nanoREV.

Three reasons why a declining economy can be good for nanotechnology

With the recent decline of the stock market, the reduction of lending, and the dearth of IPOs in 2008 things may look bleak for emerging technologies such as nanotech. But, while near term projections may look bad, in the long term economic decline could actually be extremely beneficial to technological developments involving nanomaterials. Here are three reasons why:

1.   Less resources force innovators to look for simpler more economical solutions.

Most invention is incremental in nature and build upon decades of earlier developments. For example, the  techniques to manufacture integrated circuits have been developed over about 50 years and while the improvements in these techniques have been significant and have led to cheaper and more efficient electronics, the manufacturing cost and complexity have increased at a similar pace in accordance with Moore’s 2nd law. Semiconductor and electronics companies faced with a rapid decline in capital may be forced to look for dramatically different approaches to fabrication in order to stay in business. It is very likely that nanomaterials and nanolithographic techniques may play a key role in such new fabrication.   

2.   Nanotech. start-ups will be forced to focus on applications rather than on pure materials.

With less venture capital to go around it is likely that investment will go to those companies having business plans with clearly identified markets and applications. Start-ups lacking such direction will be forced to reprioritize or go out of business. While harsh in the short term this could be a good thing in the long run leading to new market creation.

3.   The fall of the stock market will weaken older, public companies allowing newer, non-public companies a competitive advantage.

Companies not relying on public stock have a strategic advantage and more freedom to operate than public companies. Meanwhile older, public companies which need to answer to shareholders will be forced to compromise and may be more willing to deal with newer companies offering cost-cutting solutions offered by nanomaterials. In addition, in good economic times, distributors may have no desire to work with new companies offering cost reduced products due to longstanding relationships with more established companies. However, when the economy declines to a sufficient degree the distributors may reprioritize and give more weight to cost reduction than customer relationships offering a window of opportunity to newer competitors.