Superconductivity Consortia Proliferate Despite Scientific, Economic Questions

WASHINGTON—Six months after a White House panel concluded that United States competitiveness in high-temperature superconductivity hinged on the successful creation of a half-dozen industrial consortia dedicated to superconductivity research, nearly twice that many either exist or are now proposed. But while organizers tout the vast potential of superconducting electronics and stress the need to beat the Japanese in this field, troubling scientific and economic issues still cloud the prospects of success for U.S. consortia. The collaborations embrace a variety of approaches. The most visible is the new blue-chip collaboration of IBM, American Telephone and Telegraph, and the Massachusetts Institute of Technology—put together with the help of former IBM vice president Ralph Gomory, who chaired the presidential panel calling for more consortia. The most ambitious is a proposed $1 billion venture by the Council on Superconductivity for American Competitiveness (CSAC), created by former White House science adviser George Key worth. Other joint ventures include three centers based at the Department of Energy’s (DOE) national labs, several others at universities, and a for-profit industrial collaboration being organized by former presidential science adviser Edward David. Facing these new initiatives are a host of challenges, not all of which were anticipated when the groups were formed. Scientists at AT&T and IBM have found serious limitations in both the ability of superconducting materials to carry large currents and to operate in a high magnetic field. Their findings have dampened hopes for large-scale applications, such as magnetically levitated trains. Other problems relating to the manufacture of the brittle ceramics are expected to delay promising electronic applications. And industrial commitment over the long haul remains uncertain, as evidenced by the loss of half the founding members of one pioneering consortium— a program created by the Texas-based Microelectronics and Computer Technology Corp. (MCC)—after an internal study re vealed a dearth of profitable shortterm applications earlier this year (The Scientist, April 3, 1989, page 1). Despite this, optimism is the rule for many of the newest ventures. Among the most notable of the current proposals is Superchip, Inc., an unusually ambitious consortium spun off last year from CSAC. According to CSAC executive director Kevin Ott, the potential importance of superconductor research outweighs the current level of uncertainty. Superchip has drawn up a business plan that includes massive federal loans and substantial industrial participation in a “narrowly focused, device-driven, product-oriented” concentration on superconducting microelectronics. But Ott allows that it “is still very nebulous how this all is going to happen.” Via CSAC, Superchip claims five as-yet-unannounced corporate partners, backed by a $600,000 grant from the Defense Advanced Research Projects Agency (DARPA) to “scour the countryside for (superconducting] device ideas,” says Ott. But what most distinguishes the consortium is what he describes as its “novel funding approach.” The approach consists of an upcoming request to Congress for a $1 billion “bonding authority” to provide long-term operating capital for research that would start in 1993. If Congress goes along, Superchip will be able to sell government-backed bonds on Wall Street and use the proceeds to support its own operation. Assuming the consortium turns out to be successful, it would eventually “retire,” or buy back, the bonds and become privately held. If not, the government would absorb the debt. The process, which Ott believes is unique to high technology, is similar to the technique used in the early seventies to bail out Conrail, the bankrupt railroad. In that case, Congress authorized a $6 billion bond issue to rescue the floundering corporation and reorganize it under partial government oversight. Conrail eventually negotiated repayment of about half that amount. “It’s basically an insurance policy [to guarantee] that we have long-term funding,” Ott explains. “If we could do it privately, we would, but the commitment is just not there.” Congressional staffers say that it’s too early to predict the response on Capitol Hill to such a proposal. But one staffer noted that concern about superconductivity consortia has been supplanted by efforts to shrink the federal deficit and that the topic is “not a hot and burning issue in Congress right now.” Government funding remains critical for most superconductivity consortia. The joint $10 million IBM/AT&T/MIT project, known as the Consortium for Superconducting Electronics, is seeking to supplement its industrial funding with up to $6 million from DARPA for research at MIT, says Gomory, one of the effort’s chief organizers. Although the group’s two well-funded commercial partners are among the few U.S. companies capable of supporting a long-term research effort without the prospect of immediate payoffs, MIT’s pockets are not so deep. “Had there only been industrial participants, we could have done it without government assistance,” Gomory told the congressional Joint Economic Committee last month. “But to exploit the existence o[MiT’s Department of Defense- funded] Lincoln Labs and research universities, we needed to include government-sponsored entities.” Gomory said he hopes the IBM/AT&T/MIT consortium will encourage similar collaborations. “We did this to break the ice,” he told the committee. When we wrote the [White House] report [in January] we were damn sure nothing would happen.” In fact, however, industry, government, and university consortia similar to those recommended by the Gomoly report already exist. The most notable is a collaboration between MCC and another consortium, known as the Texas Center for Superconductivity at the University of Houston (TCSUH), that was set up last year by pioneering superconductivity researcher Paul Chu. The MCC/TCSUH collaboration, which brings together such industrial partners as Du Pont, Westinghouse, and 3M, is currently negotiating collaborations with superconductivity programs at three DOE labs. Such participation was one of the recommendations of the Gomory report. Other joint ventures approach collaboration in different ways. For example, the three superconductivity “pilot centers” DOE created last year at the Los Alamos, Argonne, and Oak Ridge national labs have industrial partners. But the partners will primarily trade information and resources with the center, rather than among themselves. Few other consortia expect to grow up in such plush surroundings as the IBM/AT&T/MIT venture, which one congressional staffer describes as being “born with a silver spoon in its mouth.” Officials at other consortia expect at first to rely heavily on government funding while they wait for industry to recognize commercial potential in the field. So far, the largest supplier of federal funding for superconductivity consortia has been DARPA, which currently manages a $30 million-per-year industrial superconductivity program. Most of that goes to single institutions that may or may not subcontract to other groups. However, DARPA now supports only three true consortia: Superchip, TCSUH, and MCC. The low level of consortium funding within the agency reflects a concern that consortia may not be the best approach for superconductivity research. “I think the contractor/subcontractor [approach] is more likely to come up with quick results,” says DARPA program manager Kay Rhyne. “Consortia tend to be more complicated, [andi groups considering consortia often fear that they’re going to lose a lot” by being forced to share results with partners, she says. Adds Gomory, “Working out the particular roles [of the individual partners] was not a trivial task [in organizing the IBM/AT&T/MIT venture]. It is one of the drawbacks of consortia.” One of the looming questions for superconductivity consortia is the effect of federal antitrust laws. It is not yet clear that such consortia, if they go beyond research to production and marketing, will be exempt from laws regulating monopolies. Although most high-tech consortia operate under antitrust waivers, the issue is still subject to case-by-case review. Supporters hope that the issue of domestic monopolies may recede as the high-tech playing field becomes increasingly international. DARPA Director Craig Fields told the Joint Economic Committee last month that he believes that consortia could produce and even market products without violating free-market ideals. "[It] is my understanding that the intention of such [antitrust] laws was to curb price-fixing and to avoid restraint of trade and competition,” Fields said. “Since we are now operating in a global marketplace, with the United States sometimes a modest player.. it seems unlikely that a U.S. consortium could be very successful in fixing artificially high prices or restraining competition.” For most ventures, however, the bottom line is the expected payoff from the laboratory. Consortium officials expect that the antitrust question will be resolved, perhaps by Congress, which leaves simple economics as the chief obstacle to successful superconductivity consortia. As the Gomory report noted, “While there is a high level of activity in U.S. industry today, much of it... is unlikely to survive what we believe will be a long-distance race.” What Gomory and others are betting on is that teamwork is the best way to win such a race.

Superconductivity Consortia Proliferate Despite Scientific, Economic Questions

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