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Plastic Logic has the first gee-whiz technology — a digital book reader based on plastic electronics — at DEMOfall 08. In the making for 10 years, the Plastic Logic Reader is like the Amazon Kindle electronic book reader but it uses a razor-thin display that is made out of plastic.

That’s right. It’s actually made of transistors that have been laid down on top of plastic and so it’s much lighter than any other electronic device. It should also have a large display size and great battery life. Plastic electronics have been in the works for a long time. The issue has been making the transistors as fast as anything on traditional silicon substrates. It’s nice to see it coming to fruition.

The Plastic Logic Reader is a touch-screen device that you can display newspaper pages, books, pictures and other black-and-white images on. You can annotate the display with your own marks. The display is pretty rugged and you can bend it. Try that with a glass display. The reader takes about 3/4 of a second to change pages, about as fast as an Amazon Kindle. It uses the E-Ink solution.

Joe Eschbach, chief executive, said that the costs of plastic electronics should come down over time to something like 40 percent of the cost of silicon. That’s because it doesn’t need expensive ovens to process the plastic or require a lot of processing steps.

The Mountain View, Calif.-based company competes with Sony (the Sony Reader), Amazon, and Philips Electronics. Polymer Vision is also making a foldable plastic display in a phone called the Readius. The plastic electronics industry is forecast to be a $30 billion industry by 2015, according to IDTechEX. The company’s factory will start rolling out the plastic in September and the reader will be on the market in the second quarter of 2009.

The company raised a $50 million round led by Oak Investment Partners and Amadeus Capital Partners. To date, the company has raised more than $200 million.

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Thin, flexible display tech is one of those advances that has been just over the horizon since the Internet bubble started inflating. Remember the promises of e-paper — a crossbreed with the best qualities of both paper and computer screens, used as portable reading material? So far the best we’ve gotten is the Amazon Kindle, but Plastic Logic is hoping to change that, with a plan for commercialization next year.

Plastic Logic, spun off from Cambridge University in 2000, has been working for a long time on its technology, a semi-transparent sheet of tough plastic that can quickly create and erase static images (video is still a challenge). Electronic books, of course, are the obvious application, but there is also potential for signage, RFIDs, head-up displays (HUDs) and other gadgets.

Nowadays, the company has its headquarters in Mountain View, Calif. But more importantly, it also has a manufacturing center, in Dresden, Germany, from which location it will introduce a mass-market device incorporating a flexible display — pitting it against E-Ink, Samsung, Panasonic and several other rivals who are working in a similar time frame.

That facility is scheduled to open in September 2009 2008 [update: The company initially misreported the date; the plant is slated to open next month. We'll have more details soon.] but the company says its product will be on the market in early 2009, which suggests that it’s probably working with another manufacturer. Who that could be presents some interesting possibilities. Because it’s just a display, the technology seems like a natural match for a device like a cellphone, which has a tiny screen but can download data such as the daily newspaper.

Polymer Vision has already installed a tiny foldable display into a phone called the Readius, which is slated for release in Europe this year. A larger screen could potentially be a smart add-on for a cutting-edge phone like Nokia’s N95 or the iPhone. (Interestingly enough, Steve Jobs hinted earlier this year that an Apple reader of some sort might be on its way.)

In the meantime, if you can’t bear holding out another year for a flexible display, you only have to wait until October, when the 75th anniversary issue of Esquire will have a blinking e-paper display made by E-Ink incorporated into its cover as an elaborate publicity stunt.

The $50 million funding for Plastic Logic was led by existing investors Oak Investment Partners and Amadeus Capital Partners, with participation from Intel Capital, Morningside Technology Ventures and others (a full list is here). The company has taken over $200 million to date.

The flexible chips industry doesn’t grab a lot of headlines, but it is bringing together nanotech, biotech, and other technologies to possibly usher in some revolutionary new products.

We’ve been quietly checking up on some of the venture-backed companies in this area, including NanoGram, Plextronics and Plastic Logic. They are few, and slow-moving, but worth a look.

Their potential applications sound straight out of sci-fi: interactive displays embedded in anything from clothing to wall paper, newspapers that update in real-time, soldiers wearing camouflage that changes color with their surroundings. There’s hype, too. Last month, the Seattle Post-Intelligencer newspaper dismissed a report saying it was looking to test flexible “e-paper.”

However, with the right high-tech materials and machines, semiconductors can be deposited on highly durable, flexible and — importantly — cheap substrates like plastic, often replacing silicon and glass. See this picture below.

Those inky looking things are circuits. Instead of the highly complex, capital-intensive fabrication process used today, printed electronics, in a way similar to newspaper printing, uses a roll-to-roll method, literally printing circuitry on the material as it scrolls by.

The near-term applications of flexible electronics will dramatically reduce the cost of radio frequency identification (RFID) chips, with most people expecting these RFIDs will be as prolific as bar codes are right now. Other players are making lightweight, flexible and relatively cheap solar panels that can go nearly anywhere. Later on, these flexible solar panels could actually bend to follow the sun as it tracks across the sky.

Then here’s military applications, where flexible electronics could enable soldiers to shed as much as 20 lbs of equipment, with GPS, threat detection, and health monitoring systems built into their clothes.

Before any of this can happen, a number of factors need to line up: Nanotech companies have to develop the right substrates; manufacturers need to implement new ways to mass produce them; and mainstream companies have to buy in.

Pittsburgh’s Plextronics uses organic polymers for substrates and aims to combine light, power, and circuitry in one tiny device. The company has raised over $16 million from Birchmere Ventures, Firelake Capital, and Draper Triangle Ventures. One of its major clients is PolyIC, which prints the chips, is the product of a joint venture between Siemens and Kurz. Milpitas, Calif.’s NanoGram, though technically not a start-up, changed its direction in 2004 and has since raised $25 million from a number of investors, including Technology Partners, ATA Ventures, and Nth Power Technologies. It is taking a different approach than most other companies in the field and working with silicon instead of plastic. It has recently partnered with a manufacturer in Japan to work on producing materials for flexible displays. Some other start-ups working on materials for flexible circuits are Guided Particle and Polyera.

The industry is in its infancy. In the last three years, $350 million in venture funding has gone to companies working in the field, and $100 million of that was invested by Oak Investment Partners and Tudor Investments in UK’s Plastic Logic for their production facility in Dresden, Germany. But compare that $100 million to the $2-4 billion spent on silicon wafer production facilities — and the room for growth in flexible electronics becomes clear. Polymer Vision, a potential competitor, has raised $21M (see alarm:clock euro).

Some big companies are already active. Sony and LG.Philips LCD have made announcements, and Motorola was one of the presenters promoting printed electronics at a recent conference organized by the U.S. Display Consortium.

The conference attracted over 50 VC firms, including Applied Materials, Bessemer Venture Partners, and Battery Ventures.