While the current electrical grid is a modern marvel, there is a general consensus that it needs to be upgraded to a Smart Grid with grid storage.  Energy storage is, in fact, a vital component of the coming Smart Grid, and NanoMarkets predicts that new materials and systems for chemical batteries and supercapacitors for Smart Grid electrical storage applications represent a significant opportunity. 

Even though pumped hydro is the most efficient means for storing generated power for later use, NanoMarkets believes that chemical batteries and supercapacitors represent the biggest growth opportunity for most applications, as they are not limited to certain geological locations and do not have the potential environmental impact issues of pumped hydro. 

The near-term opportunities for quality and load leveling storage are clear.  Approximately 90 percent of power outages in advanced economies last two seconds or less, and 98 percent of outages last 30 seconds or less, but their economic effects are large.  In the U.S. alone, the impact of power interruptions due to lost time, lost commerce, and damage to equipment is estimated to range from $75 to $200 billion per year.  

Supercapacitors are well-suited to many short-term (less than a minute) load leveling and quality applications, because they have an extremely fast discharge and charging response, a high current capacity, and can be cycled hundreds of thousands of times without degradation to their storage ability. 

While there is currently a large growth market for supercapacitors in uninterruptible power supply (UPS) battery systems for protecting critical infrastructure, improvements in capacity and cost are creating new markets for them as well, particularly in new high-tech industrial applications. 

Chemical batteries, meanwhile, are ideal candidates for longer-term (minutes or hours) power quality applications and for peak-shaving applications, because they have higher energy densities and, for many types of batteries, have long service lifetimes.

They represent a critical component of several Smart Grid applications at several levels along the value chain. Bulk price arbitrage, central generation capacity efficiency improvement (peak shaving), transmission capacity/transmission congestion relief, and the integration of variable output sources, such as wind and solar, are all crucial storage applications for chemical batteries in a successful Smart Grid.  

The need for storage that can integrate solar and wind cannot be over emphasized. In the U.S., 30 states have renewable energy mandates that average 17 percent integration of renewable energy sources by 2012 to 2025. Only with a significant amount of electrical storage can this level of wind and solar be integrated into a stable electrical grid, so the value proposition for new forms of electrical storage is difficult to overestimate. 

In China, for example, generating capacity is not keeping up with increased demand, and storage is being examined as a means to balance load and demand.   China also has several provinces where up to 20 percent of their electrical power comes from wind.  Electrical storage will be needed in these areas to provide higher power quality. 

Notable Recent Developments in Flexible Glass

In the past year, we have seen the flexible glass sector expand its commercialization efforts as some of the major firms in this area have ramped up their activities.  Some notable increases in the seriousness of intent in this sector over the past year include the following:

• Corning officially launched Willow Glass in 2012, its 100-μm-thick material designed for lightweight, cost-efficient products in the display industry. The material complements Corning's extensive line of display glass products with a new, ultra-thin material available in roll form.

• Meanwhile, AGC is offering a 100-μm-thick flexible glass material for "sheet-to-sheet" handling that is available with an easy-to-remove, rigid carrier glass.

• NEG has been exhibiting and marketing its own 200-μm-thick flexible glass under the name "ultra thin sheet glass" for displays and other electronics devices.

• Schott's commercially available D 263 eco product is available in sheet form with thicknesses down to 25 μm. The firm is also developing other flexible glass products.

Re-evaluating the Value Proposition of Flexible Glass:  Lower Weight for Initial Revenues

As the flexible glass business has moved forward, NanoMarkets believes the firms involved have become increasingly focused on where and when money will be made with this new material.  In its earliest days, flexible glass was seen as being somehow connected to the flexible display concept.  However, this association is much less apparent today.  Instead, flexible glass is now seen as serving more immediate demands for mobile display applications. 

