(FORTUNE Magazine) – AFTER MONTHS of rising excitement, the big breakthrough came in May at IBM's sleekly sinuous Thomas J. Watson Research Center in Yorktown Heights, New York. Scientists had been making astoundingly rapid progress with the quirk of nature called superconductivity, which enables some materials to carry electricity at low temperatures with virtually no loss of current. That's much like a man shouting in New York and being heard in Tokyo. In February researchers had fashioned superconductors that worked at -283 degrees F., a temperature high enough to use cheap liquid nitrogen as a coolant instead of far more costly liquid helium. But the superconductors appeared to carry too little current to be commercially practical -- until an IBM team led by Vice President Praveen Chaudhari showed that their capacity was a hundred times greater than anyone had demonstrated before. Then, a scant two weeks after the IBM announcement, researchers at the University of Houston raised the going temperature for superconductivity once again -- this time to -54 degrees F., which one scientist cheerfully called ''room temperature if you open your window in Alaska.'' The twin advances suddenly transported a sunburst of remarkable uses from tantalizing fantasy to the realm of serious possibility. Relatively soon, perhaps in a few years, an array of promising electronic applications could ensue: superconducting computer chips, medical scanners, and ultrasensitive detectors to probe the earth for minerals or transmit defense communications in deep space. Further along could come a world transformed by superconductors in almost unimaginable ways -- ultrafast computers, hyperefficient power plants, 300-mph levitating trains, and, ultimately, clean, safe, and plentiful energy from nuclear fusion. All of this seems much closer to reality than it did even a few months back. Companies like AT&T, Bell Communications Research, Westinghouse, and General Electric, long frustrated in their quest for commercially usable superconductors, are mustering platoons of scientists for marathon laboratory sessions. Other research squadrons are being speedily deployed at Du Pont, Corning Glass, and GTE, which have done little or no work in superconductivity but are skilled at fabricating the exotic ceramic materials that the new superconductors are made of. SHOJI TANAKA, a leading researcher in superconductivity at the University of Tokyo, estimates that as many as 600 physicists in Japanese universities and 100 researchers at Japanese companies are hurrying to commercialize the new materials. He says such companies as Toshiba, Hitachi, Sumitomo, Mitsubishi, and Furakawa are hard at work on superconductors. Labs in France, West Germany, Britain, Taiwan, China, the Soviet Union, and other countries are also charging ahead. The leader for now is IBM. In its May breakthrough the company transmitted a strong electric current through a tiny superconductor thinner than a human hair. Such ''thin films,'' already shown to work in principle in ultrasensitive detectors, will be crucial to connections on computer chips. IBM believes it can eventually match that achievement in larger-scale applications, which could include wire, flexible tape, cables, magnets, and other widely used commercial products. If it succeeds, licensing fees for the technique could add significantly to profits. It's hard to exaggerate the progress that's been made in superconducting over the past 18 months; such frenzies of discovery are rare in the cautious, painstaking world of scientific investigation. In that short time superconductivity has come in from the supercold. Exploring the phenomenon once required liquid helium, which is scarce, expensive at $11 a gallon, and a nuisance to handle. Many of the new superconductors use more plentiful liquid nitrogen, which costs 22 cents a gallon, requires less refrigeration, and is so user friendly that it can be carried around in a Styrofoam cup. The latest materials, developed by physicist Paul C.W. Chu and his Houston colleagues, appear somewhat unstable but display the earmarks of superconductivity at about the temperature of dry ice. The new materials are generally easy to make and retain their superconductivity in magnetic fields much more powerful than the old materials could tolerate -- an important property, since magnets are crucial to many superconductor applications. THE REMAINING BARRIERS to commercial superconductors appear less formidable than the problem of current-carrying capacity that IBM seems to have largely solved. The toughest obstacle: The new materials are brittle, much like Necco wafers, and therefore hard to form into useful shapes. They are also ''anisotropic,'' meaning that they transmit current better in some directions than in others. Twisting, looping, or compressing them into a wire may reduce the amount of electricity they can carry. The basic science of superconductors begins with the simple fact that the flow of submicroscopic electrons making up an electrical current meets resistance as it collides with the ions and atoms of the conducting material. The higher the temperature, the more energy the resisting particles have and the more likely they are to get in the way. It is