AMSC CEO: Impact of LK-99 'superconductor' on markets, industry
The LK-99 'superconductor' recently took social media by storm. So what is LK-99, and what does it mean for the superconductor industy? Yahoo Finance's Julie Hyman spoke to American Superconductor (AMSC) CEO Daniel McGahn about LK-99, the superconductor industry, and the impact on his company's shares.
McGahn said, "If there are technological advances in our space, it's only going to benefit us ... we need to be able to develop the future but deliver the present."
Video highlights:
00:00:55 - LK-99 and technological advancements in superconductor industry
00:03:50 - Commercialization of superconductors
00:06:30 - Impact on AMSC
Video Transcript
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- The LK-99 'superconductor' has been getting a lot of buzz lately. It took social media by storm, it grabbed the attention of scientists and journalists alike as a potential huge scientific breakthrough. What is it? Well, the basic idea, superconductivity. The ability of certain materials to conduct electricity without energy loss when cooled below a critical temperature.
The hype around this LK-99 substance was that it was the first room temperature superconductor. Such a discovery would be a game changer, but doubt was thrown on it this week when various research groups released studies countering claims originally made about the substance. Well, yesterday, I spoke with the CEO of American Superconductor Daniel McGahn. The company saw its shares spike along with various others around this hype. This despite not having a direct link to the LK-99.
DANIEL MCGAHN: We feel like we've transitioned from being a material science company, which is really what we were at our founding, to a manufacturer of completely integrated systems. So any technical advances in this field that can really further our offerings, we welcome. So I think one of the big parts of the news is that if there are technological advances in our space, it's only going to benefit us. Because it's going to spark people thinking about what the future could be.
And really, what we're capable of doing is delivering what's possible today. As a commercial company, as a public company, you know, we plan to continue to maintain this position but we need to be able to develop the future but be able to deliver the present. And a lot of what we do is translating what used to be science fiction-- if you look at any science fiction book that talks about how do we do interplanetary travel, it's a superconductor drive.
If you look at even what Tom Clancy wrote with "The Hunt for Red October," and the drive that was in that submarine, it's a superconductor drive. If you go back to the very founding of the company back in the mid '80s, it was very similar in that there was a whole brand new set of materials that were discovered and people were trying to figure out how they were useful.
And that took a little bit of time. And then it took a much longer time and pretty good amount of money to figure out how to make them, right? And then what we've figured out recently and really since I met you, I can give you responsibility for it, that we've been able to commercialize finally. It's taken a long time for this company. We've been in business more than three decades. And we're now seeing permanent installations on the grid and in Navy ships of superconductor-driven systems.
So there's a huge future, I think, in superconductivity. And I think any and all investment that helps to try to improve how the world's going to move, particularly as we have the mindset towards, you know, how do we manage the change in the climate and how do we decarbonize the economy, that our company is really at the center of how do we make that happen. And superconductor is a piece. And other types of superconductors in the future could be pieces as well.
- So again, just to sort of differentiate here. So a superconductor, I guess, in its simplest form, is something that conducts electricity without energy loss. That's the sort of idealized version. Or the idealized version would be one that you didn't need to do anything else to it. It would just be able to do that by virtue of its innate properties.
And that's allegedly what this thing was supposed to do, this thing in Korea, but it probably doesn't. So the superconductors that are in real life, in reality that you guys are using in your applications, what are they? In other words, what has to be done to them in order for them to perform without this energy loss that we're talking about?
DANIEL MCGAHN: Yeah. I mean, the two main areas that we see commercialization is what we've done and what the medical industry has done with MRI. And to give kind of to compare and contrast them and the view of the technology in the future, the MRI machine, if you've ever had one, has very significant amount of infrastructure.
And a lot of that infrastructure is being able to manage and cool the magnet. So if I have a conductor, I can do two things. It's really useful for one move current through it to get it from point A to point B or to move current through it to create a magnetic field. So we talked about what we do with the Navy. That's the feature set that we're adding there. The same thing with an MRI magnet. You're trying to use the superconductor to have high energy dense, very specific targeted magnetic fields to be able to investigate what's in the body without direct contact.
The load for the cooling apparatus in the hospital is quite significant. In our case, it's about a 20th. So the load of what we have to deliver to be able to cool the superconductor to get it to the point it can produce the magnetic field we want or move power without loss, that's a piece of the technology where people want it to head is can we do that with lower load and eventually no load?
And I think that certainly that's the pathway, but it seems like this has always been a chase for, just like infusion, they want to talk about different ways to do nuclear fusion. In superconductivity, there's been that as well. And then there's been other discoveries of other superconductors. Some of the challenges are with other materials is they're pretty significantly carcinogenic. So the last thing you want to do is to try to solve what we think is a noble and important problem for humanity, to be able to manage climate and carbon, you don't want to do that by using, you know, known carcinogens, right?
So there's a certain piece of this that you have to go through a screen on what the material is, how would eventually you be able to make it, how would you format it, how would you make a system? And what our company has done is we understand full end-to-end. So if there needs to be a change in one piece of that end-to-end, we're able to adapt, adapt and hopefully exploit it in the market and use it as a competitive advantage.
- So as all of this discussion was going on, and understanding now how it's used in the real world versus what was going on with this research, we did see some interesting activity in your stock, right? Because people saw the word superconductor, I think, maybe, and you know, bid up your shares. Now, how do you think about that from a management perspective when something like that happens?
DANIEL MCGAHN: Well, what I think the good sign of it is that through the media cycle that we've gone through and through the run up in the stock and the heavily increase in the volume, I think a lot people now understand maybe what a superconductor is, what it's useful for. I think a lot of people maybe have maybe a different imagination set where they can think about a different possible future.
And I think, you know, our role as a corporation is to make sure we're part of that and helping to move that forward. So I think it's an educational moment for many people. I think, as you said, a lot of people were looking for companies that were involved in superconductivity. And we are, you know, the main one. We are at the forefront of the technology on every level.
And these things may happen again, right? Science makes progress, but then science has to be validated, it has to be peer reviewed, it has to be understood, replicated, all those things. And then once that happens, there's a whole industrial piece to it and how do you make it over and over again, how do you make it useful, and how do you systematize it in something that somebody can buy, which takes time.
And that's really the history of our company. You know, that's what-- we've been at this for a long time, and it's taken a lot of effort, a lot of blood, sweat, and tears and shareholder investment to get us to where we are. And that's the good news in the call and partly why I'm real excited today. It has nothing to do with the stock and scientific announcements.
We've now proven out what I've been talking about for about the past two years in the transition in the company where we actually guide it for our next quarter that we're in a position where we may generate positive operating cash, which is huge news for us. We've never done that before.
- That was American Superconductor CEO Daniel McGahn reacting to some of the hype around the LK-99 'superconductor.' He talked about also the sustainability of that cash generation.
