative of the 1970s may collapse on

itself, and in doing so harm the cause of future support for related efforts.

Technology Push and Market Pull

Visibility, by itself, did not do in the synthetic fuels program. The failure lay in attempts by government bodies to anticipate the course of technological evolution and the needs of the marketplace.

(Japan has not been immune: the Ministry of International Trade and Industry tried to force Honda

out of the auto business in the 1960s.) The lesson, repeated many times over: in the absence of convincing reasons for doing otherwise, let market forces drive technology.

Although picking winners is something that Federal agencies have never done well, policies that

serve to pull the market in more subtle ways have proved beneficial. They are particularly effective

in conjunction with R&D funding designed to push the technology along.

To elaborate, the Federal government has confined its role in (non-defense) technology development largely to funding research, on the assumption that the commercial market could and would

create the necessary demand for resulting products. But this is an area where the market does not

function perfectly. Because product development efforts in high-risk technologies are extremely

expensive—accounting for nearly 80 percent of R&D costs—firms must have some confidence that

there are customers at the end of the tunnel; potential customers often do not have enough information or certainty to provide that assurance, however. Thus, there is a role for government in helping

assure an early market for such products.

In computers and semiconductors, Federal Government procurement provided that assurance.

The defense-space share of the total computer hardware market was 100 percent in 1954, and it exceeded 50 percent until 1962. Similarly, during the early years of integrated circuit production, defense and space procurement accounted for almost 100 percent of sales. Given assurances of stable–

indeed growing—demand, companies raised their own R&D spending. Technological advances coupled with learning and scale economies led to dramatic price reductions for computers. Even more

important was the “demonstration effect”: successful use of computers by military and space agencies proved their value to a skeptical business community.

Defense procurement was effective at pulling computer and semiconductor technologies along

for two reasons. The government’s mission-based needs meant that agencies evaluated technological

“’Collaborative Research: An Assessment of Its Potential Role in the Development of High Temperature Superconductivity,” prepared for

OTA by D.C. Mowery under contract No. H36730, January 1988, pp. 13-14 and 67-88.
126

alternatives carefully and provided valuable user feedback to suppliers. Moreover, agency needs, and

the technologies they spawned, meshed closely with business needs. (As one computer executive observed, “Space and defense computer applications .,. served as a ‘crystal ball’ for predicting the future direction of computer use in industry.”] Federal demonstration projects have been similarly effective under the same conditions, i.e., when mission-based government support of a developing

technology steers it in a direction which converges with commercial interests.

Lacking this, though, the synergy can quickly vanish. Because of the growing divergence between

military and civilian technologies and markets, defense procurement no longer has the positive impact it once did on commercial technology development. That issue aside, procurement and demonstration projects have been less effective when they have been done without the guidance of an agency

mission.

Governments can strengthen market forces in other ways: in Japan, government-financed enterprises buy computers and robots and lease them to end users. The result? Guaranteed markets for

the manufacturers, and reduced risk for the customers, who can turn back the equipment if they

find it unsatisfactory.

Finally, government regulations can also pull technologies into the market, sometimes with good

results. Federal fuel economy standards created incentives for American automakers to improve their

capabilities in engineering and producing small cam. Technical standards (e.g., for computer languages) can be an important spur to technology diffusion.3

As this discussion suggests, market pull policies create vexing dilemmas for governments. Policies to support the adoption of publicly-funded R&D results are an essential component of a government effort to develop technology. But insofar as these incentives for technology adaption target specific applications, policymakers are placed in the position of trying to forecast the course of technological

evolution and anticipate the commercial market. This is a task they have done poorly in the past.

Interactions Among Industry, Universities, and Government

A final principle, again emerging from the postwar history of high technology: collaborative interactions among universities and industry speed technological advance, particularly when supplemented

by government R&D support and procurement. Coupling between industry and universities played

a major role in the development of computing during the 1940s. The first practical electronic machine

was built at the University of Pennsylvania. After the war, many of the key scientists and engineers

left university and government laboratories to staff fledgling computer manufacturers like Univac.

In the late 1970a, genetic engineering and biotechnology--supported in universities and the laboratories of the National Institutes of Health with Federal dollars--moved rapidly into the private

sector, aided by abundant infusions of venture capital. Today, the United States remains well ahead

of Japan and Europe in biotechnology. At this stage, coupling among universities, industry, and government makes sense for HTS: much of the research remains well-suited to academic settings; firms

in many industries want a window on the technology; Federal agencies are already putting money in.

%ee lntefmtio.ual Competft&m k 8arv&Iu (#WW@On, N: OffiW Of Technology Aaweamen& ~ 19s7). pp. 315-317,

Airline -tiomihby MrMing p~ff competiticm, fOr@ carriers tO * other insane d Mer@fa@ their uervicea. Thy vied to offer

truvelem the lateet equipment in order to compete cm apeed uncl comfort, buying planes from Boeing, LocldwL and McDonnelWouglaa. These

manufacturers, in turn, developed new mxlds.

● A Federal technology agency. Strategy 3 that would substantially raise priorities for

considers proposals for altering govern- engineering research; and direct support

ment responsibilities for science and tech- for civilian, commercial technologies. The

nology—a subject that goes far beyond the second two hold more promise than the

particular needs of HTS. OTA analyzes first. Of course, such changes would take

three variants: a cabinet-level science and time, meaning that they have little to offer

technology agency: institutional changes in terms of the immediate needs in HTS.
-— 127

Each of the strategies has advantages and

disadvantages. Strategy 1 is in place and working; the initial Federal response to HTS illustrates the considerable strength of the traditional approach. Mission agencies moved quickly,

funneling millions of dollars into HTS R&Din

a matter of months. The scientific community

moved even faster, with large numbers of skilled

professionals shifting into HTS from related

fields. The magnitude of the response reflects

the sheer size of the pool of scientific expertise

in the United States—itself a major source of

advantage.

Several weaknesses are apparent in the U.S.

response. First, the universities are having a

hard time competing for funds; DOE laboratories are getting roughly as much money for

HTS research as NSF has for all the Nation’s

universities. The second weakness: almost complete reliance on mission agencies to support

HTS R&D. As a result, not enough R&D money

flows to non-defense industries–which might

not be a problem, were American firms pursuing HTS as aggressively as Japanese firms. Neither DOE nor the Department of Defense (DoD)

can be expected to provide broad support for

industrial R&D in HTS. HTS technologies stemming from DoD R&D may eventually find their

way into the marketplace, but time lags that

made little difference in the 1950s and 1960s,

when the United States dominated the technological frontier, can be fatal in the 1980s.

OTA’s analysis suggests that continuing along

the lines of Strategy 1—the current approach—

will more than likely leave the United States

behind in superconductivity. In mid-1988, the

U.S. position in HTS looked like a strong one.

But this is because HTS remains largely a matter for scientific inquiry. With progress toward

applications, the picture will change. At best,

a lead in science creates small advantages, often

fleeting. The real contest will be over applications engineering and manufacturing—where

Japan excels, and where proprietary technology, much of it developed in industry, will make

the difference.

Strategy Z, an aggressive Federal response,

would, first of all, assign NSF a greater role in

sponsoring R&D. Although basic research in

HTS does not seem underfunded, more money

for the Foundation—perhaps $20 million over

a 5-year period, specifically for HTS—would

guard against missed opportunities in relatively

fundamental work. With enough funding available for its research center programs, NSF

would also be in a position to support one or

more proposals for centers dedicated to HTS.

As the second step in a more aggressive strategy, the Federal Government could share in

some of the costs of R&D conducted by industry consortia. This is the simplest and quickest

way to steer more resources into applied research and generic technology development.

Government could direct public funds to R&D

industry views with favor, but where the benefits would be difficult for individual firms to

capture.

A working group on HTS would be assembled to help carry out this second strategy, and

in particular to make decisions on cost-sharing.

The aggressive response approach requires

agreement on an R&D agenda—a consensus

that should not leave out the universities or the

national laboratories, even though industry’s

view of commercial needs would have to come

first. The primary task for the working group:

deciding which R&D consortia receive Federal

dollars—a sticky issue, one involving decisions

going beyond the scientific merits of alternative projects.

This strategy skirts the “picking winners”

problem raised by Federal subsidies for private

R&D by, in effect, allocating government resources to the highest bidders, That is, among

proposed R&D consortia—all of which were

technically qualified—funds would go to those

whose members were willing to make the longest

term financial commitment and self-finance the

highest fraction of total costs. These criteria

would allocate government financing to joint

R&D ventures with the greatest expected payoffs over the medium to long term. The aggressive strategy for commercializing HTS could

substantially improve prospects for rapid commercialization of HTS in the United States at

relatively modest cost.
128

Under Strategy 3, OTA addresses prospects

for a Federal agency charged with supporting

commercial technologies, A perennial issue in

U.S. science and technology policy, many alternatives have been proposed over the years. The

possibilities range from a small, independent

agency with a budget of less than $100 million,

to a cabinet-level Department of Science and

Technology pulling together some (though

hardly all) of the R&D activities of existing

agencies,

The cabinet-level Department of Science and

Technology came forward once more in 1985

as the lead recommendation of the Young Commission on competitiveness, but found no more

support than in the past. Alternatively, is it possible to envision a smaller Federal agency with

industrial technology as its mission? Once

again, proposals have been common—e.g., for

a national technology foundation, paralleling

NSF’s role in support of science, or a civilian

version of DARPA. The latter has attracted particular attention, given DARPA’s enviable reputation—a small group of creative people, with

the judgment and experience to seek out and

support the best ideas. But DARPA has a mission, and a critical one—support of long-term

R&D with potentially big payoffs in military

systems.

Lack of a comparable mission is the potential Achilles’ heel for a civilian technology

agency. All such proposals face a common

problem: providing money for industrial R&D,

in the name of commercialization and competitiveness, without a well-understood and widelyaccepted mission, (Competitiveness is a notoriously slippery concept—more so than national

defense or health.) Lacking such a mission to

lend discipline to the process of setting priorities and making funding decisions, a Federal

technology agency could easily end up subsidizing marginal projects,

The more of its funds such an agency channeled to industry, the deeper the possible pitfalls. Direct funding of industrial R&D raises

the specter of subsidies won by lobbying rather

than merit. Yet if the technology is to be useful

to industry, then much of it should be developed by industry, Dealing with the many and

contentious issues posed by a Federal agency

for commercial technology development would

be difficult, although not necessarily impossible. If such an agency is to support R&Din the

public interest, it will need to find ways of identifying what that public interest is, convincing

potential critics that it has done so fairly, and

that the results justify continuing support.

Plainly, the three strategies analyzed in this

chapter are not exclusive. They do represent

differing views of the strengths and weaknesses

of the U.S. approach to technology development. Those who believe that the fundamental

strengths of the U.S. system remain intact feel

that industry will be able to commercialize HTS

when the time is right. Those advocating a more

aggressive policy stress the dangers of a business-as-usual mentality, given the surprising

speed with which U.S. industry has lost its

earlier advantages in high technology. The

underlying worries over loss of competitive

advantage lead those who would favor the third

strategy, or something like it, to argue that the

United States needs to thoroughly overhaul its

approach to technology policy.

STRATEGY 1: FLEXIBLE RESPONSE

The Current Approach

This strategy presumes that the existing policy framework is appropriate and sufficient for

supporting HTS.1 To those who advocate this

‘For general background, see A.H. Teich and J.H. Pace, Science and Technology in the USA (Essex, UK: Longman, 1986);

also H. Ergas, “Does Technology Policy Matter?” Technology

approach, a major departure from the current

course would be premature—at least during the

early stages of HTS. With a good deal more

basic research required to overcome the technical obstacles posed by the new materials, the

and Global Industry: Companies in the World Economy,

.—

B.R,

Guile and H. Brooks (eds.) (Washington, DC: National Academy

Press, 1987], p. 191.
129

President’s initiative (box B, ch. 2), along with

other executive branch actions, will provide a

sound basis for industry to commercialize HTS

—when the time comes, And, so the argument

goes, if the pace quickens, or foreign competition intensifies, there will be ample opportunity to agree on a stepped-up response.

This is the de facto U.S. strategy. The Federal

Government is following traditional channels,

relying on existing institutional arrangements,

and avoiding direct support for commercial

technology development. A continuation of this

approach (indeed, almost any approach) will

mean:

●

●

●

Heavy ongoing funding for defense applications of HTS. The Strategic Defense Initiative (SDI) will continue providing a good

deal of the money, and DARPA will probably continue to have a prominent place

as well. Both industry and universities

would get research money—some of the the

latter through DoD’s University Research

Initiative—but within half a dozen years,

aerospace firms and military systems houses

would probably be conducting the bulk of

DoD-sponsored superconductivity R&D.

Although DARPA has stated that the results of its processing contracts will remain

unclassified, such a policy will be subject

to change, depending on outcomes. As

R&D moves on to defense-specific applications, classified programs may become

common.

DOE and the National Aeronautics and

Space Administration (NASA) would pursue their own mission-oriented projects,

with most of the Energy Department’s

money going to the national laboratories.

Much of DOE’s support will probably go

for R&D and demonstration projects directed at electric power applications. DOE

and NASA might pick up a few projects

of interest to DoD.

NSF would continue to fund HTS in the

universities, with some of the Foundation’s

support going to individual investigators

and some to research centers.

Other ongoing shifts in U.S. technology policy

would proceed along lines suggested in chapter 4:

●

●

●

●

The executive branch will continue its efforts to open up the national laboratories,

as well as to strengthen university-industry

relationships and stimulate technology development and transfer through such initiatives as NSF’s Engineering Research

Centers (ERCs) and agency Small Business

Innovation Research (SBIR) programs.

The Administration would also continue

to press for stronger intellectual property

protection, both at home (process patents)

and overseas (negotiations with foreign

governments aimed at stronger laws and

tougher enforcement].

Some State governments would channel

support, direct and indirect, to HTS as part

of technology-based economic development programs,

Venture-financed companies dedicated to

HTS would continue to emerge. Private

firms, both new and established, would negotiate collaborative R&D arrangements,

nationally and perhaps internationally.

Over the next several years, the United States

will continue to take the course outlined above.

Will such a response, by itself, be adequate? The

following analysis indicates that it will not.

Strengths and Weaknesses

In many respects, the current approach to

HTS illustrates the great strength of the U.S.

system of technology development. Although

superconductivity had become something of a

scientific backwater by the mid-1970s, NSF for

years supported people like Paul Chu at the

University of Houston (an institution much like

a hundred others below the top ranks in terms

of research funding or prestige), and at least

a few large U.S. corporations maintained small

superconductivity research programs. Moreover, when HTS broke, American scientists

could quickly take advantage of facilities ranging from neutron scattering equipment to the

National Magnet Laboratory at MIT—facilities

already in place, the result of years of Federal
130

funding. Agencies with their own laboratories

–DoD, DOE, NASA–began new R&D internally,

while contracting out other work.

U.S. scientists not only responded quickly,

but in large numbers, as measured by the flood

of proposals to NSF, and papers published in

professional journals and delivered at scientific

meetings. This response reflects the sheer size

of the pool of scientific and technical expertise in the United States-–a notable strength.

It also reflects the flexibility of the U.S. R&D

system.

NSF was perhaps the most agile of the Federal agencies, moving quickly to provide funds

–largely redirected–to individual research

groups and to the Materials Research Laboratories (MRLs). NSF-funded investigators working in related areas were able to shift their attention immediately to HTS, because of the

flexibility of Foundation grants.

Scientists with DoD and DOE contracts or

grants were also able to move quickly. In addition, DoD redirected millions of dollars in a few

months, as various defense agencies exercised

their much-valued fiscal autonomy. Each went

its own way, with a resulting diversity of technical approaches that is probably healthy overall. Likewise in DOE, laboratories competed to

stake their claim in the newly discovered territory of HTS, resulting in an aggressive, if somewhat fragmented, effort, Interagency coordination, though largely informal, has been relatively

effective: program managers and contract monitors working in superconductivity know one

another and feel a shared sense of responsibility (box M, ch. 4).

Like government, venture capitalists reacted

quickly to the new opportunities, lining up technical experts, many of them university faculty

members, and quickly investing nearly $20 million in entrepreneurial startups (box G, ch. 3).

These startups are just one illustration of close

industry-university links in HTS—another significant asset of the U.S. system. The October

stock market plunge led at least one HTS startup

to cancel plans for a public offering but, overall, availability of capital has not been a major

constraint.

In sum, U.S. R&D in HTS will continue to

benefit from the unparalleled breadth, depth,

flexibility, and diversity of the Nation’s research

system. It is easy to see why many people feel

the current U.S. response to HTS is sufficient—

at least for now. But weaknesses have also begun to surface, and others will probably appear

over the next year or two.

Funding for basic research in HTS could be

a problem, though probably not a serious one.

As the ongoing flood of technical papers indicates, the scientific effort remains broad and

intense. (At the March 1988 meeting of the

American Physical Society, more than 600 of

3,500 papers presented dealt with superconductivity. Most were written by scientists based

in the United States.) There are no obvious gaps

in fundamental science: people somewhere are

pursuing almost every possibility imaginable.

More than likely, the ongoing university efforts

will suffice to train enough people for industry’s eventual manpower needs.

On the other hand, basic research in HTS may

already have reached its peak, More sophisticated laboratory equipment will be needed to

keep up in the future (e.g., for work on thin

films), and costs will rise, Some of the investigators who used existing grants and contracts

to move into HTS will have trouble getting new

money to continue; they will have to show real

promise, rather than routine results, to qualify

for ongoing support. And even if there is

enough money in total for basic research in

HTS, the money might be better spent (box R).

