High-tech anatomy

Millions.

That”™s the dollar total it takes to turn an idea into just a prototype of a chip that will eventually power your smartphone or help diagnose your sports injury via the next-generation MRI.

Securing enough capital to take an invention from the laboratory to the production line is the most common hurdle for an advanced technology company to leap.

For HYPRES, an Elmsford-based developer of digital superconductor technology, and others, it could take $900,000 or more to go from design to prototype.

“We”™re a venture capital-owned company, but if it weren”™t for the VCs and the angel investors, then you”™d never get the technology past the invention stage,” said Richard Hitt, president and CEO of HYPRES, which was founded in 1983 by former IBM engineers.

“Nine out of every 10 (research and development) dollars in this country originates with the federal government by way of grants or contracts,” Hitt said. “But when you consider that, there”™s a lot that gets invented that never gets productized. They expect the companies to do that. So at that point, where do you get the money? It”™s all about the money. It takes millions.”
Much of the firm”™s seed money comes from private investment.

Government bodies such as the U.S. Department of Energy and National Institutes of Health (NIH) account for the majority of HYPRES”™ governmental revenue through Small Business Innovation Research (SBIR) contracts.

HYPRES develops technology for high-performance and energy-efficient computing, medical imaging and mobile broadband applications in the commercial and government markets; it is the only commercial foundry for digital superconductor circuits in the U.S. and one of three such foundries in the world.

For the most part, the government does not fund productization except in instances where a product is exclusively developed for it, such as a military satellite communications receiver.

Retaining and expanding the region”™s advanced technology base is vital to continuing job growth.

Being centrally located ”“ half an hour from New York City investors and within two hours of key scientific colleagues in Albany and at Stony Brook ”“ has a direct impact on HYPRES”™ operations.

“Today, being within two to three hours of Boston is almost as important as it was in the ”™80s as being an hour away from New York City,” Hitt said. “Now, a lot of (investment) comes from the West Coast and other places.”

HYPRES was among several high-tech manufacturers that called for increased awareness of the industry at the New York State Superconductor Technology Summit last fall at Westchester Community College.

“The cost of nanotechnology today is prohibitive,” Jeffrey Kristoff, a strategic developer for Vistec Electron Beam Lithography in the Albany region, said at the summit. “For a startup”¦ if you want to take a nanotech structure into manufacturing, it will probably cost you anywhere from $50 (million) to $100 million just to make a few prototypes.”

High-tech manufacturers employ scientists, researchers and engineers.

U.S. Sen. Kirsten Gillibrand, D-N.Y., at a recent news conference at HYPRES headquarters, noted that “of the 250,000 computer and electronic manufacturing jobs in upstate New York, 44 percent are from the most advanced technology areas.”

Gillibrand cited a loss of more than 123,000 general manufacturing jobs in state between 2005 and 2010.

Pushing for an extension of the Advanced Energy Manufacturing Tax Credit program with U.S. Rep. Nita Lowey, D-Harrison, Gillibrand said the Security in Energy and Manufacturing (SEAM) Act would provide a 30 percent tax credit for companies investing in clean-energy processes.

The federal government funded $2.3 billion in advanced manufacturing tax credits through the Recovery Act, which leveraged about $5.4 billion in private investment.

Among Democratic House sponsors of the Made in America competitive grant program, Gillibrand said block grant recipients, small to medium-size businesses in communities with demonstrated high unemployment, would get assistance retrofitting facilities or retraining workers.

This comes at a time when the Senate Democrats”™ push to pass the American Jobs Act failed to garner bipartisan support due to the pass-along costs to the taxpayer.

Of this anti-spending climate, Lowey said, “I”™d like them to come here to a HYPRES, to see what the investment at the NIH and Defense Department (in R&D) has produced to help keep our population not only employed, but healthy, so it”™s (about) knowledge”¦ and I do hope that with time, perhaps they”™ll wake up.”

Gillibrand also expressed support for a long-term extension to an 8-year-old New Markets tax credit program, which the senator said pumped an additional $12 in private capital return for every public investment dollar through the 39 percent credit program; it was proposed by U.S. Rep. Jim Gerlach, R-Pa., U.S. Rep. Richard Neal, D-Mass., with the bipartisan support of Sens. Jay Rockefeller, D-W.V., and Olympia Snowe, R-Maine.

In New York, 155 businesses have benefited from $1.42 billion in credits since the program”™s inception in 2007; the credit has been extended on a year-to-year basis, which Gillibrand said hinders the development planning process and hurts manufacturers who need to leverage private investment.

“It”™s important that we bring attention to the fact that small operations like this really need to be supported,” Hitt said. “Next-generation supercomputers are going to come from chips that are designed here ”¦the next-generation MRI, everything you want your iPhone to do, will be assisted by technology being developed here.”