In NanoMarkets' view, the most immediate selling point for flexible glass at the present time is that it can, at least in theory, provide a lighter-weight and lower-cost alternative to rigid glass.  Such a material is exactly what is needed by the burgeoning mobile communications and computing sector, where smartphones are getting bigger and tablets are proliferating. This growth puts a premium on lower-weight glass, since low weight is at a premium in the mobile communications/computing sector.

In fact, although billed specifically as flexible, flexible glass is actually the current end point of a long-established research program to develop thin, lightweight glass, and this program specifically has always had the mobile communications and computing market in mind. 

As things have turned out, flexible glass, as it has emerged, finds the mobile communications and computing market even more ready for its capabilities than its original backers might have once thought.

As such, one might think of flexible glass as now returning to its roots in low-weight mobile display glass, which it was always bound to do. To NanoMarkets, it now seems almost inevitable that the first significant revenues from flexible glass will come from tablet and mobile phone manufacturers.

R2R Display Manufacturing and Flexible Glass:  It's What's Next

Although not an immediate revenue generator, NanoMarkets believes that roll-to-roll (R2R) display manufacturing is near to generating revenues for flexible glass. Today, most displays are made in batch processes. However, there is a general concern in the display industry that it will not be easy to scale the current batch processes for making displays much beyond where they are now in terms of substrate size.  Batch-mode display fabrication continues to scale, but at a much less revolutionary rate than in the past.

One of the reasons for this slowing down is the use of glass itself; beyond a certain point, sheets of glass reach a point where they are so unwieldy that they are impossible to work within batch mode—they are too heavy and too likely to break. Yet the display sector is reluctant to dispense with glass, which is seen as a high quality product that enhances the marketability of the final product.  Glass is also a fine encapsulation material.

Self-cleaning windows have been on the market for more than a decade, beginning with residential markets and then moving on to commercial buildings.  Several technologies are used commercially.  Yet despite all this, self-cleaning windows are not that widely known or used.  Nor are they easily available through the usual building products supply chains:

• This failure—the failure of self-cleaning windows to generate large revenues—is widely "blamed" on two factors; high-cost and low performance; that is to say, self-cleaning windows don't offer good value.  According to one source, self-cleaning windows cost as much as 20 percent more than equivalent windows without self-cleaning capabilities.

• At the present level of development, the performance of self-cleaning glass does not really seem to be all that effective. 

Is there a real chance that these kinds of windows will have more market success in a near-to-medium term timeframe?  Self-cleaning windows are obviously potentially useful. Thus on the demand side of the equation, there does not seem to be a need for a detailed explanation of why self-cleaning windows would be desirable, although we do note that certain demographic changes (notably aging populations), seem to favor the need for self-cleaning windows.

NanoMarkets believes that there are, however, indications that self-cleaning windows have a bright future. The trends that impress us here are mostly technological in nature, but this shouldn't be taken to mean that they are restricted in some sense to what is going on in an industrial lab. 

On the contrary, what we are seeing are signs that there is a growing technological impetus behind self-cleaning windows that will enable them to meet their "obvious" market potential.  NanoMarkets believes that these newer technologies—and riffs on older technologies—will (1) improve the performance standards for self-cleaning windows and (2) make such windows more affordable.  

In other words, we think there is a good chance that over the next few years, self-cleaning window technology can be improved to a point where such improvements have a positive impact on sales of such windows.  In addition, there are signs that investment money may be available for self-cleaning windows. At the very least in today's capital rationing environment, self-cleaning windows products and companies have a better than average chance of getting funding.

Given the overall disappointing results to date for printed electronics, it is perhaps surprising that there has been something of a revival of interest in strategic printed electronics in the last couple of years. Not surprisingly, this effort is much more modest than the narrative of developing a large and distinct PE industry, and in the sense that the number of applications to which the new PE is directed are fairly limited.

There are a number of ways that these efforts could be viewed.  A cynic might view them as no more than a last desperate gasp of firms that were active in the second phase of PE story.  However, NanoMarkets believes that there are now genuine opportunities to be had as the result of PE development and that this new kind of PE, which we are going to call Printed Electronics V3.0, can learn from the failures of the past, both in applications and in printing itself, to generate new business revenues. 