As noted earlier, the national laboratories have

an HTS budget in 1988 roughly equal to that

of NSF, an allocation that seems out of proportion, given the trouble universities have had getting funds.

Even if mission-oriented R&D funded by DOE

and DoD were to transfer to the commercial

marketplace, it would not do so immediately,

The time lags made little difference in the 1950s

and 1960s, when American companies were far

ahead in technology. Today, the United States

cannot afford to wait while know-how diffuses

at its own pace from Federal laboratories to the

private sector.
131

Box R.—National Laboratories or Universities?

Postwar U.S. science and technology policy has relied heavily on the university system, with the

national laboratories concentrating on mission-oriented R&D. Since the budget cutbacks of the early

1970s, many laboratories have sought to broaden their R&D—a trend that, arguably, has already cut

into the share of Federal resources flowing to the universities. With DOE efforts to move beyond

the big science role inherited from the Atomic Energy Commission (i.e., big physics) into fields such

as mapping the human genome, it may not be much of an exaggeration to say that the Energy Department seems to be trying to become a general-purpose science agency.

This expansion raises issues of balance. Compared to the DOE laboratories, the university system

is more open and supports a more diverse set of R&D projects. The universities operate with proven

systems of self-governance, intellectual autonomy, and quality control through peer review. Bad science cannot hide for too long. Perhaps most important, industry’s need for trained people gives the

universities a special claim on Federal R&D funds. No other set of research institutions trains scientists and engineers for industry in large numbers. When these people move to the private sector, they

take the latest knowledge with them.

While the laboratories’ performance in technology transfer has certainly improved over the five

years since the Packard Commission report (ch. 2), some of the remaining problems concern the amount

of autonomy that should be given to mission-oriented facilities operated under contract to the Government. In addition, the laboratories are poorly positioned to deal with problems related to manufacturing. Laboratory personnel, unfamiliar with industry and the marketplace, often ignore the need to

address processing early enough in development. University engineering departments have also fallen

into this trap, but seem to be doing more to dig themselves out. Moreover, universities have been

willing and able to work with industry; the DOE laboratories, until recently, have shown few signs

of the flexibility needed to adapt their ways to industry’s needs. At present, some people in industry

view the laboratories with suspicion—and also as competitors for Federal R&D dollars.1

The laboratories can claim advantages over the university system—including a capacity for interdisciplinary research, sophisticated facilities, and experience with large-scale projects. But, as emphasized in chapter 4, even if policies put in place to change the laboratory system prove successful,

the process will take time. Neither the universities nor the national laboratories should or could become centerpieces of a strategy for commercializing HTS. Their strengths lie elsewhere.

Y%, for example, “National Labs Struggle With Technology Transfer,” New Technology Week, Sept. 28, 1987; Allan S. Gelb (Director,

Marlow Industries, Inc.), testimony to the House Subcommittee on Energy Research and Development, Committee on Science, Space, and Technology, Oct. 20, 1987.

Granted, the mission agencies are trying to

address national concerns over competitiveness in their pursuit of HTS—e.g., through

DARPA’s processing R&D initiative. However,

the near-term focus of the DARPA processing

program in HTS may not take advantage of the

agency’s own strengths—funding of visionary

research. Finally, DARPA must ultimately serve

DoD missions, which means that when civilian and military needs diverge, commercialization will recede as an objective. Only if the

agency can link its HTS R&D with military objectives will it find continued support within

the Pentagon. Other problems aside, the program is relatively small—only about $18 million in 1988—and it was not fully underway as

this report went to press,

In short, the lack of more direct mechanisms

for Federal support of commercially oriented

R&D has become a weakness in the U.S. approach to technology development. The issue

is not overall funding levels for HTS. The issue is the allocation of those funds: missionoriented R&D does not provide enough support

for commercialization to ensure that American

firms will be able to keep up in HTS.

The problem is particularly acute because of

the wait-and-see attitude in much of American

industry. As described in chapter 3, the Japa-
132

nese are putting more effort into exploring applications. Furthermore, Japanese companies,

with their strengths in engineering and manufacturing, would probably be able to catch up

even if U.S. firms were first to reach the market with innovative products.

In sum, the current U.S. response to HTS displays the strengths and weaknesses that have

characterized the performance of American

companies in high technology. The U.S. effort

looks formidable in the middle of 1988, but that

is to be expected: the challenges so far have

been largely matters for the research laboratory.

If there is a surprise, it is that the Japanese—not

known for innovation in science—have already

posted such a strong showing.

As HTS moves toward applications, science

will recede in importance. Basic research results, by their nature, will diffuse rapidly, providing little in the way of national advantage

in commercialization. (Patent coverage sufficiently broad and strong to lock up a critical

class of HTS materials seems unlikely.) Rather,

the critical technological advantages are likely

to reside in proprietary know-how associated

with processing and fabrication techniques,

and design-manufacturing relationships—

precisely where Japanese companies have demonstrated an advantage over many of their

American counterparts.

A continued response along the lines of Strategy 1 is quite likely to fall short: the widely expressed fear that Americans will win in science,

while the Japanese take the commercial markets could come true. Support for science and

for military technology—the essence of this

strategy—served the United States well from

1950 to the middle 1970s. But the lesson of the

past 15 years is clear: in a world of increasingly

effective national competitors, these two levers

no longer suffice.

STRATEGY 2: AN AGGRESSIVE RESPONSE TO HTS

Three primary features distinguish this second

1.

2.

3.

strategy from the current approach:

A larger role for NSF, both in funding individual research at universities, and

through the establishment of one or more

university centers in superconductivity.

Federal cost-sharing of long-term, high-risk

R&D planned and conducted by industry

consortia.

A working group on commercialization of

HTS charged with helping shape consensus

on an R&D agenda, and making decisions

on Federal cost-sharing.

This strategy preserves the strengths of the

traditional U.S. approach to technology development, while compensating for the weaknesses brought out by stronger international

competition —i.e., lack of breadth in industrial

R&D, and heavy reliance on mission agencies

for Federal support.

Step One: A Larger Role for NSF

The initial step toward a more aggressive response to HTS should be straightforward: give

the National Science Foundation more money

for university research. For reasons outlined

earlier in this report, a dollar spent by NSF

should contribute more to commercial development, on the average, than a dollar spent by

DoD or DOE. In view of this, NSF’s existing

15 percent share of the total Federal R&D budget for HTS is too small.

There are two complementary ways for Congress to expand NSF’s role, An otherwise unrestricted appropriation, earmarked for HTS—

money that the Foundation could spend on superconductivity as it sees fit—would permit

NSF to fund some of the highly rated HTS proposals that it is currently forced to turn away.

As noted above, OTA has found no evidence

of serious underfunding in basic research on
133

superconductivity. Nonetheless, with an NSF

research budget that has been flat in real terms

for several years, funds for condensed matter

physics were cut back during fiscal 1988.2 (Ch.

4, which discussed this and other symptoms

of the pressure on the NSF budget at some

length, included a number of policy options addressing the general problem.) As part of Strategy 2, Congress might consider appropriating,

say, $20 million (in additional new money) for

NSF for the 5-year period beginning in fiscal

1989, specifying that the funds go for HTS research. Such a step would help ensure that the

basic science underlying superconductivity

gets adequate support, without cutting into

budgets for NSF-sponsored R&D in other fields.

In addition (or as an alternative), Congress

could authorize and appropriate funds to NSF

specifically for one or more university centers

dedicated to HTS research, To give NSF maximum flexibility, the centers could be established

under one of several existing programs, or

through a new program altogether.

While none of the Foundation’s existing or

proposed center programs (discussed inch. 4–

see especially box N) seems ideally suited to

the needs in HTS, an ERC comes closest. Although a number of the MRLs have good experimental facilities, and active research in

superconductivity, industry involvement has

rarely been a major goal. Nor are the proposed

S&T centers, although emphasizing multidisciplinary research, likely to focus as strongly

on industry interactions as the ERCs. While the

program is relatively new, and as yet few of

the ERCs have themselves demonstrated close

working relationships with the private sector,

their focus means the ERC program fits the

needs in HTS more closely than other candi20vercom mit ments by the Division of Materials Research during 1987, in the expectation of a substantial budget increase,

forced the cuts. Not only NSF, but DoD and DOE maintain that

a considerable number of highly rated research proposals are

going unfunded. The problem is not a new one, particularly for

NSF. But the problem has gotten worse, and program managers

understandably feel uncomfortable trying to draw lines between

proposals that are almost indistinguishable in quality.

dates. (None of the existing ERCs has a research

agenda embracing HTS.)

Several bills introduced in the 100th Congress

—e.g., H.R. 3048 and H.R. 3217—would instruct

NSF to establish a program for interdisciplinary National Superconductivity Research

Centers. Would a new center program for HTS

—one with the explicit mission of building a

strong technology base for commercialization,

and one with teeth in the requirements for multidisciplinary work and industry involvement—

do more for HTS than funding for one or more

ERCs or S&T centers? The answer has to be

yes, if Congress appropriates the money and

if NSF moves relatively quickly. (The Foundation would have to solicit new proposals, while

it already has proposals in hand for S&T centers

on superconductivity,)

In sum, congressional funding for several

(say, one to three) new multidisciplinary centers

in HTS could represent a modest but important step. It would not be realistic to expect such

a measure to expedite commercialization dramatically. University centers, even at major

schools, would no doubt remain relatively small

in scale and scope. Sums of $10 million to $20

million annually (perhaps $5 million, at most,

per center) are about the maximum that make

sense for an NSF center program—the Foundation does not do business on a scale much

above this, Such centers would serve primarily as a source of new ideas and trained people—an important contribution to commercialization, not to be undervalued,

Step Two: Industrial Consortia with

Federal Cost-Sharing

As another element in a more aggressive strategy, Congress could direct the Administration

to partially offset the costs of joint industrial

investment in long-term, high-risk R&D. Such

a policy—designed to address the gaps in HTS

R&D in U.S. industry—would be based on two

premises discussed at length in this report,

First, just as the Federal Government supports

basic research, it must bear part of the burden
134

Photo credit: Superconductive Components, Inc.

Pellets of HTS ceramic material

of exploring risky, radical industrial technologies, which often provide large public benefits but only small private returns. Second, although DoD has borne much of this burden in

the past, the growing specialization of defense

technologies, and continuing pressure to meet

the immediate needs of the services, mean that

the United States now lacks a consistent champion for major new technologies with potential

impacts on the civilian side of the economy.

Partial Federal support for one or more industry consortia—establishethe, as discussed in

box S, to share R&D costs–is a simple and

workable policy to address this problem. Financing some fraction of joint industry efforts

with Federal funds (or tax expenditures) would

pull more resources into applied research and

generic technology development, and raise the

overall level of R&D investment. The approach

would direct public funds into areas that industry itself thinks will have the highest payoffs,

but where the benefits would be difficult for

individual firms to capture.

In some respects, the approach envisioned

for HTS resembles that of Sematech, the microelectronics industry’s new R&D consortium (to

which more than a dozen firms have pledged

1 percent of their revenues). While providing

substantial funding, the Federal Government

would be a largely silent partner, with an R&D

agenda put together and managed by member

firms. And as with Sematech, there would be

explicit linkages with universities and DOE national laboratories, so as to tie publicly-funded

basic research to the joint R&D.

The differences between Sematech and the

HTS R&D consortia envisioned for Strategy 2

are perhaps more important. First, the semiconductor industry itself proposed and fought

for a Federally-supported venture. The companies likely to be involved in HTS consortia have

made no such effort, and are not likely to; thus,

the job of initiating and organizing such programs would fall in part on Government.

Second, DoD, through DARPA, serves as the

financial channel to Sematech. A report by a

Defense Science Board Task Force argued that

the industry’s troubles imperiled national security—one reason for DoD’s oversight role.

Moreover, DoD was perhaps alone among Federal agencies in having the technical expertise

to monitor microelectronics R&D. Even if the

DoD arrangement proves satisfactory in the

case of Sematech, it holds small promise as a

model for HTS. DoD—as well as DOE and NSF

—could be involved with HTS consortia, but

none of these agencies should oversee them,

lest their purposes be subordinated to ongoing

agency missions. This point is discussed further in the following section, which deals with

institutional mechanisms.

Finally, Sematech has a focused R&D agenda,

stemming from a consensus within the industry that manufacturing technology has been a

major source of competitive difficulty. Rather

than a single, well-defined focus, HTS lends

itself to multiple agendas, different sets of participants, Three among many possible candidates:

● Electric Utility Applications.—Utilities normally make highly conservative investment

decisions. They are unlikely to adopt a new

technology until sure it will work reliably

for many years. Thus, there may be a useful role for Government in accelerating the

development of the engineering database

and field service experience in HTS through

support for cooperative projects (which

could involve DOE laboratories),
135

Box S.—Collaborative R&D1

The breakthroughs in superconductivity brought forth many proposals echoing the theme of strength through

collaboration. The President’s initiative urged Federal agencies to cooperate with universities and the private

sector. Legislation has been introduced in Congress with similar objectives. In part, these calls for collaboration

represent a response to rising R&D costs and the loss of U.S. technological advantage. To some extent, they

stem from a misapprehension of the sources of Japan’s success (the myth of cooperation discussed in ch. 3).

Although joint research is nothing new, the past decade has seen a steady growth in U.S. R&D consortia,

and a marked change in research focus. Firms that once cooperated only on matters such as technical standards

have increasingly banded together to undertake pre-competitive R&D—projects on new technologies with direct

commercial relevance. The best-known—the joint venture Microelectronics and Computer Technology Corp.

(MCC)–has begun exploratory work on HTS.

The economics of joint R&D hold considerable appeal. By pooling resources and avoiding duplication, cooperative research increases the potential leverage of each firm’s R&D budget, while limiting the costs to any one

firm of a failed project. Joint efforts also enable participants to monitor developments in a technical field without

developing a full capability in-house.

While the benefits of cooperative research are sizable, so are the limitations. Most important, joint endeavors

cannot substitute for in-house R&D efforts, only complement them. The participating firms must absorb the results, and transform them into commercially relevant products or processes—something that requires a sophisticated and independent internal effort. For such reasons, government efforts to encourage cooperative research

programs in industries where firms pursue little or no R&D on their own have seldom succeeded.2

A second limitation may prove more serious. Ideally, cooperation in research should help lengthen project

time horizons; but many of the participants in cooperative ventures shift R&D strategies in two ways: 1) by focusing their internal research on still shorter-term work; and 2) by seeking to move the cooperative’s agenda away

from basic research and toward more applied projects. The trend has been evident in MCC, which recently restructured its largest program—in advanced computer architectures—to emphasize more immediate paybacks.

Collaborative efforts involving universities (or government laboratories) have an easier time focusing on longterm research, often with little interference from participating firms, because the firms are not seeking specific

R&D results so much as access to skilled graduates and faculty expertise. Of course, the financial commitments

are generally much smaller than those for participation in a joint venture such as MCC (and may be viewed

in part by the firm as good corporate citizenship). While cooperative R&D programs housed in universities help

maintain a strong technological infrastructure, they should not be viewed as engines of commercialization.

Finally, the sheer difficulty of organizing and managing a collaborative research venture creates its own

set of limits. Fundamental issues—reaching agreement on an R&D agenda, finding ways to share technologies

and business information, controlling costs and determining intellectual property rights—can pose enormous

obstacles, particularly when the collaborators are also competitors. These are among the reasons that cooperative research accounted for only $1.6 billion of the more than $50 billion spent by American industry on R&D

in 1985. Of this total, 85 percent ($1.4 billion) went to support R&D cooperatives in the communications, gas,

and electric utility industries, whose members do not compete directly. It is no surprise to find that industry

leaders rarely put cooperative R&D very high on the list of steps needed for rebuilding U.S. competitiveness.3

Joint R&D has a role to play–in HTS and in solving the more general problems visible in the U.S. technology

base–but that role will inevitably be circumscribed by tensions between competition and cooperation among

the participating companies. Firms seek proprietary technologies in order to compete with one another. Cooperation between firms in the same business can only go so far; cooperation between firms having supplier-customer

relationships, or those in different industries with common R&D goals, holds more promise.

ISee “Collaborative Research: An Assessment of Its Potential Role in the Development of High Temperature Superconductivity, ’ prepared

for OTA by D.C. Mowery under contract No. H36730, January 1988.

zNSF’S Industry/University Cooperative Research Center program (IUCR, box O, ch. 4) was initially designed to substitute for in-house

R&D in technologically moribund industries. An NSF evaluation found that “Companies with little research background, such as the utilities

and furniture companies, are traditionally conservative with respect to new technology and depend on their suppliers for whatever changes

they adopt. ” An Analysis of the National Science Foundation’s University-Zndustry Cooperative Research Centers Experiment (Washington,

DC: National Science Foundation, 1979). IUCR programs have gone on to more success in other industries.

sFor the results of a recent survey of corporate executives, see C’The Role of Science and Technology in Economic Competitiveness, ” final

report prepared by the National Governors’ Association and The Conference Board for the National Science Foundation, September 1987, pp.

20-30. The R&D spending figures for cooperatives come from P.F. Smidt, “US Industrial Cooperation in R& D,” remarks at the Annual ESPRIT

Conference, Brussels, Belgium, Sept. 25, 1985.
136

●

●

HTS Magnets. –Strong magnetic fields, by

dampening thermal fluctuations, can give

purer, more uniform crystals of silicon and

other semiconductor materials, making

this a natural candidate for superconducting magnets. R&D directed at HTS-based

magnets could, at the same time, help move

HTS out of the research laboratory and

lessen U.S. dependence on foreign sources

of semiconductor wafers. X-ray lithography

using compact synchrotrons—a promising

candidate for making next-generation integrated circuits—likewise could serve as

a spur for HTS R&D while filling a chink

in U.S. microelectronics capabilities.

