Transcript from NanoMarkets Q&A on Transparent Conductors

September 2012

NanoMarkets Q&A Session on Transparent Conductors
NanoMarkets Associate Editor Valerie Coffey interviewed the firm’s Principal Analyst and cofounder, Lawrence Gasman to discuss findings from the firm's recent report, Transparent Conductor Markets 2012." Participants heard the firm's latest perspectives on the evolution of the transparent conductor market and how and where NanoMarkets sees the industry unfolding over the coming years. The following is an edited transcript from the call.

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Valerie Coffey: Thank you. Just to introduce myself, Valerie Coffey here. I am a science and technology writer and editor working with NanoMarkets. My background is in physics and I’ve primarily worked in optics, lasers and electronics. Your new report on transparent conductors is very interesting to me, Lawrence. I’d like to ask you first: what were your key takeaways from your research efforts, and how have things changed since your last report? Lawrence Gasman: It’s a big report and there’s lots of stuff in it. I urge the people listening to take a look at it when they can. Three things stood out that were, if not actually different from what we saw last year, certainly some obvious trends that have accelerated. I want to mention three of those. One of them relates to ITO [indium-tin-oxide], which is still the dominant factor, of course, in the transparent-conductor market – and that is the role of China. The economics of ITO and of indium with relation to ITO are often misunderstood and the report addresses that. With regard to China, China is in the process of going through a radical reorientation towards high value-added, high-tech products – including displays and TV. It has always been a major source of indium, according to people who know more about indium than I do. If you take into consideration the complete supply, including recycled indium, the Chinese may be responsible for as much as 70 percent of the indium supply. But traditionally, indium has gone to Japan, been turned into ITO and then supplied to display companies in Japan and Korea, mostly – Taiwan, too. What we’re about to see is the domesticization of ITO: indium in China used to produce ITO in China for a budding Chinese display and PV industry where the products will become much more sophisticated. The implications of that may well affect the price of ITO, but will certainly affect the availability of ITO. That’s partly good news for people who are providing ITO alternatives and may also mean that display companies may have to move plants to China, not as used to be for labor costs, but to guarantee supply of materials.

Incidentally, we think this is a relatively temporary phase – a few years perhaps – because producing ITO outside of China is not a difficult thing to do; it just takes time for the infrastructure to be set up.

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The second thing that I wanted to mention, and this is actually a theme that goes throughout the report: a lot of companies who are providing alternative transparent conductors, that is non-ITO transparent conductors, have been looking at the touch display market, or more specifically at the touch sensor market as their source of first revenues. We think that makes a lot of sense, but what we’re seeing right now is opening up of other markets where it seems likely that alternative TCs will start to find a market, not necessarily huge revenues, but everybody seems so oriented towards the touch sensor market in the recent past that we think it’s notable that OLEDs and flexible displays are now becoming a reality, and OLEDs in particular stand a chance of being a relatively dominant display technology, and lighting technology going forwards. The third thing I want to mention is that for much of the time that we’ve been putting out this report – and we’ve been providing coverage of transparent conductors for about six years – a number of nanomaterials, particularly those based on silver and carbon nanotubes, have been proposed as alternatives to more traditional transparent conductors. In the last year or more, it seems like silver-based transparent conductors have taken off, whereas carbon-nanotube conductors still seem to be developing. We’ll talk about that in some detail later on. The three things that we’ve emphasized in this report: the relatively new Chinese role in the ITO business, as opposed to just the indium business; new kinds of displays; and the rise of silver. VC: Interesting, thank you. Can you give us some estimates on how you’re valuing the transparent-conductor market this year and how you see it growing in the next few years? LG: Yes. Again, I’d emphasize that ITO is such a big chunk of it that it’s very easy to come up with huge numbers, and we think our numbers are accurate. Just quoting them on their own – and I’ll show you what I mean in a minute – is verging on the dishonest. We think that the total transparent-conductor market this year will be about $3.9 billion and that it will grow to around $6.9 billion by about 2016 and go on growing. A few things you need to know about that: first of all, the portion of that addressable by the non-standard conductors, and the reason why everybody gets excited by transparent conductors is it’s clear that some new alternatives present market opportunities for a number of firms. We think this year that out of that $3.9 billion, only about $230 million will be alternatives. Although I don’t have the numbers in

