More than 200 companies worldwide sell nanomaterials today. As a group, they have a frighteningly poor track record, said Matthew Nordan, vice president at Lux Research, a nanotech financial analysis firm in New York.

At the scale of nanometers, or billionths of a meter, materials can display properties far different from that at larger scales. Carbon nanotubes, for instance, can be 100 times stronger than steel at one-sixth the weight and posses a bevy of extraordinary electronic properties to boot, such as the capability to behave either as semiconductors, conductors or superconductors.

In our interviews with nanomaterials buyers, we've heard horror story after horror story from companies that haven't gotten the nanomaterials they expected from suppliers, Nordan said of interviews held with more than 100 nanotech executives.

Nanotubes, metal oxide nanoparticles and fullerenes generated the most complaints, Nordan said, while nanoporous materials and dendrimers generated the least.

Complaints were many and varied -- contamination, for instance. An electronics company bought samples of what were billed as highly pure carbon nanotubes from multiple vendors. It found up to 30 percent of the materials actually were leftover iron catalyst used to grow the nanotubes.

Other times the supplied nanomaterials were not nano at all, but only contaminants and byproducts from production processes. A specialty chemicals company executive told Lux Research that after the company had purchased samples of carbon nanotubes, it found in at least one case the sample provided by the vendor included no nanotubes at all, just amorphous carbon soot.

The same executive told of a buyer of metal-oxide nanoparticles who found no shortage of vendors eagerly claiming they could synthesize the particles to the buyer's desired size. It turned out none of the would-be suppliers could package or ship the nanoparticles so that they would not clump into bigger particles, thereby losing the properties that made them useful in the first place.

When it comes to nanomaterials, they're often so small (that) conventional testing methods don't really apply very well or require significant modification to be useful, Keith Blakely, chief executive officer of Nanodynamics in Buffalo, N.Y., told Nano World.

At times, suppliers with credible backers, distribution relationships and listed prices may not be capable of selling just yet. One supplier widely considered a pivotal player in nanomaterials cannot supply product in commercial quantities. Instead, it secretly resells product from its own competitors when asked to do so, Lux Research found.

There are many reasons for this situation. To start, although a few dozen prominent companies -- such as Hyperion Catalysis in Cambridge, Mass. -- ship the majority of nanomaterials, the bulk of suppliers are tiny operations with 10 employees or fewer.

Such operations include many university lab offshoots and applications-focused startups. They work on the sidelines to sell excess material produced in the course of their research. These part-time suppliers do not seek to defraud their customers, but often lack the time, resources and focus to impose robust quality control, making the occasional bad shipment inevitable.

In addition, ever-changing nanomaterials production processes means one batch often differs from the next.

A company may be looking to continuously improve, Blakely said, and if they don't understand how the properties of the materials they are manufacturing are changing, they may inadvertently think they are improving product quality, while from a customer standpoint they may be creating problems.

Or, he continued, there may be some variability inherent in the process or scale of operation, with variabilities showing up as acceptable or unacceptable performance to customers.

Buyers and suppliers also often disagree over fundamental terminology. Saying a particle has an average diameter of 35 nanometers could refer, for instance, to the particle size when the particles were produced or to the effective size of particles in the powder the customer receives.

Lux Research predicted the nanomaterials supply situation would not improve any time soon. Standards from groups such as the American National Standards Institute and the International Organization for Standardization could solve the problem, but such requirements probably will not arrive until 2007.

All told, Lux Research projected it will take at least three years for competition to weed out ineffective suppliers and for agreed-upon standards to take shape and improve reliability.

Part of the problem, Blakely said, is that in (these) early days of material development, you do not find many companies willing to take the financial risk of scaling a process to larger commercial volumes (resulting in) batches large enough to allow a host of measurements to be applied to assure regularity in each batch and to better understand batch-to-batch variability.

Until then, both nanomaterials buyers and suppliers must immediately start adopting worst-case scenarios in any transaction to protect their interests.

Buyers should use secret shopping to qualify suppliers, Nordan said, requesting price and availability for large quantities -- a kilogram for carbon nanotubes, for example -- to weed out suppliers that can't actually deliver.

After that, he said, they should order and verify a small amount of material from the short list of suppliers that made the cut, then follow up with the vendors on any discrepancies.

They should clearly describe to suppliers how they plan to use the material to eliminate ambiguity, he added.

For instance, Blakely said, if a customer says they want 10 nanometer silver particles, and by scanning electron microscope they are mostly between 6 and 14 nanometers, might that work instead?

Lux Research recommended that prior to such talks, require vendors to sign a strict nondisclosure agreement that specifies large damages in the event of a breach.

On the other side of the table, suppliers must obsessively document each shipment, Nordan said, using tools like scanning electron microscopy images, as well as educate customers on how to use the nanomaterial without contaminating or destroying it.

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