August 8, 2010 11:02 pm

Plastic Logic in stake sale talks with Rusnano

One of Britain’s leading high-tech groups is in advanced talks with a Russian state-owned company over the sale of a significant stake, in a development likely to fuel fears about ownership of potentially world-beating UK technology being transferred to other countries.

Plastic Logic, a Cambridge company that has pioneered the development of low-cost computer chips made from plastic, is in discussions with Rusnano, a Russian state-owned nanotechnology corporation, about a capital infusion that would give it control of the UK company.

Plastic Logic – which has received $200m (£125m) in investments since it started in 2000 – is owned by a consortium of venture capital firms and large groups including Intel of the US and BASF of Germany.

A key condition of Rusnano’s investment would be that Plastic Logic’s production facility for the next phase of the technology is based in Russia.

Dmitry Medvedev, Russian president, said last year that his country would spend $10.6bn on nanotechnology by 2015.

The Chinese government has also approached Plastic Logic about providing capital, but the two sides failed to reach agreement.

A deal with Rusnano would fuel the debate over foreign takeovers of UK companies and the loss of strategically important factories.

Cambridge has been the hub of the UK’s high-tech business sector for several years, but the venture capital industry has suffered as a result of the credit crunch. Investment in start-ups specialising in new technology has fallen 40 per cent in value over two years, according to the National Endowment for Science, Technology and the Arts.

While Plastic Logic’s technology development centre remains in Cambridge, in the past two years it has shifted its headquarters to Mountain View, California and, in 2007, built its first plant in Dresden, Germany. The plant makes large plastic display screens for use in new generations of e-readers based on plastic chip technology.

For the company to fulfil its long-term potential to make plastic chips, it will require fresh injections of capital that could run to hundreds of millions of dollars. Plastic semiconductors would be a lot cheaper to produce than current-day silicon chips, thereby cutting the price of electronic circuitry by up to 90 per cent.

The low manufacturing cost of the chips could vastly extend the applications for microprocessors in everyday use.

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