Nanomanufacturing and U.S. Competitiveness: Challenges and Opportunities
Released: 2014-05-20T00:00:00

Letter

Background and Discussion of How the United States Compares with Other Countries

According to forum participants, nanomanufacturing is an emerging megatrend that will bring diverse societal benefits and new opportunities—potentially creating jobs through disruptive innovation. Further, nanomanufacturing has characteristics of a general purpose technology (GPT)—such as electricity or computers, or historically, innovations such as the smelting of ore and the internal combustion engine.

As one participant said: “Everything will become nano.”

Figure 1, below, provides examples of nanomanufacturing products that illustrate four diverse areas being affected by nanomanufacturing. Different manufacturing activities occur at different stages of the value chain.

Comparison for Nanotechnology R&D: Two Indicators

According to experts, the United States likely leads in nanotechnology R&D today but faces global-scale competition—which one forum participant described as a “moon race.” Two indicators of how the U.S. compares with other countries are R&D funding levels and scientific publications.

With respect to R&D funding, there is some uncertainty about international comparisons because relevant definitions may vary across nations—and some countries may not adequately or effectively track R&D investments or not share such information externally. However, forum participants viewed the United States as currently appearing to lead in terms of overall (that is, combined public and private) funding of nanotechnology R&D. When public funding alone was considered, a participant in the July 2013 forum presented projections showing the United States as likely being surpassed by some other nations.

With respect to scientific publications, the United States appears to dominate in numbers of nanotechnology publications in three highly cited journals—which is an apparent indication of U.S. competitiveness in quality research. However, China overtook the United States in 2010 through 2012 (the most recent year reported) in terms of the quantity of nano-science articles published annually.

Comparison for Nanomanufacturing: Four Industry Areas

A semiconductor is the generic term for the various devices and integrated circuits that regulate and provide a path for electrical signals. As such, semiconductors are the foundation of the electronics industry. semiconductors. However, they also said that U.S. manufacturing in this area has declined (although some plants are located here) and that the United States does not have a strategy to assure U.S. leadership in the semiconductor industry.

Nano-based concrete: Concrete is the most heavily used construction material in the world—with about 5-billion cubic yards annually produced worldwide—and demand for it is expected to increase to meet the infrastructure needs of a growing global population. Nanomaterials can enhance the performance of the concrete used to construct this infrastructure. These materials might potentially result in roads, bridges, buildings, and structures that are more easily built, longer-lasting, and better-functioning than those that currently exist. Experts offered differing views on U.S. global competitiveness in the commercialization and use of nanomaterials in concrete. A key forum participant said that while cement for domestic use is produced in the United States, today’s dominant companies— which are spearheading development of new technologies—are headquartered elsewhere (although this industry was previously dominated by the United States). Additionally, some experts said that other countries are spending more resources than the United States to promote commercialization; for example, one expert said that China established a national technology center to improve its competitiveness and domestic production of high-value, nano-based construction products. On the positive side, chemical admixtures are one means to introduce nano-materials into concrete—and the United States has a 15% market share of chemical sales, worldwide.

Key Challenges Facing U.S. Nanomanufacturing

According to forum participants and experts interviewed, challenges to U.S. competitiveness in nanomanufacturing include U.S. funding gaps, significant global competition, and lack of a U.S. vision for nanomanufacturing, among others.

U.S. Funding Gaps and Possibly a Diversion of Venture Capital

Participants said that in the United States, government often funds research or the initial stages of development, whereas industry typically invests in the final stages. As a result, U.S. innovators may find it difficult to obtain either public funding or private investment during the middle stages of innovation. For nano-innovators, this support gap can characterize the middle stages of both (1) efforts to develop a new technology or product, and/or (2) efforts to develop a new manufacturing process. Thus, U.S. innovators may encounter two support gaps, which participants termed: the Valley of Death (the lack of funding or investment for the middle stages of developing a technology or product), and the Missing Middle (a similar lack of adequate support for the middle stages of developing a process or an approach to manufacture the new product at scale).