Superconducting Computer Components.—

HTS interconnects may help improve the

performance of computers. Hybrid semiconducting/superconducting electronics

may also prove viable. Collaborative projects on prototype circuitry, with subsequent Federal purchases of very high-performance machines if the technology panned

out, might help speed commercial development of HTS, while at the same time preserving the U.S. lead in high-end machines.

Such a program would have a substantial

basic research component, but involve

manufacturability and applications issues

as the technology began to mature.

Whatever the substantive agenda, the private

sector should take the lead, insofar as practical, with Government participation limited to

that necessary to achieve the Government objectives–leveraging critical R&D, filling gaps

in the technology base, lengthening time horizons. Federal cost-sharing justifies such procedural rules as these:

● Government participation should be conditional on significant investment by industry—say 50 percent or more. (The Sematech

formula—40 percent from both industry

and DoD, and 20 percent from State and

local Government—provides an alternative.) The less of their own money companies contribute, the greater the risk of R&D

that strays from marketplace needs. So long

as Government funding decisions can be

limited to choosing among alternative ap-

●

●

●

●

●

preaches, all of which industry is prepared

to back, some of the problems of picking

winners can be skirted.

By also requiring, as a minimum, a 3-year

financial commitment on the part of consortium members, the Government will

have added assurance that public funds

will help support medium- to long-term

R&D. (MCC requires only a l-year commitment, down from 3 years initially; this

change is both cause and consequence of

pressures for tangible early R&D results.)

Companies should be either in or out.

MCC, which permits members to join projects selectively, has found itself trying to

wall off some of its work to prevent R&D

results from leaking to companies that have

not joined a particular project.

Entrance requirements should be transparent, lest the consortium become a smokescreen for anti-competitive behavior; any

eligible U.S. firm should be able to join

(those without majority U.S. ownership

might reasonably be barred).

people transfer technologies most effectively. To see that knowledge flows out of

the consortium, employees of the member

companies should be heavily represented

among the R&D staff. It seems reasonable

to insist that half or more of a consortium’s

staff come from member companies (rather

than new hiring). Assignments might be

temporary, but should be long enough—

perhaps 6 months as a minimum—for

meaningful contributions to R&D, and for

learning purposes.

Furthermore, member firms should be

encouraged to send their best people. MCC

dealt with this by retaining—and exercising liberally—the right to reject employees

sent by shareholders (initially, it turned

down 95 percent).3 University involvement

can also help attract the best industry scientists.

No less important if the consortium is to

affect commercialization, member firms

must conduct ongoing complementary R&D

sB.R. Inman, “Collaborative Research and Development,” Commercializing SD] Technologies, S. Nozette and R.L, Kuhn (eds.)

(New York: Praeger, 1987), p. 65.
of their own. MCC encourages “shadow

research” by members, paralleling the joint

venture’s work. This ups the ante for members; Digital Equipment Corp. spends half

again its investment in MCC seeking ways

to use the consortium’s results—a level of

commitment that has, however, been rare.

Parallel efforts will be particularly important for firms with little or no experience

in superconductivity. They will have more

learning to do than companies with backgrounds in, say, LTS.

● If one purpose of Federal funding is to stimulate visionary R&D, it may make sense to

discourage too much publicity, By reducing the pressures—political and other—for

short-run success stories, the chance of success stories over the longer term should go

up.

A long-term orientation also suggests that

a consortium’s work stop well short of fullscale commercial development efforts—

i.e., at the prototype stage, leaving further

development to the members’ own efforts.

Step 3: A Working Group on Commercialization

The final step in the aggressive strategy would

be to establish a working group of experts—

drawn from industry, universities, and government—with a limited mandate to promote the

new technology. Such a group—with a lifetime

fixed at, say, 10 years—could serve a number

of important functions.

The first is fact-finding and analysis. Currently, no public or private body has a continuing responsibility to provide authoritative policy guidance concerning such questions as:

What problems do we need to start on now to

assure rapid commercialization? How much

money will it take? Are some HTS R&D areas

getting too much money? Which areas are not

getting enough? While such questions never

have definitive answers, the first step toward

good decisions—given that the Federal Government will have to make decisions in any case—

is to understand what is going on in both government and industry, here and in other countries. The problem is not inadequate coordination. Rather, the problem is that no one has the

task of drawing even a crude map of the road

to commercialization, and setting the necessary

priorities along the way. To do so will require

solid and timely analysis, on a continuing basis. (The President’s Wise Men’s advisory committee on HTS will evidently prepare a one-time

report, rather than provide ongoing policy

guidance,)

While the working group’s responsibilities

would involve decisions on Federal cost-sharing in response to proposals from private sector consortia, it might first have to engage in

consortium-building and facilitation. In contrast to Sematech, HTS consortia are not likely

to organize themselves spontaneously, at least

until guidelines for Federal cost-sharing have

been set down. The working group might be

able to play a match-making role, helping bring

together companies, universities, and government laboratories, and aiding them in reaching consensus on research needs—a function

that could continue even after the joint R&D

effort was underway; as the experience of

Sematech and many other joint ventures demonstrates, conflict will be inherent in any consortium of independent firms,

The working group’s ability to get things done

will flow in part from its power to allocate Federal resources. Decisions on who is to get Government money will hinge not only on technical questions, but on economic judgments.

Technical evaluations of competing projects

can rely on the tried and tested approach of

external review by recognized experts without

a stake in the outcome,

Evaluating the economic merits—i.e., likely

impacts on commercialization—would be more

difficult, but the problem can be sidestepped

to considerable extent by using procedural rules

to allocate public funds. First, a consortium’s

proposed R&D agenda would have to meet minimum criteria, which the working group would

set, based not only on technical merit, but, as

discussed above, on rules for participation, and

provisions for member funding and R&D time

horizons, Then, among the qualifying proposals,

funds would go to the “highest bidders” as

measured by length of time commitment par-
138

ticipants in the consortium were willing to

make, and the fraction of total costs they were

willing to self-finance. (A third criterion—the

investments of members in complementary internal R&D—is also relevant, but it would be

difficult to determine what was “complementary” and what was not.) These measures should

help to allocate government resources to joint

R&D projects with the longest term payoffs, and

the greatest value to industry.

If the working group makes decisions on

funding, the issue of administering such a program remains. As an ad hoc body outside the

ordinary apparatus of Government, the working group would need to look to an existing

agency for help with staffing and managing its

responsibilities. This poses a dilemma. As discussed above, the working group is not simply

an advisory body, but a center for decisionmaking on commercialization policies. Yet only

a minority of its members would be Federal employees, it would go out of existence after some

period of years, and the intent is not only to

complement the activities of existing agencies

but, to considerable extent, to substitute for the

agencies—to undertake tasks that they do not

(and perhaps cannot). Attaching the working

group, even for administrative convenience, to

an existing agency could undermine its impact.

Each of the three agencies heavily involved

in funding HTS R&D—DoD, DOE, and NSF—

has noteworthy strengths: experience in funding LTS research, technical competence, and

the administrative tools needed for monitoring

the expenditure of Government funds. But each

has flaws as well: DoD’s military mission will

always come first; later if not sooner, commercial technology development will probably devolve into a secondary objective of consortia

with Pentagon involvement. DOE has less experience with the private sector than DoD—

e.g., in managing extramural R&D—and a narrower base of technical expertise. For NSF, the

assignment would be a substantial departure

from the norm; the Foundation has limited ties

to the private sector, and few employees with

industrial experience. Its past attempts to foster applied research have not met with great

success.

Are there other possibilities? The Commerce

Department is seldom seen as a technology

agency. The Office of Science and Technology

Policy (OSTP), as pointed out in the preceding

chapter, has a small staff and is not set up to

handle the kind of tasks the working group

would need to pass along, (A Federal technology agency, as described in the final section

of this chapter, might be well-suited; but even

if Congress were to pass legislation creating

such an agency, it would not be ready in time

to serve the working group.)

In the end, the best solution is probably to

set up the working group as an ad hoc independent body, with a small staff of its own, and

attach it to OSTP. As such, it should have the

necessary qualities for promoting commercialization of HTS: the flexibility and substantive

depth to learn by doing, tailoring its procedures

to the special needs of HTS as these became

apparent,

The mission agencies will take care of their

own needs in superconductivity. What is lacking is an organization to look after the broader

national interest in commercializing this new

technology. Federal support of joint privatesector R&D investments addresses the need.

This is not the only alternative—box T summarizes others—but it seems a promising one.

STRATEGY 3: A FEDERAL TECHNOLOGY AGENCY–THREE ALTERNATIVES

The Federal structure for science and tech- R&D. In 1950, after prolonged debate, Congress

nology policy has changed little since the late passed the authorizing act for the National Sci1950s. Within DoD, the Office of Naval Re- ence Foundation. The same year saw major

search set the post-1945 pattern for support of new legislation setting the National Institutes
139

Box T.—Aggressive Support for Commercialization: Other Possibilities

Flagship Projects

The symbolic and potential economic importance of HTS have led to calls for a flagship approach. With

HTS already a symbol, among other things, of U.S.-Japan economic competition, advocates of the flagship alternative see virtue in Government initiatives that likewise have symbolic value. A flagship should rally industry,

universities, and the public sector, building on the enthusiasm created in the media and galvanizing the Nation’s

creative and entrepreneurial vigor in a race, not to the moon, but over the hurdles of some earthbound Olympics—an

Olympics of science, technology, and competitiveness. This country’s strength is in meeting crises–the Manhattan project, Sputnik—not in incrementalism, say advocates of this approach. Political consensus, and a bold

national effort, could pull superconductivity out of the laboratory and into the global marketplace. Visibility

can be a strength as well as a potential source of weakness.

As appealing as such images might seem, HTS is not the kind of technology that lends itself to a massive,

concentrated effort. Although bills have been introduced dealing with magnetically levitated trains, public and

political attitudes toward rail transportation would probably have to change a good deal before maglev would

have broad appeal. Talk of an energy crisis evokes little response today. Superconducting computers will just

be black boxes; no one much cares what is inside. Defense systems do not fill the bill either.

There is another dilemma. A flagship has visibility. It must succeed, if only for such reasons. This forces

technological conservatism on decisionmakers. Apollo’s achievements were in systems engineering and largescale project management, not in revolutionary technologies; space is no place for trying out unproven technologies. Pressures for success—or pressures to avoid the appearance of failure—mean safe choices by the managers

of such projects. If the goal is Government support for long-term, risky technology development, the flagship

approach has little to offer.

DoD Processing R&D

Processing will be vital in commercializing HTS, and several legislative proposals have made it a central

element. For example, H.R. 3024 would authorize $400 million for a 5-year, DARPA-centered effort also involving DOE, NSF, and NBS.

DARPA has left a deep imprint on U.S. high technology, most of all in computers. Chapter 4 discussed DARPA’s

current HTS processing initiative—an effort that could fill an important gap in superconductivity R&D. Giving

DARPA the lead in a more ambitious effort, as in H.R. 3024, might seem appropriate, On the other hand, programs aimed explicitly at (non-defense) commercialization fall well outside DARPA’s historical mission and experience; in part because it seems to critics in the Pentagon too far removed from military needs, DARPA’s

HTS program has not found widespread support inside DoD. Congressional enthusiasm—reflected in a direct

appropriation—made the program possible, but if Congress loses interest, the program could fade away. Only

if DARPA could link the R&D with military objectives would it get internal support in the face of budget pressures

and competing DoD demands.

In the past, such pressures have periodically led DARPA to abandon longer-term R&D and embrace more

immediate military objectives. DARPA’s transfer of the MRLs to NSF marked the first of these periods (box O,

ch. 4). After the end of the Vietnam War, fatter R&D budgets enabled DARPA to move back toward long-term

research. But in the early 1980s, the pendulum swung once again, with the Strategic Computing Program a prime

case in point; DARPA has channeled much of the program’s funds to military contractors, rather than the university laboratories responsible for most of its earlier successes in computing technology, and set program objectives that will appeal to the services. Ironically, over the last few years, DARPA has behaved much like American

corporations—stressing projects with quick payoffs. Finally, there seems little question that major breakthroughs

in HTS resulting from DoD-sponsored R&D would be classified, should the Pentagon feel that, as a practical

matter, they could thereby be kept from the Soviet Union.

The DOE Laboratories

Although no one has formally proposed the designation of a lead laboratory for HTS, the suggestion has

been in the air, There are at least 10 DOE laboratories with work of one sort or another underway in HTS.

The chief argument for greater concentration and centralization is one of efficiency: with all the laboratories

on the HTS bandwagon, duplication of effort will be hard to avoid. By giving a clear mandate to one, DOE should

be better able to manage the division of labor. On the other hand, with HTS remaining primarily a matter of

research—research with fuzzy objectives—centralization for its own sake has little to offer. The conventional

management wisdom that basic research is cheap, the benefits of competition among scientists great, makes

central control unnecessary and undesirable. Nor is there an obvious candidate for a lead laboratory in HTS.
140

of Health on a course it has continued to follow.’ At the end of the 1950s, the Soviet Sputniks spurred another set of changes: the establishment of NASA and DARPA. NASA grew

out of the National Advisory Committee for

Aeronautics (NACA). Founded in 1915 to conduct research and testing, NACA remained

small until World War II, when its staff grew

to nearly 7,000 people. NASA’s staff eventually

reached five times that level, while its budget

grew even faster (NASA contracted out much

more of its work). DARPA, setup in 1958—and

originally given the mission of developing a U.S.

space program, later passed to NASA—quickly

established itself as the home of long-range R&D

within the Defense Department.

Since this period, the Federal R&D budget has

grown steadily, but organizational changes

have been minor. In 1950, the Federal Government spent about $1 billion on R&D. Today, half

a dozen Federal agencies each spend over $1

billion annually, and more than a dozen others

spend lesser amounts. Given this growth in

R&D spending, and the increasing concern over

the Nation’s ability to utilize its technology effectively, many proposals to reorganize Federal science and technology functions have

come before Congress during the 1980s. (This

is nothing new: in 1913, during the debate

preceding the formation of NACA, some of the

opponents of a new organization for aeronautics research saw it as a stalking horse for a

cabinet-level science department.)

An Umbrella Agency for Science

and Technology

The more ambitious sounding proposals often

call for a science and technology (S&T) agency

%ee, for example, J.A. Shannon, “The National Institutes of

Health: Some Critical Years, 1955-1957,” Science, Aug. 21, 1987,

P. 865.

On NACA and NASA, below, see F.W. Anderson, Jr., Orders

of Magnitude:A History of NACA and NASA, 1915-1980, NASA

SP-4403 (Washington, DC: National Aeronautics and Space

Administration, 1981); and A. Roland, Model Research: The Nationzd Advisory Committee for Aeronautics, 1915-1958, vol. 1,

NASA SP-4103 (Washington, DC: National Aeronautics and

Space Administration, 1985); also “Collaborative Research: An

Assessment of Its Potential Role in the Development of High

Temperature Superconductivity,” prepared for OTA by D.C.

Mowery under contract No. H36730, January 1988, pp. 29-34.

to consolidate Federal R&D functions. Advocates of consolidation argue that an umbrella

organization would lead to clearer priorities,

less duplication, and greater efficiency—in a

word, to better management. They point, for

instance, to the more than 700 national laboratories, managed, often quite loosely, by many

different agencies, and note the frequent criticism that the laboratory system has come under.

In fact, calls for a Department of Science and

Technology tend to be a bit misleading. Because

the mission agencies control most of the Federal R&D budget, the resulting changes would

necessarily be modest. When the Young Commission called for a cabinet-level S&T agency

in 1985, it offered no guidance on how such

a proposal might be implemented.5 The problem is clear enough. Some 70 percent of Federal R&D goes for defense and space. Much of

the rest pays for health-related research.

It is hard to envision moving more than a few

bits and pieces of DoD’s current R&D–say a

billion dollars or so—into another part of Government. Moreover, since creating the Atomic

Energy Commission in 1946, Congress has kept

nuclear weapons research isolated; currently,

nuclear weapons account for about half of

DOE’s R&D budget.

The second largest R&D agency, Health and

Human Services (DOE is third), operates a research arm—NIH—with a hundred-year tradition

of excellence. Why risk disrupting organizations like NIH in the name of management efficiency?

Even the strongest advocates of an S&T department acknowledge that consolidation could

not go too far without harming the ability of

agencies to manage R&D in support of their

own missions. But without pulling much of the

R&D that is currently the responsibility of these

agencies under the new S&T umbrella, there

‘Globa~ Competition: The New Reality, vol. I (Washington, DC:

U.S. Government Printing Office, January 1985), p. 51. The Commission simply said that the department should include “major

civilian research and development agencies. ”

For extensive discussion of proposals for an S&T agency, see

the special issue of Technologyln Society, vol. 8, Nos. 1/2, 1986,

entitled “A Department of Science and Technology: In the National Interest?”
.

would be little left, It would be hard to take seriously a cabinet-level S&T agency that would

oversee perhaps 10 percent of the Federal R&D

budget.

Given this dominance of R&D by the mission

agencies, most of the legislative proposals for

reorganization have had quite modest objectives. H.R. 2164, for example, is fairly typical.

This bill—introduced in the 100th Congress to

create a Department of Science and Technology—would pull together NSF and the National

Bureau of Standards (NBS), together with several smaller Commerce Department programs,

while also also creating a National Bureau of

Technology Transfer and an Advanced Research

Projects Foundation. The latter—charged with

supporting generic, industrial R&D—represents

one variant of a recurring proposal—a proposal

that, according to the analysis below, has more

in its favor than an umbrella agency for science and technology.