front of me, a big chunk of that $230 million is actually other metal oxides that are similar in chemistry to ITO. A pretty small chunk of that is going into the big interesting segment; however, we think by the end of our forecasting period in 2019, those non-ITO alternatives will be about $2.1 billion, which will be a significant chunk of the market by then. We’ve changed our numbers a little bit from last year. Actually, for our 2012 number, we’ve gone up a bit from last year – not much. The analysis of exactly why is complicated, but part of it is we used the same model last year, but we put slightly higher numbers for 2012 than we anticipated for last year for ITO pricing. The other factor is that for a number of these new displays, especially OLED displays, the numbers seem to be higher than we anticipated last year. That’s good news. Actually, by the time we reach the end of the forecasting period, we have a somewhat lower number for total transparent conductors this year than we did last year. There are several reasons for that. One of them is we’ve shown price declines a little faster, but also because we’re a slightly less bullish on the long-term economic situation. Part of that is the European situation, which has hit hard this year. Again, I would encourage people listening to go and look at the detailed numbers we’ve got – very detailed, granular breakouts involving the value terms for the next seven or eight year.

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Summary of Eight-Year Forecasts of Transparent Conductive Materials
10,000.0 9,000.0 8,000.0 7,000.0 $ Millions 6,000.0 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 0.0 2012 2013 2014 2015 2016 2017 2018 2019 © NanoMarkets 2012 Transparent conductive polymers Other metallic films Silver films and grids Carbon nanotube films ITO and TCO inks Other

VC: Thank you. Many of the manufacturers – and you were mentioning non-ITO transparent conductors – are counting on the touch-screen sensor market to generate their first significant revenues. Is this realistic? What other markets should they be looking at?

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LG: I think the touch-screen sensor area is very interesting. The market is appealing because there are lots of potential customers. The list of companies supplying touch-screen sensors is a long one. The list of volume suppliers of LCD displays is short. So display manufacturers have many touch-screen suppliers to choose from. Many smaller touch-screen companies are more willing to take on new technologies and to some degree – and I could talk about this at length – the requirements are less demanding for touch-screen sensors. I think things are changing there and you need to follow what’s going on in touch screens to understand the opportunities. We’ve already seen one big change. When we started covering this market, the argument for replacing ITO was that touchscreen people used analog-resistive technology, and still do for lower-end applications, and ITO is not entirely suitable for that because of its likelihood of cracking. What’s happening now that’s really interesting – the implications have yet to be worked out, but it definitely bears watching – is the arrival of in-cell and on-cell technologies that enable the LCD makers themselves to build touch into a standard display. Before, these displays went off to some kind of integrator who put his own version of a touch-screen sensor on the top. In-screen and on-screen technologies have been around for several years. The big announcement now is the iPhone 5, which is coming out this fall and will actually use on-cell technology. What does that mean for transparent conductors? It means that the company actually doing the integration of the touch is the big LCD maker who at the moment has mostly stayed away from non-conventional (i.e., non-ITO) TCs. So it bears watching, but eventually sales of transparent conductors for the touch-screen sensor business may shift to LCD manufacturers instead of independent touch-screen companies. That changes things dramatically because suddenly these companies who tried to stay away from these materials might suddenly buy them, or they may, alternatively, be antipathetic to it to such a degree that it stunts the touch-screen sensor market from its current level. I think a couple of other things are going on. Obviously, touch is spreading. Tablets are an entire new class of computing enabled entirely by touch. But one shouldn’t be too optimistic about touch because this whole class – and I’m not sure what touch

television would look like, and touch workstations have never really taken off – but of course these larger displays would use a lot of transparent-conductor material. So, it beholds companies to look a bit at OLEDs and flexible displays, as well. I know we’re going to talk about that.

