Nanopierce Technologies (NPCT)

[GeoffKrone]

Nanopierce's Technology: Orientation for New Investors

(I guess some of y'all may have seen this before.)

If you're new to Nanopierce, and especially if you're unfamiliar with the world of microelectronics and struggling to get a handle on what this "NCS Technology" is all about, this post is for you!

The "Nanopierce Connection System" (NCS) is a revolutionary new method of making electrical connections. The simplest and most familiar way of making a connection is just to place two conductors (wires, for example) in contact with each other. That's what we do when we plug an appliance into an electrical outlet, or when we hook up a set of jumper cables to jump-start a car with a dead battery. Electricians connect the wires in our houses by screwing "wire nuts" onto the bare tips of the wires to hold them together. Most people are also familiar with solder, a metal alloy which is melted and then allowed to cool and turn back into a solid. It's used when we want a very good connection (one which allows electricity to flow through the connection with little resistance) and we don't need (or want) the connection to be easily disconnected.

NCS technology involves a special method of preparing the surface of an electrical conductor so that it will make an extremely good (low-resistance) contact with another conductor when the two conductors are pressed together. No solder is required. One of the surfaces to be connected is coated with a very thin layer of metal (nickel) containing tiny particles of diamond "dust." The pointy metal-coated diamond particles stick up above the surrounding surface. When the treated surface is pressed tightly against the surface of another (untreated) electrical conductor, the sharp pointed diamond particles pierce the surface of the other conductor, establishing a very good electrical connection. No heating is required because no solder is used.

While there might be some uses for NCS in connecting relatively large conductors like the wiring in your house or car, it is in making the extremely tiny connections which are required in manufacturing semiconductor devices ("chips" for electronic devices) that NCS yields enormous advantages over existing technologies.

The potential market for NCS is the entire electronics industry: computer processors and memory chips, the tiny chips used in "smart card" and "smart label" applications, light-emitting diodes ("LED's"), cell phones, etc. I will discuss several of these market segments individually.

Complex circuits, including memory chips (DRAM's etc.), CPU's and other computer components, cell phone chips, etc.

Background: Most people do not realize that these chips are not manufactured individually. They are made from large "wafers" of silicon. On each wafer, there may be dozens, hundreds, even thousands of individual chips, depending on the size of the wafer and the size of each chip. (Technically, each individual chip is called a "die"; the plural is "dice.") In 2002, chip makers are beginning to use the largest wafers ever: 300 mm. (approx. 12 inches) in diameter. When the internal circuitry for all the chips on the wafer is finished, the individual chips are separated, but they are not yet ready for use. In order to do anything useful, the chip has to be able to communicate with the "outside world." Connections have to be made between the circuitry on the chip and the device (computer, cell phone, etc.) that it's used in.

If you've seen a CPU or memory chip, you will recall that they usually look kind of like centipedes, with a row of tiny metal legs on each side. These "legs" are usually plugged into a socket on a circuit board (often abbreviated "PCB' for Printed Circuit Board). The chip receives its power through some of these legs, but most of the "legs" are used to send instructions and data to the chip and to receive output from the chip. Relatively simple chips may have about a dozen "legs," while more complex chips have hundreds of them. Each of those little "centipede legs" has to be individually and precisely connected to the proper point on the chip itself, so that it makes contact with the proper portion of the complex circuitry within the chip.

For quite a few years, the standard method of making these connections was a technique known as "wire bonding." This technique works well enough, but it has its disadvantages, perhaps the biggest one being that the connections must be made one at a time. More recently, "flip chip" manufacturing has mounted a serious challenge to wire bonding because all the connections are made at once.

"Flip chip" is kind of like making a sandwich. Imagine that you have a chip, freshly "diced" from its wafer, lying on the table with the side that has all the I/O connection pads facing up. Next to that, imagine a thin slice of a nonconductive material which is the same size and shape as the chip, with all those little "centipede legs" already built into it. (The "centipede legs" are pointing down, the same way that they will eventually be when the finished chip is installed into a socket.) The thin slice with the "centipede legs" is called the "substrate." Each "centipede leg" extends onto the surface of the substrate. Now we take the chip and flip it over (which is where "flip chip" comes from) and stick it down on top of the substrate. The I/O (Input/Output) pads on the chip and the extensions from the "centipede legs" are carefully located so that they will match up when the two slices of our "sandwich" are pressed together. However, in this case, you can't make a good enough connection just by having a conductor on one side press up against the conductor on the other side. The existing "state of the art" for making good connections has been to use solder. An incredibly tiny "ball" of solder is placed at each connection point. (There are numerous techniques for doing this.) After the two layers are put together, the whole assembly is heated just enough to melt ("reflow") the solder. When it cools and solidifies, you have a very good electrical and physical connection.

Flip chip production methods using solder can be much more efficient than wire bonding. Other benefits of flip chip include cooling of the chip (heat flows easily from the chip through the solder to the substrate) and holding the two layers solidly together. Compared with wire bonding, flip chip methods can also provide better connections and shorter electrical pathways, yielding greater efficiency and speed of operation of the chip. Also, wire bonding can only be done along the edges of the chip. Flip chip solder bumps can be spread over the entire mating surfaces of the chip and substrate, allowing far more I/O channels on a chip of a given size.