Higher Priorities for Technology

and Engineering

Proposals for a technology agency that would

stand alongside NSF—perhaps called a National

Technology Foundation (NTF)—start with the

premise that technology does not always depend on science. Indeed, development of new

technology—a goal-directed, problem-solving

activity—differs fundamentally from scientific

research. Even where the interrelationships are

close, as they often are in high technologies,

the two activities depend on different kinds of

people, with different skills and expertise. Science seeks understanding. Technology seeks

satisfactory solutions to practical problems. Science looks to technology for tools—computers

to unravel the structure of DNA, or to guide

powerful telescopes as they scan the heavens.

By the same token, technology looks to science

for tools: knowledge of DNA leads to new pharmaceutical products; theoretical insights into

computer software now guide the design of

hardware.

U.S. problems in commercialization lie in

technology, not science. And while scientists

make their contributions to innovation and

141

Photo credjf Biomagnet/c Technologies /nc

Brain scan using equipment incorporating

superconducting quantum interference

devices (SQUIDS)

competitiveness, the engineering profession

carries much of the burden (ch. 2). Raising priorities within Government for engineering research—work directed at technology rather than

science—would be a straightforward and positive step toward renewed competitiveness.

NSF has made considerable progress at this

in recent years, most notably through its ERC

program, while amendments to the NSF charter have also given engineering more prominence. Moreover, the Foundation’s current director, Erich Bloch, who came to NSF from

industry, has provided strong leadership for initiatives such as the ERCs. But Bloch will not

be there forever. And NSF’s fundamental job

is the support of science—science for its own

sake. The Foundation cannot tilt too far toward

engineering without provoking a strong reaction

from its primary, and well-organized constituency—university scientists. Indeed, the ERCs

have already provoked such a reaction. NSF
142

is unlikely to shift its priorities much further

unless pushed from the outside.

Currently, about 10 percent of NSF’s budget

goes for engineering. It is hard to envision the

Foundation, as presently constituted, increasing the proportion for engineering to more than

15 or 20 percent. The Engineering Directorate’s

budget has been spread among several thousand departments in the Nation’s nearly 300

engineering schools. With relatively low levels

of support from NSF, faculty have turned to

DoD for money, skewing research toward specialized military problems. (This trend affects

curricula and course contents as well, although

less directly.)

An NTF, independent of NSF and DoD, could

be a powerful lever for moving university research back toward the civilian side of the economy, and for steering engineering education

back towards practical industrial problems.

Nonetheless, OTA’s past analyses have found

restructuring NSF—making it, say, into a National Science and Technology Foundation—

to be a more attractive option than creating a

separate National Technology Foundation.6 Science and engineering do depend on one another.

Thus, an integrated agency, charged with supporting both engineering and science, makes

more sense than two parallel agencies—provided sufficient resources can be guaranteed for

engineering.

In this variant of Strategy 3, with the focus

on engineering research in the universities, impacts on commercialization would be long-term

and indirect—both a strength and a weakness.

Government money would not go directly for

commercial technology development in industry, avoiding the problems such a step would

raise. But it would take time before the resources flowing to new research in engineering could make a difference for competitiveness and commercialization. In particular,

creating an NTF would not do much for HTS.

e“Development and Diffusion of Commercial Technologies:

Should the Federal Government Redefine Its Role?” staff memorandum, Office of Technology Assessment, Washington, DC,

March 1984.

Other suggested reorganizations would target industrial technologies more directly. Box

U, for example, discusses one recent proposal,

in this case a reorientation of NBS.

An Agency for Commercial

Technology Development

For years, DARPA has enjoyed an enviable

reputation: an elite band of non-bureaucrats,

able to pick technological winners and drive

them forward. Why not, many have asked, do

the same on the civilian side of the economy?

The response follows just as quickly. DARPA

can pick winning technologies because it has

a reasonably clearcut mission, whereas a civilian DARPA would have a much fuzzier charge.

Nonetheless, at a time when U.S. industry has

lost ground competitively, the notion of a civilian DARPA holds considerable appeal—an

agency devoted to championing high-risk, longterm projects, technologies that could make a

real difference in international competition,

The huge U.S. trade deficit, and especially the

imbalance with Japan, is today’s Sputnik. Somebody has to do something.

DARPA has, in fact, been able to anticipate

technologies important to civilian industry. Although commercialization per se has not been

DARPA’s goal, for most of the agency’s history

the defense mission has not tightly constrained

its decisions. Rather, DARPA has invested in

what it regarded as high-payoff technologies,

on the rationale that DoD would ultimately benefit as a purchaser.

If DARPA can make make technically sound

decisions, a civilian agency should also be able

to do so. But the DARPA analogy can be taken

only so far. A civilian DARPA, by its nature,

would be much more difficult to run efficiently:

nurturing new technologies intended to succeed in the marketplace is a more complex and

exacting undertaking than supporting a technology for which the Government is the end

user. In addition, a civilian DARPA would have

high visibility politically. Technology development is now seen as the sine qua non of economic prosperity. This means that a civilian

DARPA would be under strong pressure from
143

—

Box U.—An Advanced Technology Program

Among reorganization proposals, the proposed Technology Competitiveness Act has come

closest to implementation. The bill—incorporated in the omnibus trade package passed by Congress in the spring of 1988 (and vetoed by the President)—would:

. rename the Commerce Department’s National Bureau of Standards (NBS) the National

Institute of Standards and Technology;

● authorize regional centers for the transfer of manufacturing technology;

. provide for technical assistance to State technology programs;

● establish a clearinghouse on State and local initiatives on productivity, technology, and

innovation;

. create an Advanced Technology Program as part of the revamped NBS.

The technology transfer and State assistance provisions in the bill could be useful. But it is the

Advanced Technology Program (ATP) that would most directly address U.S. needs for industrial technology.

The ATP would assist businesses in applying generic technologies, and in research needed

for refining manufacturing technologies and for rapid commercialization of new scientific discoveries. This would be accomplished through, among other things, aid to joint R&D ventures

(including ATP participation in such ventures under some circumstances). The bill also authorizes cooperative agreements and contracts with small business, and involvement of the Federal

laboratories in the program. Although the trade bill itself does not appear to specifically authorize appropriations for the ATP, a predecessor bill in the Senate (S. 907) would have authorized

$15 million for the ATP in its first year.

special interests, States, and Congress itself to

steer resources to particular projects, In other

words, a civilian DARPA could easily become

a pork barrel. Political interests could override

economic sense.

Could a Civilian Technology Agency (CTA)

avoid these pitfalls? What might it look like, and

what it would do? In many versions it would

be small and lean (DARPA’s staff numbers

about 125), emphasizing flexibility and making

use of experienced professionals on temporary

assignment from the established mission agencies, In more expansive alternatives, a CTA

might pull in relevant functions from elsewhere

in Government, such as support for universitybased engineering research (from NSF), a technology extension effort, and perhaps aerodynamics programs (from NASA). Box V outlines one recently proposed agency. Beyond

questions of size and scope, a CTA’s effectiveness would depend heavily on four questions:

1) its mission; 2) project selection and monitoring; 3) the quality of its staff; and 4) intramural research.

Mission

The CTA’s central mission would be to extend the time horizons of U.S. industrial R&D,

and help fill some of the gaps in the Nation’s

technology base. More specifically, it would be

responsible for supporting two rather different kinds of work. The first is long-term, highrisk 17&D at pre-commercial stages, with the

goal being relatively dramatic advances in technology. For example, candidate projects in the

manufacturing area might include direct reduction steelmaking, or expert systems for shopfloor production scheduling. HTS examples

could begin with three-terminal electronic devices, or integration of semiconductor and superconducting electronics,

The second area is generic technology development, which would typically be incremental.
144

Box V.—An Advanced Civilian Technology Agency, as Proposed in S. 1233

S. 1233—the Economic Competitiveness, International Trade, and Technology Development Act

of 1987—reported by the Senate Governmental Affairs Committee in 1987. It was then incorporated

in that house’s omnibus trade bill, later to be dropped. S. 1233 is of interest here because of its provisions for an Advanced Civilian Technology Agency (ACTA), which would have been part of a new

Department of Industry and Technology-the latter created through a major reorganization of Federal Government responsibilities.

The ACTA provisions in Title I, Part III of S. 1233 represent the closest. that Congress has yet

come to implementing some form of civilian DARPA.l Intended to support technology development

and commercialization through contracts and grants, cost-shared with industry, the agency would

give particular attention to risky, long-term projects. Technology-related functions transferred from

the Commerce Department, including NBS, would stand alongside the ACTA (rather than becoming

part of it). The bill authorized an ACTA budget big enough to make a difference—$80 million in the

first year, rising to $240 million in the third year. Financial support to industry would be permitted

through the stage of prototype development.

S. 1233 would provide for a high-level outside advisory board, but in most other respects leave

agency operations up to the Secretary of the new department and his or her deputies. Report language

calls for a small professional staff (35, initially), coming largely from industry, with considerable use

of scientists and engineers on loan from the private sector.

IAS explicitly stated in Economic Competitiveness, International Trade, and Twhnologyl?ewdopment Act of 19S7: Report of the Committea

on Governmental Affairs, United Stfites SmMte, To Accompany S. 1233, Report No. 100-82 (Washington, DC: U.S. Government Printing Office,

lune 23,19871, P. 10. In *tion 122 of the bill, the a8ency fS directed to coordinate i~ activities with those Of ~th DARpA and NSF~ the dir@ctors

of which are to be members of its advisory board.

Many projects here would aim to reduce research to practice. The work would help many

companies, but would rarely lead directly to

proprietary advantage. Examples (again from

manufacturing): nondestructive evaluation techniques, especially those suited to real-time operation as part of feedback control systems; small

hand tools for mass production that are ergonomically designed for ease and speed of use

(something that gets little attention in the United

States compared to Japan and Europe). HTS

examples include processing of the new ceramic materials, and magnet design and development for applications such as separation of

steel scrap, or refining of ores.

Why is mission so important? Because it is

a precondition for accountability. DARPA’s

mission creates discipline over the decisions

of its staff and managers: only so long as DARPA

can show that the work it funds will support

future military requirements can the agency expect support from the Office of the Secretary

of Defense and the relevant committees in

Congress.

For a civilian agency, vague statements concerning commercialization or competitiveness

will not do. Lack of agreement on mission is

one of the reasons why none of the many bills

introduced over the years to create a new technology agency has become law. Consensus on

mission is critical for any agency with substantial budget authority—and given the size of the

U.S. economy, and the needs for industrial technology, a CTA would have to have an annual

R&D budget of $100 million or more for meaningful impact (DARPA’s current budget is about

$800 million).

Whatever form a CTA might take, it would

never have a mission as clearly defined as that

of DARPA or NASA. The overall goal—supporting commercial technologies in order to support the international competitiveness of U.S.

industry—does not lend itself to neat and clean

decisionmaking. Competitiveness is difficult to

measure, harder to predict, and depends only

partially on technology. Many people and many

groups may view competitiveness as a legitimate goal. But as a practical matter, it would
145

not be possible to judge the merits of a CTA’s

work—or evaluate the outcomes of completed

R&D projects—by linking that work to competitiveness. The linkages are too loose, the causal

connections often spanning many years. Even

so, it should be possible to define the technological objectives of a CTA tangibly enough to

provide a handle on mission.

Project Selection and Monitoring

With the charge of supporting commercial

technology development, much of a CTA’s budget would have to go for contracts with the private sector (including consortia), on a costshared basis. Some money might also flow to

non-profit laboratories, and to universities

through grants and contracts, But the point,

after all, is to channel direct support to industrial technology, supplementing the many indirect measures the Federal Government already calls on.

A CTA would not be able to rely exclusively

on review panels or outside experts to develop

an overall strategy—a broad view of where resources should go—or for help in setting priorities. Outside experts, by definition, have a

narrow view. The further science and technology advance, the greater the specialization

among experts. The CTA would have to depend

on the collective judgment of its own staff for

strategy and priorities.

How about project-specific decisions? Money

for private firms raises questions. The agency

would have to choose projects on grounds that

would be accepted as fair. Again, the answer

begins with a competent staff, combined with

merit review processes (box W).

The CTA Staff

Federal support for commercial technologies

will always run the risk of devolving into little

more than a program of subsidies for industry,

with much of the money going to marginal

projects, The primary guarantee against that

danger is to staff the CTA with professionals

who have the independence of judgment and

the technical knowledge to make good decisions and stick to them,

To gain the respect of their industrial counterparts, CTA employees—technical specialists,

program managers, administrators—would

need a good grasp of market realities, as well

as of industry’s technical requirements. They

would need to function as part of a peer group

that includes industrial scientists, engineers,

and R&D managers.

If the agency’s managers were to provide exciting work, give employees substantial responsibilities, and maintain a selective and competitive personnel policy—more like DARPA or the

Office of the U.S. Trade Representative than

the Commerce Department—a CTA should

have little trouble in assembling a capable staff,

Finding people with strong technical credentials is relatively easy (American universities

excel at deep but narrow training of engineers

and scientists). Breadth and experience—industrial experience, in particular—are harder to

find, Bringing in people from industry might

require exceptions to normal civil service requirements,

Given that the Federal Government already

employs many highly competent engineers and

scientists, the CTA could begin by assembling

a core staff borrowed from other agencies. Continued use of detailees would ensure a steady

flow of fresh perspectives, while also helping

with inter-agency coordination and technology

transfer. Industry sabbaticals that sent CTA employees to the private sector for periods of 6

months to 2 years could help serve the same

purpose (as suggested inch. 4 for national laboratory employees),

Intramural R&D

Although most of its projects would be contracted to industry, it would also seem desirable for a CTA to carry out in-house R&D in its

own facilities. This need not be a large-scale

undertaking (say, 5 percent of the agency’s budget). But it would allow staff members to keep

their hands in. Some technical employees might

rotate through the CTA’s laboratories. Others

could spend part of their time engaged in R&D

more or less continuously.

,, ~,,

I – 1’ t –

I : .’ ,
146

Box W.-Project Review

When it comes to selecting projects for extramural funding, Federal mission agencies rely primarily on expert technical reviews. DoD conducts many of its technical reviews internally, but also kinks

to external bodies, permanent and ad hoc, on occasion.l NSF and NIH use outside review panels

extensively, aiming at merit-based rankings reflecting the collective judgment of a group of recognized experts-the peer review model.

Not perfect, these processes can be criticized if the reviewers do not have appropriate qualifications (a problem particularly for internal agency reviews), or represent the conventional wisdom when

the need may be to break the mold of ongoing research. Sometimes reviewers may favor their friends

(true anonymity may be impossible in a specialized field). But the general approach has been widely

accepted. It works, and-if applied appropriately-should work for sponsorship of industrial R&D

by a CTA.

Once a broad agenda of R&D priorities had been set, the CTA could look to review panels for

merit-based judgments, mixing outside engineers and scientists with the agency’s own staff. The outside people would have to come from organizations without a direct stake in outcomes. There is no

reason why a materials scientist working for an electronics firm could not give a fair review to the

materials-related portions of HTS proposals on electrical machinery. Alone, such an individual would

not have the expertise. In a group, he or she would contribute a useful perspective.

Contract monitoring, necessarily, would be the responsibility of the CTA staff. Agency employees

would need to keep a critical distance from sponsored work, and be willing to cut off funding to

companies that failed to perform (something DoD has difficulty doing on occasion).

ll%e Advisory Group on Electron Devices, ~ longstanding committee of specialists fiorn the three military services, industry, and tmiversities, exerted considerable influence in shaping the Very HiglMpeed Integrated Circuit program, See “Federal Support for Industrial Technology: Lessons From VHSIC and VLSI,” prepared for OTA by G.R. Fong under contract No, H3651o, December 1S87.

NSF uaee criteria for rating proposals that includw technical competence of the proposed reeearch, baaed on past achievements, as well

as the details of the proposal; “intrin$ic merit of the research,” meaning the likely impacts on scientific advance; and relevance. See Guide

to Frogramw FiaceJ Yesr 1988, NSF 87-57 (Washington, DC: National Science Foundation 1987), p. ix. For a recent examination of scientific

peer review, see University Funding: Information on the Role of Peer Review at NSFwrd NIH, GAOIRced-87-87FS (Washington, DC: U.S. General Accounting Office, March 1987).

This activity would also force staff members

to demonstrate that they can produce what they

want others to produce—R&D that is relevant.

The test is simple. If the intramural R&D is

picked up and used by industry, the CTA staff

has passed. Table 15 summarizes this and other

features of a CTA.

Pitfalls

The primary difficulties for any agency

charged with supporting commercial technologies are likely to be political rather than technical. The problems of defining an R&D agenda,

and recruiting a staff with the right mix of skills

and experience would be straightforward compared with the problems of establishing credibility within the broader system of U.S. policymaking. Like any Government institution that

seeks to endure, a CTA would have to respect

notions of democratic virtue. That requires—

in addition to accountability—prudence in

spending public funds, fairness in dealings with

the private sector, and some degree of balance

with respect to regional interests. 7

For a CTA to become a reality, any proposal

would have to satisfy constituencies having

very different interests—some conflicting. The

Frost Belt, seeking to rebuild its technological

base and infrastructure, would no doubt want

7E. Bardach, “Implementing Industrial Policy, ” The Industrial

Policy Debate, C. Johnson (cd.) (San Francisco: Institute for Contemporary Studies Press, 1984), p. 103. The discussion following draws heavily on Bardach, Also see H. Heclo, “Industrial

Policy and the Executive Capacities of Government, ” The Politics of Industrial Policy, C.E. Barfield and W.A. Schembra (eds.)