The Valley of Death begins after a new technology or product has been validated in a laboratory environment and continues through testing and demonstration as a prototype in a non-laboratory environment (but before industry acquires it as a commercial technology or product). The Missing Middle occurs during analogous stages of the manufacturing-innovation process, as illustrated below (fig.2). Participants further said that substantial amounts of funding/investment are needed to bridge the Valley of Death and the Missing Middle—and that high costs can be a barrier to commercialization, especially for small and medium-sized U.S. enterprises.

Additionally, some said that recently, venture capital (VC) funding has been diverted from physical science areas like nanotechnology to fund new ventures in Internet services that may provide larger and faster returns on investment.

Significant Global Competition

Varied forum participants and experts interviewed made statements to the effect that other nations do more than the United States in terms of government investment in technology beyond the research stage. According to participants, the funding and investment gaps that hamper U.S. nano-innovation (such as the Missing Middle) do not apply to the same extent in some other countries—for example, China and Russia—or are being addressed. Multiple participants referred to the European Commission’s upcoming Horizon 2020 program, specifically mentioning a key program within Horizon 2020: the European Institute of Innovation and Technology or EIT, which emphasizes the nexus of business, research, and higher education. The 2014-2020 budget for the EIT portion of this European Commission initiative is €2.7 billion (or close to $3.7 billion in U.S. dollars as of January 2014).

Lack of a U.S. Vision for Nanomanufacturing

Multiple forum participants said that the United States lacks a vision or However, one explained strategy for a nanomanufacturing capability.that such a strategy could be designed by (1) proceeding from a vision or goal to the examination of the social, technological, economic, environmental, and political elements of the relevant systems and their interactions with one another; (2) understanding the basic science, engineering, and manufacturing involved; and (3) consulting the full range of stakeholders. This participant said that although systems thinking and the design of a grand strategy, based on a vision, are often employed following a crisis that motivates a nation, such an effort could be usefully pursued in advance of a crisis, using foresight. Such an effort would reflect the statements of another participant who said, in effect, that the future of nanomanufacturing for the United States is limited only by our ability to envision what we want to see realized. This approach would likely draw upon the U.S. federal government to develop and articulate the strategy—in coordination with industry, academia, nonprofits, and state and local governments. Additionally, some federal effort is implied for implementation, but the level of funding and the mix of funding sources (not specifically discussed at the forum) would likely be specified as part of developing a vision and strategy for nanomanufacturing.

Other Competitiveness Challenges

Forum participants described further challenges to U.S. competitiveness in nanomanufacturing, including the earlier loss of an industry, as discussed above for lithium-ion batteries—or even extensive prior offshoring in some industries, which can be important, in part because, as one participant said: “when we design here ship abroad, we lose this shop- floor-innovation kind of mentality” and threats to U.S. intellectual property on the part of some other countries or entities within those countries—which occur with respect to both university research and private R&D on, for example, manufacturing processes.

Some Key Policy Issues Concerning Nanomanufacturing

Forum participants suggested the need to address policy issues in U.S. research funding, challenges to U.S. competitiveness in nanomanufacturing, and other areas, including environmental, health, and safety (EHS) issues.

U.S. research funding. Forum participants said it is essential for the United States to maintain a high level of investment in fundamental nanotechnology research. This is because (1) some other countries are now making significant investments in R&D and (2) ongoing research breakthroughs will drive the future of nanomanufacturing. One participant emphasized that as nanotechnology increasingly moves into manufacturing, it may be important to consider not only continuing funding for fundamental nanotechnology research, but also targeting some funding to early stage research on nanomanufacturing processes.

Challenges to U.S. competitiveness in nanomanufacturing. Forum participants said the United States could improve U.S. competitiveness in nanomanufacturing by pursuing one or more of three approaches, which might be viewed either as alternatives or as complementary approaches.

These three approaches are described in table 1, below.