as if a man tried to walk through a boisterous New Year's Eve crowd in Times Square. He may get through, but he will raise a sweat doing it. In a properly cooled superconducting material, electricity encounters almost zero resistance, so that a current can travel great distances without dissipating energy. It is as if the Times Square pedestrian not only walked unimpeded, but was also picked up by the crowd and carried when he got tired. According to the prevailing explanation of superconductivity, the crystal structure of the superconducting material forces the electrons to form orderly pairs, eliminating wasteful electron scattering. Scientists first found that some substances act as superconductors at temperatures near absolute zero (-459.7 degrees F.), the point at which all molecular motion -- and therefore all resistance -- stops. In 1911 the Dutch physicist Heike Kamerlingh Onnes discovered that frozen mercury loses all resistance at the temperature at which helium changes from a gas into a liquid, about -452 degrees. By 1973, using alloys of metals like niobium and germanium, scientists had succeeded in nudging the critical temperature, the point at which a material shows a sharp drop in electrical resistance, only to -418 degrees. The turning point came in January 1986, when an unconventional insight struck Karl Alex Muller and Johannes Georg Bednorz of IBM's Zurich research laboratory. They tested substances so electron poor that they normally don't conduct at all: compounds of lanthanum, barium, copper, and oxygen. Fired as ceramics, they are similar to the substances found in oven-proof cookware. Bednorz says that since he and Muller were novices in superconductivity, ''We were free to try something crazy.'' Out of hundreds of their mixtures, one showed zero resistance at a record- breaking -406 degrees. After a group at the University of Tokyo led by Tanaka confirmed Bednorz and Muller's breakthrough, an international race was on. By the end of 1986 the Tokyo group, along with researchers at AT&T's Bell Labs and the Institute of Physics in Peking, had raised the critical temperature to -388 degrees. In February 1987, researchers at the University of Houston and the University of Huntsville, Alabama, led by Houston's Chu, got a whopping rise in critical temperature to -283 degrees, comfortably above the -320 degrees boiling point of liquid nitrogen. The March 18 meeting of the American Physical Society in New York turned into a frantic crush of 3,000 scientists from a dozen countries, all trying to learn about the latest advances. ''The Woodstock of physics,'' Michael Schluter of Bell Labs called it. Since then the stampede has been on, especially for headlines. Rushed and incomplete work has created misleading impressions. At the ''Woodstock'' meeting, Bertram Batlogg, a Bell Labs researcher, proudly brandished a flexible electrical tape made from the new materials. A truly flexible tape could be used for magnetic coils or for electrical transmission lines. ''I think our life has changed,'' proclaimed Batlogg. But there is one big problem with the Bell Labs tape: When it's flexible it doesn't superconduct, and when it superconducts it isn't flexible. AS IT DOES in an ordinary conductor, a current flowing through a superconductor generates a magnetic field -- the principle underlying electromagnets. But if the magnetic field becomes too powerful, it quenches the superconducting flow. Until IBM's advance in May, the new superconductors could withstand huge magnetic fields applied to them but couldn't themselves generate a large field because they carried too little current. Now they may be able to generate large magnetic fields without shutting off the superconductive flow. What makes the IBM breakthrough so remarkable is not merely how quickly it happened but its wide applicability. IBM passed a current through a thin film in such a way that it could probably turn the same trick in a thicker application. When a current rushes through a superconductor, it produces troublesome eddies. If allowed to careen through the current like tiny tornadoes, they disrupt flow and weaken current-carrying ability. Junk particles and defects deliberately introduced into the ceramic attract the eddies and pin them down. In principle, says Chaudhari, the research team leader, IBM could do the same thing with larger applications that it does with thin films. He won't give the exact recipe; that's patent-lawyer country. Some of the earliest thin-film applications may be computer chips that marry semiconductors to superconductors. Superconductors probably won't substitute for silicon or gallium arsenide in chips, but they could replace the metals that connect chips together. Superconducting circuits communicate with each other faster than semiconductor circuits because they use less energy and generate less heat, so they can be crammed together more tightly than silicon- based circuits. Higher-performance computers would result, and supercomputers that now occupy space the size of offices could be shrunk to the size of shoe boxes. But that doesn't mean superconducting supercomputers will arrive soon, Chaudhari cautions. ''Those two supers in a row sound appealing, I know,'' he says, but major