Transparent Conductor Markets

NanoMarkets

Transparent Conductor Markets

A NanoMarkets Teleconference Event

Hosted June 2010

© NanoMarkets, LC

NanoMarkets, LC PO Box 3840 Glen Allen, VA 23058 Tel: 804-360-2967 Web: www.nanomarkets.net

www.nanomarkets.net

NanoMarkets

NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-270-7017

www.nanomarkets.net

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NanoMarkets Analysts Paul Markowitz and Lawrence Gasman Share Their

Thoughts on the Transparent Conductor Market

The transparent conductor market has evolved over the past decade from one

that could be referred to as the ITO market to one that includes alternative

transparent oxides, polymers, and nanomaterials. Rising and falling indium

prices, and thus ITO prices, coupled with ITO’s infamous brittleness has driven a

search for an alternative transparent conductor—one that’s just as transparent

and conductive as ITO (or better) at a lower, more stable price.

The landscape of this market is constantly changing as new materials become

available, most notably nanomaterials, and as application areas move between

different technologies, some relying more heavily than others on ITO.

Paul Markowitz, associate analyst at NanoMarkets, and Lawrence Gasman,

principal analyst and co-founder of NanoMarkets discuss this landscape and

what these changes mean for suppliers of alternative transparent conductors

as well as for start-up firms looking to get into the industry. (NanoMarkets has

covered transparent conductors for about four years now, and so has unique

insight into the history and future of the industry.) The firm recently released

a new analysis of the transparent conductor market in June.

Lawrence Gasman: How open are end users to ITO alternatives? There's a lot of

talk about the materials and the technology, but we know from our forecasts

and from talking to people in relevant industries that these alternatives aren't

going to take over the world any time soon. What's happening and what's

actually preventing the alternatives from taking up large market shares at

present?

Paul Markowitz: Most ITO users will say they are very open to using ITO

alternatives. ITO is the material that people like to grumble about. And the

grumbling has been directly related to the cost of ITO.

In our experience, however, when it really gets down to changes there's still a

lot of resistance and that's because of the risk involved, especially for

conservative industries like the flat panel display industry. Flat-panel display

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makers still shutter at the thought of the qualifications and factory

reconfigurations that would be required in order to adopt a different

transparent conductor. They'd rather wait—until better times when they're

more comfortable with the risks, until the margins get so squeezed that they're

forced to do something, or until they've completely waved goodbye to

profitability.

The risk is not as great when a company is already thinking of making changes

anyway or when they're already familiar with the material. Cima Nanotech is

looking to reduce the risk for conservative end-users by getting initial

acceptance of their transparent nanosilver films in an “easier” market, notably

the electromagnetic field for plasma displays. Here's a market where an

alternative transparent conductor can be used in a display, but its use is less

critical to picture quality. It also represents some low-hanging fruit for the

supplier. This could help build some familiarity of Cima Nanotech’s film among

the plasma display makers and other display makers as well—possibly making it

more palatable for those companies to adopt it for other uses as well.

LG: How do you see the roadmaps developing for reducing the cost of

transparent conductors and the most appropriate way of actually implementing

those roadmaps in the manufacturing plant and in the marketplace?

PM: Trying to bring down the cost of transparent conductors can actually be

broken into two different areas. One is reducing the cost of ITO itself, and of

course there's been work to try to deposit it more cheaply. The inks from

Sumitomo, Acheson and some other companies have been tried and available

for quite some time but they haven't really made it. There must be a reason

related to performance or cost why inks from big companies like this, which

certainly have no problem in marketing, have not been able to find a better

place in the market. But beyond that, NanoMarkets’ analysis has shown again

and again that the options for reducing the costs of ITO are running out. The

inks don't seem to be working and actually the cost of ITO will be dominated by

the cost volatility of indium more so than any kind of incremental

manufacturing improvements. We’ve run cost models that show even modest

increases in ITO costs will easily get in the way of reducing display prices.

The second option is using alternative transparent conductors, which is the

most promising way to reduce cost. Alternatives like other transparent

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conductive oxides—zinc oxide and tin oxide—are one approach, trying to

reduce materials cost while still using familiar deposition techniques. The

deposition can still be pretty expensive but at least there's cost certainty—

you're not riding up and down with the commodity market. And then the main

route to reducing cost is actually changing the deposition method, the

printable and coatable options. For instance, using conductive polymers,

nanosilver and carbon nanotube films, which may have some benefit as far as

material cost goes, but mainly reduce cost through a change in deposition.

