Multinationals Move on Nanotech

In a story headlined, "China Second to U.S. in Nano," which citied a report this month from Lux Research, UPI said that "several countries, including China, are beginning to gain on the top nations of the United States and Japan."

But a closer look at the Lux report shows that things are a little more nuanced and a lot less sensational. The U.S. remains the big spender in nanotechnology. Even if VCs and the IPO market have been cold, federal and state spending, as well as big companies like General Electric (GE Quote) and DuPont , are more than picking up the slack.

China was ranked sixth in government funding (although it was even with Japan when Lux factored in how much that spending could purchase in local markets) and fifth in corporate spending. China's focus was also on low-cost areas like materials and chemicals that hold out less profit potential than fields such as bioscience.

The report, authored by Lux analyst Michael Holman, rated countries on their nanotech innovation, as well as their ability to turn those innovations into commerce. Japan, Germany and South Korea joined the U.S. in excelling at both. China joined the U.K. and France in being strong at the research end, while Singapore, Taiwan and Israel hold more potential on the manufacturing end.

Still, the strong lead that the U.S. has long enjoyed in nanotech is narrowing. "Despite its strong position, its lead is beginning to erode," the report noted.