(Washington, DC: American Enterprise Institute, 1986), p. 292;

and International Competitiveness in Electronics (Washington,

DC: Office of Technology Assessment, November 1983), ch. 12,

especially pp. 475-482,
147

Table 15.—Desirable Features in a Federal Agency for

the Support of Commercial Technology Development

Budget.—$100 million to $500 million annually in early years,

exclusive of industry cost sharing, with 90 percent or more

going for the support of R&D projects. These projects might

be split roughly as follows:

● Industry, both single companies and consortia-80 percent

● Universities and non-profit research institutes—15 percent

● Internal agency projects—5 percent

Cost-sharing on industry projects at 40 to 60 percent seems

appropriate to ensure that companies view the work as important.

Staff.—At the $500 million level, the agency would probably

need about 250 professional employees. At any one time,

about half the professional staff time would be devoted to

intramural R&D—with technical employees expected to

spend some fraction of their time, over a period of years, actively engaged in R&D.

Substantial use of detailees from other Federal mission

agencies, as well as people on leave from universities and

industry would be desirable. The agency’s permanent staff

members could also be expected to spend periodic tours in

industry.

Intramural R&D.—At the $500 million level for the agency,

5 percent for intramural R&D means $25 million annually (and

perhaps 100 full-time equivalent professionals), It would seem

preferable to maintain a number of relatively small efforts,

spread quite widely across the spectrum of industrial technologies; given that the primary function of intramural R&D

is to maintain staff expertise, breadth would be essential.

Even with half a dozen R&D areas, many staff members with

other specialities would have to spend time in industrial

laboratories to maintain hands-on R&D skills.

SOURCE Office of Technology Assessment, 1988

parity with the Sun Belt; small business interests would probably begin lobbying for setasides. Long before it opened its doors, an

agency with the mandate to “restore U.S. technological competitiveness” would face pressures

from companies in financial straits, seeking,

for instance, relaxation in the CTA’s requirements for cost-sharing.

Other threats to neutral allocation of CTA resources would be almost as quick to materialize. Perceived inequities between competing

firms and industries would be all but impossible to avoid even with long-term R&D. CTAfunded R&D on magnetic separation of steel

scrap would help minimills at the expense of

integrated steel producers. Advances in magnetic levitation rail technology would threaten

aircraft manufacturers and airline companies.

Such pressures could easily jeopardize the

CTA’s intended focus. Not only would distressed

industries be pushing for a quick fix, a national

emergency—an energy crisis, say—would bring

calls for technological solutions. With high turnover likely in its political leadership—on average, assistant secretaries remain in Government

for only 18 months—a CTA would be under

constant pressure to show results. Pressures for

immediate results would coexist with pressures

to maintain funding for major projects, even

if they proved flawed. Managers would be reluctant to admit mistakes, and–compared to

their private sector counterparts—have less incentive to do so. Even flawed projects develop

constituencies, moreover, ready to argue for

continued funding.

In sum, a CTA—like any public institution—

would have to win favor from enough well-situated constituents to continue its work. That

is as it should be. The danger—and a very real

one—is that, as an institution charged with

spending money, a CTA would become just

another forum for the distributive clashes that

already consume Congress and much of the executive branch. Said one close observer of science policy, “We have the most highly-developed system of interest groups in the world,

and they’ve discovered R& D.”

CONCLUDING REMARKS

The Federal Government’s responsibility for nology policy is not only to find and support

promoting technology is plainest in two cases: such R&D, but to stimulate industry to use the

support for basic research, and investment in results in timely fashion.

risky and speculative technologies, In both, substantial public benefits may coincide with mea- Basic research continues to flourish under

ger private returns. The problem for U.S. tech- the present system of U.S. support for science
148

and technology: when the breakthroughs in HTS

occurred, the Nation had the resources and flexibility to mount a considerable effort in short

order. To support advanced technologies, however, the United States has traditionally relied

on the mission agencies—DoD, in particular.

The approach reflects a philosophical distaste

for government involvement in the economy,

and also the belief that government cannot anticipate the needs of the marketplace; spinoffs,

rather than direct financing, have supported

many of the new technologies that American

industry commercialized.

The approach worked well for several decades. But the world has changed. Military technologies have grown steadily more specialized,

the defense sector more isolated from the rest

of the economy, If DoD R&D funding was ever

a cornucopia for U.S. industry, it is no longer.

Second, other countries have caught up in technology. Today, both Japanese and West German firms spend higher proportions of their

revenues on R&D than American firms. That

spending has been one of the critical elements

in their competitive success,

The emerging pattern in HTS seems much

like that in microelectronics. Japanese firms are

investing their own funds heavily. Government

policies support their efforts. In the United

States, only a small fraction of the Federal

money for HTS finds its way into industry, and

most of this will pass through DoD.

These and other indicators lead to the conclusion that a continuation of current policies

for supporting commercialization of HTS will

leave U.S. industry behind its strongest international competitors, The United States may

continue to dominate the science of superconductivity, and might pioneer in commercial innovations. But the contest will eventually come

down to engineering and manufacturing, where

American industry has fallen down in recent

years, and where the Japanese continue to

improve.

OTA has analyzed two alternatives to the

business-as-usual approach. One of the choices

—creation of a Federal technology agency, with

HTS as a piece of its territory—holds promise

for the future. Such an agency might support

industrial technology directly; many proposals

have envisioned a kind of civilian DARPA,

established to focus on R&D relevant on the civilian side of the economy. The pitfalls are not

so much technical—maintaining a sound portfolio of projects–as political. A CTA would

have to deal with the demands of distressed industries, depressed regions, and companies

simply attracted by a pot of R&D money,

Whatever their merits, the alternatives under

Strategy 3 cannot offer near-term support for

HTS. The ad hoc measures outlined under

Strategy 2 could. This approach —Federal costsharing of joint R&D—would be explicitly designed to promote an industry-centered agenda

of long-term, high-risk R&D in superconductivity. Government’s role—carried out through

a working group on commercialization—would

be as facilitator, as well as financier, helping

to establish consensus on a research agenda,

and securing cooperation from universities,

Federal laboratories, and mission agencies, The

three elements in Strategy 2 meet the needs

summarized at the beginning of the chapter:

diversity and continuity of Federal support;

market-driven decisions; technology push complemented by market pull; low visibility; collaboration among industry, universities, and

Government. In conjunction with ongoing activities in the mission agencies, they would substantially improve the odds on U.S. industr y

in the race to commercialize HTS.
Appendixes
Appendix A

Glossary

Coil/rail gun: Uses a rapidly changing magnetic

field in a spiral coil (coil gun) or a linear conductor (rail gun) to accelerate a projectile via magnetic forces. Much greater velocities can be

reached than are possible with gas expansion (as

in a conventional gun).

COMAT, Committee on Materials: An interagency

group under the Federal Coordinating Council

for Science, Engineering and Technology chaired

by the White House science advisor. COMAT's

Superconducting Materials Subcommittee, chartered in June 1987, is comprised of program directors and other representatives of Federal agencies involved in superconductivity R&D,

Critical current density: The maximum value of

the electrical current per unit of cross-sectional

area that a superconductor can carry without

reverting to the normal (non-superconducting)

state. The critical current density drops as the

temperature rises toward the transition temperature, and as the magnetic field increases,

CTA, Civilian Technology Agency: Several legislative proposals over the years would establish

a Federal CTA focused on commercial technology development.

DARPA, Defense Advanced Research Projects

Agency: A Defense Department R&D funding

agency that gives most of its support to long-term,

high-risk projects, Examples include artificial intelligence, and, currently, processing of hightemperature superconductors.

DPR, Domestic Policy Review of Industrial Innovation: A Carter Administration study of alternative Federal policies for stimulating technological innovation.

Electromagnetic launcher: See coil/rail gun.

ERCs, Engineering Research Centers: Cross-disciplinary research centers funded by the National

Science Foundation at universities.

ETL, Electrotechnical Laboratory: This Japanese

laboratory, administered by the Ministry of International Trade and Industry, has been involved

in superconductivity research since the mid-1960s

FCC, Fine Ceramics Center: A laboratory in

Nagoya, Japan jointly funded by industry and the

Ministry of International Trade and Industry.

participating firms send researchers to work at

the facility, which opened in the spring of 1987,

Fiber-optics: Use of glass fibers to transmit light

(produced by lasers) for telecommunications and

computer networking. Optical fibers can carry

much more information than electrical wires.

FLC, Federal Laboratory Consortium on Technology Transfer: A network of technology transfer

officers from 400 Federal laboratories and eleven

agencies for facilitating transfers of technology

from the laboratories to industry. First setup informally in 1974, the FLC was given a statutory

basis in the Federal Technology Transfer Act of

1986 (Public law 99-502).

HTS, high-temperature superconductor: Refers to

materials—four classes of which have been discovered since 1986—with much higher transition

temperatures than previously known superconductors. (See LTS.)

Intermetallic compound: Chemical compounds of

nominally fixed composition, one or more elements of which are metals. Most intermetallic

compounds—e.g., the superconductor niobiumtin (Nb3Sn)—are brittle and therefore hard to

work with,

ISTEC, International Superconductivity Technology Center: An organization for superconductivity R&D set up by Japan’s Ministry of International Trade and Industry.

IUCRs, Industry-University Cooperative Research

Centers: National Science Foundation program

that provides seed grants for cooperative R&D

at universities,

JJ, Josephson junction: Superconducting electronic

devices that can be used to sense electromagnetic

radiation and also as digital switches (hence as

logic devices in computers).

oK, degrees Kelvin: The absolute scale of temperatures, with O 0 K (-4940 F) equal to absolute zero

(a temperature that can be approached but never

reached,

Logic chips: Integrated circuits consisting of arrays

of gates each of which implements a Boolean

function such as AND, OR, NOR, NAND. Computer processors are built from logic chips, as

are many specialized digital systems.

LTS, low-temperature superconductor: Materials

that become superconducting only when cooled

to a few degrees above absolute zero. All superconductors discovered before 1986 were lowtemperature materials, with 230 K (-418 0 F) the

highest known transition temperature, (See HTS).

Magnetically-levitated train (maglev): Trains suspended and propelled by magnetic forces offer

the prospects of much higher speeds than can

be achieved by conventional wheel-on-rail technologies. A prototype superconducting maglev

train in Japan (also called a linear motor car) has

achieved speeds of over 300 miles per hour.

151
152

Magnetometers: Sensors which measure magnetic

field strength. Because magnetic fields accompany so many physical phenomena, magnetometers—including ultrasensitive versions made

from superconducting devices—have many uses.

(See JJ, SQUID.)

Magnetic resonance imaging (MRI): Refers to

equipment and techniques used in medical diagnosis for imaging the soft tissues of the body. MRI

systems often use superconducting magnets.

MCC, Microelectronics and Computer Technology Corp: A joint venture that conducts R&D.

MCC’s program to develop and evaluate electronic applications of HTS had 13 participants

as of the spring of 1988.

MITI: Japan’s Ministry of International Trade and

Industry.

Monbusho: Japan’s Ministry of Education, which

supports university research.

MRLs, Materials Research Laboratories: Now supported by the National Science Foundation, several of the MRLs are conducting research on

HTS.

Multicore Project: Established by Japan’s Science

and Technology Agency to link nine laboratories

and government organizations working on HTS

with one another and with industry.

NBS: National Bureau of Standards of the U.S. Department of Commerce.

New Superconductivity Materials Research Association: Generally called the “superconductivity

forum, ” this association was set up by Japan’s

Science and Technology Agency. It provides

workshops, symposiums, and other opportunities for interaction among corporations, universities, and national laboratories.

NSA: U.S. National Security Agency.

NSF: U.S. National Science Foundation.

1-2-3 superconductor: One of a new class of hightemperature superconductors, typified by yttriumbarium-copper-oxide and called 1-2-3 because of

their generic chemical formula: RBazCOs07.X,

with R almost any one of the rare-earth elements..

Much of the research on the new superconductors has focused on the 1-2-3 materials, which

typically have transition temperatures above 90

0 K .

OSTP, Office of Science and Technology Policy:

Headed by the White House science advisor,

OSTP is part of the Executive Office of the

President.

Perovskite: Refers to the crystal structure shared

by the 1-2-3 and other high-temperature superconductors.

Rail gun: See coil/rail gun.

RAM chips: Integrated circuits that provide random access memory for computers and other digital systems.

SBIR, Small Business Innovation Research: A Federal program, in operation since fiscal 1983,

which requires Federal agencies to set aside a

small percentage of extramural R&D budgets

for contracts with small businesses.

SDI, SDIO: The Strategic Defense Initiative, and

the Defense Department organization that runs it.

Sematech: An R&D consortium, financed by 14

member companies (as of the spring of 1988) and

the U.S. Government, established to pursue improvements in semiconductor manufacturing

technologies.

Signal-to-noise ratio: An important parameter for

sensors, the signal-to-noise ratio compares the

signal the sensor is intended to measure with

background noise (one source of which is thermal, rising with temperature).

SMES, superconducting magnetic energy storage

system: A coil or solenoid of superconducting

wire in which an electric current can circulate,

storing energy until needed for purposes such

as feeding an electric utility grid or powering a

free-electron laser.

SQUID, superconducting quantum interference

device: A very sensitive instrument, built with

Josephson junctions, used to detect magnetic

signals.

STA, Science and Technology Agency: Under the

Prime Minister’s Office in Japan.

S&T centers, Science and Technology centers:

Multidisciplinary centers proposed for funding

by the National Science Foundation.

Stevenson-Wydler Act: The Stevenson-Wydler Technology Innovation Act of 1980 (Public law 96-

480, as amended), placed increased emphasis on

technology transfer from the Federal laboratories. The 1986 Federal Technology Transfer

Act (Public law 99-502) amended the 1980 act to

provide (among other things) more emphasis on

cooperative research between federally operated

laboratories and industry.

Superconductivity: Total loss of resistance to direct electrical currents.

Superconducting magnet: An electromagnet wound

with superconducting wire. Essentially all the

power consumed goes for refrigeration to keep

the coil windings below their superconducting

transition temperatures.

Three-terminal electronic device: One which, like

a transistor, can amplify a signal substantially.

(See two-terminal device.)

Transition temperature: The highest temperature
.

at which a material becomes a superconductor,

also known as the critical temperature. The transition temperature drops as the magnetic field

and current density increase.

Two-terminal electronic device: one which, like

a Josephson junction, can serve only as a weak

amplifier. (See three-terminal device.)

URI, University Research Initiative: A Department of Defense program, started in 1986, intended to support university capabilities in research, and training of scientists and engineers,

in disciplines important for national defense.

153

VHSIC program: An R&D program begun by the

Department of Defense in 1979 to develop advanced integrated circuits for military systems.

VLSI program: Joint government-industry R&D effort in Japan for developing very large-scale integrated circuits (VLSI), in existence from 1976

to 1980.

X-ray lithography: Creation of patterns for fabricating integrated circuits using X-rays, Because Xrays have shorter wave lengths than visible light,

they can produce finer patterns, hence denser

circuits.
Appendix B

The Technology of Superconductivity

Electric currents travel through superconductors

with no resistance, hence no losses (provided the

current is steady—alternating currents meet resistance even in superconductors). When current

flows in an ordinary conductor, say a copper wire,

some power is lost. In a light bulb or an electric

stove, resistance creates light and heat, but in other

cases the energy is simply wasted. With no resistance, magnets wound with superconductors can

create very high fields without heating up and dissipating energy. Motors and generators with superconducting windings could be smaller, lighter, and

more efficient than those built with copper. Very

high magnetic fields might be used to fire projectiles, to float molten metal in a steel mill, to levitate

trains.

Table B-1 lists some of the possible applications.

During the 1960s, low-temperature superconductors (LTS)—specially developed metal alloys like

niobium-titanium—came into use in specialized applications such as magnets for scientific research.

Some current LTS applications—e.g., ultrasensitive

magnetic field detectors—will not be superseded by

high-temperature superconductivity (HTS) (because

of higher thermal noise at higher temperatures).

Other applications, possible but not practical with

LTS, could become much more attractive with HTS.

As table B-1 indicates, superconductors not only

banish electrical losses, and provide the basis for

very sensitive detectors of magnetic fields and other

radiation, but can also be used to produce the fastest

possible electronic switching devices. In addition,

superconductors exclude magnetic fields, which

means they can be used as radiation shields. (The

exclusion of external magnetic fields is termed the

Meissner effect, after the physicist who discovered

the phenomenon in 1933.)

Many of the applications listed in table B-1 have

been goals for engineers and scientists since superconductivity was discovered early in the century.

I Much of the material in this appendix is drawn from ‘ ‘Superconductive Materials and Devices, ” Business Technology Research, Wellesley

Hills, MA, September 1987; and “Technology of High Temperature Superconductivity,” prepared for OTA by G.J. Smith 11 under contract No.

J3-21OO, January 1988. Also see Physics Today, Specia] Issue: Superconductivity, March 1986; A.P. Malozemoff, W.J. Gallagher, and R.E. Schwall,

“Applications of High-Temperature Superconductivity,” Chemistry of

High-Temperature Superconductors, ACS Symposium Series 3s1, D.L.

Nelson, M.S. Whittingham, and T.F. George (eds.] (Washington, DC:

American Chemical Society, 1987), p. 280; “Research Briefing on HighTemperature Superconductivity,” Committee on Science, Engineering,

and Public Policy, National Academy of Sciences, Washington, DC, 1987.

Along with powerful magnets for a variety of purposes, prototype generators, electrical transmission

lines, and computer chips have all been made, operating in most cases at liquid helium temperatures

(about 4° K, or 4 degrees above absolute zero, figure B-l). But the very low temperatures have been

a barrier for many of the applications possible in

principle.

