Next generation power modules demand increased heat extraction capability along with reduced weight and volume. In this paper, thermally annealed pyrolytic graphite (TPG) is analyzed and compared with conventional materials used in power modules for thermal management. Fundamental properties of TPG are explained and compared with commonly used materials in power module heat spreaders and substrates. The copper encapsulated TPG heat spreader is manufactured and compared with bulk copper in simulation and experimental based analysis. The results show that copper encapsulated TPG achieves more than 50% reduction in thermal resistance along with 48% reduction in weight in the heat spreader layer.