How do you see suppliers meeting the demand for carbon fiber?
The supply chain has woken up to the fact that composites in consumer electronics is finally a viable technical and business proposition and are now forward pricing. However the cost, quality and capacity offerings are still not there. As an industry, we have to make a decision. We’re in a nice low volume, high margin business. Do we really want to switch into the very low margin, but high volume alternate? The interesting thing is this is where the money is going to be made. If you look at carbon fiber suppliers Cytec and Toray, they are decently sized companies, but they are fantastically small compared to the big consumer electronics brands.
What do you think are the risks and benefits of switching to a low-margin but high-volume industry?
For existing players, the principle risk is the commoditization of a niche high-margin/low-volume below-the-radar product. By increasing volume in a sector with lower regulatory barriers to entry, today’s leaders who are, in the grand scheme of things, still relatively small and poorly integrated, risk incentivizing others to come and play on their door step.
The benefits include a huge increase in volume with a dramatic decrease in capital expenditures/inputs.