Examples of Public- Private Partnerships Designed to Promote Innovation in Nanomanufacturing

Two examples of U.S. public-private partnerships that are designed to promote innovation in nanomanufacturing are housed in universities. A related example with similar goals is a user facility that is located within a federal laboratory.

The NASCENT Center

The Center for Nanomanufacturing Systems for Mobile Computing and Mobile Energy Technologies (NASCENT) was founded at the University of Texas at Austin in 2012, with funding from NSF. Two key objectives are: to create processes and tools for manufacturing nano-enabled components for mobile computing, energy, healthcare, and security— as well as simulations for testing potential nanomanufacturing approaches, and to provide an ecosystem with computational and manufacturing facilities—for example, large-area wafer-scale and roll-to-roll nanomanufacturing,faculty, staff, and students. as well as the university’s resources, including The Center’s overall goal is to facilitate the rapid creation and deployment of new products and to mitigate the risks associated with the Valley of Death and the Missing Middle. A co-director of NASCENT told us that another goal is to use “10 years of NSF funding to develop the center infrastructure so it will . . . self-supported from industrial partnerships and other funding sources.” Center partners include industrial partners—such as toolmakers, materials suppliers, and device makers—that will provide both technical and financial support; companies ranging from start-ups to well-established firms that will implement or adopt technology created by the center; and “translational research partners” such as technology incubators and technology funds.

The College for Nanoscale Science and Engineering

The College of Nanoscale Science and Engineering (CNSE), established in 2004, is part of the State University of New York and is located in Albany—within the existing regional (Hudson Valley) ecosystem centered on the semiconductor industry. CNSE is designed as a unique research, development, prototyping, and educational public-private partnership for advancing nanotechnology. A chief CNSE partner is SEMATECH—a global consortium of major computer chip manufacturers that coordinates cutting-edge R&D projects on semiconductors and is headquartered at CNSE. CNSE has more than 300 members and strategic partners that include large U.S.- and non-U.S.-headquartered private companies such as IBM, Intel, Samsung, and Global Foundries; small and medium-sized companies; universities from across the United States; and regional community colleges and economic development organizations, as well as government-agency sponsors. CNSE facilities allow the development of semiconductors just short of mass production—which is relevant for companies attempting to transition from an innovative concept to a prototype and to prepare for large-scale production. CNSE has developed models of pre-competitive collaboration among its partners, which use high-tech CNSE equipment that would be too costly for many individual companies to purchase.

The Center for Nanoscale Science and Technology

The Center for Nanoscale Science and Technology (CNST) is hosted by a federal laboratory at the National Institute of Standards and Technology (NIST). CNST is a user facility with baseline sponsorship through the Department of Commerce, which is augmented by external commercial funds in the form of user fees paid by industry, academia, government labs, and states. CNST supports the U.S. nanotechnology enterprise from discovery to production by providing industry, academia, NIST, and other government agencies access to world-class nanoscale measurement and fabrication methods and technology. The CNST’s shared-use nanotechnology-fabrication capability (called NanoFab) gives researchers economical access to and training on a commercial state-of-the-art tool set required for cutting-edge nanotechnology development. The simple application process is designed to get projects started in a few weeks.

Looking beyond the current commercial state of the art, the CNST’s nanotechnology-metrology capability offers opportunities for researchers to collaborate on creating and using the next generation of nanoscale measurement instruments and methods.

Concluding Remarks

Based on the views of a wide range of experts, nanoscale control and fabrication are creating important new opportunities for our nation—as well as the need not only to recognize challenges, but also, where challenges exist, to act in response to them. The United States leads in some areas of nanomanufacturing, but faces increasing international competition. Challenges specific to U.S. competitiveness include, among others: possible weaknesses associated with prior extensive offshoring in the U.S. funding gap known as the Missing Middle, some U.S. industries, and the lack of a national vision and strategy for the United States to lead or sustain a high level of competitiveness in global nanomanufacturing markets in the years ahead.

