Liquidmetal Technologies filing outlines its $20 million agreement with Apple

Posted:
in iPhone edited January 2014


In its 10-K filing with the US Securities and Exchange Commission, Liquid Metal outlined the details of its $20 million licensing program with Apple, which began in 2010.



Toward the end of 2010, Apple entered into an exclusive agreement to license the use of Liquid Metal's amorphous metal alloys with unique atomic structures, used to create products that are stronger, lighter, and resistant to wear and corrosion.



The metal alloys owned by Liquidmetal Technologies were developed by a research team at the California Institute of Technology, and their amorphous, non-crystalline structure makes them harder than alloys of titanium or aluminum.







In its latest 10-K filed today, the company noted that its "Total Revenue decreased by $19.6 million to $972 thousand for the year ended December 31, 2011 from $20.6 million for the year ended December 31, 2010.



"The decrease is primarily in the licensing and royalties revenue category due to a one-time licensing fee that occurred during 2010," the filing stated. In 2011 the $972,000 in revenue came from a combination of $572,000 in product sales and $400,000 in other licensing and royalty payments, a steep drop from the previous year's $20.6 million that largely came from Apple.



Describing that transaction, Liquidmetal stated, "On August 5, 2010, we entered into a license transaction with Apple Inc. ("Apple") pursuant to which (i) we contributed substantially all of our intellectual property assets to a newly organized special-purpose, wholly-owned subsidiary, called Crucible Intellectual Property, LLC ("CIP"), (ii) CIP granted to Apple a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in the field of consumer electronic products, as defined in the license agreement, in exchange for a license fee, and (iii) CIP granted back to us a perpetual, worldwide, fully-paid, exclusive license to commercialize such intellectual property in all other fields of use.



"Additionally, in connection with the license transaction, Apple required us to complete a statement of work related to the exchange of Liquidmetal intellectual property information. The Company recognized a portion of the one-time license fee upon receipt of the initial payment and completion of the foregoing requirements under the license transaction. The remaining portion of the one-time license fee was recognized at the completion of the required statement of work.



"Under the agreements relating to the license transaction, we are obligated to contribute all intellectual property that we develop through February 2012 to CIP. In addition, we are obligated to refrain from encumbering any assets subject to the Apple security interest through August 2012 and are obligated to refrain from granting any security in our interest in CIP at any time. We are also obligated to maintain certain limited liability company formalities with respect to CIP at all times after the closing of the license transaction. If we are unable to comply with these obligations, Apple may be entitled to foreclose on our assets."



AppleInsider was first to discover that Apple was looking to hire a number of experts on amorphous metal alloys to build products using Liquidmetal's technology. The first product Apple created using Liquidmetal was an iPhone SIM card ejector tool.



[ View article on AppleInsider ]

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Comments

  • anantksundaramanantksundaram Posts: 16,831member
    A last gasp of hope: The new MacBooks will have some LQMT pizzaz in it.



    Otherwise, after a patient two years, I'll probably bail. \
  • macky the mackymacky the macky Posts: 4,615member
    Fascinating video. If this technology were to be used for iPhone and iPad cases, would the characteristics of the liquid metal make the cases practically indestructible and lighter than any competitor's products?



    If this is in Apple's future product releases, like this Fall, for example, this, as well as their practical lock on retina displays, should suck all the air out of whatever MS and RIM are going to say about their products. It can practically destroy Samsung's "plastic" products in comparison. These are interesting times for Apple competitors.
  • ajbdtc826ajbdtc826 Posts: 190member
    Only $20M? Lol
  • hobbithobbit Posts: 532member
    I wonder why Apple did not manage to introduce a single liquid metal product in the last 2 years.

    Surely they must have played with this technology even quite a bit before that, before they decided to license it in 2010.



    Does it really take 2+ years from licensing to use this technology?



    Perhaps there are substantial challenges still left, which is why we don't see it used more in any kind of products yet.



    I wonder whether both the iPhone 5 and iPad 3 were supposed to use it - only to be pushed back.





    Or maybe it is the other way around:



    With the new iPad I can see Apple might have hoped to use Sharp's lower power IGZO panels, a lower power A6 CPU and true worldwide LTE modem. None of these happened yet, so they introduced the 'iPad 2S' for which they did not want to use their new liquid metal case either.



    Perhaps similar thoughts influenced the iPhone 5 -> 4S release. (P)reserving the liquid metal case 'revolution' for the true iPhone 5.
  • wurm5150wurm5150 Posts: 763member
    Quote:
    Originally Posted by hobBIT View Post


    I wonder why Apple did not manage to introduce a single liquid metal product in the last 2 years.