High-temperature superconductors and liquid

nitrogen cooling (77 0 K, figure B-1) would bring relatively modest improvements in costs, system complexity, and practicality for most of these applications. Liquid nitrogen temperatures, after all, are

only high compared with the near-absolute zero of

liquid helium. Where system designs already incorporate LTS—e.g., magnetic resonance imaging

(MRI, ch. 2)–it might not pay to change over simply to take advantage of HTS. In applications where

unattended operation is desirable—e.g., military

surveillance or geophysical exploration—the much

reduced boil-off rate of liquid nitrogen would be a

major advantage. HTS also holds obvious attractions for applications in space; beyond low-Earth

orbit, passive cooling may suffice to maintain superconductivity in the new materials.

Nonetheless, it is quite possible that continued

R&D will bring new applications of HTS that cannot yet be anticipated. superconductivity at room

temperature, moreover, would be truly revolutionary. Compact and efficient small motors and actuators, for example, could find uses ranging from

household products and automobiles to machine

tool drives and power-packs for replacing aircraft

hydraulic systems.

Superconductivity

Above its transition (or critical) temperature, a

superconductor exhibits electrical resistance like

any other material. Below the transition temperature, the material has zero resistance to direct current (DC): a steady electric current will circulate in

a superconducting coil forever, so far as anyone

knows. Variation in the flow of current does lead

to electrical losses; thus a superconductor dissipates

energy when turned on or off, or when carrying an

ordinary alternating current (AC losses). However,

these losses are much less than those in a good normal conductor (e. g., copper) at the same temperature.

154
155

Table B-1 .—Representative Applications of Superconductivity

——————— -.

Large-scale passive:

Shields, waveguides

Superconductors screen or reflect electromagnetic radiation; possible applications range from coating of

microwave cavity walls to protection from the electromagnetic pulses of nuclear explosions.

Bearings

Repulsive forces created by exclusion of magnetic flux

make non-contact bearings possible.

High-current, high-field:

Magnets

Medical imaging

LTS magnets widely used in commercial systems.

Scientific equipment

LTS magnets used in fusion experiments and particle

accelerators.

Magnetic separation

Possible uses include separating steel scrap, purifying ore streams, desulfurizing coal, and cleaning up

stack gases, At least one LTS magnet is in current use

for purifying Kaolin clay.

Magnetic levitation

Levitated trains have been extensively studied, with

prototypes in Japan and Germany.

Launchers, coil/rail guns

Electromagnetic launching systems can accelerate objects to much higher velocities than gas expansion;

possible applications range from small guns for military purposes to aircraft catapults and rapidly repeatable Earth satellite launching.

Other

Powerful magnets could eventually find a very wide

range of uses. Examples: compact synchrotrons for

lithographic processing of integrated circuits; growth

of the crystals for integrated circuits (a strong magnetic field yields more nearly perfect wafers of silicon

and other semiconductor materials); MHD (magnetohydrodynamic) systems for energy conversion. MHD

thrusters might also be used in place of propellers to

drive ships and torpedos.

Other static applications

Electric power transmission

Prototypes of LTS underground lines have demonstrated feasibility, but such installations are not costeffective (compared with overhead high-tension lines)

at present.

Energy storage

Solenoids wound with superconducting cable could

store electrical energy indefinitely as a circuIating current; i n addition to utility applications (e. g., load leveli rig), superconducting storage could find uses in miIitary systems (e.g., pulsed power for large lasers). Cheap

and reliable superconducting energy storage would

eventually find many other applications.

Rotating machinery

Generators

A number of LTS prototypes have been buiIt to investigate possible electric utility applications.

Motors, motor-generator sets

Used in conjunction with a superconducting generator, a superconducting motor could be an efficient

alternative to mechanical power transmission for applications such as ship and submarine drives, railway

locomotives, and perhaps even for helicopters. Sufficiently low costs would open up many industrial applications.

Electronics:

Passive

Superconducting wiring (interconnects) for computers,

on-chip or between chip, could help increase processing speed.

Sensors

SQUIDS (superconducting quantum interference devices) made from Josephson junctions (JJs) are the

most sensitive detectors of electromagnetic signals

known; applications range from detecting neural impulses in the human brain to geophysical exploration,

detection of submarines in the deep ocean from airplanes or, potentially, from space, and nondestructive

inspection.

Digital devices

JJs can also be used for digital switches, opening up

such applications as computer logic and memory; competitive three-terminal devices with substantial gain may

eventually be developed; combined semiconductorsuperconductor devices or systems also hold many attractions.

Other devices

Analog/digital converters, voltage standards, many

types of signal processors, and microwave mixers can

all be designed, in principle, with superconductors;

some of these applications (e. g., voltage standards)

have been reduced to practice with LTS JJs. —

NOTE This Iist IS based on known properties of known materials. It IS not exhaustive, even for existing, well. understood Iow-temperature superconductors

SOURCE Off Ice of Technology Assessment, 1988

Until 1986, the highest known transition temperature was 23° K (in niobium-germanium). Then two

IBM scientists in Zurich discovered a new class of

materials that showed superconductivity at 35-40

°K (see box C, ch. 2). Shortly thereafter, the compositions now termed the 1-2-3 superconductors

were found, with transition temperatures in the vicinity of 95° K. The first of the 1-2-3 materials announced contained yttrium, barium, and copper

oxide. More recently, copper-oxide ceramics containing bismuth or thallium have been found. These

have superconducting critical temperatures in the

range, respectively, of 110° K and 125° K. In April

1988, the first HTS compositions containing no copper were announced, with transition temperatures

up to 30° K.
156

Figure B-1 .—Temperature Scales University of Leiden had developed cryogenic refrigeration equipment capable of reaching these

very low temperatures, In 1913, Kamerlingh-Onnes

found that lead became superconducting at 7.20 K.

At this point, the Leiden group built a superconducting magnet with lead windings, only to find the

lead reverting back to its normal state when the

magnetic field reached a few hundred gauss—a severe limitation on practical use, given that a common kitchen magnet creates a field of about 1,000

gauss. (The average magnetic field of the Earth is

one-half gauss; the windings in electric motors create fields of about 10,000 gauss,)

Critical Properties.—Later it was learned that maintaining the superconducting state requires that both

the magnetic field and the electrical current density, as well as the temperature, remain below critical values that depend on the material. Figure B-2

shows this schematically, while table B-2 gives the

critical values of temperature and field for a number of superconducting materials, Practical applications, in general, require that both the transition

temperature and the critical current density be high;

in some cases, relatively high magnetic fields are

SOURCE: Office of Technology Assessment, 1988. necessary as well.

A major advantage of the new materials, of course,

is the potential for simpler, less expensive cooling,

For technical reasons, superconductors must be

operated well below their transition temperatures—

as a rule of thumb, at half to three-quarters the transition value. In fact, then, liquid nitrogen temperatures will be marginal for the 1-2-3 compositions

(although the practical advantages of operating in

the range of 40 0 K rather than 4° K can be great),

If the more recently discovered ceramics, with critical temperatures of 110° K and up prove to have

otherwise useful properties, liquid nitrogen cooling will almost certainly prove adequate.

All the HTS compositions so far discovered are

ceramics, rather than metals. They are new materials, poorly understood. All ceramics are brittle;

they require processing and fabrication methods

very different from metals and alloys.

Superconducting Properties and Behavior

In 1911, Heike Kamerlingh-Onnes, a Dutch physicist, made the astounding discovery that mercury

lost all electrical resistance at 4° K. Earlier,

Kamerlingh-Onnes and his research group at the

Figure B-2. —Dependence of the Superconducting

State on Temperature, Magnetic Field, and

Current Density

Temperature, T

A Critical surface

if outside)

SOURCE: Off Ice of Technology Assessment, 1988
157

Table B-2.—Critical Values for Superconducting Materials

Temperature Magnetic field Current density a

(degrees Kelvin) (gauss) (amps per square centimeter) — —

Aluminum . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . .

Mercury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Niobium. ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Niobium (75%) - titanium (25%) ., . . . . . . . . . . . . . . . . . . . .

Niobium - tin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1-2-3 ceramic (YBa2Cu 3069) . . . . . . . . . . . . . . . . . . . . . . . . .

aAt Zero magnetic f(eld

buppercnhcalfield (Type H superconductor

cAt42 K

dAt77 K Thehlghestvaluesare reached wlthor!ented Slngie-crystat films

SOURCE Offrceof Techr?ology Assessmen! 1988

By the late 1930s, scientists had distinguished

Type I and Type II superconductors. Type I materials, in which the phenomenon had first been studied, shift abruptly to their normal state above the

critical magnetic field. Type II superconductors exhibit a mixed state between two values of magnetic

field, the lower and upper critical fields. The new

HTS materials show Type II behavior, with extremely

high critical fields (table B-2)–indeed, so high in

the 1-2-3 compositions that simply measuring them

has proven very difficult.

As Kamerlingh-Onnes found with his lead-wound

magnet, Type I superconductors have critical fields

too low to make useful magnets. While Type II materials have much higher critical fields, the new

HTS materials have proved to have disappointingly

low values of the third critical parameter—the current density (table B-2).

Raising allowable current densities in the 1-2-3

ceramics from the values found initially in polycrystalline samples (consisting of many grains, randomly oriented)—below 103 amps per square centimeter—quickly became a major research target. For

most applications, improvements of 100 times or

more—to the range of 105 or 106 

amps per square

centimeter—will be needed, This is important not

only for high-power applications; electronic devices

carry small currents, but current densities are high

because cross-sectional areas are microscopic.

Not a fundamental limitation, the low current

densities are materials processing problems (critical current density depends on the microstructure

of the material, hence on its processing). Many years

of R&D were needed to raise the critical values for

Type II superconductors like niobium-titanium to

the values shown in table B-2, Similar effort lies

ahead for the new HTS materials; so far, progress

has been most rapid in thin films,

From the 1930s to the 1980s.—The 1930s and 1940s

saw a good deal of progress in the cooling and refrigeration systems needed to reach very low temperatures, spurred in part by wartime needs for liquid oxygen.2 After the end of the Second World War,

the newly formed Office of Naval Research established a major research program in low-temperature

physics. One consequence—rapid improvements in

the technology for producing liquid helium—made

experimental research in superconductivity much

easier.

Federal support during the 1960s included development of very powerful superconducting magnets,

principally for conducting experiments in highenergy physics and nuclear fusion, as well as exploratory studies of possible electronic applications

of superconductivity. The first of the current generation of conductors, niobium-tin, was developed

during the early 1960s. A brittle intermetallic, very

difficult to work with, niobium-tin found little use.

Within a few years, almost all LTS magnets were

being wound with niobium-titanium—more ductile,

though with a lower critical field.

With steady progress in processing techniques,

niobium-titanium conductors could be fabricated

as braided cables each containing thousands of very

fine filaments. Small filaments—less than the diameter of a human hair—reduce the AC losses stemming from variations in current, and have other

highly desirable properties for magnet applications.

These filaments are embedded in a copper matrix,

capable of carrying the full current in the event of

an accidental loss of superconductivity. The conductors must be flexible enough for winding, and

j“Government’s Role in Computers and Supercondu{:tors, ” prepared

for OTA by K. Flamm under rontra( t No H3f?J470, March 1988, pp 43ff.
158

mechanically strong because the magnetic field creates very high forces. Many years of R&D have led

to steady improvements in LTS magnets.

The discovery of the Josephson effect in the early

1960s opened up a new class of possible applications in electronics. Josephson junctions (JJs), made

with a thin insulating layer (a matter of a few atomic

diameters) separating two superconductors, can act

as very fast electronic switches—comfortably exceeding the fastest semiconductor devices. Because

they dissipate so little power—about 1,000 times less

than semiconductors—JJ electronics can be more

tightly packed, which also contributes to speed.

Theory

Theoretical work had likewise moved ahead, culminating in 1957 in the Bardeen-Cooper-Schrieffer

(BCS) model, for which a Nobel Prize was later

awarded. The BCS theory explains superconductivity in terms of interactions between electrons

(which carry current) and phonons (atomic vibrations). Under normal conditions, the electrons collide with atoms, leading to electrical resistance and

energy loss. In the superconducting state, electrons

move in coordinated fashion without any collisions.

While the BCS model explains superconductivity

in the old materials, so far HTS has baffled the theorists. Until 1986, most of those working in the field

had agreed that BCS superconductivity at temperatures above about 30 0 K was impossible. Given the

recent experimental results, the theoretical community has been scrambling to extend the BCS model

or find some new explanation.

Although the Josephson effect was first predicted

theoretically, and later confirmed by experiment,

theory gave little or no guidance in the search for

LTS materials with higher transition temperatures.

Thus the situation is really no worse for HTS. Looking for materials with higher transition temperatures remains largely a matter of trial-and-error,

guided by intuition—laboratory research that is

time-consuming and expensive.

Processing and Fabrication

Tailoring HTS materials for applications either

in electronics or where high currents and/or fields

are needed (e.g., electric power) will entail design

and processing at size scales from the atomic level

on up. Engineers and scientists engaged in applications developments, as well as materials processing, will have to concern themselves with electronic

structure (energy gaps), crystal structure (the arrangement of atoms in the material), microstructure (grain boundaries), and the fabrication of films,

filaments, tapes, and cables.

The HTS ceramics are not only brittle, and chemically reactive, but highly anisotropic—meaning that

properties vary with direction within a grain of the

material. The 1-2-3 ceramics, for instance, show

differences of as much as 30:1 in critical current

density depending on grain orientation. Some of

the current density limitations can be traced to

anisotropy, but grain boundaries seem to be the primary culprit.

Some of the processing and fabrication techniques familiar from work with electronic and structural ceramics hold promise for the new superconductors. Bulk samples of HTS material can be made

by hot pressing, extrusion, and tape casting, among

other methods. The anisotropy in the 1-2-3 materials has led many research groups to seek processes

for aligning the grains—e.g., extruding a slurry of

single crystals in a high magnetic field to create a

tape. Semiconductor fabrication techniques, likewise, can in some cases be adapted for making thin

films.

Past work on niobium-tin, a brittle intermetallic

compound, may also hold lessons for HTS materials, which, like other ceramics, cannot deform

plastically. Because they break easily and without

warning–like glass, being very sensitive to small

imperfections (hence the scribed lines used to “cut”

glass)—practical applications may require specialized in-situ processing, as well as careful design to

minimize strain. Magnets wound with niobium-tin

are made starting with strands of niobium in a

copper-tin alloy matrix–flexible and ductile. Heat

treatment after the wires have been drawn and

wound into coils causes the tin to combine with the

niobium, forming the superconducting compound,

with its vastly different properties. Some R&D

groups have pursued similar processes for ceramic

superconductors.

Progress has been faster with thin films, which

can be created via a wide range of well-known techniques—e.g., sputtering, and evaporation by molecular or electron beams, Finding good substrates

on which to deposit the HTS layer has been the primary problem. The HTS compounds react chemically with many otherwise desirable substrate materials, including those used for integrated circuits

(silicon, sapphire). Strontium titanate gives high

current densities compared to other choices, but

is expensive and has otherwise undesirable properties. Silicon would be ideal as a step toward combining semiconductor and superconducting electronics. While the temperatures so far required for

creating the proper HTS composition have posed
159

difficulties, many research groups have been working on the problems, with encouraging results.

Applications

Much of the excitement over HTS has been stirred

by speculation concerning such possible applications as low-loss electric power transmission or

magnetically levitated trains. In some of these cases,

commercialization will depend more on system

costs and progress in competing technologies than

on the specifics of HTS. Both transmission lines and

levitated trains have been demonstrated with LTS

materials. Superconducting transmission lines, which

must be run underground because of the cooling

requirements, may eventually prove cost-effective

relative to conventional underground transmission;

thus far, however, these applications have not moved

out of the test stage, Maglev trains could be built

by the end of the century in Japan and West Germany. Competing technologies sometimes present

a moving target for superconductivity: after more

than 10 years of R&D aimed at a Josephson computer, IBM concluded that competing semiconductor technologies were improving rapidly enough

that its approach to JJ computer elements would

probably not bear fruit.

More than likely, then, 5 to 10 years of R&D lie

ahead before many applications of HTS emerge.

Those that come earlier are likely to be highly

specialized—perhaps in military systems, perhaps

targeted on very demanding civilian needs (for example, Hypres’ very high-speed data sampler,

which incorporates LTS electronics]. The ongoing

R&D will involve:

1.

2.

3

Basic research, both theoretical and experimental, aimed at explaining HTS, at finding

new materials and exploring their properties,

and at understanding structure-property relationships.

Applied research, focused particularly on development of processing methods and optimization of material properties through manipulation of processing variables, A great deal of

R&D will be needed before routine production

of tapes and multifilamentary conductors could

begin, with substantial improvements in critical currents an early step. Josephson junctions

for electronics will also be difficult to reduce

to practice.

Applications engineering (for HTS)—e.g., development of prototype chips containing many

JJs–including extensive testing under realistic

operating conditions (environmental exposure,

4.

5.

thermal cycling, mechanical vibrations, electrical surges, loss of temperature control), Joining techniques for conductors will be needed;

so will repair methods.

Process engineering—manufacturing methods

for routine (rather than laboratory) production.

Problems here will include yields and reliability in superconducting circuits, and methods

for producing long continuous lengths of superconducting cable. Inspection, testing, and

quality control procedures will need a good

deal of attention.

Systems engineering—design, development,

and demonstration of applications in which superconducting components are integrated into

such end products as computers, electrical

generators, and coil or rail guns. For instance,

without further progress in transition temperatures, HTS interconnects in computers will

require cooling to liquid nitrogen temperatures.

