Case Closed: Graphene Is the Next Carbon Nanotube

Despite graphene's exceptional properties – and endless proselytizing by academia, industry, and media alike, of its wunderkind material status – Lux has consistently articulated a healthy dose of skepticism regarding the material's concrete commercial potential. In our 2012 report "Is Graphene the Next Silicon...Or Just the Next Carbon Nanotube?" (client registration required), we examined the interplay between graphene's compelling performance properties as an advanced material, and the significant hurdles it would inevitably face transitioning from the lab to the marketplace. As background, one look at the rocky history of graphene's older carbon cousin, multi-walled carbon nanotubes (MWNTs), shows that a research and patent boom along with impressive technical performance is far from a guarantee of commercial success (client registration required). In fact, we've long encouraged participants in the graphene space to view their MWNT predecessors as a lesson to be mindful of – a case study with trials and tribulations on display to be learned from rather than repeated (client registration required). However, our ongoing monitoring of this landscape has made it increasingly clear that graphene looks much closer to the next carbon nanotube than the next silicon, and here's why:

  • Over-aggressive capacity expansions coupled with limited commercial demand exacerbate current supply glut. Total global graphene nanoplatelet (GNP) capacity has increased from 120 tons/yr in 2012 to 910 tons/yr today, driven largely by aggressive Chinese capacity expansions such as by Ningbo Morsh [(300 tons/yr) client registration required], and Xiamen Knano [(100 tons/yr) client registration required]. On the contrary, demand growth has been significantly more sluggish, such that current GNP demand has yet to exceed 15% of the current supply (client registration required). What's more, this metric does not even include significant capacity expansions still in progress by the likes of The Sixth Element (client registration required), and Deyang Carbonene Technology (client registration required). Beyond such depressing return on supplier investment calculations, when this overcapacity is considered in addition to the billions of commercial investment in the material by governments and multinationals – such as EU's Graphene Flagship, National University of Singapore's Graphene Research Centre (client registration required), and South Korea's approved roadmap for graphene commercialization – graphene's severe under-performance to live up to the massive hype becomes even more pronounced.


  • Most developers are long shots with unproven technical value and business execution. Other than a select few, the GNP space is flooded with undistinguished suppliers. While it is worth noting that longtime market leader XG Sciences (client registration required) continues to maintain momentum by receiving investment from Samsung Ventures (client registration required) and will work with Samsung SDI on next-generation Li-ion batteries for consumer electronics, such positive commercial traction is an exception rather than the norm. In fact, the Long-shot quadrant of the Lux Innovation Grid (LIG) has become so dense that we struggled to squeeze in the names of all these start-ups with unproven technical value and business execution. Even once-promising developers like Angstron Materials (client registration required) have lost shine because of inability to provide cost and performance data around completed storage cells, questionable value proposition, and long road to commercial products. What's more, many Chinese GNP suppliers have been forced to sell their products below cost to attract the interest of industry players and offload excess capacity (client registration required).


  • Lack of concrete performance metrics demonstrating true value proposition in most segments. While the touted exceptional properties of as-synthesized graphene are no doubt a delight to lab researchers and misguided major media outlets, the material in raw powder form is a far cry from commercial product-ready. As with MWNTs and other nanomaterials, the ability to maintain the performance of graphene when the material is dispersed in a matrix is a major challenge. What's more, agglomeration and viscosity issues limit the practical loading of graphene as a primary reinforcement or additive in many applications. As such, the most salient metrics evaluating graphene's true commercial value proposition are that of a final device or product (e.g. composite part, battery, supercapacitor, transparent conductive film [TCF]) containing the material, and on this front graphene is sorely lacking. And lest we forget, not only do graphene products have to prove themselves on performance, but they need be compelling enough to justify their higher upfront price tags. As one telling example, Lux's Energy Storage team has found that despite the hype around graphene as a material to displace activated carbon in supercapacitors, graphene will lag behind other active materials and will struggle to beat incumbents (client registration required).

While the aforementioned market dynamics certainly present a bleak picture for those seeking to make money from selling the raw material, multinationals may view the space through the lens of arbitrage opportunities and leverage the looming market shakeout to scoop up developers (or their technology portfolios) on the cheap. Similarly, the GNP supply glut will increasingly present attractive, low-price opportunities for downstream application developers. However, such application developers need to be confident they possess the internal expertise to bring graphene to commercial success in target markets, unlike Bayer MaterialScience's doomed fate in MWNTs, for instance, in which the company's lack of internal activities in composites and batteries were a major hindrance to the commercialization of its nanomaterials (client registration required).

Finally, it would be a disservice to graphene film developers to entirely lump them in with their GNP peers. While GNP developers indeed appear poised to repeat the trajectory of their older MWNT cousins, graphene film start-ups, on the other hand, have shifted strategy. While initial hype and attention on graphene film application development focused on TCF segments like displays and touch screens, in the past two years there has been a pivot among developers to sensors to spur revenue growth (client registration required). For instance, Graphene Frontiers (client registration required) has positioned itself as a sensor (rather than graphene) developer (client registration required for each). While this pivot to selling sensor devices rather than raw graphene indicates a maturation from a business model standpoint, inducing a bandgap in graphene is not trivial, and developers may ultimately find this segment even more challenging to penetrate than TCFs. Regardless, it is at least heartening to observe start-ups reacting to struggles (in this case finally realizing besting incumbents like ITO and other emerging material options like silver nanowires and metal nanoparticles is a daunting challenge) and devising new strategies that take into account critical lessons from the past. Just don't expect graphene to live up to the untenable hype, or become the next silicon.

To read more insights from Lux Research analysts visit Lux Populi.