Within PE V3.0 we find a relatively narrow group of applications that are being treated seriously by those interested in PE V3.0, but these applications are systems that rely on a large number of components and it is these components that are actually printed.  For example, from the end-user perspective one area of interest would be powered smart cards, but this might mean printing two types of components; chips and displays: 

• Most of the current interest within the PE V3.0 framework is with a class of applications that are clearly strategic in nature with a tendency for them to also be low-cost and disposable/short-lived.  These points are interrelated in that for very low-cost applications, it may be very hard to achieve economic viability without using functional printing.

• There are also some other applications, which we are including in PE V3.0 where printing is used (or could be used) and there is a chance that it could become strategic in nature, but where “disposability” is not really the issue. Printed mobile and TV displays and printed solar panels are the main examples here. These PE V3.0 applications are mostly characterized by the fact that, although not common, printing is being deployed by one or two firms, in a way that is hard to ignore.

What all this means ultimately is that PE V3.0 is much more modest in its ambitions.  It is certainly not trying to create a major new industry for Europe or, indeed, anywhere else.  More importantly in the context of this report, the applications being put forward by advocates of PE V3.0 are relatively few in number and they are limited to those where:

• The PE industry is reasonably sure that today's printing technology is up to the task set for it.

• There is a fairly clear and short path to first revenues for the systems being printed.  This was something that wasn't really emphasized in the previous phase of PE and is all the more important given the current poor economic conditions that exist in many parts of the world at the present time. 

What this third phase of PE has in common with the second phase is at the fabrication level.  That is, we are again talking about creating fairly complex devices using printing processes.  And the motivation at least is fairly strategic; printing is seen as important so that these devices can become fairly ubiquitous.  However, there is in this latest phase of PE development, a lot more thought being given to how and why the market could lead to such ubiquity.

The OLED encapsulation sector has changed considerably in the past two years.  OLEDs have broken out of their previous niche market pattern, in which they were used mostly for simple, passive matrix displays for MP3 players, cell-phone sub-displays, etc., that had modest encapsulation needs well served by simple cover glass technologies.

Today, however, the OLED industry is booming, with full-color, active-matrix (AM) OLEDs leading the way.  Indeed, OLED displays have gone mainstream, and OLED lighting is not far behind:

• OLED displays are the fastest growing primary display type in mass-market smartphones, tablets, and other mobile computing products.

• Meanwhile, OLED lighting is now on the market in the form of designer light kits, as well as in luxury luminaires, and NanoMarkets is predicting that larger segments of the lighting market are likely to be penetrated by OLED lighting in the next few years.

• OLED TVs appear to be – finally – on the verge of mass-market introduction, with products from Samsung and LG expected in 2012 and 2013, respectively. 

These trends mean that the addressable market for OLED encapsulation materials is rapidly growing and should continue to do so. 

Increased Production and Larger Panel Sizes Lead to New Encapsulation Needs

Notably, these OLED market trends are accompanied by two shifts in the OLED panel demand patterns that will influence the market for OLED encapsulation. 

• First, of course, increased production of OLED panels of all types is good for the encapsulation business.

• Second, there is an important, ongoing shift toward larger panels, especially in TV and lighting applications, both of which are expected to greatly increase the size of the addressable market for OLED encapsulation materials.

Why Double Glazing Isn’t Boring Anymore

Double glazing shipments worldwide are worth billions of dollars annually.  But growth of this traditional business is slow (this is especially so given the woes of the construction industry) and one would never identify it as an opportunity per se; that is no one would suggest that “double glazing” as a business that people should jump into as a way of making big money.   It has been at least 30 years since someone could seriously make such a claim.   In one trade press article that NanoMarkets retrieved as part of the research for this report, the double glazing industry was portrayed as “boring,” which seems to NanoMarkets to be a fairly reasonable characterization of the glazing industry considered as a whole.

