Wolfe: Spinning Potential
12/03/2004 12:00 am EST
Few industries have the potential to truly revolutionize the world. One that does is nanotechnology, and in this sector, there is no better guide than Josh Wolfe. Here, he sorts through the rather complex story of NVEC, and its potential in the field of spintronics.
"In an emerging field like nanotech, ups and downs are inevitable. There is always going to be hype, speculation, mystery, and promise. This is precisely the story of the development of spintronics-based MRAM—the fast, dense, non-volatile memory technology that remains poised to revolutionize computer memory and portable consumer electronics. Projected by some to become a $50 billion industry by 2010, nearly every major tech company now has a hand in MRAM, and much of it seems to center around one small but crucial player, NVE Corporation (NVEC NASDAQ), whose intellectual property portfolio may provide the basis for MRAM’s development.
"Spintronics is a nanotechnology that utilizes a quantum property of electrons called spin rather than its electric charge. An electron can either be in a state of ‘spin up' or 'spin down.’ If these states can be controlled, they can comprise a binary language capable of encoding information such as in computer memory. This is precisely the idea behind MRAM, magnetic random access memory, which uses magnetization to manipulate spin states. W hat’s the significance of all of this? The advantages of storing information in magnetism rather than electrical charge are enormous.
"Today’s forms of RAM, which use charge to represent data, need to be supplied with a constant flow of electricity. In fact, their memory cells need to be refreshed thousands of times per second, which uses up a significant amount of electrical power. Spin, on the other hand, is much more stable—once the spins are aligned, they stay that way unless you apply a magnetic field to flip them, so a computer running on MRAM uses much less power. What’s more, in the event of a power outage or a system crash in a computer running regular RAM, the data is lost the second the electricity stops flowing. Spin orientation, on the other hand, stays put, so an MRAM computer doesn’t lose data. This feature, called non-volatility, marks a tremendous improvement in computer memory design.
"MRAM also eliminates the boot-up process, yielding ‘instant-on’ computers that turn on and off as quickly and easily as a light switch. MRAM has been called the holy grail of memory, because it promises more compact, more efficient, and more secure data storage than conventional RAM. It combines the density of DRAM, the speed of SRAM, and the data integrity of Flash—all of which translates to instant-on non-volatile computers, and super-fast, tiny, reliable portable devices like cell phones and MP3 players. It’s no wonder that so many companies are scrambling to get their hands on it.
"NVE has been developing spintronic-based MRAM since 1989, working mainly off government research grants. They’ve built up an impressive intellectual property portfolio, consisting of 32 issued US patents and over 100 patents worldwide, either issued, pending, or licensed—including the basic patents needed for a wide range of commercial MRAM applications both for the near and long term. It seems difficult to imagine that other companies could develop MRAM technology that doesn’t in some way overlap with NVE’s patents.
"The million dollar question is, just how crucial is NVE’s intellectual property for MRAM commercialization? As of now, NVE has licensed its intellectual property to both Motorola and Cypress Semiconductor, two key players in the MRAM game. It is estimated that the first commercial MRAM products are set to appear in the beginning of 2005 in lower-speed applications, and consumer electronics will be quick to follow. The coming months will set the tone for the industry, and may cement NVE’s position as an IP powerhouse. What remains clear is that MRAM will soon truly change the face of electronics, and the companies leading the revolution will reap the bounty of the information age’s latest incarnation.
"We would add that the shares of NVE recently swooned in trading following a widely followed financial Web site's criticism of the company's prospects. We do not feel that this article was ‘news’. There were no third-party interviews or new research. It was an opinion piece by a writer with unlisted credentials or affiliation. We’d also note that NVEC has been long under attack by controversial short-seller Manuel Asensio who wages press release campaigns that successfully shake investor confidence.
"The race to commercialize MRAM has entered the home stretch. Who’s going to come in first, who’s going to profit, and how is it all going to affect the landscape of nanotech investment? We remain confident of NVE’s prospects despite some vocal detractors, and a few investment firms are beginning to wake up to this potential. In the meantime, uncertainty still lingers. And that means long or short, this stock will remain volatile. In the absence of any material news, we stand by our contention that NVE's intellectual property is valuable and reiterate our Buy rating on the stock."