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VC: Exactly, yes. That leads to this question: What are the prospects for non-ITO transparent-conductor sales into the OLED market, now that OLEDs seem to be a mainstream display technology for cell phones and perhaps televisions? LG: First of all, all OLEDs today use ITO. That’s either good news or bad depending on your point of view. Secondly, we have a lovely table in the report of all the things that are wrong with ITO in the OLED context. For one thing, ITO not only cracks, which is the thing everybody says about ITO, and OLED displays may be flexible displays, so that’s one issue, but ITO also tends to actually distort the working of OLED displays because it causes shorts, because it tends to react sometimes to some of the materials there. So we’re predicting a big shift away from ITO over an extended period of time. This is an opportunity for some of the new companies moving into non-standard transparent conductors to look at some other area other than touch screens. Is this particularly big? Not really. We think maybe by 2017, we’re looking at about $250 million in transparent-conductor usage by the OLED industry. But a couple of things to bear in mind with that number: first of all, the smaller companies are not necessarily looking for hundreds of millions of dollars in revenue, but rather a way of getting enough revenue to show that they can be cash-flow positive – we’re seeing this in one or two companies now – in order to prove to investors that they can take the business to the next stage. So far, they have looked almost exclusively at touch, which we mentioned before. What I’m saying is that they can now look other places to get that extra little bit of revenue. The other thing that’s fascinating about OLED is that an OLED is an emissive display of lighting technology so you only need transparent conductors on one side of the display. With LCD you need it on two because you’ve got backlights that need to shine through everything. So, potentially over a long enough period – fancy a world where all displays move to OLEDs – that could cut the usage of transparent conductors by half. I’m not saying that that’s going to happen any time soon, not in our forecasting period, but it is an issue and something to think about. It wouldn’t matter to the smaller companies because they’re trying to go from nothing to something. But if you were a big ITO supplier and you’re looking 15 years out, maybe, maybe that starts becoming an issue for you.

We think maybe by 2017, we’re looking at about $250 million in transparentconductor usage by the OLED industry

VC: Flexible displays are coming close to market-ready and given that ITO is notorious for its tendency to crack or bend, and you said it reacts with certain materials in OLEDs, which of the alternative transparent conductors would be best suited for flexible displays?

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LG: First of all, flexible displays could be an LCD display, surprisingly. It could be an OLED display, which is what I was alluding to. It could be an e-paper display. Until fairly recently it was quite strongly associated with e-paper. The few flexible displays that are out there have a noticeable preponderance of e-paper. ITO doesn’t flex very well, and we know that. The real question is what flexible displays are going to be like. There’s a lot of talk about these, but in the end, the initial flexible displays may well be just curved displays, in which case ITO is not all that challenged. It’s when you start getting to rollable displays or stretchable displays that ITO cannot be used. To the extent that we move to these rollable and stretchable displays, that’s a huge opportunity for non-ITO suppliers, but what we don’t know is when or why that’s going to happen. To some extent, the story that was told around rollable displays has been damaged by the arrival of tablet computing, which does some of the things that rollable displays were supposed to have done if you listened to people a few years ago. So we really don’t know. The other “don’t know” about all of this – and I’m kind of surprised by the outcome of some of the interviews we did – is how far you can take ITO. If ITO works with some of this flexible stuff, then a lot of people are going to stick with what they know. The case in point is not the flexible displays themselves as much as producing a display using roll-to-roll manufacturing. There are different opinions about whether you could do that successfully in high volume using ITO. What surprised me when we did the interviews was that some of the people who said you can’t use ITO this way were actually ITO suppliers. I’d take that as a positive as a supplier of non-ITO TCs. In the report, we’ve broken out for each of the classes of displays what percentage would be flexible, but we don’t have an overall number for the amount of transparent conductor that will be consumed in the flexible display market. One of the reasons for doing that – and I said “flexible” and “OLED” in kind of the same breath – was that the OLED market is now a developed commercial market. You see these things everywhere. There is a very good chance by next year that you’ll start to see admittedly high-priced OLED televisions.

Flexible displays still seem a bit niche-y, and it’s a little difficult to understand why people need them. I think that will change, but it could be a couple of years before we start seeing them.

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Opportunities for non-ITO Transparent Conductors in the Flexible Display Market
Curved and conformable displays

Use of ITO

Addressable Markets Alternative TCs
Limited. Could include lighting and some information displays. Smartcards and ESLs. These could be quite large in terms of volumes, but they haven't taken off and displays are very small Initially medium sized displays that would extend the visual experience for smartphone users Unknown. No such devices exist outside of a few research devices Large potential market, but alternative TCs do not yet have the performance to make major inroads

Opportunity for Alternative TCs

Possible Being used now but product lifetimes may be inadequate Could not use ITO Could not use ITO Used now, but questions on use for highvolume manufacturing

Limited. ITO could most probably be used, large volumes of TCs are unlikely to be needed, and alternative TCs may find it difficult to meet performance criteria Performance requirements are well matched to today's alternative TCs, but market is not assured and could be quite small Could be huge, but improved alternative TCs will be required in terms of performance and applications for this type of display are not assured Unknown and too distant for manufacturers of alternative TCs to think about Controversial since many think ITO will continue to be the best choice for R2R

