updated 1/10/2007 11:07:49 AM ET 2007-01-10T16:07:49

A Cambridge University spin-off plans to build the world's first plastic electronics factory, allowing the company to make a groundbreaking new brand of circuitry printed on flexible plastic sheets rather than hard silicon chips.

Although Plastic Logic Ltd.'s new factory in Dresden, Germany, will produce only digital displays for electronic books, the technology shows promise for making consumer electronics cheaper because, unlike silicon semiconductors, plastic circuits can be printed using a roll-to-roll processing technique similar to that used by conventional home printers.

"The low costs may enable displays to be disposable, added to toys or become economically viable in applications where they are used only rarely," said Robert Street, a senior researcher at Xerox Corp.'s Palo Alto Research Center in Palo Alto, Calif.

He said the new technology was particularly suited to handheld devices because plastic circuitry is lightweight and unbreakable.

But Street warned that the potential cost savings have yet to be proven, partly because they are highly dependent on the ability to manufacture circuits at high volumes.

Plastic Logic's new factory will initially use the more expensive sheet-fed processing, but spokeswoman Anusha Nirmalananthan said it would later switch to roll-to-roll processing. It is scheduled to start cranking out the e-books in 2008, feeding a market Nirmalananthan said was predicted to grow to 41.6 million units by 2010.

Plastic Logic has secured $100 million funding for the project from a variety of investors, including Oak Investment Partners and the Tudor Investment Corp.

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