Wall Street Corp Reporter Interviews Mr. Stanford R. Ovshinsky, President and Chief Executive Officer of ENERGY CONVERSION DEVICES, INC.
April 13, 1999
Wall Street Corporate Reporter via NewsEdge Corporation : ** NOTE: TRUNCATED STORY **
Apr 12, 1999 (Wall Street Corp Reporter) --
My wife and I started Energy Conversion Devices, Inc. in January 1960 in order to have science and technology solve societal problems, and that is a pretty big order that we have worked sedulously at and with a measure of success. We chose energy and information as being opposite sides of the same coin, and the coin is made of atomically engineered materials. In 1960 it wasn't apparent to most people that energy would be a problem nor with the advent of the transistor that there would be a need for a new type of approach to semiconductors.
We worked with amorphous and disordered materials, an area that we had pioneered since the 1950s, and invented new types of photovoltaics, that is, solar cells that generate electricity from the sun, nickel metal hydride batteries that make electric vehicles realistic and revolutionary new information products such as nonvolatile memories and exceedingly fast switches. All of the above are in production and now used throughout the world.
Energy Conversion Devices, Inc.
Due to the basic nature of the work we do and its impact on global society, we operate internationally and have right from the first year of the company's inception. We have a joint venture in our batteries with General Motors for electric vehicles and a joint venture in photovoltaics with Canon of Japan as well as with a Russian company that is very well known in the area of energy. In addition, we operate through licensing as well as manufacturing, including machine building.
In terms of the consumer battery market, last year almost 900 million batteries were made by our licensees and we anticipate that number will be up by 30% this year. Any portable product using NiMH rechargeable batteries is based on our patents. In fact, every rechargeable battery company of any significance is a licensee of ours. We work with the largest companies in the world, and primarily the ones in this field are in Japan.
In terms of our memory materials, we are the inventors of optical phase change memories and all of the large companies that are involved in rewritable DVDs and products of that nature are all under agreement with us as well.
Manufacturing
Of our battery products and photovoltaics and we have a very effective and well-known machine building division which designs and manufactures the production machines utilized for the making of our various products. Due to the nature of the consumer battery market, our licensees' production is of great importance and supplies a stream of royalties. The same is true of our phase change memory that is utilized for rewritable CDs and DVDs. When one speaks about energy storage and batteries for electric cars, one is talking about huge markets and that is the reason we are allied with the largest companies of the world.
Revenues
Our revenues have come from our business agreements and as production expands, and we are expanding production in the various areas, will also increase from our own manufacturing. Of course, there will be expanding income from licenses and royalties.
Expansion
The company is very active now in Europe for batteries as well as photovoltaics. In addition, we have a plant in Mexico and are active in that area in photovoltaics. We are increasingly active in the area of telecommunications as people put satellites into space to handle telecommunications across the globe. We offer very lightweight photovoltaic solar cells, which are radiation hard and generate a tremendous amount of energy per weight. When satellites were being put up by the military, cost was of no great concern. However, companies are now putting up satellites and cannot afford the weight of conventional photovoltaics. That is why our photovoltaics are of great interest.
We have alliances in Japan, Korea, Taiwan, Europe and Russia and are negotiating in China and India as well. We have been called a company that has the enabling technology for the new millennium, and that is a very nice thing to have said about us!
International markets
Because we are not part of the problem, but an answer, we are utilized by those who would like to build new industries and have more competitive products. Therefore, we have been in demand by those countries who wanted to become part of the advanced technology scene. Our ability to create new synthetic materials utilizing our atomic engineering science and technology is utilized by companies seeking to gain control or competitive advantage in their areas of semiconductors, energy storage and energy generation.
Of course, there is a dynamic drive all over the world to have technology that can alleviate pollution and climate change. I believe that strategic dependence on oil is very dangerous because of the wars fought over it. In brief, we are in demand because we are meeting very important basic needs of the world economy and are looked upon that way by the companies in the countries we deal with.
R&D
The R&D work that we do is financed by agreements with our partners, by contracts from U.S. Government agencies as well as internally. We not only invent the materials, we also invent the products and production technology. We hold the basic and fundamental patents in the various fields in which we operate so R&D pays off to us because it is the foundation of the commercial business agreements that we make.
Changing technology
We are the agents of change, and have never been a company that has had to keep up with anybody. In fact, in every field that we have entered, we have become the dominant and enabling technology. Ours is a fundamental new area of science and technology and our people have been with us for many years. They are very dedicated, committed, talented and recognized for their abilities throughout the world. Because we are the leaders, it is all a matter of understanding what the world economy needs so that we can become the means and resource for those who need to react positively to a changing world. In fact, we are used by some of the biggest companies in the world because we are leaders.
Strategy
Energy and information are the basis of the world economy and we are a catalyst for change in both. For example, we are active in replacing carbon-based fuels through the use of hydrogen. This demands hydrogen storage in a solid, exactly what we have. You read a lot about the hydrogen economy, but if you are driving in cars with our nickel metal-hydride batteries, you are already driving in and on the hydrogen economy. As we bring the cost down of photovoltaics by building bigger machines, we become competitive to coal, gas, oil and uranium.