LG: You’ve talked in general terms about the trends, but obviously from the

perspective of the end user what really matters is what actually happens in his

application. In particular, there are two applications in which there seem to be

a lot of talk about the opportunities for ITO alternatives. Let’s start with the

one that always comes up for us, which is touchscreen technologies. How do

you see the need for transparent conductors changing with the evolution of

touchscreen technology. (We've seen some pretty dramatic changes in

touchscreen technology in the last three or four years.)

PM: Touch technologies have been historically one of the major focuses of

alternative transparent conductors, in large part because of analog resistive

touchscreens; they have flexible parts, parts that move when you touch them.

Because ITO is brittle, this flexing causes the transparent conductor to degrade,

resulting in limited number of touches. You can get a high number of touches,

but certainly not unlimited.

But you're right, the touchscreen market certainly is evolving and at this point

the flexibility issue is actually becoming a bit less relevant for two reasons. The

analog resistive touchscreens, for one thing, are losing market share; they're

still growing but they're making up a smaller portion of the market. Other

technologies, mostly projective capacitive, which is used in iPhones and other

Apple products, have grown faster and are taking share from analog resistive.

These other technologies are more durable than the analog resistive—they

don't have the moving parts and some don't even use ITO; projective capacitive

does but you're not flexing it when you touch it.

The other factor that's making this less relevant is that ITO is actually flexible

enough for most resistive touchscreen applications. Are one hundred thousand

touches enough for a low-end touchscreen? For a cell phone, sure, those are

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going to be replaced in a couple years anyway and we're not talking 100,000

total touches, we're talking about touches over the same point. That might not

be enough for a point-of-sales screen, say, and there are certainly

opportunities for alternative transparent conductors here, certainly flexible

ones, but also the answer to a worn-out point-of-sale touchscreen may not be

so much a new transparent conductor but a new touchscreen technology. The

other technologies are rapidly developing and coming down in cost so that is

another option.

LG (Side Note): One thing I want to mention is one of the big potential changes

in the touchscreen technology area is what we've called the in-pixel,

sometimes called in-cell technology, where instead of using a third party to put

a touch sensor effectively on the top of an LCD screen, the LCD manufacturer is

essentially building in the touch capability. And that's happening because the

touch is becoming so mainstream now. And those technologies may or may not

use ITO or transparent conductors but they're a lot less vulnerable to touch

than the analog resistive.

When people started really getting interested in the transparent conductive

market, they assumed that the bulk of touchscreen technologies would actually

still be analog resistive, which uses a lot of ITO and also is sensitive to pressure.

While analog resistive is the dominant technology, as Paul said, it's becoming

less dominant.

I think the other reason why people were interested in alternative transparent

conductors is because lots of people were talking about flexible displays and

ITO not being flexible enough for those displays. But the reality is that those

flexible displays, which we think long-term have a very good future as do

alternative transparent conductors, actually seem to be being pushed into the

future. Polymer Vision, which was going to come out with a foldable display,

itself folded. Plastic Logic has announced that its e-reader, which has a flexible

backplane and is not really a flexible display, isn't going to come out anytime

soon. So flexible displays and with it the prospects for the flexible transparent

conductors has sort of gone away a little bit.

LG: The next area I'm interested in is OLED lighting and I’ve mentioned that we

have a huge program in forecasting OLED lighting with four or five reports

coming out every year in that area. We see OLED lighting as potentially a very

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large market going forward over the next decade or so. But this seems to be an

area, just based on my own research, where ITO seems to be truly hated. It

seems that a great deal of effort, considering the early stage OLED lighting is in,

has gone into getting rid of ITO in the OLED lighting space. Can you tell us more

about that Paul?

PM: OLED lighting hates ITO for two reasons, basically. For one thing, they've

watched the display industry. The display industry has gotten itself addicted to

ITO and they kept paying the money for it as the price rose in the last decade

especially in the middle of it with indium prices reaching $1,000. They were

stuck. And the OLED lighting business doesn't want to be caught like that.

The other reason that's maybe more interesting is that ITO represents the

establishment. OLED lighting likes to consider itself the poster child of flexible

printed organic electronics—the symbol of everything that's new and cool in

these fields. They would like to not only be new for their own technology but to

bring other cool new technologies with them. Even beyond that, they're more

concerned with the cost side of it. They know that eventually they're going to

need to compete with incandescent light bulbs. And to compete with

something that cheap, they won't be able to compete directly on cost but total

cost and they'll still need to bring their unit costs down quite a bit. That's

something that high-cost ITO is not compatible with. They don't want to be

beholden to it like the display industry.