Fortunately, these temperatures also offer performance advantages for semiconductor chips.

Many of these activities can go forward in parallel.

In some cases it makes sense to proceed sequentially. For instance, applied research aimed at increasing current density can and should proceed

in conjunction with process R&D, because processing affects microstructure, and microstructure affects current density. But work on production scaleup must wait until the effects of processing variables can be reasonably well understood. On the

other hand, research intended to discover whether

a particular processing technique—e.g., laser

annealing—compromises some properties will be

needed early.

High-Current, High-Field Applications

Magnets.—Most past applications of superconductivity have involved the design and construction of

powerful magnets wound with LTS materials and

cooled with liquid helium. Such magnets have been

used in scientific experiments (e. g., the Tevatron,

ch. 2), and in MRI. Learning to design and build

magnets helps with more demanding applications,

such as rotating machinery.

Almost all the power consumed by a superconducting magnet goes to operate the cooling system.

For a big magnet wound with copper, resistive

losses far outweigh the refrigeration costs for an

equally powerful LTS magnet. Indeed, large copperwound magnets need their own cooling systems just

to carry off the heat generated through resistance.

The cost comparison below, for a bubble chamber
160

magnet at Argonne National Laboratory—a typical

early scientific application—shows that a conventional magnet would cost five times more to

operate: 3

Annual operating costs (thousands of dollars)

Superconducting Conventional

magnet magnet

(actual) (estimated)

Electrical power. ... . . . . . $17.5 $550

Cooling . . . . . . . . . . 81.3 4

Maintenance . . . . . . . . . . . . . 5.2 ?

$104 $554 +

Superconducting magnets have other advantages

compared with conventional magnets. Stability is

easier to achieve, for instance. In a conventional

magnet, the field strength varies as the windings

heat up and expand. The stability characteristics

of LTS magnets give them advantages both in scientific apparatus and in MRI.

With LTS magnet technology well in hand, HTS

designs will have to perform at least as well (in terms

of characteristics such as stability) before their simpler cooling systems and lower operating costs will

make them competitive. Fabricating the conductors

will be difficult, Stable operation and protection

against overheating in the event of refrigeration

failures require multifilamentary cables, just as for

LTS, with filament diameters of a few microns.4

Given the brittleness of the new ceramics, methods

for producing filaments and for fabricating cables

are not yet in sight.

Once HTS wire and cable become available, applications-specific requirements will come to the

fore. MRI, for example, while requiring highly stable fields for good image quality, does not otherwise make heavy demands on the magnet system.

Still, joining methods that eliminate resistive imperfections will be needed for image quality comparable with that already achieved using LTS.

MRI systems are expensive, and savings from simpler cooling will not make that much difference for

commercial competition. Magnetic separation is

3

P. J. Reardon, “High Energy Physics and Applied Superconductivity, ”

IEEE Transactions on Magnetics, vol. MAG-13, 1977, p, 705, This magnet, for Argonne’s 12-foot bubble chamber, draws 1800 amperes, producing a field of 1.8 X 103 gauss. The cost figures assume 140 operating

days per year.

As another example, a magnetic separator for purifying Kaolin clay

(table B-1 ) consuming 270 kilowatts [kW) if built wltb a conventional magnet, plus another 30 kk%’ for cooling the magnet, could today be replaced

with an LTS magnet that needed no more than 60 kW, all for refrigerating the windings,

4Report of the Basic Energ~’ Sciences Advisorj Committee Panel on

High-Tc Superconducting Afagnet Applications in Particle Phjsics,

D~E/Ef7-0358 (Washington, DC: Department of Energy, December 1987),

pp. 9-12.

another story. Here, for instance, cheap but powerful magnets could be used to sort scrap metal for

recycling, in refining ores, purifying chemicals,

removing sulfur from pulverized coal, and cleaning up waste water, In all these applications, cost,

reliability, and ease of use (including maintenance)

by a largely blue-collar labor force become significant design considerations. Design considerations

for maglev trains likewise include cost, reliability

and longevity, and safety. But the political and economic questions loom even larger than for, say,

desulfurizing coal, In the United States, investments

in fixed-rail transportation would have to clear obstacles ranging from opposition by airlines to high

costs for rights-of-way. In Japan, where the needs

and constraints differ, R&D on HTS-based maglev

is much more likely to go forward.

Electric Power and Utility Applications.—Magnets have

no moving parts. Technical complexities grow in

electrical machinery, and in the entire range of electric utility applications. Transformers, for example,

would demand more attention to AC losses than

magnets, while superconducting transmission lines

will almost certainly have to go underground, so

long as refrigeration is required. Underground lines

are costly, although already in use in many urban

areas. Still, the over-riding design requirement is

reliability, Utilities are quite willing to trade off

higher operating costs against lower probability of

failures and down-time, A disabling failure, after

all, can lead, not only to a blackout, but to an ongoing need to purchase power from other suppliers

until repairs have been completed.

In general, HTS-based generators will need conductors similar to those for magnets. Dynamic

forces, however, will add to static forces, while cooling also becomes more difficult. Large conventional

generators already have efficiencies greater than 98

percent. Superconducting field windings can increase this to more than 99 percent, In a large

machine, an improvement of 0.5 percent to 1 percent in efficiency can be significant—reducing the

losses by half—while superconducting generators

have the additional advantage (for utility applications) of increasing network stability (they are less

sensitive to shifts in electrical load).

Worldwide, at least two dozen LTS generator

R&D projects have been undertaken since the middle 1960s, but none has gone beyond construction

and testing of a prototype. Utilities will have to be

convinced that such machines offer reliable service over periods of many years before investing;

HTS will not affect the economics much compared

to LTS, and, lacking even the experience base of
161

LTS systems, the new materials have an added hurdle to overcome. Energy storage rings—with no

moving parts, and tolerable failure modes—will

almost certainly come first.

Other Electrical Machinery.–For non-utility applications, characteristics other than efficiency and reliability come to the fore: superconducting machines

promise to be smaller and lighter than conventional

motors and generators by half and more, These are

the attractions for ship propulsion, where a superconducting generator driving a superconducting

motor could eliminate the gearing and shafting between turbine (or other prime mover) and propeller. With much more freedom in packaging, nuclear

submarines could carry more weapons (or be smaller),

So could surface ships. Submarines might also prove

quieter, perhaps even faster. Moreover, with the motor/generator set(s) providing speed control (and

reversing), efficiency during part load operation

would rise (the turbine can run at its optimum

speed).

As table B-1 indicated, other, more cost-sensitive,

applications for motor/generator sets might also

open up at some point. And of course, given high

enough operating temperatures, the many large

electric motors used throughout industry (ranging

from pump, fan, and blower drives to machine tools

and rolling mills) would be candidates for replacement.

Electronics

From the beginning, Josephson junctions have

been the basis for many superconducting electronic

devices, SQUIDs—superconducting quantum interference devices, simple circuits incorporating JJs–

have extremely high sensitivity levels, which have

led to a considerable range of practical uses for LTS

SQUIDS. The Josephson effect can also be exploited

for computer logic and memory; although a number of practical problems stand in the way, JJs could

in principle replace semiconductor chips in powerful digital processors (box J, ch. 3).

Sensors.–SQUIDs can detect the very faint signals produced by the human heart (10-6 gauss) and

brain ( 1 0

-9 gauss). These simple circuits can also

measure a wide variety of other electromagnetic signals (anything with an associated magnetic signature from DC up to microwave frequencies). SQUIDS

are about 1,000 times more sensitive than the next

best magnetic field detectors, They can sense the

disturbances in the Earth’s magnetic field caused

by a submarine deep in the ocean, or the field distributions caused by geologic formations holding

oil or mineral deposits, Requiring, in simplest form,

only one or two JJs (rather than the large numbers

required in computer applications), LTS SQUIDs—

typically fabricated from niobium—are now made

routinely.

To minimize thermal noise, SQUIDS should be

operated at the lowest possible temperature, and

in any case at less than half to two-thirds of the superconducting transition temperature, At liquid nitrogen temperatures, for instance, sensitivity will

be 20 times poorer than at liquid helium temperature, Even so, an HTS SQUID would still be a more

sensitive magnetic field detector than any of the alternatives except an LTS SQUID, If they can be built

successfully, HTS SQUIDS will quickly find a considerable range of applications (though none of

these are likely to be high-production-volume applications).

Computers and Other Digital Systems.—JJ-based electronic devices promise switching speeds 10 times

faster than the very best compound semiconductors. Because the energy losses are several orders

of magnitude smaller, JJ-based integrated circuits

could be packed much more densely, However, the

practical problems of making JJ-based chips far exceed those of SQUIDS.

Even if the practical problems were solved, Josephson computers might not be commercialized.

The competing technologies extend well beyond

silicon and gallium arsenide chips: a good deal of

R&D has been going into alternative computer

architectures such as massively parallel processors.

Much of this work seeks increases in processing

power without major advances in components. Still,

faster chips will always promise faster machines,

But, in a further contrast with SQUIDs—which are

the most sensitive magnetic field detectors known—

the theoretical limits of JJ-based logic devices fall

well short of what might eventually be possible, for

example, using optical switching. Thus the window

of opportunity for JJ-based computing may never

open. (It may never open for optical computing, either.) On the other hand, advances in device design—and, in particular, a practical three-terminal

device that would erase the primary drawback of

JJ chips, low gain–could open a broad new frontier. 5 It is simply too early to say,

R&D in the United States and Japan on LTS-based

JJ computing illustrates some of the problems that

designers of HTS logic and memory would face.

IBM was able to build logic chips with 5,000 junctions reliably, but had trouble with cache memory.

5S. G, Davis, “The Superconducti\’e Computer In Your Future, ” Datamation, Aug. 15, 1987, p 74,
162

(Fast logic does no good without fast cache memory for support.) IBM’s prototype memory chips,

with over 20,000 JJs, proved susceptible to errors

caused by slight variations in control current—a

good example of the kind of problem that a 3-

terminal device would help solve. More recently,

Japanese companies have built several kinds of LTS

chips incorporating niobium JJs. Fujitsu’s 4-bit

microprocessor, 25 times faster than a similar silicon chip, and 10 times faster than a gallium-arsenide microprocessor, consumes only 0.5 percent as

much power as either. NEC has produced a 1,000

bit dynamic memory, containing 10,000 JJs; access

time is a factor of 200 better than for silicon.

The first applications of HTS in computers may

be interconnects–electrical pathways joining otherwise conventional chips. Signal dispersion and

other problems associated with transmitting electrical pulses within the processor limit performance; practical means for incorporating HTS interconnects should find ready application in large and

powerful machines.

Moreover, at liquid nitrogen temperatures, superconductors and semiconductors could operate compatibly in hybrid designs. Ordinary semiconductors

cannot be used at liquid helium temperatures; even

if they could be made to operate in otherwise satisfactory fashion, semiconductors would dissipate too

much heat, overwhelming the cooling system. Given

that hybrid LTS-semiconductor systems are not feasible, past work on Josephson computing has involved either all-superconducting chips, or unique

designs with controlled temperature gradients. The

Hypres data sampler, for example, uses an integrated circuit cooled to liquid helium temperature

on one end only—that end holding about 100 LTS

JJs.

Three-terminal devices could be a big step forward in superconducting electronics, making possible logic designs at the chip level much like those

now used with semiconductors. It could well be,

however, that major advances in HTS electronics

would come only with devices that departed in a

major way from currently known electronic devices, The first requirement, in any case, is mastery of thin-film fabrication technology.

Military Systems

As table B-1 indicated, possible defense applications of superconductivity range from shielding

against nuclear blasts to high-speed computers and

motor-generators for ships. Conceptually, there may

be little difference between military and commercial applications. But in practice, differences will

be pervasive at levels all the way from devices and

components (e.g., radiation hardening) to the system configuration itself (cost-performance tradeoffs

much different than for commercial markets). Computing requirements for smart weapons—for example, real-time signal processing—tend to be quite

different from those important in the civilian economy. Thus, as development proceeds, military uses

of superconductivity will diverge in many respects

from civilian applications.

Some of the military applications could be compelling. Submarine detection with SQUID-based

sensors, for instance, offers at least a factor of 1 0

improvement over current methods. Conventional

electric generators for shipboard or vehicle use, or

for producing electric power under battlefield conditions, produce about 2 horsepower per pound;

prototype LTS generators have already reached 25

horsepower per pound. Superconducting coil or rail

guns promise increases in projectile velocities of

5 to 10 times.

The U.S. Department of Defense (DoD) has funded

superconductivity R&D since the early 1950s, contributing to the development of large, high-field

magnets, electrical machinery, LTS sensors, and superconducting computers. DoD (and the Department of Energy) also supported much of the materials processing R&D that proved necessary to

achieve high current densities in LTS wire and cable. Since 1983, the R&D objectives of DoD programs in LTS have been redirected, and the programs have grown, as a result of the Strategic

Defense Initiative (SDI).

For SDI, HTS shielding, waveguides, and sensors

(for use in space) hold obvious attractions, while

LTS work also continues; early in 1988, Bechtel and

Ebasco began an SDI-funded design competition on

LTS magnetic energy storage for powering groundbased free-electron lasers. SDI has also targeted very

high-frequency communication systems, where

LTS could offer substantial improvements in performance and extended frequency range. Here, the

1-2-3 ceramics seem to offer theoretically promising electronic characteristics (i. e., larger energy

gaps). They would also avoid the many practical

problems that liquid helium cooling poses in a military environment.

DoD has also renewed its attention to two of the

prospective high-field, high-power applications—

ship propulsion, and coil/rail guns, Military funding of R&D on LTS machinery began in the middle

1960s, with a 300()-horsepower prototype completed

several years ago. Magnetohydrodynamic (MHD)

thrusters offer a wholly different alternative, doing

away with propellers, as well as shafts and gear-
163

ing. In 1978, the Defense Advanced Research

Projects Agency began funding R&D on electromagnetic launchers, or coil/rail guns. The initial goal,

apparently, was a cannon for the Navy. With the

advent of SDI, much of the DoD work has been

redirected toward higher velocity systems, capable

of launching a projectile into space. Like the commercial applications, the requirements, whether for

machines or for coil/rail guns, start with good conductors.

Developing the Superconductivity

Technology Base

Table B-3 gives a sampling of expert opinion on

timing for a number of the applications discussed

above, Without too much oversimplification, the

R&D needed for supporting these and other applications can be pictured as in figure B-3.

Leaving aside military applications, particularly

those in which the superconductor serves as a passive shielding medium, sensors and other relatively

straightforward electronics applications will probably come first. As noted earlier, without new and

much more tractable families of HTS materials,

learning to make practical wire and cable will be

a long and tedious process. As a result, the highcurrent, high-field applications will be slower in

reaching the marketplace than thin- and thick-film

electronics.

The R&D tasks outlined in figure B-3 will take a

wide range of skills. Materials synthesis and characterization demands well-equipped laboratories and

sophisticated experimental techniques—e.g., X-ray

Table B-3.—Estimated Development Times for

Prospective HTS Applications

Application Timea

SQUIDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less than 5 years

Sensors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years

Computer interconnects . . . . . . . . . . . . . Less than 5 years

Superconducting computer. . . . . . . . . . . Long-term

Multifilamentary composite cable . . . . . 5 to 10 years

Magnet system . . . . . . . . . . . . . . . . . . . . . over 10 years

Magnetic energy storage . . . . ... , . . . . Long-term

Transmission lines . . . . . . . . . . . . . . . . . . Long-term

Electrical generators . . . . . . . . . . . . . . . . Long-term

auntll ~mall.scale commercial Production

SOURCE “Technology of High Temperature Superconductivity, ” prepared for

OTA by G J Sm!th II under contract No J3-21OO, January 1988, p. V.97,

based on interviews

and neutron diffraction, electron microscopy,

molecular beam epitaxy. Making thin and thick

films of the 1-2-3 materials with adequate currentcarrying capacity will probably mean oriented grain

structures—a good deal more difficult in production

than in the laboratory. Fabricating useful Josephson junctions will mean controlling the deposition

of very thin layers. The processing techniques are

likely to be more demanding than related semiconductor processing technologies.

Still, there is much that can be learned from related technologies, not only in microelectronics, but

in ceramics. Applications of both structural and

electronic ceramics demand very pure starting materials, careful control of processing (and thereby

structure), and sensitive nondestructive inspection

techniques, Some of this experience base will translate to HTS, especially to fabrication processes for

filaments and wires.

As figure B-3 suggests, cryogenics technologies

will be needed for most applications of HTS (in the

absence of room-temperature superconductivity],

Space is the exception, Even if much higher transition temperatures emerge, good performance may

still require cooling—e.g., to minimize electrical

noise, or increase current-carrying capacity, Although much of the speculation concerning HTS

has assumed liquid nitrogen cooling, closed-cycle

refrigeration systems can reach temperatures as low

as 100 K, and would probably be the technology of

choice in many systems.

Much of the R&D needed for commercialization

of HTS will have to go on more-or-less simultaneously. For simplicity, one-way arrows join the boxes

in figure B-3: a more realistic picture would be full

of feedback loops representing the flows of knowledge accompanying development of a complex new

technology (ch. 2), As conductor fabrication technology evolves, the design constraints for magnets

and machines will take shape. System level studies

of digital processors will feed back to the device

level.

Developing the technology base in HTS means

multidisciplinary research, and productive interactions among universities, national laboratories, and

industry. Developing a technology base quickly, so

that U.S. industry can keep up with Japanese industry, will mean taking risks, and managing overlapping R&D projects. The examples of industries

ranging from automobiles to microelectronics (ch.