Experts outlined three main approaches for responding to these challenges: (1) reviewing and renewing policies that undergird U.S. innovation; (2) supporting public-private partnerships that address U.S. funding gaps—especially as these apply to nanomanufacturing; and (3) defining a vision and strategy for achieving and sustaining a high level of U.S. competitiveness in nanomanufacturing. The potential benefit that experts see in pursuing forward-looking approaches such as these is to help chart a favorable course for the global economic position of the United States as we move further into the twenty-first century.

Chairman Bucshon, Ranking Member Lipinski, and Members of the Committee, this concludes my statement. I would be happy to answer any questions you may have.

GAO Contacts and Staff Acknowledgments

If you or your staff have any questions about this testimony, please contact me at (202) 512-5648 or personst@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this testimony. GAO staff members who made key contributions to this testimony include Judith Droitcour, Assistant Director, and Eric M. Larson, Analyst-in-Charge.

Appendix I: List of Forum Participants

Gene L. Dodaro (Host), Comptroller General of the United States George Allen, Former U.S. Senator and former Governor of Virginia Tina Bahadori, Environmental Protection Agency Sarbajit Banerjee, University at Buffalo, State University of New York Lynn L. Bergeson, Bergeson & Campbell PC Bjorn Birgisson, KTH Royal Institute of Technology Bill Canis, Congressional Research Service Vicki L. Colvin, Rice University Joseph DeSimone, University of North Carolina Bart Gordon, Former Chairman, Committee on Science and Technology, U.S. House of Representatives, and Partner at K&L Gates LLP John Ho, QD Vision, Inc.

Appendix II: Examples of General Purpose Technologies

Appendix II: Examples of General Purpose Technologies ”Nanotechnology has yet to make its presence felt as a general purpose technology, but its potential is so obvious and developing so quickly that we are willing to accept that it is on its way to being one of the most pervasive general purpose technologies of the 21st century” (Lipsey et al. 2005, 132).

Appendix III: List of References

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Christensen, Clayton M., and Michael E. Raynor. 2003. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, Massachusetts: Harvard Business School Publishing Corporation.

Council on Competitiveness. 2007. Competitiveness Index: Where America Stands. Washington, D.C.: Council on Competitiveness, January.

Executive Office of the President. 2012. Report to the President on Capturing Domestic Competitive Advantage in Advanced Manufacturing. Washington, D.C.: Executive Office of the President, July.

GAO (U.S. Government Accountability Office). 2012. Nanotechnology: Improved Performance Information Needed for Environmental, Health, and Safety Research. GAO-12-427. Washington, D.C.: GAO, May 21.

GAO (U.S. Government Accountability Office). 2014. Nanomanufacturing: Emergence and Implications for U.S. Competitiveness, the Environment, and Human Health. GAO-14-181SP. Washington, DC: January.

Holman, Michael. 2007. “Nanotechnology’s Impact on Consumer Products.” (Slide presentation at a meeting organized by the Directorate- General for Health and Consumers, European Commission, October 25, 2007.) New York, New York: Lux Research, Inc.

Lipsey, Richard G., Kenneth Carlaw, and Clifford Bekar. 2005. Economic Transformations: General Purpose Technologies and Long-term Economic Growth. New York: Oxford University Press, Inc.

Morse, Jeffrey D. (ed.). 2011. Nanofabrication Processes for Roll-to-Roll Processing: Report from the NIST-NNN Workshop. Workshop on Nanofabrication Technologies for Roll-to-Roll Processing. Seaport Convention Center, Seaport Boston Hotel, Boston, Massachusetts, September 27-28.

Persons, Timothy M. 2013. “Comptroller General Forum on Nanomanufacturing: Overview.” Slide presentation at the Comptroller General Forum on Nanomanufacturing. Washington, D.C.: U.S. Government Accountability Office, July 23–24.

Roco, Mihail C. 2013. “Global Investment Profile in Nanotechnology— Comparing U.S. to Selected Economies.” Slide presentation at the Comptroller General Forum on Nanomanufacturing. U.S. Government Accountability Office, Washington, D.C., July 23.

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