The One Device To End All Disease
One 14-millimeter “chip” may soon end cancer, heart attacks and strokes… and deliver $7 trillion in wealth to Americans who tap into the one tiny company that controls ALL the patents.
By Michael A. Robinson
Dear Radical Technology Profits Subscriber,
Imagine a tiny medical device that gets transplanted under your skin and protects you from the world’s deadliest diseases, like cancer and diabetes.
A device that acts as an early warning system against heart attacks, respiratory failure or stroke, allowing you to enjoy your favorite activities without worry, while adding 22 healthy years to your life.
This is not science fiction, it’s happening today.
And it’s all thanks to what will undoubtedly be the greatest scientific breakthrough of the last 25 years… maybe of our lifetime.
I’m talking about MEMS, short for Micro-Electro-Mechanical Systems.
MEMS are specialized sensors that integrate circuits and sensors on a single chip to both sense and control an environment. They contain a central processor that collects data and measures everything from sound to motion to temperature changes.
And they are incredibly small. In fact, they can be as small as a single micron.
I’m in a unique position to tell you about this nanotechnology because I was directly involved in an early prototype that gave rise to the entire industry.
That industry forerunner was sold for $126 million back in 2006.
But I’ve followed the industry ever since.
And I can tell you today, the MEMS industry is going ballistic.
MEMS currently generate $11.1 billion of revenue a year. And it’s about to grow exponentially larger.
In fact, revenue for MEMS is projected to grow an astounding 63,000% in a little over three years. And create $7 trillion in new wealth.
These tiny dynamos, which can cost as little as $50, can be found everywhere – from simple applications in cars and cell phones… To more complicated rigs in “smart home ecosystems” that control your locks, lights and heating… To “digital battlefields” where troops and their jets, tanks and missiles share intelligence with each other in real time.
But there’s no doubt as to where the biggest opportunity lies right now:
I’m talking about Medical MEMS… like the kind found in the 14mm device that has some of the biggest experts in the medical profession making eye-opening predictions about the end of illness.
And one company – STMicroelectronics NV (NYSE:STM) – could be the catalyst behind it all – as well as the biggest profit opportunity you’ll find anywhere.
This Tech Company, 1/30th The Size Of the Big Pharma Titans, Developed The MEMS Technology That Could End All Disease
Don’t worry if you’ve never heard of STM. Most investors haven’t. Not yet…
But the odds are overwhelming that STM won’t remain under the radar for long.
Based in Geneva, Switzerland, STM operates some 12 manufacturing sites around the globe and has a workforce of 45,000 employees.
To stay ahead of the curve, it pours a ton of money into R&D, which last year represented expenditures equivalent to 28% of sales.
The heavy R&D spending explains why the firm has such a lucrative patent pipeline.
STM estimates that it invents roughly 1,100 new products a year. Of those, it patents between 500 and 700.
All told, it currently has a whopping 16,000 patents in its pipeline.
And 800 of them focus specifically on MEMS – including those devices set to revolutionize medicine.
The Extraordinary Way MEMS Work
To understand how MEMS work, think about the tiny medical implant that can be safely inserted just beneath your skin.
These implants contain numerous MEMS, such as those developed and patented by STM.
Each MEMS has a built-in Augmented Fusion Engine. It allows multiple MEMS to work together through a wireless network.
So after the MEMS Microsensor sends its readings to the MEMS Microcomputer Unit…
That data is analyzed and sent to a MEMS device that’s already built into your smartphone for tracking.
It’s also transmitted simultaneously to a MEMS device in your doctor’s computer system.
Together, the three MEMS devices cross-analyze this intelligence continuously…
They don’t require you to make an appointment two months in advance to keep you healthy.
And it doesn’t stop there.
MEMS Are Giving Medical Technologies an Einstein-Like I.Q. Boost
That’s because the MEMS in the doctor’s computer system and your smartphone, are continuously communicating with a global network of similar devices…
Together they create a fusion of intelligence between technologies.
They are analyzing data together…
Developing early warning systems…
And measuring the body’s most critical indicators, including specific proteins that appear in the blood – before something deadly such as a heart attack occurs.
They can also end cancer by detecting the disease before a malignant mass ever has the chance to develop…
And they can end respiratory disease by measuring a complex set of data (such as pollen and pollution levels) then sending an emergency alert to prevent a dangerous and even deadly attack from occurring.