difficulties remain with both cost and design. Other thin-film applications on the near horizon include cheaper and easier-to-use versions of tiny, ultrasensitive detectors called squids, for superconducting quantum interference devices. Squids have applications ranging from defense to medicine and geology. Scanners that measure magnetic activity in the brain will become smaller and cheaper, says William Black, senior vice president of Biomagnetic Technologies, which now makes them using helium- cooled superconductors. The skull distorts electric currents, but magnetic waves pass through it undisturbed. The magnetic waves of, say, schizophrenics or cancer patients may contain important diagnostic information. Unlike imaging scanners that use large magnets to probe the body, brain-wave scanners passively measure the body's own faint magnetic fields. They're faint indeed: about one billionth of a gauss, a measure of magnetic strength. (Magnets for sticking notes on the refrigerator door run more than 100 gauss.) Stanford physicist Theodore Geballe, an expert in thin films, says squid- based sensors will be able to analyze the dim magnetic fields within the earth to find deposits of oil or minerals. The military sees a variety of uses for squids: The Navy wants squid-based equipment to detect the magnetic stirrings of Soviet submarines hidden deep within the ocean. The Air Force is interested in high-frequency radar and other sensor and communication systems in space, where they are necessary to Star Wars, the Strategic Defense Initiative. Liquid-nitrogen superconductors would make those systems smaller and reduce their power requirements. Computers on the ground would have to analyze billions of bits of information about thousands of incoming missiles and mobilize defenses in an instant. A superconducting computer might be capable of a trillion calculations a second, compared with a mere billion for the fastest Cray supercomputer, says Dallas Hayes, an official at the Rome Air Development Center near Boston, which is overseeing a signal-processing project. Further down the line are commercially viable magnetic trains, hyperefficient power plants, and, perhaps, nuclear fusion. A Japanese prototype superconducting levitating train already travels at up to 300 mph. It works on the familiar principle that like poles of a magnet repel; powerful magnets repelling powerfully can lift a train. But since the magnets on the Japanese train are cooled with liquid helium, it needs heavy compressors to keep the costly coolant from evaporating. Cheap liquid nitrogen would help make a magnetic train lighter and more economical. Researchers at Westinghouse are working on electric-power generation through superconductors that would more than double the usable output of conventional generators, according to research director John Hulm. Transmission lines would send the electricity great distances with virtually no loss, compared to the 8% lost today in transmission and distribution, the Electric Power Research Institute estimates. Superconductors could save hundreds of millions of dollars in fuel and other costs annually, says the industry group. Magnetic containment fields could also store electricity essentially forever, notes Hulm of Westinghouse. Utilities now dissipate unused power every night when customer demand slackens. SUCH CONTAINMENT fields, or bottles, will also be needed for nuclear fusion generators that could produce electricity more safely and cheaply than conventional nuclear power plants. The generator's plasma, a boiling mixture of hydrogen isotopes, would be so hot -- hotter than the surface of the sun -- it couldn't touch any surface; only a magnetic bottle could hold it. Helium-cooled superconductors, costly and troublesome, now power magnetic bottles and the pulsing magnets that heat the plasma in experimental fusion reactors. With such promising applications, it is no wonder that Japan's Ministry of International Trade and Industry (MITI) is swinging into action. Japan has progressed to ''a respectable level'' in the superconductivity race, says an official at MITI's Office for Basic Technology for Future Industries. U.S. scientists were impressed with the University of Tokyo's methodical confirmation of the initial discovery of the new superconductors at IBM Zurich. Alarmed by the possible threat of Japanese dominance of yet another high- tech industry, Senator David Durenberger, a Minnesota Republican, has sponsored a bill to establish a presidential commission to coordinate superconductivity research and development, as Japan's MITI does. The prospect of such bruising competition makes some top Japanese scientists uneasy, especially in view of the two countries' strained trade relations. ''Much too political, much too political,'' says the University of Tokyo's Tanaka of the Durenberger bill. ''Superconductivity is like a precious stone in the earth. We must develop it very carefully. It must not be dominated by one person, one company, or one country.'' With a scientific and commercial free-for-all busting out around the world, however, Tanaka's noble sentiments may be lost in the race to commercialize superconductors -- especially since the first few laps have gone cleanly to the U.S.