Regarding the information side of our business, the DRAM market alone at this point is an over $30 billion market, the SRAM market about $3 billion, the Flash market about $5 billion. It is our ambitious but achievable strategy to replace all of the above with our Ovonic Unified Memory which is not only nonvolatile but much lower in cost and cost is the driving factor in this business. We are aiming as well with our all thin film logic devices at the $60 billion logic/microelectronics market and we have the unique Ovonic memories and switches which are capable of learning, making possible truly intelligent computers.
Acquisitions
Joint ventures are in our past, and they will be in our future as well as will strategic alliances. In fact, we are negotiating several very important strategic alliances of great substance and I believe that our growth will come from both manufacturing and joint ventures. We are very fortunate to have as our chairman Bob Stempel, who previously was chairman and chief executive officer of General Motors. We are indeed partners and he will in the future take over my role in the company. He is an incredible talent.
Recently, Ken Baker, who was an important vice president of General Motors, joined us as well. He is a very important addition bringing great talent and ability to his role as chief operating officer and vice chairman of ECD. He works very closely with both Bob and me. To complete our 'dream team', we have been joined by Tyler Lowrey, who was chief Technical officer and vice chairman of Micron. He was responsible for their becoming the largest DRAM manufacturer in the country and probably now the world. We have a superb management team in place for the future.
Backlog
Fortunately our backlog consists not just of orders for various products, but of very important business alliances that are in the process of being negotiated. We are fortunate that we are now being approached by many companies.
Capabilities
We have plans to dramatically increase our activities in solar cells through international marketing and building bigger machines. The latter is important because the costs come down very dramatically with volume and the size of the photovoltaic business is directly related. Once you are able to get competitive with conventional fuels, you open up huge new areas of profitability. The other area of expansion is in our energy storage business, both in our nickel metal hydride batteries and in our hydride storage materials, which make hydrogen as a fuel practical. We are in the process of expanding our manufacturing capabilities in Europe, Russia and China.
Competitive advantage
Our principal competitive advantage is being the enabling technology and we would not be able to do all of this if we didn't have the protection of our intellectual property. As an inventor, scientist and entrepreneur active in building new industries, I make sure that we generate basic patents that give us proprietary control of the fields that we enter.
We are one of the very few companies that has ever gotten basic patents in Japan. We have the enabling, fundamental and dominating patents in the fields that we enter. Our intellectual property, which appears on our books as zero, is our greatest asset and places great value on our company. The other great asset is the incredible people that make up our company.
Selling products
Our machine division sells directly to our customers. At our subsidiary, the Ovonic Battery Company, we sell the electrodes and materials that we manufacture for our batteries to our licensees and joint venture partners. Our United Solar Systems Corporation sells its solar shingles and solar standing seam roofs to distributors as well as through direct sales.
We are not something that one adds to the roof; our products are the roof, and a much better roof at that with the additional benefit of generating electricity. In fact, combined with our batteries in the garage, one can be truly autonomous and free from the utilities or be supplemental to them. Since we are in such large fields, our marketing strategy is specially designed for each area.
Raw materials
The reason that getting raw materials is not a problem for us is that we actually are in the materials business, which means that we synthesize, engineer and design materials on an atomic scale that are the basis of new products.
Potential investors
Investors who can understand that information and energy are the engines of change and growth in our industrial society will find ECD a company which they can appreciate for obviously whoever has the enabling technology for these two areas has the leadership for the coming millennium.
Productive capacity
The company has no debt and sufficient cash for our needs. We expand by alliances and increasing productive capacity and I think that the agreements and joint ventures that we have with the various companies will help us get whatever investments we need in various ways including, if necessary, from outside investors.
Important decision
The most important decision we made last year was to determine in a very focused way, the direction that would be the most profitable and important for our stockholders. We brought in a management team that is incredibly talented, and in fact, I don't know any company that has better talent than we have. With Bob Stempel as our chairman, and the new unique talents that have joined us, we have truly a dream team. We know where we are going in terms of the new areas of energy, not only of energy storage, but of energy generation as well and we know exactly where we are going in terms of our information field. That has all come to a head in the last few years and is looking very good for the future.
'Hero for the Planet'
I would like WSCR.COM's readers to remember that this is a very different kind of a company. In fact, I don't know any other company that has as many leading global corporations that have joined with us in building new industries. We invent the materials, invent the products and invent the production machines for those technologies that the world greatly needs. There is a dynamic drive in our favor. WSCR.COM's readers might be interested in an article in the February 22, 1999 issue of Time Magazine about the company where we are called the 'Hero for the Planet'.
We have an acceptance out there now that says that what the world really needs is to do something about its problems with regard to pollution, climate change and dependence on oil and new technologies for transportation so that we don't depend on the gasoline engine. Our new information products will allow for much better computers and telecommunications.
The telecommunications industry needs not only our batteries but also our ultralight thin film photovoltaics for commercial satellites. We are working in amorphous and disordered materials, a new area of physics and materials science, which we literally created. We control the field through our intellectual property and the unique products that we originated.
Excitement
Not only do Iris and I still have the excitement that we had when we started the company on January 1, 1960, but it has been just wonderful working together. We are proud not only of our work but of the environment we have created where we have such good colleagues and collaborators. The worldwide acceptance that we are now seeing spurs us on for we are trying to change the world for the better and we are making a dent in it. Our work in science and technology is rewarding and exciting since the world really needs what we have. We are dedicated and committed and certainly very positive in our assessment of the future.
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?1999 Wall Street Corporate Reporter Inc.
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