But in the past few years – perhaps as long as five years – there are signs that the double glazing business has started to become much less boring.  What we are seeing – or at least beginning to see -- is this sector begin to clearly transcend the “double glazing” name or even the (more general) “insulated glazing” name.  There seems to be a new business emerging that is more deserving of the name “advanced glazing systems,” a name that seems to capture the sense of novel technologies playing an important role.

What has happened here seems to us to be much more than a shift in industry semantics brought about by changing times and marketing approaches.  Instead, we are talking a real shift in direction brought about by changing demand patterns and novel technologies.  Such a change is surely deserving of a new name; so surely the “advanced glazing systems” epithet is a good one to use.

On Demand, Technology and Advanced Glazing Systems

On the demand side of the equation, the changes that we are talking about are pretty much common knowledge.  For a number of reasons, energy has become more valuable and therefore ways of conserving energy themselves have a higher value: 

• Advanced glazing systems seem to be a way to conserve energy and in a high-priced energy environment they take on growing commercial significance and appear to address larger markets

• Although related in part to the growing cost of energy mentioned above, NanoMarkets believes that the market for advanced glazing systems is also getting a boost from a more general societal environment in developed countries where a significant part of the population is concerned about “environmentalism,” in a general sense. 

• Advanced glazing systems stand to benefit from this meme because they can be marketed as meeting the psychological needs associated with “environmentalism,” and because (more objectively) they fit round with the growing number of building codes and standards that have emerged/are emerging built around environmentalist and energy saving needs.

Although several firms tried to exploit similar opportunities without success in the not-so-distant past, NanoMarkets now believes that the time is right for PV encapsulation to lead to significant revenue generation for well-prepared companies. Today’s opportunities in PV encapsulation can be summarized as follows:

• Several novel encapsulation technologies, such as multilayer dyad films and high performance barrier films deposited using atomic layer deposition (ALD), are now emerging that can serve important sectors of the PV market. 

These newer encapsulation technologies have implications for the rising-in-importance flexible PV (especially CIGS, OPV, and DSC) sector, especially for building-integrated PV (BIPV) and other applications.  Encapsulation is a key enabling technology for BIPV, which is expected to be the fastest growing sector of the PV industry over the next decade and a diversification opportunity for encapsulation technology suppliers.

• Encapsulation firms can create larger addressable markets for their technologies by leveraging existing efforts for the PV sector.  While encapsulation for organic light emitting diodes (OLEDs) is so often the focus of commercialization efforts in encapsulation, much of the work done for the OLED sector can be transferred to the PV sector with relatively minor adjustments. 

For example, the optical and barrier performance requirements in PV are significantly less severe than in the OLED industry, yet encapsulation in PV requires different environmental stability characteristics and, often, much longer lifetimes. Differentiation of encapsulation products to meet the specific needs of the PV industry offers a way for firms to create a competitive advantage in PV while also expanding their market.

The same can be said of encapsulation in the food packaging industry; in this case, the PV industry has stricter performance specifications with respect to barrier level but also more room for added value, thus potentially creating an opportunity for food packaging firms to make their mark in the PV encapsulation industry where values are so much higher.

• Major efforts are also underway today to test the barrier properties of new encapsulation technologies.  These efforts are creating an opportunity for equipment and testing firms, like market leader Mocon, to supply related test equipment.  Both new testing models and equipment are needed for PV products that have 20-25 year lifetimes.

But Slow Growth in the PV Industry Will Limit Growth Rates in Encapsulation

NanoMarkets anticipates significant challenges to the status quo in the PV market in the coming decade. The PV sector as a whole is entering a period of flat or moderate growth in the next couple of years, and the industry remains highly cost-sensitive.

Until recently, the PV market was a boon to the materials industry, partly thanks to government subsidies. NanoMarkets believes, however, that the boom days are over for the PV sector, and the outlook for the next decade is much different from that of the last:

• First, the success of the PV industry is closely tied to the construction industry, which is still struggling in several important markets, such as Australia, Canada, France, Sweden, Spain, and the UK.