    Surely they must have played with this technology even quite a bit before that, before they decided to license it in 2010.



    Does it really take 2+ years from licensing to use this technology?



    Perhaps there are substantial challenges still left, which is why we don't see it used more in any kind of products yet.



    I wonder whether both the iPhone 5 and iPad 3 were supposed to use it - only to be pushed back.





    Or maybe it is the other way around:



    With the new iPad I can see Apple might have hoped to use Sharp's lower power IGZO panels, a lower power A6 CPU and true worldwide LTE modem. None of these happened yet, so they introduced the 'iPad 2S' for which they did not want to use their new liquid metal case either.



    Perhaps similar thoughts influenced the iPhone 5 -> 4S release. (P)reserving the liquid metal case 'revolution' for the true iPhone 5.



    You haven't thought about mass production.. The bigger question is can mass produce millions using this technology?
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by anantksundaram View Post


    A last gasp of hope: The new MacBooks will have some LQMT pizzaz in it.



    Otherwise, after a patient two years, I'll probably bail. \



    Bail on waiting for LiquidMetal or bail on the Mac notebook line? I can see I'm getting tired of hearing about LM without anything coming to fruition.
  • sinisterjoesinisterjoe Posts: 134member
    Quote:
    Originally Posted by Wurm5150 View Post


    You haven't thought about mass production.. The bigger question is can mass produce millions using this technology?



    Yep that's exactly it. They need to look at all the individual chemicals/materials involved, the different treatments that need to be applied to them, the quality/uniformity of mass production, and finally they need to design a process to do it on a very large scale. They simply bought the patent rights 2 years ago to make sure no one else got there first. When they finally do produce a mainstream product with LM it's not going to be an iPad, iPhone or even a MacBook. It will be a product produced in much smaller quantities. People will scoff at the LiquidMetal AirPort Extreme or whatever but that's exactly the scale it will start at. (i.e. iPhone 3G SIM removal tool)
  • acslater017acslater017 Posts: 424member
    Hmm...hard to know what to think about this. Does a drop in revenue mean that Apple's not doing anything with the technology? Or simply that it was a one-time payment? If $20 million is all that they're getting paid, that's a steal if Apple can use it for mass-produced items.



    LiquidMetal seems like a wonderful material. Strong, light, electromagnetically transparent (in some flavors, I think). That, combined with GorillaGlass 2, should make for some more durable iPhones in the future.
  • mdriftmeyermdriftmeyer Posts: 6,811member
    Quote:
    Originally Posted by acslater017 View Post


    Hmm...hard to know what to think about this. Does a drop in revenue mean that Apple's not doing anything with the technology? Or simply that it was a one-time payment? If $20 million is all that they're getting paid, that's a steal if Apple can use it for mass-produced items.



    LiquidMetal seems like a wonderful material. Strong, light, electromagnetically transparent (in some flavors, I think). That, combined with GorillaGlass 2, should make for some more durable iPhones in the future.



    Read the article again. Apple gained this exclusive relationship with a one time fee of $20 Million that they then created an LLC to apply this new IP that they then granted back to Liquidmetal Tech to use in areas other than the agreed upon exclusive areas Apple wanted.
  • hobbithobbit Posts: 532member
    Quote:
    Originally Posted by Wurm5150 View Post


    You haven't thought about mass production.. The bigger question is can mass produce millions using this technology?



    The promise of Liquidmetal is a strength similar to CNCing from a solid block of metal (like unibody enclosures) with the "processing efficiency of plastics" (presumably injection molding).



    Surely Liquidmetal must have proven this processing method before making any such claims.

    And plastics processing is a fairly well understood production method. Yet if it turns out that such a process for Liquidmetal still has to be invented, then it perhaps is not as simple as for plastics. Somehow this statement seemingly doesn't match reality.





    But perhaps Apple is still deliberately not using it, milking the unibody designs.
  • moxommoxom Posts: 325member
    So when are we gonna get one of these?







  • copelandcopeland Posts: 268member
    Quote:
    Originally Posted by hobBIT View Post


    The promise of Liquidmetal is a strength similar to CNCing from a solid block of metal (like unibody enclosures) with the "processing efficiency of plastics" (presumably injection molding).



    Surely Liquidmetal must have proven this processing method before making any such claims.

    And plastics processing is a fairly well understood production method. Yet if it turns out that such a process for Liquidmetal still has to be invented, then it perhaps is not as simple as for plastics. Somehow this statement seemingly doesn't match reality.





    But perhaps Apple is still deliberately not using it, milking the unibody designs.