However, flip chip techniques using solder are not perfect by a long shot. There are an awful lot of steps in the production process. On the chip itself, the metal used for the surface of the bond pads is usually aluminum, and solder doesn't stick to aluminum very well at all. Also, when aluminum is exposed to air, it very quickly forms a surface layer of oxide which impedes the flow of electricity. In one approach to this problem, a process called "sputter etching" is used to remove the oxide and expose a fresh aluminum surface. Then several layers of different metals are laid down onto the aluminum. These layers of metal are called the "Under Bump Metallization" or "UBM." First, the aluminum is coated with an adhesion layer, which prevents further oxidation of the aluminum and also gives the next layer something it can stick to. The next layer may be a "diffusion barrier" to keep atoms of the solder bump metals from finding their way into the body of the chip and ruining it. Then there is another layer which provides for solder "wettability." Then the solder ball itself is formed on top of the UBM, using any of about a dozen available techniques. Heat is then applied to melt the solder. The chip and substrate are now solidly connected at dozens or even hundreds of separate points, but the thickness of the solder balls prevents the two layers from actually touching each other between the intended connection points. This is good, because if they did touch, the whole thing would short out, but you can't just leave the chip with a tiny gap between the layers because sooner or later moisture might get in there and short it out anyway! So the last step is to fill the gap with a nonconductive "underfill" which is dispensed along the edges of the chip and drawn into the gap by capillary action. The underfill also helps to glue the "sandwich" together. It helps to keep the solder bump connections from breaking, particularly when the chip and substrate expand at different rates when they are heated. (This is more of a problem with large chips than small ones.)

As you can see, solder bump methods require a lot of production steps, which can take a long time. Also, there is a limit to how closely solder bumps can be placed to one another, without danger that they will overflow their boundaries when they are reflowed and make unintended contacts with their neighbors, destroying the chip. Also, traditional solders contain Lead (Pb). Governments in many nations are in the process of requiring that Lead be eliminated from electronic products because of pollution issues which arise when the product is discarded. Lead-free solders exist, but they may not work as well and they almost always have to be heated to higher temperatures than solders that contain lead.

Instead of using solder balls, it is possible to use a conductive adhesive to make the connections. However, this requires extremely precise dispensing of the adhesive and has other limitations of its own which have kept this technology from mounting much of a challenge to solder ball methods.

This is where the "WaferPierce" version of Nanopierce's NCS technology comes in. While the chips are still on the wafers, an electroless plating process is used to coat the aluminum contact pads with a thin layer of nickel containing particles of diamond dust. A final very thin layer of gold may be put on top for even better initial electrical performance and resistance to corrosion over the years. After the dice (chips) are cut from the wafer, each die is glued to its substrate under slight pressure, using a non-conductive adhesive which takes the place of the underfill in the solder bump method. Little precision is required in the application of the nonconductive adhesive. It is unnecessary to avoid getting adhesive on the contact points, because when the two layers are pressed together, the sharp points of the metal-coated diamond particles will pierce through the adhesive, as well as through any oxide which may exist on the surface of the mating contact point, establishing an excellent electrical connection. In fact, the nonconductive adhesive shrinks as it cures, pulling the two layers tightly together. NCS connections also provide good heat transfer from the chip to the substrate to help keep the chip cool. Their ability to conduct electricity is at least as good as solder and better than conductive adhesive. The contact points can also be considerably closer together than solder balls without risk of shorting out. Because the plating process is applied to the entire wafer at once, tens of thousands of contact points are treated at the same time.

Using either solder ball flip-chip or NCS technologies, the substrate does not have to be the typical "centipede" which is stuck into a socket which is in turn attached (soldered) to a printed circuit board. If you don't care about being able to remove the chip easily from its board, the chip can also be attached directly to the circuit board itself. In this case, the PCB itself becomes the substrate. "Chip on board" is not a Nanopierce innovation, but NCS is readily adapted to it.

Smart Cards and Smart Labels

"Smart cards" and "smart labels" represent one of Nanopierce's most important target markets for quick commercialization. A smart label is just like any other label: a small sheet of paper or plastic with printing on one side and adhesive on the other. The printed side can display a bar code, a shipping address, whatever you want. The difference is that embedded within the smart label is a tiny electronic chip or "transponder." This chip can store information. The information is sent to and retrieved from the chip by radio waves. The device which "reads" the information on the chip is usually just called a "reader." (I guess they ran out of confusing technical names....) Because "Radio Frequency" waves are used to read the tag, and because the smart label is used to "IDentify" whatever it's attached to, this is often referred to as "RFID" technology. A "smart card" is just like a smart label, except that the chip is embedded in thicker, stiffer plastic --- just like the credit cards you're familiar with, except that the magnetic stripe on the back is replaced by a chip which can store far more information. Smart cards are used for "access control" (opening doors), paying tolls on highways, and (in Europe) making phone calls at public phones. Banks are beginning to combine them with credit cards, and the Mobil Speedpass is basically a smart card in a different physical form.