• Second, in most countries, many of the subsidies and tax incentives that have supported the PV industry for a number of years are being reduced significantly.  Recall that when the Spanish government took this step several years ago, the PV market in Spain declined by 75 percent; Germany also recently sharply reduced PV subsidies, and the German PV industry has shrunk considerably as a result.

Today, the LCD market heavily dominates the optical coatings and films needs of the display industry. LCDs and their backlight units use diffuser films, polarizers and reflective polarizers, contrast enhancement and prismatic films, as well as antireflection, antiglare, and privacy films.  But most display makers are now looking for the “next big thing” in displays.  This next big thing could come in the form of 3D devices, OLEDs for mobile computing applications, and perhaps even OLED TVs in the near-term; e-paper has also grown in importance over the last few years.

Although most of the revenues from optical coatings and films used in the display industry for years to come will be generated by those used in LCDs, NanoMarkets believes that the opportunities in this space will be shaped by the emergence of the new kinds of displays outlined above.  These new kinds of displays can be expected to create new kinds of optical films, and may create openings for new firms to establish a market presence and gain market share versus the competition.

Nonetheless, such changes could also create a problem for firms supplying optically functional display films that have long relied on a well-established LCD sector for sales.  Both OLEDs and e-paper displays are backlight-free, and they thus require fewer optical film products than conventional LCDs. 

Optical Films and Coatings for the LCD Industry:  Multi-Functional Films and New Functionality

Optical films in an LCD include films in both the backlighting unit (BLU) and on the front surface of the display.  BLU films include a reflector, a diffuser, one or more prism films, a rear polarizer, and sometimes a reflective polarizer).  Front surface optically functional coatings or films include an antiglare/antireflective film and, sometimes, a privacy film (for personal mobile devices).

Over the next few years, we believe that LCDs will be locked in a battle with other kinds of displays for the visual quality that they offer. NanoMarkets believes many of the films and coatings that are used in LCDs will prove potent weapons in this fight.  In addition, we think that the optical coatings/films can be utilized to lower the costs and improve the profitability of display makers, which will only be more challenged as the newer kinds of displays gain market traction.

Improving visual quality:  With regard to the visual quality challenge, we see improved anti-glare and ant-reflection films as being a key opportunity since both go a long way to improving the readability or viewability of an LCD, and both are especially important in high brightness and outdoor settings. 

With so much of the display industry focused on the mobile display industry, NanoMarkets sees films/coatings for reflectors as presenting another opportunity in the LCD sector in the near term, this is because they maximize brightness for the LCD at the lowest possible power consumption. Today, the simplest reflectors are made from metallic films, white paint, or a white pigment-filled film like 3M’s white diffuse reflector (WDR).  However, we see a growing need for more sophisticated and higher reflectivity reflectors, which are typically fabricated with multilayers of alternating low and high RI polymers. 

Although the early promise of organic thin-film transistors (OTFTs), or, more broadly, organic field effect transistors (OFETs), as well as organic or polymer-based memories has not been met, today there are signs that things may be turning around.  In the last couple of years, there has been renewed interest in these devices, and NanoMarkets believes that the industry may be on the verge of a second renaissance.

This resurgence will be built upon improved material performance, the establishment of an integrated manufacturing and supply chain, and the emergence (finally) of a viable market for applications that will benefit from the low-cost, print- and solution-compatible capabilities of organic and polymeric materials. These applications include the following:

• Smart packaging, which includes food, personal care, pharmaceutical, and medical packaging, at least some of which can benefit from improved labeling that brings more value than added cost to the consumer;

• Interactive media, which includes gadgets such as greeting cards, simple toys, and inexpensive games, for which printed electronic components enable low enough price points to make them widely sellable, while still offering profitability to the seller;

• Branding and security, wherein printed electronics is a value-added component employed to reduce counterfeiting and/or increase safety or product compliance;

• Tagging and smartcards, which may incorporate printed electronics for logistics, tracking, and/or payment applications; and

• Display backplanes based on organic or printed electronic components, which have thus far suffered from fits and starts, but may emerge stronger once the emerging flexible display market gets off the ground.

