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Good post; please keep digging. Would appreciate your sharing your final personal conclusion on a good entry point and what conditions you place on it.

Vis a vis a JR maglev order: One of our known unknowns is, what does the majority of the 2003, AMSC/Sumitomo agreement on cross-licensing of 1g contain? I'm guessing that 2g is discussed in general; and 2g applications inside Japan in particular.

Now, 2003 was a long time ago, and times have changed; the 1-g cross-licensing that is ostensibly the main part of the agreement was because 1-g was intended at that time to be the wire of production through 2010, even by AMSC's schedule. They intended on selling ship motors, SuperVars, etc. etc. with one-g wire for years. That all changed in 2005, when they made real breakthroughts in both 2-g producibility and, somewhat surprisingly, performance. They made the command decision to stop 1-g production years earlier than planned (last wire was May 31st of this year; still sitting on the floor in Massachusetts)). They burned their 1-g ships, and set sail into the unknown with 2-g alone. No backups.

Right now, getting to wire production breakeven on 2-g will happen with 10-cm wide tape production, yielding 2 million meters per year of 2nd gen wire. I bring that up because they have already gotten requests to provide quotes from two utilities - and each of those requests is for 2 million. A production rate that, even at their own schedule, they won't get to till 2010 (practically). And several things have to happen between now and then.

The Massachusetts factory - assuming 2nd gen really works, price and performance wise at all, can become fairly saturated fairly quickly just with utility orders. (That may be an overstatement on my part - but not by much). IF AMSC feels it can reach a cross-licensing/royalty agreement et al with Sumitomo to produce in Japan, I think they'd go for it, knowing they might not be able to fill the order, anyway.

I know we're a couple of levels deep here; but it's not an unreasonable supposition. Also, knowing a little about how the Japanese business world sometimes work - or at least how JR sometimes works -- I'm curious about what verbal assurances AMSC gave about 'real' production of 2g, when they provided the 1-g samples for last years' maglev tests.

Nothing is over till its over. But, between the secret parts of the 2003 1-g cross-licensing agreement - plus whatever side discussions happened with JR, what the 'understandings' are - I bet that's been discussed and we're not being told. Plus, AMSC is not without some leverage here: I mean, assuming AMSC stays ahead in the producible 2-g wire game.....if Sumitomo doesn't want to give a good agreement, AMSC could always say they'll set up their Asian production base in China or something. That would scare the $hit out of the Japanese. Not only for their own local reasons, either; because it would short-circuit Japanese competition for the China high speed rail market.

Interesting times.

jp
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