It’s pretty easy to see a pattern here. MEMS technology can end a disease before it makes you sick.
Not just heart and respiratory diseases. But cancer, sleeping disorders… and countless other illnesses.
And that’s why I believe STMicroelectronics can be such an extraordinary profit play for you right now.
Every time a MEMS device is produced or sold, that’s tied to these patents, you could end up getting a piece of that action.
With their prized patent pipeline, STM has positioned themselves to be unstoppable.
The First Company to Reach MEMS Sales of $1 Billion
In fact, STM’s expertise in MEMS technology has already vaulted it to the head of the pack: It was the first company in the world to reach total MEMS sales of $1 billion.
And yes, the mobile revolution is a big part of STM’s success story, too.
You see, such MEMS as accelerometers and gyroscopes remain integral to the way smart phones and tablets function.
Gyroscopes are tiny MEMS that allow you to turn your mobile device upside down and have the screen turn with it. Besides speed, accelerometers measure gravity, tilt angle, incline, rotation, and vibration.
For STM, this is a great business to be in…
Handhelds are outselling PCs by a factor of 5-to-1. The market research firm Comscore says more than 160 million Americans already have smart phones. Industry analysts predict that number will increase by the end of this decade to 225 million users in the U.S. alone.
STM dominates this market, ranking first in all three major mobile operating systems. It commands 75% of devices using Apple’s iOS, 54% of Windows machines and 31% of those running Google’s Android. This is a key reason why its MEMS sales are growing much faster than the overall market – 30% for ST Micro compared with 16% for the industry.
Meantime, STM is also way out in front of what is about to be a major growth factor within the mobile world – wearable computers.
STM makes MEMS that go in running shoes, eyewear, earbuds, and smart watches.
Five years ago, this field was barely a blip on the global tech radar screen.
But a recent market analysis by IMS Research shows absolutely explosive growth is just around the corner. IMS forecasts that shipments of wearable computers will zoom to 171 million units by the end of 2016.
That’s compares with just 14 million sold in 2011. We’re talking about a stunning growth of 1,120% in just five years.
But there’s still so much more in play to get to the $7 trillion wave of wealth that’s going to sweep through America…
Central Nervous System For The Earth Program (CeNSE)
Take, for example, HP’s Central Nervous System for the Earth (CeNSE), a project being implemented at this very moment to literally cover the entire planet with more than a trillion MEMS devices.
The project is a collaboration between HP and Shell. Together, these giants are developing a wireless sensing system to gather critical knowledge regarding seismic activity on land.
But they’re also placing these sensors underground to seamlessly identify sweet spots for oil. It’s estimated that MEMS can increase production capabilities by 1,000%… and cut costs in half.
Shell already derives $453 billion a year in revenue from energy production. Now multiply that by 10X. That means Shell is predicting that MEMS can help them secure: $4.53 trillion in energy each year… At half the cost…
Make no mistake: This is a huge breakthrough in nano-sensor research… and it all uses MEMS technology that STM holds patents for.
Smart Cities and Smart Bridges
MEMS are also being fully integrated into buildings, roads, bridges, windows, parking garages you name it. I’m talking about a $113 billion “Smart City” infrastructure boom worldwide.
Already 12,000 MEMS devices have been deployed in the small city of Santander, Spain. They’ve taken over the tracking and management of the city’s power grid and trash disposal system. So far this small test has saved the city 25% on its electric bill and 20% on its garbage expenses.
Yet, that’s only a small taste of what’s about to come.
Megacities – those with populations over 10 million people – will soon be using MEMS technology to help them modernize aging infrastructure. Paris already has 1 million Smart City sensors already installed. MEMS devices are being buried under the asphalt, affixed over street lamps and atop city buses.
They’re measuring everything from air pollution to open parking spaces.
Asian cities, especially in Japan and China, are now aggressively building MEMS sensor technology into new developments.
In fact, the Chinese government recently launched a grand urbanization strategy: A five-year plan to build entirely connected “smart cities” to accommodate the 450 million rural Chinese citizens migrating to urban areas.
During the first phase of development, China will spend more than $12 billion building this technology over the next two years.
And the Japanese government is installing this technology in two cities: Fujisawa and Mitaka. It’s only a matter of time before similar programs will find their way into American cities.