    I know amorphous metals from academic studies but I am not sure if it is really ready for mass production.

    The process of producing amorphous metals is pretty expensive as it involves the special recipes and a super fast cooling

    to prevent the metal from crystalizing. This means the original junk of metal is small because of the need of super fast cooling.

    You then have to merge these really small junks of metal to a bigger one during the process.



    When I looked at amorphous metals in Q4 2010 these plates the are using in the video was the absolute maximum the could make (I was not in contact with LiquidMetals).



    Now you have to shape the metal to your desired design. But you are limited because you can not heat it too much

    because then it would crystalize again. Shaping it by cold deformation at high deformation rates might include the risk

    of some recrystalizion as it does with regular metal. Maybe even milling is inducing too much heat locally to form some

    thin layer of crystalized metal.



    I am no expert in amorphous metal but I believe there is still some work left to be done.
  • asciiascii Posts: 5,363member
    It seem like an amazing metal, and yet it's been around for years now and not more products imagined? Too bad.
  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by hobBIT View Post


    I wonder why Apple did not manage to introduce a single liquid metal product in the last 2 years.

    Surely they must have played with this technology even quite a bit before that, before they decided to license it in 2010.



    Does it really take 2+ years from licensing to use this technology?



    Perhaps there are substantial challenges still left, which is why we don't see it used more in any kind of products yet.



    I wonder whether both the iPhone 5 and iPad 3 were supposed to use it - only to be pushed back.





    Or maybe it is the other way around:



    With the new iPad I can see Apple might have hoped to use Sharp's lower power IGZO panels, a lower power A6 CPU and true worldwide LTE modem. None of these happened yet, so they introduced the 'iPad 2S' for which they did not want to use their new liquid metal case either.



    Perhaps similar thoughts influenced the iPhone 5 -> 4S release. (P)reserving the liquid metal case 'revolution' for the true iPhone 5.



    Read the press release. Most of 2011 was spent gearing up. Their revenues (if you leave out the $20 M Apple payment) were actually higher in 2011 than in 2010. They reported that during 2011, they were able to get things going for the future. The key statement is:

    Quote:

    Mr. Tom Steipp, President and CEO, commented, "Liquidmetal Technologies has reached an important milestone enabling it to realize the benefits of its partner relationships. By the end of 2011, we are now able to source alloy feedstock from Materion, process our alloys using next generation molding machines from Engel and manufacture commercial parts at our contract manufacturer, Visser Precision Cast. Looking forward, we will be working with our partners to scale up these production capabilities while engaging with customers in aerospace, medical, sporting goods and other industries."



    Total revenue from product sales was largely unchanged for the year. (572 K to $569 K). The big change was in royalty revenue.



    Keep in mind, also, their recent press release that they just started shipping product to several customers. On March 6, they issued the following press release:

    Quote:

    Liquidmetal(R) Technologies Inc. (OTCBB: LQMT) today announced that its manufacturing operations are currently in the midst of shipping commercial parts to several of its customers world-wide. Parts delivery began this past December with continuing shipments scheduled for the months ahead.



    I expect that their numbers for the first quarter will look much better than the past.



    Quote:
    Originally Posted by acslater017 View Post


    Hmm...hard to know what to think about this. Does a drop in revenue mean that Apple's not doing anything with the technology? Or simply that it was a one-time payment? If $20 million is all that they're getting paid, that's a steal if Apple can use it for mass-produced items.



    LiquidMetal seems like a wonderful material. Strong, light, electromagnetically transparent (in some flavors, I think). That, combined with GorillaGlass 2, should make for some more durable iPhones in the future.



    See above. We don't know if Apple's going to do anything with the technology because LQMT stated that they were just able to get supply and processing problems sorted out in December. I would guess that the earliest we could see an Apple product based on LQMT would be late this year, more likely early 2013 for the higher volume products. Of course, Apple's penchant for secrecy means that LQMT will not be able to comment on what they're shipping to Apple, if anything.



    Keep in mind, though, that LQMT involves more advanced processing than conventional alloys. While they would certainly save a great deal by being able to press powerbook cases rather than machine them out of aluminum billets, we don't know yet whether the cost savings will be great enough to justify the added material cost. If I had to guess, I would say that the first product will be the iPhone - because there is considerably less metal in the iPhone, so the cost premium would be smaller. In addition, space is a premium for the iPhone, so saving even a fraction of a cubic inch would be valuable.
  • ronboronbo Posts: 669member
    Quote:
    Originally Posted by Macky the Macky View Post


    Fascinating video. If this technology were to be used for iPhone and iPad cases, would the characteristics of the liquid metal make the cases practically indestructible and lighter than any competitor's products?



