Is competitive landscape for graphene about to drastically reconfigure, asks IDTechEx

07 May 2019

Graphene, 2D Materials & Carbon Nanotubes_Markets, Technologies & Opportunities 2019-2029

Interesting times for graphene: multiple significant applications are arriving to market, potentially indicating the initial stage of a growth phase. Companies are finally seeing revenue & average order sizes grow, thanks to a few high volume (multi-tonne) lead conversions.

In its new report, Graphene, 2D Materials and Carbon Nanotubes: Markets, Technologies and Opportunities 2019-2029, market research & business intelligence firm, IDTechEx Research forecasts that the graphene industry will reach an inflection point between 2021-2022. Despite these positive signs, the industry remains fundamentally loss-making, with many firms seeming to be on a weak footing. Indeed, signs are that the competitive landscape may be poised for a period of change and realignment.

At some point, particularly during the period 2010-2013, the number of graphene companies mushroomed. These firms were mostly positioned as suppliers. The rate of company formation then slowed, although recently IDTechEx sense that a new wave is being formed, with focus on graphene applications, and not production.

Almost all firms were, and are, in the negative. Most have very small revenues, with many surviving thanks to direct or indirect research grants and subsidies. IDTechEx have often argued that this is an unsustainable model. And many firms have already quietly left the scene (IDTechEx can easily identify more than 12, and know of several more whose finances are strained). Some have been acquired by larger and more capable firms. These processes are likely to accelerate.

Today, some volume applications and revenue leaders are being established. These firms are erecting a growing competence gap and barrier between themselves and others. As a result, the business map is beginning to consist of three tiers of non-start-up companies:

(1) those who are resource-constrained, and thus poorly placed to capture the growth phase;

(2) those who have some capacity, strong know-how and a long customer list, but are not yet leaders; and

(3) leaders who have the largest technical and commercial know-how, as well as capacity and revenue.

IDTechEx think many in category (1) will not survive for long, as outlined in the report. Subsidies, old contracts and local advantage might keep some ticking along, but even then, they would likely remain a semi-permanent start-up.

Those in category (2) are in an unsustainable position. The landscape is shifting, and the leading edge of the industry is leaving them behind. They face difficult and risky business and investment choices to avert their demise. IDTechEx think they have a narrow window for significant action (2-4 years) – and no easy options.

Those in category (3) are the emerging leaders. They have a competitive advantage on one or multiple fronts. They have accumulated commercial know-how and large installed capacity, with reasonably consistent production quality. They have secured first rounds of large orders, reflecting customer faith in their technology and in their ability to supply graphene consistently at high volume and reasonable price. The competition between these firms is shifting towards cost and volume.

Revenue trends by companies. Revenues estimated & many firms not shown due to negligible income. Indeed, around 35-45 firms <1$M revenue. Note fairly characteristic revenue distribution pattern with leaders clearly emerging. Source: IDTechEx Research

Still, they differentiate by the properties of their materials and by the target markets; increasingly they will be pushed towards competition in terms of operation effectiveness. Some among them are taking additional capital risk to invest in larger capacities, hoping to open-up serious discussions in markets where volume is critical; and to dramatically raise their scale and cut cost, in order to force others out, consolidating the market.

The latter will be difficult to achieve given that graphene has a speciality chemical character and is not really one material serving one market. Indeed, no two graphene are identical, and this will keep the market somewhat fragmented, with companies positioning at different price-performance benefit points.

There are also early stage start-ups. On the production side, they either claim to have a technology to produce graphene at higher yields (often with reduced waste and energy consumption) and/or a technology that produces the so-called 'true graphene'. Many of their innovations look like incremental improvements and are not disruptive. But this is not to say that they are not important innovations, for example, increasing graphene concentration and cutting production time are key development directions.

These new players are facing a market that is already somewhat established. This is different to the situation of 7-8 years ago, when many were acting as though it was the 'wild west'. They must take the time to learn the lessons of the industry and choose their positioning with care, otherwise they will easily become copycat firms easily dismissed. These players must be very thorough in their strategic market segmentation and quickly find their focus, otherwise they will waste their limited resources trying to please everyone – and thus pleasing no one.

In general, the business landscape is beginning to reconfigure itself. The leaders are emerging, increasing their capacity, revenue, and technical and commercial know-how distance with the rest of the pack. Many others face uneasy choices about what to do next. They cannot afford to lose much time. As always, fantastic opportunities will emerge in times of change. The situation is therefore worth being closely watched.

To follow this industry, please consult Graphene, 2D Materials and Carbon Nanotubes: Markets, Technologies and Opportunities 2019-2029. This report from IDTechEx Research offers a detailed analysis of the technological and commercial progress of graphene, carbon nanotubes and non-graphene 2D materials. It is the result of years of ongoing research since 2011/2012.

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