This technology is also being used by the Army Corps of Engineers to repair America’s own crumbling infrastructure. Like on bridges, where sensors constantly record movements, tilt and orientation to detect maintenance issues before it’s too late.
The bottom line is we’re at the early stages of this becoming standard technology for every modernized city in the world.
Even the U.S. military is loading up on MEMS technology.
In a meeting I conducted with Major General Michael Mazzucchi, we discussed the Army’s plans to utilize MEMS to conquer what he called “the digital battlefield.”
Subs, fighter jets, tanks, artillery, troops, cruise missiles, and more are all sharing intelligence with each other in real time.
De-classified military projects, involving MEMS pressure sensors are currently budgeted at $45.5 million. However, the military is already allocating a much larger piece of their $528 billion budget to additional MEMS capabilities.
I personally have knowledge of 4 highly-sensitive MEMS programs. For instance, the Air Force is using them for what the Department of Defense calls, “5th generation fighter sensors.”
These dramatically enhance the ability of our military’s aircrafts to safely navigate what are labeled “anti-access, area denial environments.”
In other words, enemy environments. The MQ-9/Block 5 aircraft program uses MEMS for the transfer, encryption, and communication of classified intelligence.
The “D-U-S” program stands for “Dominate in Unmanned Systems.”
Here MEMS were integrated into unmanned underwater, aerial, and ground vehicles to carry out explosive detonation and surveillance assignments.
The “GPA” program is short for Global Precision Attack. And it involves 30,000 airmen and 41,000 hours of missions last year alone.
MEMS were implemented to upgrade the sniper capabilities and datalink pods necessary to ensure those missions were a success.
The budget for these programs is classified. But we do know that the Department of Defense is looking at MEMS as one of their main resources for streamlining operations by $487 billion between now and 2021.
And when it saves the military a lot of money, it makes the company with the patents for that technology a lot of money.
And STMicroelectronics is poised to be the catalyst behind it all.
Yet, despite its huge success with MEMS, STMicro is hardly a one-trick pony…
Besides MEMS and sensors, it also makes MPEG video decoders, smart-card chips, automotive integrated circuits, computer peripherals, and chips for wireless and mobile applications. In fact, the firm is a global leader in semiconductor manufacturing and ranks as the largest in Europe.
And it holds patents for a lion’s share of these technologies too…
The firm has a PEG ratio of minus 13. A ratio of .5 or less means excellent prospects for growth.
To improve profits, STM announced a new strategic plan last December. Now, the big drivers are expected to be imaging, microcontrollers, MEMS, and discrete power.
The company says that MEMS/sensors and microcontrollers lie at the heart of their growth plans. These products are in categories that account for about 34% of overall sales.
In the automotive group alone, STM expects a 7.3% CAGR growth until 2016. On a consolidated basis, CAGR growth is expected to reach almost 8% through 2016.
For the 4Q14, STM expects to generate 15% of total revenues from products that currently don’t exist, and expects revenue to reach the $2 billion mark in the near term.
As part of a restructuring plan, STM recently winded down a joint venture it operated with the Swedish telecommunications firm Ericsson (NasdaqGS:ERIC). To reduce capital expenditures, STM plans to nearly double outsourcing from the current 11% to about 20%.
For the long haul, STM wants to maintain a leadership position in MEMS and sensors used in touch, voice, and gesture control. STM says it wants to remain at the head of what it calls the “fingertip revolution,” in which touch screens will work even if your hands are wet or you’re wearing gloves.
The firm has also begun producing devices it calls HUBS.
These are devices that have multiple embedded MEMS and sensors. So, for instance, devices needed to detect motion will combine accelerometers, gyroscopes, and compasses. Environmental devices will combine pressure, temperature, and humidity MEMS.
At the same time, STMicroelectronics has developed what it labels “augmented MEMS fusion engines.” These combine functions to deliver advanced results like indoor navigation, 3D voice positioning, audio navigational hints, and acoustic points of interests.
Riding the new wave of smart products, STM’s MEMS technology can be found in “Smart City Infrastructure,” like smart street lamps that have voice assist, automatic dimming and brightening, and camera activation for security.
For smart autos, STM is creating MEMS designed to enhance personal safety, acoustic comfort, and assisted guidance.