There's been a lot of work on trying to get rid of ITO in OLED lighting. There've

been demonstrations of ITO-less OLED lights; CDT has one that uses copper

wires instead of ITO. But switching away from ITO won't happen immediately.

The small prototypes they're producing today use ITO, mainly because it's

available and easy; it's allowed them to get into manufacturing without an

additional development issue. The alternatives will come into play as the

volumes get higher, as they develop the higher volume processes for

manufacturing and we expect by 2017 that ITO will be used in less than half of

OLED lighting devices and that's almost $180 million worth of transparent

conductors.

LG (Side Note): At some point in the future probably in 2015 timeframe, OLED

lighting is going to have to compete at some level with incandescent lights. One

of the things that's driving the OLED lighting market is that incandescent lights

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are being phased out in a large number of countries. So price points become

very important. How prices will be compared between these very different

technologies is still up in the air. But clearly OLED lighting is going to have to be

very inexpensive and using products like ITO is questionable especially when

you think about what the volumes are going to have to be for that stuff.

LG: Let’s move on to the third of those areas that I wanted to discuss, which I

know is an area that you’ve done a lot of reports for us on and that's the thin-

film photovoltaics, which is different in a number of ways than the other ones.

Again, it's a fairly well-developed sector at this point. What's going on there in

terms of transparent conductors?

PM: Thin-film PV is kind of approaching a position that's in some ways similar

to the display industry; they've chosen a few materials for their transparent

conductors and these materials are getting entrenched in their processes. But

the difference here is that they're using materials like zinc oxide and tin oxide,

which are the cheap materials. The fluctuations in the price of zinc and tin are

not going to have any significant impact on the cost of manufacturing PV

panels. The deposition is maybe a little bit higher, as well as it's somewhat

more expensive in cost in most cases, but that's again something where the

cost is certain.

But we still think there is some opportunity here. It's not as big an opportunity

as in something that's already using ITO and has much more of a cost incentive.

Not in the next couple years but by the end of the eight-year period that we

forecast in our report, there will be some flexible alternative transparent

conduct being used. We expect that to be only about 9 percent of the thin-film

PV market and that will be worth about $118 million in flexible transparent

conductors. Before then, we expect the amount of ITO being used in thin-film

PV to basically just continue petering out. It’s really only thin-film silicon that's

using the bulk of the ITO and a little bit is used in CIGS, a little bit is used in

OPV, but the amounts used there aren't really comparable. As cost competition

continues in the thin-film PV industry, the higher cost processes will be weeded

out and that'll get rid of most of the ITO that's still being used. As far as

flexibility, I mentioned that maybe 9 percent would be flexible alternative

transparent conductors, but that's not really going to be driven by the need for

flexibility. ITO is flexible enough for many things and that includes any kind of

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mainstream flexible PV, anything that's not going to be rolled and unrolled

multiple times, things like roofing products that are installed once, or cells that

are made on roll-to-roll processes and only get flexed a small number of times.

The incentive is more about cost than flexibility.

LG: Going back to flexibility for a second, just to clarify what I said. It seems like

flexible displays are not something we're going to see in the marketplace in the

next two years. And four years ago we would have said something different.

Obviously it's easy to jump to conclusions, assuming that the lack of flexible

displays is because there aren't any good flexible transparent conductors out

there, but that doesn't seem to be the case. There seem to be other reasons

why flexible displays aren't out there. We've been pretty bullish, and remain

pretty bullish on the concept of a rollable display; we can see lots of reasons

why that would have a very good marketplace, but it does seem that a lot of

things have gotten in the way. They'll be here eventually but I don't think that

what's standing in the way is the flexible transparent conductors.

LG: Let's move on from applications to the actual materials. There seems to be

kind of two groups of materials. These are conventional materials, such as zinc

oxide, and nanomaterials. Let's talk first about the conventional materials,

including the other transparent conducting oxides and the conductive polymers

and how you see that as an alternative to ITO. Clearly, they have some issues

related to conductivity and transparency otherwise people wouldn't be using

ITO. But where do you see their opportunities, because they clearly are

continuing to be pushed as an alternative to ITO in certain applications?

PM: Certainly they are a good alternative to ITO in some applications. There is

a penalty in transparency and conductivity like you said, but it's been worth it

in some applications, specifically in thin-film PV, where cost is such an

important factor and where you’re not looking at an image through the

transparent conductor. They have had a big impact in thin-film PV, but they're

often overlooked because their impact is not really done justice by the

revenues that they create because these materials are so cheap. In thin-film

PV, they'll have almost 30 percent penetration by the end of 2010, but that'll

only amount to about $22 million.

