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Catching a Falling Financial Knife

Apple Stock Hopes to Turn Liquidmetal Into Gold

Companies / Tech Stocks Apr 30, 2012 - 09:53 AM GMT

By: Money_Morning

Companies

Best Financial Markets Analysis ArticleDavid Zeiler writes: Apple Inc. (Nasdaq: AAPL) loves to think of lucrative new uses for other people's bright ideas.

For instance, the original iPod wouldn't have been possible without Toshiba's innovative 1.8-inch hard drive.

And when Steve Jobs learned about Gorilla Glass in 2006, he convinced Corning to revive the largely unused technology so Apple could put it in the iPhone.


So it's no surprise that Apple has been toying with yet another breakthrough technology.

It's called Liquidmetal.

Liquidmetal is a family of metal alloys that combines a variety of metallic elements. It's a technique that rapidly cools the mixture into a "metallic glass" with a distinctly different molecular structure than conventional metals. It becomes amorphous, as opposed to crystalline.

That amorphous structure is the secret behind Liquidmetal's many remarkable properties.

Now imagine what Apple could do with a material that:

•Is five times as strong as aluminum and twice as strong as titanium;
•Is three times as elastic as ordinary metals;
•Is highly resistant to corrosion;
•Is highly resistant to scratching and wear;
•Has a fingerprint-resistant, glossy finish that needs no polishing;
•And can be blow-molded like glass or injection-molded like plastic.

And while most of the basic ingredients of Liquidmetal -- zirconium, titanium, nickel, copper, and beryllium -- remain the same, adjustments to the ratios and manufacturing process can customize the alloy for many different purposes.

Invented in 1992 as part of a joint project between NASA, the California Institute of Technology and the U.S. Department of Energy, Liquidmetal creates vast new possibilities - particularly in the hands of a company as innovative and resource-rich as Apple.

As NASA's web page for spinoff technologies puts it:

"In the same way that the inventions of steel in the 1800s and plastic in the 1900s sparked revolutions for industry, [this] new class of amorphous alloys is poised to redefine materials science as we know it in the 21st century."

The Story of Liquidmetal Technologies Inc. (OTC: LQMT)
The technology belongs to the aptly named Liquidmetal Technologies Inc. (OTC: LQMT), a company formed more than two decades ago to commercialize the new material.

In contrast to the promise of its technology, Liquidmetal is tiny. With no factory of its own, Liquidmetal enlists partners to manufacture customized parts for customers. It has fewer than 20 employees and its market cap recently slipped below $50 million. The stock has been trading below $0.50 lately and tends to be volatile.

And yet as the owner of the intellectual property, Liquidmetal appears to be sitting on a gold mine. Still, Liquidmetal's attempts to commercialize its product met with mixed success until Apple came along.

Intrigued by Liquidmetal's unusual properties, Apple made a deal with the company in 2010 to secure exclusive worldwide rights to use the alloy in consumer electronics products. Liquidmetal retains the right to license its technology to other industries, such as defense or medical.

"They have been working with Apple for a long time," Drew Merkel, one of Liquidmetal's biggest investors, told the Cult of Mac Website back in 2010. "They were making prototypes, trying to land a big fish."

Apple Senior Vice President for Industrial Design Jonathan Ive, whose enthusiasm for alternative materials and manufacturing processes is well known, is said to be particularly fascinated by Liquidmetal.

So far, not much has come of the relationship - Apple's only confirmed use of Liquidmetal is the SIM card removal tool included with some versions of the iPhone.

But that's likely to change soon.

What Apple Could Do With Liquidmetal
Apple would not have invested more than $20 million - that was just the upfront fee it paid Liquidmetal in 2010 - simply to build a better SIM card removal tool.

Recent rumors out of Korea have suggested Apple will use Liquidmetal to make the outer case of the iPhone 5, which is expected to launch in October.

But such possibilities were being discussed as far back as 2010.

"I think they're going to make the iPhone out of it," Dr. Jan Schroers, a former director of research atLiquidmetal who is now an Associate Professor of Mechanical Engineering & Materials Science at the Yale School of Engineering and Applied Science, told Cult of Mac. "It's quite obvious from what Liquidmetal has done in the past and what the technology is capable of."

Obviously a metal with exceptional strength and durability, not to mention a silky-smooth, smudge-resistant finish, would suit the iPhone 5 perfectly.

"The next iPhone needs to truly stand out from the crowd," Canalys analyst Chris Jones told Wired. "A change in materials is a likely way to differentiate its form factor."

Schroers said Liquidmetal could also be used to build remarkably thin, strong seamless frames for other Apple products, such as MacBooks, iPads or big screen displays. For that matter, it would make an ideal frame for the much-anticipated Apple iTV.

Apple could even etch its logo as a holographic image into the alloy. How cool is that?

Liquidmetal's unusual properties also make it a good candidate for a wide assortment of other components, such as an iPhone antenna, parts of rechargeable batteries and laptop hinges.

A Waterproof iPhone 5?
But perhaps the most significant possible use of Liquidmetal in an Apple product is for waterproofing mobile devices such as the iPhone.

Last year Crucible Intellectual Property, the Liquidmetal subsidiary formed in the 2010 deal to work with Apple, filed a patent covering the use of the alloy as a waterproof sealant.

According to the Patently Apple Website, the patent says the process could be used in "a telephone, such as a cellphone, and a land-line phone, or any communication devices, such as a smartphone, including, for example, aniPhone.Other listed devices includean electronic email sending/receiving device or be a part of a display, such as a digital display,a TV monitor, an electronic-book reader, an iPad and a computer monitor."

Apple itself had earlier filed for a patent on a different method for waterproofing mobile devices, so it's clearly determined to add it as a feature one way or another.

To anyone who's ever dropped their iPhone into a swimming pool, bathtub or toilet, such news will be welcome indeed.

And with Liquidmetal in Apple's arsenal, a waterproof iPhone may be only the beginning.

"It is hard to predict what will come, when you leave such a technology to the imagination and creativity of Apple product development and innovation," Dr. Atakan Peker, a former vice president of research at Liquidmetal, told Cult of Mac. "I won't be surprised with some very interesting [Liquidmetal-using] products in the future."

Source :http://moneymorning.com/2012/04/30/is-apple-inc-nasdaq-aapl-bet-on-liquidmetal-about-to-pay-off/

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Catching a Falling Financial Knife