With the possible exception of display backplanes, all of the above rely on the ability to fabricate extremely low-cost electronic components at very high volumes. Conventional silicon-based electronics could not achieve these price/volume points, but plastic electronics may be able to do so.

Extremely low-cost electronics are traditionally considered incompatible with conventional silicon wafer-based electronics that rely on expensive substrates and complicated lithography processes. But “organic electronics”, or more broadly, plastic electronics, in which the key functional electronic components, like transistors, logic elements, and memories, are fabricated with inexpensive organic or polymeric materials using inexpensive deposition and/or patterning processes on plastic substrates, are poised to change the paradigm.

The promise of plastic electronics is that it will usher in an era of ubiquitous or pervasive computing and communicating across many sectors, including those not traditionally considered the realm of “electronics”, like packaging, branding, and security.  

NanoMarkets believes that, while the changes in the indium supply that we expect to see as the result of Chinese indium policy will benefit the firms manufacturing novel TCs, the effect could be temporary.

What the alternative TC business really needs to develop a sustainable business, however, are new applications where (1) the advantages of alternative TCs are fairly clearly understood and (2) market penetration by these materials is not as hard to achieve as in the conventional LCD market. There are now several applications where alternatives TCs now seem well positioned.  And some of these have only just begun to appear.

The ongoing market evolution and spread of touch-screen technology:  The alternative TC firms are already crowded into the touch-screen sensor sector, which they rightly see as having performance requirements that are well matched with what these firms’ new materials can offer right now.  The alternative TC providers also correctly perceive that the touch-sensor firms do not have the same level of commitment to ITO that the mainstream display firms.  And there are many touch-screen sensor firms, and just a few mainstream display firms.

The problem is that the touch-screen sensor market will probably never be that large and for the reasons just explained it is getting crowded with prospective TC suppliers.  It is expected to grow fast, so the current focus of the alternative TC makers on this sector will most probably be rewarded to some extent at least.

A resurgence of thin-film solar panels: For the past few years, crystalline silicon (c-Si) panels manufactured in China and sold at very low prices have been crowding out thin-film PV (TFPV) technology in the solar panel space.  However, as noted above, current Chinese industrial policy favors moving Chinese high-tech industry to higher value added products and we think this will mean the end of the subsidized Chinese c-Si solar panel era within a year or so.

TFPV—unlike c-Si PV technology—makes extensive use of TCs and is the one applications sector where ITO has largely been dispensed with.  Which TCs are the best for TFPV has not yet been fully determined, although non-ITO TCOs are by far the most frequently used alternative to ITO.  The choice of ITO alternative being used depends on the specific absorber layer being used.  But if the TFPV market revives for any reason—it is good news for ITO alternatives. 

OLEDs and OLED lighting:  2013 shows every sign of being the “year of the OLED.”  For the past few years, active matrix (AM) OLEDs have become successful in the smartphone sector and seem likely to become even more popular in 2013.  Beyond that, the first really commercial OLED televisions should be widely available by then and OLEDs are also expected to have a presence in the tablet computing market. 

Although OLED lighting is not expected to go mainstream until the 2015-2016 period, we would also expect the availability of luxury luminaires using OLED panels to become more wide spread in 2013 and beyond, with their prices dropping to a point where the addressable market for these lighting products will have expanded to include the upper middle class and not just the very rich. 

Faced with the fact that we may never know quite how ITO prices vary with the price of indium, manufacturers of alternative TCs have a number of options. They can, of course, continue to make unsubstantiated claims about the high prices of indium and how this makes the case for their alternative formulations.  We have no doubt that this is what they will do to some extent and that these efforts will work to some extent.  However, in the light of the above analysis, this strategic approach seems likely to have limited impact in the long-run.