    When you drop your iPhone, it's not the case that breaks. Still, it'll be interesting to see what changes.
  • anantksundaramanantksundaram Posts: 16,831member
    Quote:
    Originally Posted by SolipsismX View Post


    Bail on waiting for LiquidMetal or bail on the Mac notebook line? I can see I'm getting tired of hearing about LM without anything coming to fruition.



    Bail on the MB!? Heavens, no.
  • melgrossmelgross Posts: 28,596member, moderator
    Quote:
    Originally Posted by copeland View Post


    I know amorphous metals from academic studies but I am not sure if it is really ready for mass production.

    The process of producing amorphous metals is pretty expensive as it involves the special recipes and a super fast cooling

    to prevent the metal from crystalizing. This means the original junk of metal is small because of the need of super fast cooling.

    You then have to merge these really small junks of metal to a bigger one during the process.



    When I looked at amorphous metals in Q4 2010 these plates the are using in the video was the absolute maximum the could make (I was not in contact with LiquidMetals).



    Now you have to shape the metal to your desired design. But you are limited because you can not heat it too much

    because then it would crystalize again. Shaping it by cold deformation at high deformation rates might include the risk

    of some recrystalizion as it does with regular metal. Maybe even milling is inducing too much heat locally to form some

    thin layer of crystalized metal.



    I am no expert in amorphous metal but I believe there is still some work left to be done.



    They use this for a number of things. One of them is the heads of some golf clubs. They make those by the tens of thousands, at least. I don't know how well they sell.



    Mostly, product parts would be thin, not bulk. The m anufacturers isn't all that difficult these days, but the alloys are expensive, and that's what limits their use. As a practical matter, would the cases be better? Likely not.



    People wanting a MacBook pro with a Liquidmetal case would have to be prepared to pay more for one.
  • johnny mozzarellajohnny mozzarella Posts: 1,728member
    Quote:
    Originally Posted by SinisterJoe View Post


    Yep that's exactly it. They need to look at all the individual chemicals/materials involved, the different treatments that need to be applied to them, the quality/uniformity of mass production, and finally they need to design a process to do it on a very large scale. They simply bought the patent rights 2 years ago to make sure no one else got there first. When they finally do produce a mainstream product with LM it's not going to be an iPad, iPhone or even a MacBook. It will be a product produced in much smaller quantities. People will scoff at the LiquidMetal AirPort Extreme or whatever but that's exactly the scale it will start at. (i.e. iPhone 3G SIM removal tool)



    iPod nano (watch)
  • johnny mozzarellajohnny mozzarella Posts: 1,728member
    Quote:
    Originally Posted by Ronbo View Post


    When you drop your iPhone, it's not the case that breaks. Still, it'll be interesting to see what changes.



    It would be nice if it bounced back up into your hand.
  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by melgross View Post


    They use this for a number of things. One of them is the heads of some golf clubs. They make those by the tens of thousands, at least. I don't know how well they sell.



    Mostly, product parts would be thin, not bulk. The m anufacturers isn't all that difficult these days, but the alloys are expensive, and that's what limits their use. As a practical matter, would the cases be better? Likely not.



    People wanting a MacBook pro with a Liquidmetal case would have to be prepared to pay more for one.



    Check their history. They've made golf clubs,skis and tennis rackets.

    http://en.wikipedia.org/wiki/Liquidmetal





    Early versions had brittleness problems and some of the golf clubs shattered. But those have apparently been resolved (or they have found applications where brittleness doesn't matter) as they have lined up new customers.



    It is important to keep in mind that Liquidmetal is a technology, not a product. They have many different alloys and the alloys can be tweaked for a given application. Some of the alloys are over a thousand dollars a pound, while others are far, far less. For example, Liquidmetal tennis rackets are on the market and they're not ridiculously priced:

    http://www.nextag.com/head-liquidmet.../products-html



    Since tennis rackets are competitively priced, I don't believe that a Liquidmetal Macbook Pro would be horrendously out of line. I'd be confident that the price premium would be $50 or less. Keep in mind that:

    1. A liquidmetal case would use far less material than the current aluminum case.

    2. The cost of expensive machining would be eliminated. Instead, the parts would be simply cast or pressed.

    3. Recovery of aluminum fines (and the resulting explosion risk) would be eliminated.

    4. The weight saved could reduce the size and weight of the MBP or it could allow for a larger battery.

    5. Apple has a history of leading the way with new technologies and might well do something like this.



    You can learn more at their web site:

    liquidmetal.com
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