A British company will on Wednesday announce that it has secured $100m to build the world’s first plant for making semiconductors out of plastic rather than silicon.

The technology could cut the price for electronic circuitry by up to 90 per cent and
hasten the day when goods including cans of baked beans and items of clothing are made of “intelligent” materials.

Plastic Logic, based in Cambridge, is to build the factory by the end of next year in Dresden, Germany, backed by funds from Oak Investment Partners and Tudor Investment Corporation, the US venture capital groups.

The plastic semiconductors are made using a process similar to ink-jet printing, which is widespread in the packaging industry for producing labels.

Plastic Logic, which was formed in 2000 and employs 90 people, has received $50m in previous investment rounds. Its shareholders include Intel, the world’s largest microchip company, and BASF, the world’s biggest chemicals group.

Hermann Hauser, a Cambridge entrepreneur and financier who is a director of Plastic Logic, said the semiconductors could bring about huge changes in the global electronics industry.

“It could lead to an era of truly cheap electronics in which intelligent circuitry was sewn in to your clothing, for instance, to give you a set of instructions when you put the clothes on to tell you what you are supposed to be doing during the day,” he said.

Mr Hauser said Plastic Logic had a two-year lead on competitors that are studying similar devices. Companies including Lucent of the US, Philips of the Netherlands, Japan’s Hitachi, Samsung of South Korea and AU Optronics of Taiwan are working on plastic semiconductors or monitoring their development.

Tim Bajarin, principal analyst at Creative Strategies, a California-based technology consultancy, said building the plant would be “good news” for the entire semiconductor industry by signalling the viability of plastic microchips and providing a “new option” for the way the industry develops in the next 30 years.

Jim Tully, head of semiconductors at Gartner, the US market research group, said the possibility that a plastic form of semiconductors could leave the laboratory for the factory floor was “very attractive”.

While silicon chips – total sales of which came to about $250bn in 2006 – were unlikely to be superceded, plastic chips could emerge as an important sector, he said.

Mr Hauser said he believed Plastic Logic could achieve $1bn in annual sales within 5-10 years. Its first products are to be a series of light, tough and flexible display screens the thickness of a credit card.

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