Lower total costs: A more fruitful approach would seem to be to focus on a claim that alternatives to ITO offer lower total costs, primarily because they are associated with lower manufacturing costs.  This case is relatively easy to make and, as it happens, is also often more valid than simply looking at changing material prices.  Usually, this analysis is based on the undeniable fact that ITO deposition is a wasteful sputtering process using expensive equipment, while some of the most interesting alternative TCs use additive solution processing equipment with far less waste and lower capital costs.

At far as this goes, NanoMarkets thinks that the lower total cost argument is a good one and will be (and should be) part of the marketing strategy of any firm that is offering a new material for consideration as an alternative to ITO.  The only problem with the total cost approach in this case is that this point has been made for a long time and clearly has not made major users of ITO rush to buy alternatives.  We can see no reason why this would change in the future: 

·         One reason, that the total cost approach can be less convincing is that—whatever the total cost of ITO alternatives may or may not be—they are almost always of lower performance than ITO and to some extent that may be inherent in precisely those processes that are being touted as less expensive; solution processing being the main case in point.  This is one good reason why today’s ITO users shy away from switching to ITO alternatives.

·         The other relevant fact is that comparisons of capital expenditures between conventional sputtering and less conventional solution processing technology are easier to talk about than assess in practice and vary from user to user.  For example, using depreciated sputtering equipment may be less expensive than using new solution processing equipment.  In addition, in a capital expenditure comparison in which much depends on depreciation, the choice of depreciation method used in calculations becomes important.  Engineers tend to assume that the appropriate method is straight-line depreciation, but this is not necessarily the view that would be taken by a competent management accountant.

Uncertainties, China and the future of alternative transparent conductors:  The other factor that needs to be taken into consideration in any assessment of the prospects for alternative TCs are market uncertainties.  NanoMarkets believes that various market uncertainties are currently powerful enough that they are in effect shaping the market for ITO and its alternatives.  However, these factors work both in favor and against novel alternatives to ITO.

On the negative side of the equation, is the fact that—to put it colloquially— “better the devil that you know.”  In the seven years or so that NanoMarkets has been covering the TC space, we have yet to come across anyone—user or supplier—that sees ITO as a wonder material.  It is—some would say—a bad material, but just better than everything else.  The point here is that ITO is a known quantity, while carbon nanotubes, graphene, silver nanowires and even conductive polymers come with many uncertainties attached to them in terms of both performance and lifetimes.

The technology gaps in the OLED industry have not gone unnoticed by the materials suppliers, which have been providing steady improvements in performance.  Overall, most clearly needed by the OLED industry are materials used in the functional stack – emitters, hosts, transport and blocking materials, etc. – that enable higher efficiency and longer lifetimes at the right color points to achieve proper color gamut (in displays) or the right color rendering index (CRI) and color temperature (in lighting). 

Obviously, US-based OLED materials pioneer Universal Display Corporation (UDC) and its materials partners are at an advantage here, at least with respect to phosphorescent technologies and the superior efficiency that they can provide, and with respect to customization and optimization of auxiliary materials to be used in conjunction with the phosphorescent materials. 

However, a breakthrough by an outside firm based on non-phosphorescent (or at least not on iridium metal cores) could be quite lucrative to the inventing firm as well. Breakthroughs in any of a number of other materials could also translate into a significant opportunity.

The Need for Better Blue Emitters

In Lighting: As we noted above, lifetime is still a critical issue for up-and-coming key OLED applications. Some progress has been made on the color and lifetime of a light blue OLED emitter system that may advance OLED lighting. For example, UDC is now actively commercializing a light blue emitter that delivers 70 lm/W luminous efficacy and an operating lifetime of 30,000 hours (to 70% of initial luminance) in an OLED lighting panel.

While this achievement is notable, the industry still has much to be accomplished.  First, it remains to be proven that this material can be scaled up at the customer with the same results.  Second, even this performance lags behind that required to support a serious business case, i.e., at 100 lm/W and 50,000+ hour lifetimes, for using OLED lighting in general illumination applications.