In the supermarket, the main benefit of smart labels will be easier scanning of items. With bar codes, a cashier has to handle each item and scan it -- sometimes repeatedly, if the scanner fails to read the bar code correctly on the first try. Speeding up the checkout process will benefit customers and stores alike. However, properly managing inventory may be even more important. With a smart label on every item, a retail store can know precisely what's in stock and where it is at all times, which in turn makes it possible to order products efficiently when they are needed. We are very close to seeing smart labels on every piece of luggage carried by every airline, and every package shipped by the major carriers like FedEx and UPS. These applications alone would consume billions of smart labels every year, and Nanopierce is aiming for a share of that market.

The chips in smart labels and smart cards are getting smaller all the time. Chips measuring a little over a millimeter on each side are now common. RFID technology can be either "active" or "passive." The active type is powered by a built-in battery, which gives it a much longer range (maybe as much as 300 feet) at a much higher cost. The passive type has no on-board power supply. It obtains its power from the radio waves transmitted by the reader. Passive tags have a very limited range --- about a meter at best, often less. Even a passive tag, though, has a big advantage over a bar code label: You don't have to be able to see it to read it.

So what does NCS have to do with smart labels and smart cards? Well, like any other radio device, the little tiny chip has to have an antenna to send and receive information. The antenna doesn't have to be a wire or a metal rod -- it can even be a thin stripe of electrically conductive ink printed on the label. But the chip has to be connected to its antenna, and the connection has to hold up even when the flexible label is bent repeatedly. You obviously can't use solder, since the heat would melt the label or set it on fire! NCS can be applied to the contact point on the chip, the chip can be glued to the label using a nonconductive glue, the metal-coated diamond particles pierce through the glue, and you've got a durable low-resistance connection. The cost of producing smart labels can be very substantially reduced using NCS, and cost has been the main obstacle to widespread use of smart labels.

Looking a little farther into the future, the smart tag experts at MIT's Auto-ID Center envision an "Internet of Things" in which virtually every consumer product would carry a smart label and every appliance would be able to read them. Your refrigerator would be able to warn you that the gallon of milk you bought last week has passed its expiration date. Your microwave would read the cooking instructions from a package of frozen food and program itself to cook it. Obviously, you're not going to put a 20-cent label on a 35-cent pack of gum, but if smart labels could be made for a penny apiece, the uses are endless. Even at a nickel apiece, the market would probably reach a hundred billion labels per year within the next few years.

LED's: Light Emitting Diodes

LED's are semiconductor devices that give off light. You see them every day -- the little red indicator light that tells you a phone line is in use, the row of flashing green lights that indicate how loud the music is on your stereo, etc. They are useful because they don't consume much power, they last for years without burning out, and they respond very quickly when switched on and off. Most people are not aware of the extent to which LED's have begun to be used in much larger scale applications over the past few years. The huge displays that are used to show instant replays in football stadiums, for example, are increasingly made with LED's. Approximately ten percent of all the traffic lights in the U.S. now use LED's rather than conventional light bulbs because of their low power consumption and long life. (It has been estimated that replacing all the traffic lights in Tokyo with LED versions will save enough electricity to equal the entire output of a good sized generating plant!) Lighting manufacturers around the world are in an intensive race to develop LED replacements for ordinary incandescent light bulbs. Automakers are moving quickly to adopt LED's for use in brake lights and many other applications.

In order to obtain sufficient brightness and resolution in displays using LED's, it is necessary to mount a lot of LED's very close together. Previously, solder or conductive adhesives have been relied upon to connect the LED's, but these have severe limitations. It's difficult to control the placement of the adhesive precisely enough to keep it from spreading too far and causing short circuits, and similar problems arise with solder. Also, LED's generate a lot of heat, which has to be given an opportunity to dissipate. Nanopierce scientists have shown that NCS works extremely well in this environment as well. (Check out "Electrical and Thermal Performance of a New Process for High Density LED Array Assembly," a paper presented at IMAPS 2001 by Wernle and Kober, available on the company's website.) Nanopierce recently announced the signing of a Letter of Intent with Opto Tech, a leading producer of LED's and LED products, to jointly develop NCS for use in LED applications. Discussions are reported to be under way with other LED manufacturers as well. Although LED's may not turn out to be Nanopierce's biggest profit center, it may be one of the earliest.

This concludes my introduction to Nanopierce's fascinating new technology. I hope you've found it to be useful. A few points to emphasize in conclusion: These are the views and opinions of an ordinary shareholder. I have no professional training in electronics, so it's not impossible that I might have gotten something wrong. I do not represent the company nor was I compensated in any way by NPCT for writing this post (or anything else! LOL!). I also have no formal training or credentials in business or finance, and I am not an investment advisor. In other words, don't take my word for anything. If you're interested enough to want to keep digging, Kent Kloock posts a "Due Diligence" summary just about every day, and it is chock full of valuable links. I also strongly recommend Kathy Knight-McConnell's website, which is found at http://www.investortoinvestor.com .

Best regards,

Geoff Krone