Small flexible PM displays

Fully rollable displays Stretchable displays R2R fabricated displays

© NanoMarkets 2012

VC: So, off in the future? LG: It’s interesting. I’ve been to quite a few trade shows and talked to quite a few people all over the world in the last two years about displays. At the trade shows you definitely see OLEDs everywhere. For those of us who went to the SID show in Boston a few months back, LG and Samsung had some amazing-looking displays. When I was in China earlier this year I saw OLEDs all over the place. But you never really see flexible displays unless you look very hard, and they’re not that flexible when you find them. So, I think that’s a different stage and maybe that reflects on the opportunities for transparent conductors, too. We think it does.

VC: One place where transparent conductors are being used a lot is the solar panel business, which is definitely in crisis across many sectors. Are there still opportunities for transparent-conductor markets to sell into the PV sector, and what are they?

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LG: That isn’t as attractive as the display industry. While our raw numbers for transparent conductors have risen in part because we’ve been more bullish about displays than we were last year, it’s hard to be bullish about the solar panel market because so many of these companies are broke. You could argue that if transparent conductors are cheap enough they will sell, but selling on price alone is never a great thing to do. We think this will all get sorted out eventually. It’s sort of hit rock bottom. One of the reasons for this problem is that Chinese companies have been subsidized for so long they are able to force other companies out of the solar-panel market. About a week ago, one of the leading Chinese companies said that they were having financial problems, too. It’s not really because of demand. I think it’s partly because when you start subsidizing things, you never know what the long-term implications are and you may actually be bankrupting the companies you’re subsidizing in the long run. We think there is plenty of room for commodity solar panels, but solar panel makers must increasingly look at higher value-added products where they can sell them not just on price. That can mean several things, but one of the most important is building-integrated photovoltaics [BIPV], which is largely in the roof but could be in glass and in the walls. The hot area in terms of the absorber-layer materials is CIGS – which is flexible – and that is good for BIPV, particularly because it’s lightweight and also has quite high efficiency. We see that area continuing to grow. Although they are small and niche-y, organic PV [OPV], and dye-sensitized cell [DSC] PV also have some attractive features like the ability to work in low light for BIPV. In terms of transparent conductors, we lowered our forecasts in PV from last year. But there are some niche opportunities – people who have dabbled with new kinds of transparent conductors like silver in the CIGS area – I chose my words fairy carefully. OPV and DSC are slanted towards BIPV. With OPV and DSC, the transparentconductor issue is similar to that affecting OLEDs; OPV is more or less the same kind of technology, whereas DSC is a little more complicated. We see some niche-y things in the PV area, but if we were doing a consulting project, we would put it last on the list after OLEDs and flexible displays.

VC: Really? LG: By the way, with PV we’re really talking about thin-film photovoltaics and OPV/DSC, not the mainstream market of crystalline silicon, because they have great big silver grids painted on top of them, not transparent conductors. But we’re still talking about a $100 million market. Most of that is TCO, a non-ITO transparent conducting oxide, but some niche-y opportunities exist. We think that by 2016 we’re looking at a $200-plus million market for transparent conductors. So, definitely growth, but a big chunk of it is standard stuff. It’s a little like the ITO market in that it’s a captive market for primarily tin oxides and zinc oxides.

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Transparent Conductive Materials Market in Thin-Film and Organic PV by Type
300 250 200 $ Millions 150 100 50 0 2012 2013 2014 2015 2016 2017 2018 2019 © NanoMarkets 2012 Other Trans conductive polymers Other metallic films Silver films and grids Carbon nanotube films ITO and TCO Inks Other TCOs ITO classic

VC: Interesting. Speaking of silver, silver-based transparent conductors – both inks and meshes – are getting a lot of attention currently. Could you discuss how well they’re actually doing in the market and what their future is in the transparentconductor space? LG: Yes, they are getting a lot of attention. We think that this year the total market for silver-based transparent-conductor market is $20 million – not including big grids based on crystalline silicon PV panels because that is actually a very large market.

