By Edwin Cartlidge

When Apple's hugely successful iPad burst onto the market in April last year, a pioneer in plastic electronics took a body blow. Halting the launch of its own thin, lightweight Que e-reader, the company Plastic Logic, based in Mountain View, Calif., seemed in dire straits. But last week, it all looked rather different.

Plastic Logic finalized a deal worth $200 million with a consortium headed by the Russian Corporation of Nanotechnologies (Rusnano), the state-owned venture-capital company for nanotechnology, and says it will use the money to produce a more advanced reader at a new state-of-the-art factory on the outskirts of Moscow.

Industry watchers say that the deal is huge by the standards of the nascent field of plastic electronics. John Rogers, a materials scientist at the University of Illinois at Urbana-Champaign, describes it as "eye-popping", while Michael Holman, a New York-based analyst at international research advisory company Lux Research, likens it to a "Moon shot." "There is the potential for Plastic Logic to become a major manufacturer and for Russia to have a new industry," Holman says. "But there is a lot of risk on both sides."

Plastic Logic is one of several companies developing electronic devices made not from silicon but from new kinds of organic molecules that can conduct and semiconduct.

These molecules can be dissolved to form inks, allowing components to be printed onto easy-to-handle substrates such as plastic. The process potentially slashes the cost of chip production and opens the way to completely new applications, such as flexible displays or tracking devices that can be printed onto clothes, food packaging or even people. The industry is currently worth about $2 billion a year, but market analysts IDTechEx, based in Cambridge, Mass., estimate that it could grow to about $60 billion by 2019.

Behind-the-scenes breakthroughs

Plastic Logic was spun out of the Cavendish Laboratory at the University of Cambridge, UK, by physicists Richard Friend and Henning Sirringhaus in 2000. The company has made many of the technical breakthroughs in the field, but has still to enter the market. Production problems at its existing factory in Dresden, Germany, for instance, were partly behind its decision to delay and then abandon the Que launch. Plastic Logic will use part of the new money to pay off the $50-million loan it took out after canceling Que, and part to update the Dresden factory and its R&D center in Cambridge. The rest will be spent on starting to build its plant in Zelenograd, where its new reader will be produced starting in 2013 or 2014.

Rusnano was set up by the Russian government in 2007 to establish a home-grown nanotechnology industry by 2015 to help reduce the country's reliance on oil and gas exports. As well as the initial tranche handed over this month, the venture-capital company is also partially guaranteeing $100 million of bank loans to Plastic Logic and has said that a further $400 million in cash and loan guarantees will be made available to the company in the future.

Plastic Logic had offers from other, mainly state-based groups in countries including China, Singapore and Taiwan, but, says Sirringhaus, decided that the Russian bid was the most attractive, partly because of the ready supply of scientists and engineers in and around Zelenograd.

Yet many Western high-tech companies are reluctant to move to Russia because of concerns over corruption and a lack of home-grown manufacturing. Indeed, this deal is only the third of comparable size between Rusnano and a foreign company, even though the Russian government is keen to attract international partnerships.

It is not just the Russian side of the deal that raises questions, however, says Holman. He points out that virtually every other company involved in plastic electronics license or sell their products to established electronics manufacturers.

Plastic Logic, in contrast, manufactures its own consumer devices. Holman believes that this business model is unlikely to succeed because, he says, it requires the company to invest in a lot of processes that lie outside its core competence, such as device integration, design and programming.

Added to this, says Holman, are the uncertainties surrounding plastic electronics in general. He points out that two parameters of organic-molecule transistors--the speed of the electrons flowing through them and the ratio of the current in their on and off states--still lag behind those of silicon transistors and mean that plastic circuits are unlikely ever to be used in high-end applications such as computer processors.

Innovations and economics

In fact, plastic circuits might not turn out to be cheaper after all, says Rogers, pointing out that the cost of silicon chips continues to fall as manufacturers become more efficient. He argues that plastic electronics companies should not set out to compete on price, but instead develop completely new kinds of device, be it for medical, military or consumer applications, that take advantage of plastics' characteristics.

Sirringhaus is reluctant to discuss products currently under development at Plastic Logic, but acknowledges that the new reader "will make optimum use of plastic's light weight, robustness and flexibility". He points out that the Que was fairly rigid because it contained components that were not themselves flexible, but says that future versions might be able to bend, for example allowing displays larger than A4 to be folded into a briefcase or rucksack.

"We have taken a steep path," he says. "We have developed completely new materials and used them to make something that you can put into the hands of a consumer. I'm amazed that we have got as far as we have in 10 years."

Indeed, Rusnano's managing director Georgy Kolpachev is confident that plastic electronics has a bright future. "I cannot assess if Russia will be number one in the market, or number five or number ten," he says. "But we have very strong scientists here in Russia. They are producing interesting results in semiconducting polymers and we hope to combine these with results from the Cambridge research center."