Most recently, STM has entered into an agreement with Mobileye (NYSE:MBLY), a technology company that develops vision-based advanced-driver-assistance-systems for collision prevention and mitigation. Some of the features include traffic-sign recognition, vehicle detection, collision mitigation and pedestrian detection, among others.
STM will supply chips and expects significant growth from the partnership, as more auto manufacturers incorporate Mobileye products into their vehicles.
In fact, by one estimate, the technology will be available in 160 car models by 2014 and 237 by 2016.
If the company’s new strategic plan works and they make their numbers, I’m projecting gains of 135% in the short run.
But that’s nothing compared to the bigger returns you could see as the MEMS revolution really takes off…
My initial 135% target is based on what I believe will be EPS of between $0.85 and $1 a share by the end of this year. If STM has a PE of 20, a discount from leading semiconductor firms, that gives us a target price of between $17 and $20 by the end of this year.
My Real Demand Tracking System (RDTS) chart shows the 100-day line has remained key support all this year as the stock has encountered volatile trading. That means we’re picking up this winner near the bottom of its range.
Even better, the chart shows that as the stock has corrected it had made higher highs. This tells us that resistance is rising with each leg up, a bullish long-term sign.
Bottom line: STM is uniquely positioned to cash in on the tremendous growth in MEMS that are changing everything from mobile computing to medical technology to energy exploration. They have a patent portfolio that can produce huge profit opportunities for us as well.
Of course, the tech markets are notoriously volatile. So, we want to take advantage of this trend but protect ourselves at the same time.
For that reason, I’m doubling our standard stop loss to 40%. We can always tighten the trailing stop later if the stock gets ahead of itself on the strength of its new growth plan and the amazing power of its MEMS patent portfolio.
Action to Take: Buy STMicroelectronics NV (NYSE:STM) at market and use a 40% stop loss to protect capital and profits.
Three More Companies Dialed into MEMS
Although we will not be adding these companies to the Radical Technology Profits portfolio at this time, I wanted to share with you three additional companies capitalizing on this coming wealth:
Atmel Corp. (NasdaqGS:ATML)
Founded in 1984, Atmel has been designing and manufacturing cutting edge sensors and microcontrollers for several decades. They’re also a world-class supplier of wireless and serial memory products. And they’ve recently developed a significant line of integrated touch devices. In fact, one such device is being used by Microsoft for its Windows 8 operating system and can be found in 70 different tablets and ultrabooks while being involved in more than a 100 other Windows 8 programs. Just recently, in fact, they scored a significant victory: Large microcontroller contracts with Samsung, supplying the sensor hub in their hugely popular Android smartphone. Trading for under $10, Atmel is also a major microcontroller supplier for Amazon’s top selling reader, Kindle Fire.
Freescale Semiconductor Ltd. (NYSE:FSL)
This Austin-based company, formerly a division of Motorola, specializes in the design and development of embedded sensors, microprocessors and microcontrollers. Their chips can be found in almost every conceivable type of machinery including cars, washing machines, tablets, e-readers, lighting systems, airplanes, and security systems to name a few. But from my vantage point, it’s Freescale’s portable medical device innovations that offer the biggest profit potential today. While the global medical device industry is already a rapidly growing market with value expected to jump from $164 billion in 2010 to $228 billion by 2015, the proliferation of portable devices is taking this market to a whole new level. Freescale aims to ride this wave to new highs.
JDS Uniphase Corp. (NasdaqGS:JDSU)
This company is more often thought of as a play on broadband telecommunications, particularly fiber optics and optical communications. No doubt, that is a big part of the company’s operations. However, JDSU also makes MEMS products used in the fiber optics areas of its operations. Not only that, but back in 2000 it paid about $750 million to acquire a then-leading MEMS firm. JDSU said it bought the firm because MEMS components play a vital role in optical switches and the company says the technology is critical for the fiber optic field. The stock is highly volatile and pops all around, but if it just got back to its five-year closing high of $28.16 a share on February 7, 2011 it could rally for gains of 100%.
I am keeping my eye on these three companies – and many more. If we decide to make a move, you’ll be the first to know.
As I’ve said repeatedly: This MEMS revolution is going to usher in $7 trillion in new wealth. Now, as a Radical Technology Profits member, you’ll have a real chance to capture some of this wealth for yourself.
Cheers and good trading,