Those are more of a macro grid like Swiss cheese with big holes in the middle -- not really transparent conductors. In our report, we estimate that silver-based transparent conductors are a $20 million market now, spread over everything from nanosilver ink like Cambrios produces to a whole variety of films made with silver grids in them. They seem to be taking off. There are actual products out there -- enough of them to make a difference using this approach rather than ITO. There’s a variety of reasons for it: low cost of manufacture, and it’s often an additive type of technology. You could talk about that in depth. This is another area that is different from last year. I mentioned earlier that it has reached the takeoff point. We are always impressed when real products are out there using these technologies. We think that by 2019, which is the end of our forecast period, you’re looking at about $940 million in silver transparent conductors. It’s not a giant business, but it becomes a fairly substantial business. We think that by 2019, which is the end of our forecast period, you’re looking at about $940 million in silver transparent conductors. The other thing that impresses us is not just the success of Cambrios, the mineshare leader in this, but the fact that several companies in this space developing products or who have their own silver-type films are very big companies who have an opportunity to make this work, if anybody could. Companies that at some level have either developed or say they’re going to develop silver-based transparent conductors include 3M, Agfa, Dow Chemical, Hitachi Chemical, Mitsubishi, SaintGobain, Sumitomo and Toray. That’s a pretty impressive bunch. These are not marginal companies, and couple that with Cambrios’ apparent success in this field and you’re looking at something substantial. Most of these are in the touch-screen market right now, but we’ve had that discussion and we think they could look elsewhere. We get to that number by assuming that towards the end of the forecast period they penetrate the LCD market. That’s the proverbial $64,000 question that hangs over all of these things; otherwise you have a kind of permanent niche business for some of these unusual materials. VC: Getting back to carbon nanotubes, you mentioned that they don’t seem to be taking off, and they’ve made a couple of false starts in the transparent-conductor space. Do you expect them to succeed eventually? LG: I do. It does seem like they’ve made a couple of false starts, and not to go into history here – although I am – I remember doing interviews with, say, Eikos six years ago when we were being told that this is the way of the future. Eikos has all but left this business now. Unidym at one point told me that they expected a high penetration of carbon nanotubes as a transparent conductor by this time, and that hasn’t happened. Looking at our numbers, we have $0.2 million for 2012, and some

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of that is transparent anti-static material used in the defense industry, which still fits our definition but is a different conversation. There is good news, although it has proven very hard to make these things into inks. It’s not that easy; separating out the conducting and semiconducting materials, etc. These are technical problems we’ll get over. The good, long-time story is this: nanotubes are highly conducting when they’re conducting, as opposed to semiconducting. If you can make that separation, you end up with a remarkable material. A few companies of some substance have backed carbon nanotubes at some level: Dow, Linde, Samsung as an end user with some R&D, and Torre – not as long a list as the others. My sense is the commitment isn’t quite as great overall. The other thing discussed in our report that isn’t often mentioned is – and you shouldn’t take this the wrong way – silver grids and silver inks make excellent transparent conductors but the next stage isn’t obvious. When you’ve sold a lot of that, what’s your next product? What’s always been said about carbon nanotubes is that this is the first stage towards more extensive carbon-nanotube electronics. Whether that will actually transpire or not – people have been talking about carbon-nanotube transistors for as long as NanoMarkets has been around – I don’t know. But you can see that carbonnanotube transparent conductors could be the first stage in a much larger business, and you really can’t say that about silver. I’m sure there are exceptions to that rule, but nonetheless, I’m seeing that. VC: About how long is it going to take before we see them commercially used? LG: If we’re just talking about carbon-nanotube inks and films, I think there’s enough impetus to start seeing somebody announce. There have been experiments and companies messing with them for as long as I can remember, practically. By next year you might see a couple of small announcements. What’s different, I think, for silver is that you’re going to keep seeing a couple of small announcements. Maybe they’ll be used by a small signage company – although the company is small, the signage might actually be large and looking for a way to distribute voltage across a large panel – that kind of thing. I’ve always thought that until sales reach about $100 million, this isn’t a business that a lot of people are going to be chasing after except tiny firms. That would happen, based on our numbers, around 2016 and 2017. It isn’t going to be until the end of our forecast period that you start seeing these numbers leap out. If you mean: when could you characterize carbon-nanotube transparent conductors as a path for broader carbon-nanotube electronics, I don’t know. For that to happen,

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people would have to begin giving up on silicon. There’s a long history of people predicting that’s going to happen in the next five years, and then it doesn’t. I could give a whole webinar about that.

