The graphene market presents an exciting opportunity for investors, particularly when they can anticipate the sector’s next big trends. The Investing News Network interviewed graphene expert Dr. Khasha Ghaffarzadeh to hear his views on the graphene industry. Ghaffarzadeh, Research Director at IDTechEx and author of the report “Graphene, 2D Materials and Carbon Nanotubes: Markets, Technologies and Opportunities 2016-2026,” had quite a bit to say about the future of this intriguing market. Read on to find out more.
Top graphene trends: consolidation, affordability, and regional domination
According to Ghaffarzadeh, “there are many trends shaping the industry.” The first is that the industry is coming off the peak of hype: “businesses are asking the questions: where is all the money that was promised?” A significant hype curve coupled with a tremendous amount of governmental subsidy mean that the graphene market is saturated with companies across the globe. However, most of these companies are “poorly differentiated and poorly capitalized.” Furthermore, many of these companies “depend on government money one way or another: they either sell samples to researches which are working on government funded projects or they receive direct government grants.”
What all of this means is that one key trend to look out for in the future is consolidation. “The scene is ripe for it,” says Ghaffarzadeh. “Once the governments pull the plug on the money, many companies will fail. This, I think, will be for the overall good of the industry as bigger and better resourced suppliers will emerge.”
Meanwhile, “another trend is that graphene is becoming increasingly available and affordable. . . Graphene prices vary dramatically on the market, by several orders of magnitude depending on the type and suppliers.” Some of these “are already quoting prices less than 75$/Kg.” Ghaffarzadeh warns that this is a risk that graphene will prematurely become commoditized “but is inevitable because of the substitution go-to-market strategy.”
Finally, “as with every industry that we cover, China is also having an effect here. Government support together with strong research at large scale have led to China being the largest patent holder in graphene and to China becoming the largest holder of nominal production capacity worldwide.”
Challenges ahead for the graphene market
Despite the excitement surrounding the graphene market, it’s not going to be smooth sailing for the players involved. “The substitution challenge will persist so long as that killer application is not found,” states Ghaffarzadeh. Furthermore, the market’s large reliance on government subsidy is not, in the long term, a sustainable approach.
The good news, however, “is that graphene is making its way, as we speak, through many qualification processes at many companies for many applications all around the world. Some of these applications will succeed and will create demand, but if the story of CNTs is to be a lesson, then we should not expect graphene to revolutionize many industries.” Instead, “we should moderate our expectations and think that this will optimistically be an industry on the scale of $200 million in the next decade and that market penetration will come slowly.”
Top advice for graphene investors
When questioned, Ghaffarzadeh finds it difficult to offer general investing advice for graphene investors “because it depends on why they invest. It is also difficult because there are many me-too players in the industry.” However, in general Ghaffarzadeh believes that “companies that demonstrate their performance at the level of the intermediary and not powder or platelet are taking the right approach. The intermediaries are key to unblocking the market and key to accelerating market uptake. Many have realized but some of new generation of companies are still focused on pure graphene play.”
Furthermore, he also thinks “that the industry is now at a level when investors can demand and expect to see limited but growing revenues from sales. It is also important for the companies to demonstrate that they are in advanced discussions with potential buyers outside academia all over the world. This is important because the sales list of many companies today is still dominated by research organization.” All told, the graphene market is turning out to be an incredibly interesting sector to watch. As consolidation occurs and the market expands into new applications, it will be interesting to see how the market unfolds.