2) demonstrate that competing in HTS will require

an R&D system that effectively supports parallel development on many different but inter-related

problems.
164

Figure B-3. – HTS R&D

Making Making wires, tapes,

films and other high-current

conductors

Thick Thin

I

v

Shielding,

interconnects,

Devices,

sensors

(many types)

Systems

Magnets

Machinery

Electric utility applications

SOURCE: Office of Technology Assessment, 1988
Index
Index

Advanced Civilian Technology Agency (ACTA), proposal for, 144

Advanced Technology Program, proposal for, 143

Altair, 31

American Superconductor Corp., 60

Ampex, 45

Antitrust, enforcement and U.S. industrial competitiveness, 5, 6, 22

Applications

high-current, high field, 40-41, 65, 136, 159-160,

162-163

LTS, 154, 157

military, 162-163

prospective HTS, 40-41, 44-48, 134-136, 159-163

superconducting electronics, 41, 136, 161-162

Appropriations. See Budgets; Funding

Atomic Energy Commission U.S. (AEC), 25, 131, 140

AT&T, R&D funding by, 7, 21, 55, 56, 57, 58, 59, 71,

72, 102

Bardeen-Cooper-Schieffer (BCS) model, 158

Bednorz, J. C., 26

Bellcore, R&D by, 56, 59

Bloch, Eric, 141

Boeing, 98

BRITE (Basic Research on Industrial Technologies in

Europe), 43

Budgets

CTA R&D, 144, 147

Federal Government R&D, 5, 9, 17, 23, 83, 87

Japanese superconductivity R&D, 10, 61, 65, 68, 69,

70, 71-72, 73, 75

see also Funding

California, University of—Berkeley, 58, 60

Carter, Jimmy, 22

Central Electric Power Research Institute—Japan, 70

Ceramics

commercializing R&D results pertaining to structural for use in heat engines, 27, 28, 44-45

Japanese expertise and leadership in, 19, 27, 61

superconductivity materials made of, 3, 6, 27, 44-

45, 155, 156, 157, 158, 162

China, 3

Chu, Paul, 26, 129

Civilian Technology Agency (CTA)

desirable features of, 144, 145-146, 147

mission of, 143-145

potential problems with, 146-147

project selection and review for, 145, 146

proposals for, 13, 126, 141-142, 143

Collaboration

industrial R&D, 133-137

industry/Federal Government R&D, 5, 12-13, 23, 86,

113-114

industry /university/Government, 123, 124, 126

industry/university HTS, 59, 60, 130, 131

international HTS research, 11, 77-79, 86, 115-118

in Japanese R&D system, 9-10, 11, 62-63, 73-77

policy issues and options concerning strengthening

university /industry/Government, 8, 9, 85-86,

104-115

Commercialization, 3-5, 17-20, 42-44

aggressive support strategy for, 132-138, 139

European HTS, 43

factors influencing U.S. HTS, 35-40

Federal Government’s role in high-technology, 3-5,

9, 20-27

flagship approach to technology, 125, 139

overview of technology, 3-5, 17-20

strategies for HTS technology, 12-13, 123-142

summaries of specific examples of technology}’ R&D,

27-28, 44-48

working group on, 137-138

see also Management; Marketing; Research and development [R&D)

Committee on Materials (COMAT), 90

Conductus Inc., 60

Costs. See Budgets; Funding

Current density, critical, 156, 157

Defense Advanced Research Projects Agency

(DARPA)–DoD, 139

as precedent for CTA, 142-143

R&D support by, 9, 25, 44, 85, 93, 104, 139, 163

Defense. See Department of Defense, U.S. (DoD);

Military

Department of Commerce, U.S. (DOC), 138, 143, 145

Department of Defense, U.S. (DoD), 90, 91

high-technology development [postwar history),

96-98

HTS R&D funding by, 6, 12, 24, 41, 85, 93-99, 112,

162-16 3

R&D budget of, 23, 87

see also Defense Advanced Research Projects

Agency (DARPA); Military

Department of Energy, U.S. (DOE), 90, 91

collaboration with industry by, 5, 23

HTS R&D funding by, 6, 12, 24, 28, 44, 85, 99-101

see also National laboratories

Development, See Commercialization; Research and

development (R&D)

Digital Equipment Corp., 31, 137

Domestic Policy Review of Industrial Innovation

(DPR), 22

Du Pont, R&D by, 6, 7, 51, 57, 58

Eastman Kodak, 57

Economic Competitiveness, International Trade, and

Technology Development Act—1987, 144

Economic Policy Council (EPC), 90

Education

HTS personnel, 130, 133

U.S. engineering, 4, 142

167
168

Electric power

HTS applications involving, 160-161

shortage in Japan, 9, 40

Electric Power Research Institute, 90, 101

Electronics, superconducting, 41, 136, 161-162

Energy Research and Development Administration

(ERDA], See Department of Energy (DOE)

Engineering

education, 4, 142

parallel, process for HTS, 34-35, 159, 163

raising priority of research on, 13, 141-142

Engineering Research Centers (ERCs)–NSF, 9, 103,

104, 106, 107, 108

ESPRIT (European Strategic Program of Research in

Information Technology), 43

Eureka (program), 43

European Community (EC), 43, 78

Expenditures. See Budgets; Funding

Exxon, 55

Fabrication. See Processing

Federal Government. See Government, Federal

Federal laboratories. See National laboratories

Fine Ceramics Center (FCC)–Japan, 70, 76

Food and Drug Administration, U.S. (FDA), 47

France

basic research support by, 26

government involvement in industry affairs by, 22

R&D support by, 43

Funding

continuity in R&D, 8, 85, 91, 123, 124-125

Federal HTS R&D, 6, 9, 24, 84, 86-93

Federal objectives of R&D, 9, 23-27, 84

industrial R&D, 6-7, 21, 54, 57, 58, 60, 61, 84

R&D at U.S. universities, 6, 12, 85, 102, 103, 104,

132-133

see also Budgets

Fujitsu, 71, 72

General Electric (GE), R&D support by, 46, 55, 57, 59

General Motors Corp. (GM), 21, 98

Germany, Federal Republic of. See West Germany

Government, Federal (U.S.)

HTS funding by, 6, 9, 24, 84, 86-93

industry support by, 3-5, 12, 20-23, 128, 131,

133-137

procedural rules for R&D cost sharing by, 136-137

R&D budget, 5, 9, 17, 23, 83, 87

R&D funding objectives of, 9, 23-27, 84

technology commercialization strategy options for,

12-13, 123-148

see also Military; individual agencies in

Government, State, HTS support by, 11, 23, 114-115,

129

Heat engines, 44-45

History, of superconductivity development, 26,

154-158

Hitachi Co.

business strategy of, 51

R&D support by, 7, 64, 71

Hoechst AG, 43

Honda, 32, 33

Houston, University of, 58, 129

Hypres Co., 41, 159

IBM, 41, 43, 51, 98

R&D funding by, 7, 21, 55, 56, 58, 59, 71, 72, 102

transition temperature breakthrough by, 3, 26, 155

Imsai, 31

Incentives

indirect, for commercialization, 5, 6, 12, 20, 22

Japanese energy shortage as HTS R&D, 9, 40

Industry

competitiveness of U.S. high-technology, 3-5, 8-9, 32

direct support from Federal Government to, 5, 12,

20-23, 128, 131, 133-137

HTS R&D consortia, 127, 133-137

HTS R&D strategies of U. S., 6-7, 57-59

R&D funding by, 6-7, 21, 54, 57, 58, 60, 61, 84

R&D strategies of Japanese, 9-11, 29, 33-35, 51-52,

60-67

R&D strategies of U. S., 4, 6-7, 10, 34, 35, 51-52,

53-59

“wait and see” attitude of U. S., 4, 6-7, 10, 52, 53,

55-56, 131-132

Industry/University Cooperative Research Centers

(IUCRs)–NSF, 107

Intermagnetics General Corp. (IGC), 48

International Superconductivity Technology Center

(ISTEC)–Japan, 65, 72, 77-79

Investment. See Budgets; Funding

Japan

basic research support by, 7, 9, 26, 61, 68, 75

ceramics technologies expertise of, 19, 27

corporate R&D strategies in, 9-11, 29, 33-35, 51-52,

60-67

HTS policy of, 9, 10-11, 67-79, 86

HTS R&D initiatives in, 3, 7, 9, 10-11, 67-80

industry support by government in, 9-10, 22, 62-63,

73-77

national laboratories of, 9, 69, 70, 76, 78

policy issues and options concerning technology interchange with, 9, 86, 116-117

U.S. technology interchange with, 11, 77-79, 86,

115-118

Josephson junctions (JJs)

computer applications using, 41, 64, 71-72, 161-162

reproducible HTS, 30, 41

R&D for, 57, 70, 163

Keyworth, George, 91

Knowledge base

Federal Government’s contribution to, 3, 5, 11-12,

21, 96

for superconductivity, 163

gaps in U.S. technology, 11, 83, 85, 91, 136

private sector’s access to, 3, 5, 21

Korea, Republic of. See South Korea

Legislation. See individual statutes
Low-temperature superconductivity (LTS), 5, 6, 25, 65

historical development of, 154, 156, 157-158

magnet technology, 29, 40, 41, 48, 64, 154

properties and behavior of, 156, 157

R&D funding for, 93, 95, 99

see also Josephson junctions (JJs); Magnets

Maglev (magnetically levitated] trains, 73, 74, 159,

160

Magnetic resonance imaging (MRI), commercializing

R&D results involving, 27, 29, 31, 41, 47-48,

154, 160

Magnets

HTS, 29, 160

LTS, 48, 157, 159-160

Maintenance, See Management

Management

Japanese industrial R&D, 63

U.S. industrial R&D, 54-57, 135

Marketing

policy, 143, 144

R&D applications, 8-9, 29-31

research, 43

Market pull, policies encouraging, 123, 124, 125-126

Massachusetts Institute of Technology (MIT), 60, 96

Materials Research Laboratories (MRLs), 103-104,

106-107

Matsushita, 29, 45

Microelectronics

consortium, 5, 35, 134, 136

as precedent for HTS commercialization, 35-40

Microelectronics & Computer Technology Corp.

(MCC), 79, 135, 136, 137

Military

commercial spin-offs from R&D spending by, 4, 5,

9, 84-85, 94-95

R&D directed toward, 25, 83, 84, 85

superconductivity applications, 162-163

see also Department of Defense, U.S. (DoD)

Ministry of Education (Monbusho)–Japan, HTS support by, 68, 70-73

Ministry of International Trade and Industry

(MITI)-Japan, 63, 71, 72

HTS support by, 68, 69-70, 75, 76

International Superconductivity Technology Center

(ISTEC), 65, 73, 77-79

Ministry of Transport—Japan, HTS support by, 68,

73, 74

Mitsubishi Electric, R&D support by, 64, 74

Muller, K. A., 26

Multicore Project (STA)–Japan, 69, 76, 77

Muto, Yoshio, 73

National Academy of Sciences (NAS), 86, 87

National Aeronautics and Space Administration, U.S.

(NASA], 91-92, 101-102

National Bureau of Standards, U.S. (NBS), 24, 77, 87,

90, 101

National Cooperative Research Act—1984, 22, 24

National Critical Materials Council (NCMC), 89,

90-91

169

National defense. See Department of Defense, U.S.

(DoD); Military

National Institutes of Health, U.S. (NIH), 25, 138-140

National laboratories

HTS R&D in, 85, 110-114, 131, 139

LTS magnet research at, 48

technology transfer to private sector from, 19, 22,

23, 83, 86, 110-114, 130

see also Department of Energy, U.S. (DOE)

National Security Agency, U.S. (NSA), 71, 97

National Science Foundation, U.S. (NSF), 90, 91

Engineering Research Centers, 9, 103, 104, 106,

107, 108

HTS R&D funding by, 6, 12, 85, 102, 103, 104,

132-133

Industry/University Cooperative Research Centers

(IUCRs), 107

Japanese industry superconductivity survey by, 64,

65-66

Japan Initiative of, 116

multidisciplinary R&D encouragement by, 9, 85,

102-103, 105, 106, 107

Research Applied to National Needs (RANN) program of, 107, 125

science and technology (S&T) centers (proposed),

104

National Technology Foundation (NTF), proposal for,

141-142

NEC Co., R&D support of, 7, 71, 72

Netherlands, The, 43

Nippon Steel, 51, 67

Nippon Telephone & Telegraph (NTT), 71

Nissan. 33

Office of Science and Technology Policy (OSTP), 89,

90, 93, 138

1-2-3 ceramics. See Ceramics

Onnes, Heike, 156, 157

Oxide ceramics. See Ceramics

Packard, David, 23

Packard Commission, 131

Patents, as indirect incentive to industrial investment, 6, 20, 22, 111

Personnel

CTA, 145, 147

exchange program (industry/national laboratories),

86, 112-113, 116-117

Japanese superconductivity R&D, 64, 65

U.S. superconductivity R&D, 11, 64, 130, 133

Philips, 43

Planning. See Management

Policy

commercialization and U.S. technology, 3-5, 9, I 1 -

12, 20-27, 83-86, 128-13 2

issues and options for Congress, 83-119

Japanese HTS, 9, 10-11, 67-79, 124-125

see also Strategies

Polymorphic Systems, 31

Private sector. See Industry
170

Processing

as central element in HTS commercialization, 139

HTS applications marketing and methods of, 8-9,

30

R&D funding of, 95, 98

techniques for HTS materials, 157-159

RACE (R&D in Advanced Communication-technology

for Europe), 43

RCA

R&D support by, 55

VCR commercialization and, 29, 46-47

Reagan, Ronald

HTS initiative of, 6, 34, 128-129

R&D support by, 12, 23, 83, 85, 90, 91

Young Commission and, 22

Regulation, as indirect incentive for industrial investment, 5, 20, 22

Research

Federal support for directed, 25-27, 83

Japanese support for basic, 7, 9, 26, 61

U.S. support for basic, 12, 23, 24, 56, 83, 130, 133,

139

marketing, 34

multidisciplinary, 9, 85, 102-103, 105-107, 133

Research and development (R&D), 3-5, 7-11, 17-20

collaborative HTS, 133-137

continuity in funding, 123, 124-125

coordinating Federal, 89, 90, 128, 140-141

corporate strategies for, 4, 6-7, 9-11, 29, 32-35, 51-59

CTA intramural, 145-146, 147

diversity in support for, 123, 124

Federal budget for, 5, 9, 17, 23, 83, 87

Federal funding of HTS, 6, 9, 23-27, 84, 86-93, 128,

133-137, 140-141

industrial funding of, 6-7, 21, 54, 57, 58, 60, 61, 84,

163, 164

marketing of, 8-9, 29-31

parallel, 34-35, 66, 67, 163

policy issues and options concerning funding levels

and priorities for Federal, 8, 9, 85-86, 87-93

science and technology (S&T) agency for coordinating, 128, 140-141

U.S. industry view of long-term, 4, 6-7, 10, 52, 53,

55-56, 131-132

Research Applied to National Needs (RANN)

program—NSF, 107, 125

Saito, Shinroku, 76

Science. See Research

Science and Technology Agency (STA)–Japan, HTS

support by, 68, 69, 76

Science base. See Knowledge base

Sematech, 5, 35, 134, 136

Siemens, 43

Sloan, Alfred, 33

Small Business Innovation

22, 115

Small Business Innovation

115

Development Act–1982,

Research, Federal (SBIR),

Sony, VCR development by, 31, 46

South Korea

export policy effectiveness of, 5, 61

VCR development by, 46

Sperry Univac, 71, 72

SQUIDS, 161, 162

Stanford University, 58, 60

Stevenson-Wydler Technology Innovation Act–1980,

22, 143

Strategic Defense Initiative (SDI)

HTS use in, 24, 85

LTS research for, 40, 162

Strategic Defense Initiative Organization (SDIO), 93

Strategies

Japanese R&D, 9, 10-11, 29, 33-35, 51-52, 60-67

key ingredients of Federal HTS development, 123,

124

options for Federal Government HTS commercialization, 12-13

product/process, 33-34

U.S. industrial R&D, 4, 6-7, 10, 34, 35, 51-52, 53-59

see also Policy

Tanaka, Shoji, 72-73, 76

Taxes, as indirect incentive to industrial investment,

5, 20, 22, 92-93

Technologies

commercialization of (overview), 3-5, 17-20

DoD’s postwar development of, 96-98

industrial competitiveness and development level

of, 4, 21

strategies for commercializing HTS, 12-13, 123-142

Technology base. See Knowledge base

Technology push, 123, 124, 125-126

Technology transfer

from Federal laboratories, 9, 22, 23, 83, 86, 110-114,

130

policy issues and options concerning U.S./Japanese,

9, 86, 115-117

Technology Transfer Act—1986, 111, 118

Toshiba

R&D support by, 64, 74, 76

VCR development by, 29, 31, 45

Training. See Education

Transition temperatures

current flow and, 154

discovery of ceramics’ higher, 26, 155,

United States. See Government, Federal

Universities

163

Us.

funding for HTS R&D at U. S., 6, 12, 85, 102, 103,

104, 132-133

HTS R&D in Japanese, 72-73

multidisciplinary R&D within, 9, 85, 102-103, 105-

107, 13 1

University Research Initiative (URI)–DoD, 107

U.S. Steel, 55
171

Video-cassette recorders (VCRs), commercialization of Westinghouse, 59

R&D results involving, 29, 31, 45-47

Visibility, level of R&D programs, 123, 125, 137, 139 Young, John, 22

Young Commission, 22, 128, 140

West Germany

export policy effectiveness of, 5 Zenith, 46

R&D support by, 43