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Friday, March 25, 2005

Bright Future for Obducat & Molecular Imprints

Today’s news brought to my attention two interesting—and related—news items. The first was an article entitled Life beyond CMOS that noted that companies like Intel, Infineon, STMicroelectronics and Philips are developing CMOS chips with 65nm size features and, longer term, must move to the 45nm range—a development which will require a new fabrication method. The second article announced that sixteen chip makers have now joined the “elite $1 billion capital spending club.”

These two developments should be of great interest to nanotech investors because as those sixteen companies continue to manufacture ever smaller integrated circuits they will need new nanoscale equipment.

This brings me to two companies that I believe have great long-term potential. The first one, Obducat, is a publicly-traded company on the Swedish stock exchange; while the other company, Molecular Imprints, is still private. (Full disclosure: I have not yet invested in Obducat but am in the process of doing more research).

Obducat is an international leader in the emerging field of nanoimprint lithography. According to the International Technology Roadmap for Semiconductors, the future production of electronic devices will require new lithography solutions and Obducat is an early leader in nanoimprint lithography (NIL)—having already sold dozens of its NIL presses to companies such as General Electric as well as major academic institutions.

To date, Obducat has not experienced an increase in sales and its small size and relative dearth of capital leave it at the mercy of large competitors with deeper pockets, but I believe it is worth keeping an eye on--especially if it can sell some of its equipment to a large chip manufacturer like Intel or IBM.

The second company is Molecular Imprints, a world-leading manufacturer of step-and-flash imprint lithography (S-FIL). S-FIL is a stamping lithography technique that is capable of delivering resolution to 20nm and below at a high speed and low cost (estimated to be 10 times less expensive than today’s state-of-the-art).

Many in the semiconductor industry are convinced that progress must continue along the lines of Moore’s Law—-which succinctly states that the number of circuits capable of being placed on a chip doubles every 12-18 months. This means that semiconductors will move from 90nm to 65nm and, soon, to 45nm resolution. Molecular Imprint has the ability to potentially jump the fabrication process down to the 20nm level. Furthermore, its S-FIL technology is well-positioned to deliver a low-cost, low complexity alternative to today’s optical lithography tools because it can operate at lower temperatures and pressures than the technology of some of its leading competitors (like NanoNex).

Furthermore, Molecular Imprints has an extremely strong intellectual property portfolio and has already lined some key partners and customers--including Hewlett-Packard. It also has a $36 million grant from the National Institute of Standards and Technology (along with KLA-Tencor and Motorola) to develop nano-imprint lithography infrastructure for low cost, high-throughput replication at the 65 nm node and below.

If Molecular Imprints goes public in 2005, I would strongly encourage investors to consider an investment. In the interim, publicly-traded Harris & Harris (TINY) offers an indirect way for the individual investor to gain at least a small equity stake in the company.

Jack Uldrich

Related Links:
Obducat
Molecular Imprints