After AI, the next buzzword is room-temperature superconductor After AI, the next buzzword is room-temperature superconductor After AI, the next buzzword is room-temperature superconductor

After AI, the next buzzword is room-temperature superconductor

Macro 3 minutes to read
Charu Chanana

Head of FX Strategy

Summary:  Breakthrough in room-temperature superconductors has gathered headlines recently with the discovery of LK-99 by Korean scientists, which has been replicated by some Chinese labs as well. This discovery has the potential to revolutionize many industries from power grids to medical imaging to high-speed trains to quantum computers and nuclear fusion. While development and commercialization can still see many bumps, the potential far-reaching impacts have got everyone excited. This article explores some potential investment opportunities to onboard this latest buzz in markets.

Korean researchers claim to have developed a superconductor that can operate at room temperature and ambient pressure. This miracle material offers virtually no resistance to the passage of electric current and eliminates magnetic fields. It could therefore remove all electricity transmission losses, making electricity supply available for other developments and uses and making zero-carbon targets a reality. They could also revolutionize everything from transportation, medical imaging, electronics and chips as well as quantum computing and nuclear fusion.

Similar elements were created earlier for energy efficiency, but in highly-controlled conditions such as extremely low temperatures which made them impractical. Calling it LK-99, researchers say that the gray-black compound of lead, copper, phosphorus, and oxygen, formally known as copper-substituted lead phosphate apatite, exhibited superconductivity characteristics at temperatures above 400 kelvins (126.85 degrees Celsius or 260 degrees Fahrenheit). Meanwhile, Chinese researchers have also replicated this breakthrough technology. Indian researchers have also published papers claiming successful preparation of the LK-99 material. If the capabilities of LK-99 prove to be true, and if it can be mass-produced and commercialized, this may mean many industries could be disrupted.

There are certainly reasons to believe that the development could be disrupted or delayed. The production of superconductors is a complex and costly process, requiring significant investment in research and development. Moreover, the technology is still in its nascent stages, and there are technical hurdles to overcome, such as maintaining superconductivity at room temperature.

However, many South Korean (Duksung, Sunam, Shinsung Delta Tech) and Chinese (Jiangsu Etern, Jiangsu Fasten, Henan Zhongfu, Jinhui Mining) stocks related to the technology have been on an uptrend since July end. The Korean exchange has also warned against speculative bets as some stocks continued to hit their daily limits. However, these are small cap stocks and Korean equity index KOSPI remained in red, down 0.5%, amid a general risk off mood after Fitch downgrading US rating. US stock American Superconductor (AMSC) also surged ~50% on these reports, and is up over 200% YTD.

LK-99 may or may not be the room-temperature superconductor the world is waiting for. But it will perhaps be a push towards research and advances taking place to focus on energy efficiency and battery technologies. Investors should carefully consider the risk/reward before getting exposure to this nascent theme. Some of the broader themes that can benefit from this technological advancement include:

  • Green metals such as copper or lead futures or ETFs
  • Energy storage battery metals such as lithium, cobalt, nickel, manganese
  • Copper miners such as Southern Copper, Japan’s Sumitomo Metal Mining
  • Zinc (lead is a byproduct of zinc) miners such as Teck Resources
  • Electrical wire manufacturers like Japan’s Sumitomo Electric Industries
  • Energy storage (battery) manufacturers such as China’s CATL, BYD, Korea’s LG Energy

Besides these core areas, opportunities could be found in areas where applications of this technology could make big changes. This could be in the energy sector, healthcare equipment manufacturers, transportation and logistics and technology companies working on quantum computers.

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