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I suppose round about 2020 or so. It’s hard to see how you can keep going on with silicon beyond obvious things like processes in fridges and cars. But for the leadingedge processes, you’ll have to look to something other than silicon. Whether that will be carbon nanotubes, who knows, but that’s certainly an option. VC: Good answer. Here’s another question for you, Which companies do you see as important players in the transparent-conductor market, and which ones have you seen decline in overall importance? LG: I’m going to interpret “importance” as their level of influence. It’s not just that they’re producing these things; they’re companies with the ability to shape. The one that I would mention first is Cambrios. I think Cambrios really deserves a little award for showing that you can develop a new material like this and actually go out and sell it, which is what they’re doing. They’re moving towards profitability. VC-financed firms have a different end game than a Dow, a Linde or a Hitachi Chemical. It seems like Cambrios’ staff has done a lot right and if you’re looking at the business model to follow with novel transparent conductors, they may be the ones to look at. Some of the companies to look at are the OEMs because some of them are so big that they really shape the acceptability of technology. One of them is clearly Samsung. Samsung has been open to new kinds of materials and it’s almost all of the stuff that we look at it in novel display technologies with respect to the development of technology and the openness to new technology. They have a carbon-nanotube project, for instance, working with Unidym, which I believe is still ongoing. They’ve done stuff on graphene, which is new as a transparent conductor. Looking to them about the way things will go is worthwhile, although I would also say that they have enough going that certainly some of these will get dumped along the way. In the same vein, Apple has the same ability to shape things, although they’ve been less concerned with materials. We did mention the in-cell touch technology and the implications of that with transparent conductors, and it’s too new to talk about what those might mean. The other kind of display that Apple is associated with is something we didn’t talk about, which is the transparent display that they use for augmented reality applications. Whether that has implications for transparent conductors I don’t entirely know, but it could, because it’s all about transparency and transparency is obviously one of the main factors making for success in transparent conductors.

It seems like Cambrios’ staff has done a lot right and if you’re looking at the business model to follow with novel transparent conductors, they may be the ones to look at

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The other companies I’d mention are Heraeus and Agfa. We haven’t talked about using conductive polymers in transparent conductors, but they’ve had some success. Nobody pretends that you could put that in a high-end television display or anything like that; they simply don’t perform at that level. But if you think that displays are going to continue to be built into more and more things, and into lowend applications like smart cards and shelf labels and that kind of thing, then to the extent you need transparent conductors at all, you really don’t need to spend your money on ITO. You’d go for something like a conductive polymer, which is highly flexible and would fit a smart-card application. Heraeus and Agfa have been doing work in that for years and now, again – much like Cambrios – deserve praise for having real-world applications out there. In terms of decline, I mentioned Eikos. They kind of started in the carbon-nanotube transparent conductor area, but they’ve dropped out of that. I suppose the other group of companies that I’d mention are the Japanese display makers who might once have been the rainmakers, as it were, for these newer technologies and transparent conductors in particular, who have fallen on hard times in many ways. It isn’t that they’re not innovative anymore, it’s that people look to Korea and LG and Samsung. The influence of Japanese display makers has waned considerably in the last few years. VC: Which companies in Japan? LG: I’m talking about the traditional display makers. Sharp springs to mind. They’ve combined together now to form a kind of exclusive Japan display corporation. There’s Toshiba in there, some other companies. If you’re more than 30, if you go back a little ways and think about what you used to see when you went to buy a television set or a computer display, it’s a different group of companies now. In terms of influence that means something. VC: How about start-ups? If you’re just entering the market, what are the best offers going to be for start-ups at this point? LG: It depends, and it depends on funding. What we’ve seen behind the scenes is a lot of companies out there with minimal funding. I’m not sure if in the long run many of those will survive. If you have a fairly long timeframe, then there’s something to be said for carbon nanotubes. We’re not dismissing them entirely, but the story of their early success doesn’t seem to be true. On the application side, chasing after the OLED market makes a lot of sense because in spite of some real issues – you have to get ITO out of there, and for good reason – some important people are working on research in that field like COMEDD in Germany.

