Back ADVANCED MATERIALS (Business 2.0) "Hasta La Vista, Titanium" By BILL RICHARDS, October, 2002 Liquidmetal is harder and stronger than any other alloy. So why can't anyone make money selling the stuff?   LIQUID GOLD : After failing at its own line of golf clubs (above). LiquidMetal is helping Cleveland Golf put the alloy in its drivers.     "Think plastic," John Kang says with a smile, holding up small slab of blue-gray metal and passing it over for inspection in his Lake Forest, Calif., office. The shiny ingot doesn't look or feel like plastic. It looks more like coal and hefts like gold. But when heated in its raw form to 750 degrees Fahrenheit at Kang's new factory in South Korea, the mysterious alloy does something that amazes even the most unflappable metallurgist. It softens into a viscous tar that can be molded like plastic. Then, when cooled rapidly, it congeals into a solid that's twice as hard as titanium or stainless steel, and so smooth that paint won't stick to it, which scientists liken to "metallic glass" is called Liquidmetal. Kang, 39, is CEO of Liquidmetal Technologies, which owns the licensing rights to the new substance. An impressive roster of manufacturers have lined up to test the stuff for new products. The U.S. Department of Defense is working on new armor-piercing shells that will use Liquidmetal instead of depleted uranium. Cleveland Golf, a maker of high-end golf clubs, is working with Liquidmetal on a driver that can outgun its own titanium clubs. Surgical Specialties, a medical equipment manufacturer, is developing a new Liquidmetal scalpel to replace its stainless-steel blades. And the alloy even has one bona fide production customer: Liquid-Metal will begin making superthin cell-phone casings for Motorola in Korea this fall, and eventually for the company's tinyV70 cell phones. Kang is so confident of the material's potential that he's even hired Silicon Valley industrial design firm Ideo to help create a Liquidmetal-encased laptop that would roll up like a piece of paper. Here's what has all of those companies interested: Because Liquidmetal behaves like plastic at certain temperatures, a single die can cast thousands of precision parts. The alloy's closest relatives - steel and titanium - take separate molds each time they are cast, and require additional machining to get them to spec. When Chrysler makes a steel pinion rod in its steering assemblies, 97 machining steps are required before the rod arrives on the assembly line. By contrast, Kang boasts, Liquidmetal scalpel blades would emerge from their molds razor-sharp and ready for surgery, since the metal can be cast with unprecedented accuracy to within I micron, or a 25,000th of an inch. What gives Liquidmetal its wondrous properties is its atomic structure, or lack thereof. Instead of forming into tight crystalline clusters when it cools, the way traditional alloys do, Liquidmetal - a meld of beryllium, copper, nickel, titanium, and zirconium - forms with its atoms strewn haphazardly. The result is a material that doesn't give under pressure, making it harder and more elastic than ordinary alloys at normal temperatures, yet more malleable under heat. Todd Hufnagel, an associate professor of materials science and engineering at Johns Hopkins University, calls "amorphous alloys" such as Liquidmetal "probably the most significant development in metallurgy in 50 years." Strangely, the one thing the miracle alloy hasn't yet done well is make money. Liquidmetal Technologies raised $70 million in its initial public offering in May (the stock, which opened at $15, has since slid back to about $7). But apart from some small research-and-development contracts from the Defense Department, the main sources of its / $4 million in revenue last year were energy companies, which used the prized alloy as a spray coating for oil pipelines. Except for Motorola, most of Liquidmetal's business at the moment is for limited development of new products, not full-scale production. The company's slow start traces back to a strategic gamble it made in 1997, four years before Kang was named CEO. The firm developed, built, and marketed a line of Liquidmetal branded golf clubs through a subsidiary called Liquidmetal Golf. The clubs were technological marvels, twice as hard and four times as elastic as competing titanium drivers, but commercially they were a double bogey PGA pro Paul Azinger, a paid endorser, credited Liquidmetal with giving him an extra 12 yards on his drives. But high production costs made the clubs too expensive for all but the pros, and the startup didn't have the marketing savvy of companies like Callaway. Last year, as the IPO drew near, Kang finally pulled the plug on the venture, which had lost $23 million, most of it in marketing costs, on $16 million in revenue. "It was all very new and all very expensive," says Peter Thomson- Smith, the former president of Liquidmetal Golf, who is now a vice president at the parent company. At that point, Kang could have simply begun licensing his alloy to equipment makers like Motorola and collected fees, as most research firms do. But knowing that his profit margins would be higher if he continued to manufacture products himself, Kang has since repositioned the company as an industrial supplier of all things made with Liquidmetal. Kang is spending as much as $45 million of his newfound capital on the 150,000-square-foot factory in Korea, where the firm will make those phone casings for Motorola and shells for the Army. At the same time, Kang's production engineers will work on fixing Liquidmetal's biggest commercial Drawback: its cost. A pound of Liquidmetal currently costs $12 to $15 to produce compared with $3 to $5 for stainless-steel and aluminum, and $6 to $15 for titanium). They have already made significant progress. If Liquidmetal's partnership with Cleveland Golf pans out, Kang says, producing the new golf-club parts will eventually cost only 10 percent of what it did during the days of Liquidmetal Golf. Kang claims, for example that the cost of making the "hozel," the joint between the head of a club and the shaft, has dropped from $14 to $2. That matters, because Liquidmetal won't own the market for amorphous alloys forever. Hufnagel says Alcoa, Boeing. and Honevwell are all working to come up with their own versions of the material. Bill Johnson, a Caltech scientist who co-developed Liquidmetal and continues to work as a researcher for the company, is experimenting with an alloy that would perform like Liquidmetal for a fraction of the cost, but he's still tinkering with the formula. To Kang, making parts for somebody else's golf clubs or cell phones might seem more prosaic than hanging around with PGA stars - but it should also be more profitable. For the time being, he is the sole supplier of a metal that's very precious indeed. The question is, Will he be able to cash in before his rivals catch up, or is he merely sitting on a pile of strong yet pliable fool's gold? go to top