Going beyond thin-film PV, there are other opportunities for them. One of the

best we believe is flat panel displays. I’m not suggesting that there will be a

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huge penetration of alternative transparent conductors in this market but the

flat panel display is so huge market that even small penetrations can bring big

volumes. There's a penalty for using alternative transparent oxides so it has to

be in displays that are not top of the line in picture quality. This will be things

like small televisions, electronic shelf labels, LCDs used in electronic shelf

labels—things where a five percent drop in transparency isn't going to make or

break a market. Even though plasma displays are more of a high-quality picture

product, alternative transparent oxides may have some potential there as well

just because plasma displays are being squeezed so hard by LCDs, by

competition and by cost pressures. The slight difference in transparency can be

tuned for to make pictures look the same even with a very small loss in

brightness.

If cost pressures continue and ITO costs keep getting higher, we think that by

2017 the alternative transparent conductive oxides could penetrate as much as

17 percent of the flat-panel display market; that's $113 million and that's

mainly for those smaller LCDs and some penetration into plasma displays.

You also asked about the conductive polymers. People have been very hopeful

for conductive polymers for quite some time. But they're just not as conductive

or transparent as they need to be to really get good penetration into high-

performance applications. They stated out in anti-static applications and

they're great for that. They've been trying to get into higher performing

applications with new formulations and companies like Agfa and H.C. Starck do

come out periodically with new formulations, which do boost conductivity, but

it's not happening fast enough to really make a dent in the more demanding

markets within the next few years. There have been some products. Fujitsu had

a touchscreen, for instance, that used transparent organic conductors, but that

really hasn't been a runaway success. The extended life that you get from using

a transparent organic conductor instead of ITO has turned out in most cases to

not be worth the reduction in transparency and conductivity that you need to

settle for.

LG: Paul, will you talk a little bit about how we see nanomaterials playing into

this because they seem to have the potential but at the same time they clearly

have very little share of this marketplace at the present time?

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PM: You're right and we do see these as the biggest opportunity for ITO

alternatives because they're really the materials with the best likelihood of

beating ITO in terms of transparency and conductivity—the very things that are

usually traded off when you switch to a new material. Metals, especially silver

and most of the nanometal products are nanosilver based, are inherently more

conductive than ITO. Already the fine metal grids are used in some applications

to get better conductivity than ITO with good light transmission. The printable

and coatable silver-based preparations are aimed to make similar networks,

not really grids but networks basically by coating without having to pattern

them. It's not just nanometals. Carbon nanotubes are even more conductive

than metals so they offer a lot of opportunity too just from a standpoint of how

conductive they are and how transparent they can be while still being

conductive enough.

LG: Where do you think the biggest opportunities for nanomaterials really are?

How is that going to play out in the marketplace?

PM: I think nanosilver will be the first to be able to match ITO's performance in

volume. There've been reports of matching ITO's performance with

nanomaterials here and there but this doesn’t hold up when you get into high-

volume manufacturing. I think nanosilver will be able to do that in not too long

because it's pretty easy to work with. Nanosilver is fairly well understood,

conductive, and maintains its conductivity at the small dimensions of the

nanomaterials.

Carbon nanotubes may be more conductive than nanosilver but only some of

them are and they're produced in mixtures with conductive ones and

semiconductive ones that aren't as useful for conductive applications. Not only

that, but even the conductive ones might not be conductive anymore if you

“blow on them.” They're very sensitive to environmental conditions. One of the

challenges for carbon nanotube-based films is making them consistently

conductive. You want a transparent conductor that you know how conductive

it will be when you use it. You don't want to have to first decide what

atmosphere it will be in.

Carbon nanotubes actually do have better low-cost potential than nanosilver,

in the longer term, which may give them a benefit above nanosilver. I still think

nanosilver will be first to get into higher volumes, however. The low-cost

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potential comes from just the fact that it's carbon, which is dirt cheap. They

come from coal, and from a number of other sources too and there's a chance

that the nanotubes that those could be made very cheap as well. Nanosilver

will always be strained by the cost of silver. It'll never be able to get lower than

that cost, which is fairly high on a per-gram basis.

Where’s the best opportunity for these nanomaterials? They've got a pretty

broad appeal, actually—touchscreens, e-paper, OLED lighting. Nanosilver will

lead the way and that will be first in touchscreens. If those films made with

nanosilver can beat ITO in transparency and conductivity within the next few

years and maintain that through high-volume manufacturing then even in high-

end touchscreens they could get 20 percent penetration as soon as 2015 and

that's $134 million. Of course there’s opportunities beyond touchscreens—

including the other categories, we expect over $370 million of transparent

nanosilver film and over $300 million in carbon nanotube film by 2015.