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The OLED market is almost a mainstream display technology now, and has potential as a niche lighting technology, although it will be a large niche. Again, it doesn’t scale up from a transparent-conductor manufacturer’s point of view to the same degree that LCD does because you only use one layer. But that may be the way it goes. If OLEDs take over LCDs, that would happen over a long period of time, and that does have some implications (as we discussed earlier). Other areas we might look at are entirely new forms of transparent conductor. One of them is graphene, which is a hot topic, but is a long way from becoming a commercial product for transparent conductors. People are doing interesting things in that field, but I don’t get the sense that there are real implications in that commercially yet. What did come up – and is also slightly new this year – is a discussion of what we call “fourth-generation transparent conductors.” These are mixes of things, such as nanomaterials, metals, oxides, or polymers. Development of these is surrounded by real technical issues, but it doesn’t involve an entirely new kind of material such as graphene does. A few companies dotted around are looking at these things in a casual way. Some companies are also looking at copper as a transparent conductor. All of those things offer an opportunity to a start-up. I think they’re all high risk, but that’s kind of the deal with start-ups so there isn’t a lot of point in a company going into the ITO business 30 years after it started. VC: Have any other interesting niche applications caught your attention this year? LG: Yes. I’d say “niche” with italics and underlining. One of the other hot topics we cover – it isn’t covered in huge depth in this report, but it is covered – is the whole area of smart windows. People are increasingly interested in that, mainly for the energy-efficiency issues, but also for other reasons like self-cleaning: who doesn’t want a self-cleaning window if you live on the 15th floor? That has some demand for transparent conductors, especially around the infrared area, and we are told that infrared in general, infrared applications of ITO and other TCOs, are doing quite well this year. We didn’t try to value that, mainly because these things are mixed with other coatings and it’s a little difficult to assign a definite amount, but we’re clearly talking about quite a few millions. What’s more important is that the smart windows movement is accelerating quickly. Smart windows have been around for a long time in one form or another, but suddenly they’re getting a lot of attention. Don’t be surprised in next year’s report if we have a much bigger section on that and when you ask me next year: “What’s changed since last year?” I begin with smart windows. I don’t know that that’s true, but there’s definitely some buzz there.

VC: Here’s my concluding question: Heading into the future, will mainstream LCD makers ever adopt new transparent conductors? LG: I think they will, and that answer has several parts. Of course one part of it is: if they don’t, our numbers are high and all the interesting materials we’ve been talking about for the last 40 minutes or so are going to be no more than niches. Even some people in the indium business say that eventually indium will run out, although they’re talking about 70, 80, or 100 years. They’re probably wrong about that, by the way, because usually when people say that things are going to run out, they don’t. What’s more likely is that the performance of some of these newer materials are going to get so good and the idea of additive manufacturing for transparent conductors is going to become so prevalent because it gets so good that LCD makers will start to do more than experiment with this and it will gradually eat into the ITO product. When we started covering ITO, I borrowed a quip from one of the interviews I did, which was that ITO was the material that display makers love to hate. I got bored putting that in reports so I haven’t put that in for a few years, but it’s true. This is not a material that display makers particularly like working with. So if something better could be offered, some of them would likely take it up. That is on the verge of happening. If you look at those performance numbers in our report, which are pretty vague because everybody has a different idea of what these materials can do, you can see that they’re pretty much on the edge of ITO performance, with the exception of conductive polymers – because performance is not their pitch. The other ones are on the verge of performing as well or better than ITO. So it would be a surprise if non-ITO solutions didn’t eat into the LCD business. The other issue is that by the time we get to the end of our forecast period, a big chunk of the LCD business may have shifted to OLEDs, and if that happens – and opinions differ widely on whether that’s going to happen or not; some people are skeptical about OLEDs – then ITO is definitely not the right material, even though it’s being used now. It’s likely that the mainstream display industry will use non-ITO solutions. It’s a conservative industry for lots of good reasons, not the least of which is they have these whacking great fabs to make displays that make commitments to certain technologies. Nobody is going to say, “Hey, it’s Friday, I think I’ll use silver inks instead.” Of course, all that means is ripping out all this stuff and banging it off a printing machine. The world doesn’t happen that way, but it might begin to happen slowly and certainly that’s the assumption of our model. If you believe that’s wrong, then this is definitely the wrong business to be in. Of course, there’s also (I discussed this a few questions ago) the possibility that the

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materials that we’re focusing on today won’t be the materials that are more widely available in the future. It might be graphene. I doubt it, but it’s composites that are only beginning to happen. VC: Yes, there’re lots of things to keep an eye on ahead.

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LG: Yes.

Related NanoMarkets Reports:

• Transparent Conductor Markets 2012 • Transparent Conductors in Thin Film and Organic Photovoltaics-2012 • Conductive Coatings in Electronics and Energy Markets • Emerging Markets for Non-ITO Transparent Conductive Oxides • Transparent Conductor Markets 2011 • Markets for Silver-Based Transparent Conductors – 2011

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