NVE Corp. Spins Electrons into Profits

James Daughton, founder of NVE Corp, [NVEC: NASDAQ and a component of the Edwards' Real Nanotech Index] hopes to convert the natural spin of electrons into dollars. Daughton started NVE in 1989 after fifteen years at Honeywell, where he was a vice president managing solid-state electronics R&D. By 1994, NVE had already commercialized its first magnetic sensor based on a newly discovered property of matter, giant magneto resistance, a consequence of electronic conductivity based on spin. With that product, commercial spin electronics, or spintronics, was born.

Conventional electronics began in earnest as an industry over a century ago when Thomas Edison created the electric light bulb by passing current through a tungsten filament. Edison's electric current relied on the fact that negatively charged electrons flow naturally through a metallic conductor toward a positively charged pole. The entire electronics industry – lighting, heating, refrigeration, television, computers, MP3 players, digital cameras, etc. – and most of our industrialized society depends on this property of electrons.

Conventional electronics relies on charge, but electrons have at least one other trick, a quantum property called spin. So what is spin exactly? Think of each electron as a tiny magnet. The macroscopic magnets with which we are familiar have two poles, north and south. Electrons likewise have two poles, which physicists have helpfully labeled “up” and “down.” This magnetic property of electrons is related to spin.
 
Think of a big charged sphere rotating in space (the Earth, for instance). The spinning electronic field generates a magnetic field with two poles. Unlike the Earth, a single electron only has one pole. In fact natural magnets are generated when spin-oriented electrons line up, with the “up” electrons collecting on the north pole and the “down” electrons on the south pole.

“The term ‘spintronics' evolved during a period of stunning discoveries and developments over the past 15 years regarding magnetic phenomena in the areas of magnetoresistance, magnetism switching, and other magnetic properties,” says Daughton. Credit for coining the word “spintronics” goes to Stuart Wolfe of the Defense Advanced Research Projects Agency (DARPA), one of the spookiest of government agencies. DARPA has been intimately involved with funding the development of this nascent industry.

The first major products to arise from spintronics are the read-heads on the latest generation of hard drives. These rely on the spintronic property called “giant magneto resistance.” Certain materials change their resistance to electronic current depending upon their orientation in a magnetic field. Read-heads rely on nanotech processes for creating very thin films.
 
A sandwich is made in which two magnetized layers are separated by a very thin non-magnetized layer. The magnetized layers will allow only electrons with a certain spin (either up or down) to pass through. If they are aligned, there will be low resistance, allowing current to pass through. If they are not aligned, resistance is created such that electrons of neither spin will pass through. An analogy can be made to a polarized light filter. One such filter will pass only light coming from a perpendicular angle, thus eliminating glare. If two filters are placed at right angles to each other, almost no light will pass through.
 
In the read-head, the first magnetic layer is fixed in one direction, but the second is not. As it passes above the track of data on a hard drive, the little magnetized domains that represent the 1's and 0's of computer code flip the second layer from parallel to antiparallel, changing the resistance, and thus the current through the read-head. The read-head flies at up to eighty miles per hour over the surface of the disk at a vertical separation of only 10 nanometers, reading or writing as it goes. Current computer hard drives are magnificent examples of nanoscale engineering, although largely unrecognized as such.

NVE currently has an interest in three types of products: sensors, couplers and MRAM, a new type of computer memory.

NVE's sensor products detect the position of a magnet or of a metal to determine position or speed. The biggest market for such sensors is in industrial robots. The sensors are also used in implantable medical devices. St. Jude Medical is one of their biggest customers. NVE is also targeting non-life-support medical devices such as hearing aids, which have a shorter FDA approval cycle. Additionally, NVE is working on what it calls “BioMagnetIC” sensors, after the DARPA project of the same name. NVE has announced a contract to tailor devices for a lab-on-chip applications – “ultra-compact, fast, accurate diagnostic systems to replace entire laboratories,” according to Daniel Baker, NVE's CEO..
 
NVE's couplers are a component of transceivers used to transmit data. NVE's spintronic couplers operate at 110 million bits per second, better than twice as fast as the best optical couplers. So far, NVE's couplers are mainly used in factory and industrial applications. According to Baker, NVE also has “several broadband and telecommunication design wins, although the volumes aren't very large yet.”

NVEC is not developing MRAM itself, but has licensed out its intellectual property to other companies. such as Cypress Semiconductor, Honeywell and Motorola. In principle, MRAM can be made very dense, extremely fast, and is non-volatile, and therefore has the potential to replace all other computer memory. Considerable controversy exists over the value of NVE's MRAM patents. The company's stock price has traded into the 60's versus its current price of 16.75 as this is written. Several stockholder suits have been filed alleging that NVE's management misled investors about its prospects relative to MRAM.

NVE Co., however, is a viable and profitable company with its current product categories, regardless of what happens with MRAM. In its latest quarter, product sales were up 56% and pretax income was 64%, with a gross profit margin of 50%. The company seems well positioned to profit as spintronics replaces conventional electronics for many applications.