Investing in Graphene – the Wonder Material That Could Become Bigger Than Silicon

The biggest game-changer in technological history is already here

It’s widely known that the use of silicon in semiconductors has led to the biggest advance in technology for the last hundred years. Computer chips are now found in every conceivable appliance, from your mobile phone and desktop computer to the engine management system of your car and even embedded into your fridge.

In the future, these computer chips could be made from graphene instead of silicon

Although silicon production has become a global industry it isn’t actually the best material that can be used for semiconductors, due to its relatively poor electrical conductivity properties. In fact, the main reason silicon came to such prominence is because it’s so readily available in its raw form and is, therefore, cheap to refine. But what would happen if the properties of silicon could be improved in some way, or even replaced entirely by a new product?

Step forward graphene. This incredible material is 200 times stronger than the comparable weight of steel, and it’s also very good at conducting both heat and electricity. The electronics giant Samsung has discovered that using graphene in conjunction with Silicon can dramatically improve semiconductor performance by improving conductivity on an enormous scale.

Imagine computers that are hundreds or even thousands of times faster than anything that’s currently available, and it’s clear to see what a dramatic effect this new material could have on the world’s industries.

Whilst it will be several years before graphene production reaches the tipping point where it becomes globally commercial, the opportunities for investing in early-stage graphene R&D and production companies could prove very beneficial to tech-savvy investors.

But what else can graphene be used for?

It’s not just computer chips that could benefit from the extreme properties of the new wonder material. Graphene is also transparent, flexible and impermeable, which means it could have a vast range of applications in the future.

It’s already been theorised that graphene could allow the production of a lightweight and impossibly strong ‘space elevator’, which would allow the transport of goods into space without the need for rockets.

Graphene at the atomic scale

And the boffins at MIT have plans for a graphene-based filter that can easily remove salt from seawater, making it drinkable. With the world’s fresh water supply reaching peak usage, graphene could prove to be the saviour for poorer nations fresh water requirements.

But what is graphene? Developed at the University of Manchester in the UK in 2010, researchers found that by sticking tape onto a block of graphite they could peel away incredibly thin layers. By subsequently peeling away further layers of graphite from the tape, and eventually dissolving the tape in a solvent, the resulting layer is just one atom thick. This single layer of graphite is known as graphene.

Whilst the process has been described as being simple enough to perform in your kitchen, the reality is that cutting edge tech companies and university labs are the only places where graphene can currently be created.

However, early adoption has already been taken by some companies who have the foresight to appreciate the benefits of the material. Unusually, fishing rod manufacturers have already started adding graphene to fishing rods to make them more robust. And the aerospace industry is conducting trials in using graphene to construct lightweight, fuel-efficient aircraft frames.

How to invest in the future

So where does this leave the individual investor? Well if you can find them, you might be able to invest in early-stage graphene producing companies via Venture Capital Trusts (VCTs). In the UK, VCTs are becoming increasingly popular with investors due to the generous tax breaks that are given to them.

A little information about this investment structure might be needed at this point. A VCT is a company whose shares trade on the London stock market, just like Barclays or Vodafone. However, rather than banking or telecoms, a VCT aims to make money by investing in other companies. These are typically very small companies which are looking for further investment to help develop their business.

To encourage investment in this crucial area, the UK government offers generous tax benefits to investors, including tax relief of up to 30% when investing. If you’ve already maxed out your ISA and SIPP, a VCT is a logical alternative.

The possibilities for graphene are endless


Companies which could benefit from graphene

So now you’ve decided to invest in the future of graphene, what are your options? One suggestion is the venture capital firm IP Group, who are listed on the UK AIM index under the ticker IPO. They hold large stakes in a wide range of university-based companies including Applied Graphene Materials, listed on AIM as AGM. Whilst AGM is not currently turning a profit, the risk of investing in this micro-cap company could be offset by stratospheric gains should they discover new ways to manufacture the material.

If you have a lower appetite for risk then maybe you could investigate Samsung Electronics or Airbus. Both of these giants would benefit directly from incorporating graphene into their production processes, and both are large enough to fund the terrifically expensive R&D required to bring a new product to commercial success. They also have the benefit of having subsidiary sales from a wide range of departments, so the possible failure in one particular department can be offset by profits from the rest of the organisation.

There are also potential profits to be made from companies that are able to reduce the costs of graphene production. One of these is Dotz Nano, which has devised a way to make graphene-based particles just a few nanometers wide from coal. Whilst the cheapest graphite sourced from China is currently $800 per tonne, coal can be obtained for as little as $10 per tonne, a significant cost saving.

If anything can be learned from the technological developments of the last 100 years, it’s that something seemingly small can easily become a global phenomenon within a few short years. If you missed out on the rise of the semiconductor, then maybe you now have the opportunity to get in early on the next tech boom instead.


Personal finance blogger who's fanatical about financial freedom, investing and making money in the UK

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