LG: Let me reverse the question on you. This is clearly an area where there's

some potential for start-up firms and we both know that most of the

companies in the transparent conductive nanomaterials are kind of start-up

firms. They don't entirely fit that bill but pretty close. Is this where you see the

main opportunity for start-ups in transparent conductors? Are there other

opportunities for start-ups? Are there other materials where start-ups could

play?

PM: The nanosilver is really the main nanometal material but there certainly

could be opportunities for other metals. Like I said before, Cambridge Display

used copper wire for its OLED lighting device and other metals are often coated

and then patterned to form open structures that transmit light and are still

conductive. If that can be done in a nanomaterial way, by coating and forming

the networks without patterning like is done for the nanosilver inks, then

certainly that could be an opportunity for startups to try to exploit.

Besides nanotechnology, the transparent organic conductors could offer some

opportunities. In organic chemistry, it doesn't take much to change a molecule,

to make a new molecule that has similar properties to another molecule. Of

course there are companies that are trying to make materials that are similar to

the Bayer transparent conductors but are not covered by patents and have

similar transparency and conductivity. There are certainly plenty of options in

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chemistry. But we do think that the nanomaterials are the biggest opportunity

for startups just because they have the most promise of reaching and beating

ITO's performance. We see about $1.3 billion in nanomaterial-based

transparent conductors by 2017.

Where are these opportunities? Let’s look at nanosilver, for instance, which we

think will break into the market in volume first of the nanomaterials. There are

really only two companies that are aggressively and publically pushing the pure

nanosilver products and those are Cima Nanotech and Cambrios. And they're

using very different technical approaches. This is where the IP is. Cima

Nanotech is using roundish silver nanoparticles that self-assemble into

networks and Cambrios is using silver nanowires that basically fit randomly on

a surface and form a network. With such different approaches there's probably

some other ways to approach this too and these are things that new start-ups

could develop. It may be a similar situation for carbon nanotubes. There are

just a few companies that are pushing that aggressively for transparent

conducive films so there ought to be different approaches here too.

LG (Side Note): We've been talking about tubes and wires, but if you read the

research literature on nanomaterials there's all sorts of other shapes—cones

and rods and lord knows what else. And I know none of those have been used

in the context of transparent materials. But it certainly seems like if venture

capital ever emerges again, that there's the opportunity in theory for

completely new companies to try completely new directions.

LG: I have one more closing question for you. Obviously one thing that

transparent conductor suppliers have to supply is the materials themselves, but

is there anything else in the value proposition? I guess I’m asking this

particularly in the context of alternative materials to ITO. What's the total value

proposition that they really need to offer because we've heard from companies

that they've tried new things and just found that they don't get much traction.

PM: Of course they need to provide a path to low total cost whether the

materials cost less or if they depend on the deposition and other processing

techniques to reduce cost. When talking about a conservative market segment

like the flat panel displays, it also has to be minimally disruptive to what they’re

doing already. If you switch from sputtered ITO to printed nanosilver say,

you're getting rid of a bunch of equipment in the line and you are changing the

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layout of the end user’s factory, which is going to have significant cost beyond

just buying new equipment and changing your material supply stream. The less

change that is needed the better it is for a conservative industry like flat panel

displays.

Another big part of adopting a transparent conductor is of course not just

getting the material and being able to apply it, but qualifying it. That's one of

the big...I’m trying to think of a wild animal that display makers are afraid

of…when they're thinking of switching to a new transparent conductor. These

companies have procedures, they have quality controls, they need to really

thoroughly evaluate something. They can't just say oh it's better, let's go with

it.

LG: It makes sense for a new supplier to come in and try and hold their hand

and work with trials and things, then.

PM: Yes and that'll help them get to market faster—if they partner with a

device manufacturers and they help with their trials and maybe even with

designing products.

Related NanoMarkets Reports:

Transparent Conductor Markets 2010: ITO and the Alternatives Zinc Oxide Markets, 2010 and Beyond Electromagnetic Compatibility (EMC) Materials and Components Markets and Opportunities ESD Products and Materials: Markets and Opportunities Conductive Coatings Markets, 2010 and Beyond Touch Screens: Technologies, Materials and Markets - 2010 OLED Lighting: An Eight-Year Market Forecast (2010)

For a full listing of NanoMarkets reports and services, please visit us at www.nanomarkets.net

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