Sequoia Capital partner Shaun Maguire reveals why this industry is one of the ‘most underrated’
In a recent episode of the “Relentless” podcast, Shaun Maguire, a partner at Sequoia Capital and investor in several of Elon Musk’s ventures, highlighted the often-overlooked importance of the specialty chemicals sector within the broader chemicals industry. Maguire emphasized that many people fail to recognize the critical role that specialty chemicals play in the production of a wide range of commercial and household goods. According to a 2022 report from the Cybersecurity and Infrastructure Security Agency (CISA), specialty chemicals comprise about 23% of the chemicals industry, and they are vital for the operations of many companies. Maguire pointed out that certain essential chemicals are so specialized that only one company in the world may produce them, making their availability crucial for uninterrupted production processes.
Despite the current downturn in the chemicals industry, with production volumes expected to contract by 0.2% next year according to Deloitte’s 2026 Chemical Industry Outlook, specialty chemicals are emerging as a bright spot. While traditional commodity chemicals face overcapacity and fierce competition, specialty chemicals typically command higher margins due to their unique applications and lower commoditization. For example, Maguire mentioned how the loss of access to a specific specialty chemical could significantly delay projects, as seen in some of Musk’s businesses. The report also notes that while demand in sectors like construction and consumer goods is likely to remain weak, the semiconductor market is poised for growth, particularly driven by the increasing need for chemicals in AI data centers. This presents an opportunity for investors like Maguire, who see the potential for specialty chemicals to thrive even in challenging market conditions.
Overall, Maguire’s insights serve as a reminder of the vital yet often neglected role that specialty chemicals play in the global economy. As the industry navigates its current challenges, the emphasis on niche chemicals could lead to innovative investments and advancements, highlighting the need for greater awareness and understanding of this essential sector. With the S&P 500 Chemical Industry index lagging behind the overall market, the focus on specialty chemicals may provide a path forward for investors looking to capitalize on the unique opportunities within this underrated industry.
Maguire said specialty chemicals are crucial.
Brendan SMIALOWSKI / AFP
Shaun Maguire, a prominent VC, said most people don’t understand the chemicals industry.
He said that specialty chemicals are especially important, since certain companies rely on them.
The chemicals industry is in a downturn, but specialty chemicals might offer a bright spot.
Shaun Maguire
, a partner at Sequoia Capital and early investor in several of
Elon Musk
‘s companies, says people aren’t focusing on niche chemicals enough.
On an episode of the “Relentless” podcast that aired on November 17, Maguire said that he might invest in the chemicals industry if he had $10 billion to start a business.
“The chemicals industry is one of the most underrated industries in the world for many reasons,” Maguire said. He added that most people don’t think about the industry, which supports production for nearly all commercial and household goods, according to a 2022
report
from the Cybersecurity and Infrastructure Security Agency.
And those who do know about the industry don’t fully understand it, thinking of it as strictly a commodity industry, Maguire said.
“But a large fraction of the industry, I’d say at least 25%, is hardcore specialty chemicals that are actually very rare. A lot of times, there’s only one company in the world that will make some specialty chemical,” he said. (Specialty chemicals accounted for about 23% of the industry, according to CISA’s report).
Maguire said that those chemicals can be crucial for another company’s production, as he said is true of one of Musk’s businesses, and that losing access to a key chemical can severely delay or upend projects. Specialty chemicals include “adhesives, sealants, flavors and fragrances, food additives, and explosives,” according to
CISA
.
The chemical industry is in a downcycle, and production volumes are expected to contract by 0.2% next year, according to Deloitte’s
2026 Chemical Industry Outlook.
Though the report predicts continued overcapacity in basic chemicals, it found that specialty chemicals are earning higher margins.
“Specialty chemicals tend to be less commoditized and avoid the hyper-competitiveness of the commodity chemicals markets,” the report reads.
Although chemical demand in the construction, automotive, and consumer goods industries is likely to continue suffering, the semiconductor market may offer a bright spot, according to Deloitte’s report. The boom in
AI data centers
is helping to fuel growth, per Deloitte.
So far in 2025, the chemical industry has badly lagged the overall market. The S&P 500 Chemical Industry index was down 5% for the year through Thursday, while the S&P 500 was up more than 11%.
Read the original article on
Business Insider