In Displays: More critically, the lifetime problem has not yet been solved adequately for red, green, blue (RGB) full-color displays, especially with respect to high efficiency deep blue phosphorescent emitters.

In the AM OLED displays on the market today, red phosphorescent emitters are already used preferentially, and green phosphorescent systems are increasingly being adopted as well.  But even in the relatively small, relatively short-lived AM OLED mobile computing applications, the blue emitter system is still dominated by a conventional fluorescent system.

Furthermore, there are no real signs that the industry will make the switch to all-phosphorescent any time soon, other than a vague promise by Samsung to adopt UDC’s phosphorescent blue “as soon as it can be qualified.”

The problem is that the larger-area applications like TVs are expected to have much longer product lifetimes than most mobile computing devices, which today makes differential aging among emitter systems a problem for display engineers and consumers alike. 

NanoMarkets expects that the OLED TV industry will need to make a move toward all phosphorescent to allow the technology to establish a strong foothold in the display market. Solving this problem is a materials related issue. 

Growing Demand for OLED Panels

But smartphones are, of course, only part of the story.  Increases in demand are happening across the OLED industry, and the sector is booming.   Nearly all segments are growing on a per-unit basis, from passive matrix (PM) OLED displays, to sophisticated AM OLEDs for tablets, computers, TVs, and white-emitting OLED panels for lighting applications. Overall, NanoMarkets predicts that, as a result, the value of OLED materials will grow from about $524 million in 2012 to over $7.4 billion by the end of the forecast period in 2019.

Of that total, the value of core, functional OLED materials – which is to say active layer materials like emitters, hosts, dopants, and hole and electron injection, transport and blocking materials, but excluding electrodes, substrates, and encapsulation materials – will reach nearly $370 million this year, and grow to over $2.9 billion by 2019, corresponding to about 71 and 39 percent of the total OLED materials market, respectively.

This growth will be realized through the following key trends:

·         Phones and tablets: Today, Korean display giant Samsung dominates the OLED market, at least for AM OLED displays, so other panel makers need to get into the mobile computing market to solidify OLEDs as something more than specialty products, and to broaden the customer base for OLED materials.

The good news is that this shift is happening, with Taiwanese OLED makers AU Optronics (AUO) and Chimei Innolux, Chinese OLED maker Tianma, and others hoping to expand production in the near future. There are also persistent rumors that Apple may soon adopt an OLED display, which would greatly expand the addressable display market. 

·         TVs: Second, as we point out in this report, materials suppliers are in need of not only higher unit sales, but also larger average panel sizes, in order to see materials demand rise significantly.  The good news here is that all signs point to the fact that the next “big things” in OLED displays will provide just that. 

Larger-area OLED TVs from Samsung and rival Korean display maker LG Display are, at last, coming on the market in 2012. If the industry can both meet its cost goals and successfully convince consumers of the value of OLED TVs, they are poised to generate significant revenues from material sales in the coming decade.

·         Lighting: The other big news in OLEDs is the steady, if sometimes disappointingly slow, progress of OLED lighting – another market with a potentially large panel area that will translate into high material demand. 

This market is also finally seeing the beginning of a real commercialization trend.  Hardly a month goes by without another luxury luminaire, designer kit, or OLED lighting installation project announced or launched, and NanoMarkets believes that the next three or four years will be a critical manufacturing (and market) development phase in advance of real growth, which will start to occur in about 2015 – 2016.  

The PV market is undergoing dramatic change as the industry transitions from one of generous subsidies to one with dwindling subsidies, dramatically reduced prices, reduced margins, and anticipated massive consolidation. 

As the PV module market shifts towards a commodity business model with associated mergers, and many players are weeded out of the panel area, which dominates the overall solar industry, there are many in the industry looking for new business models with greater opportunities for high margin growth.  

NanoMarkets believes that one of the areas of high growth for solar PV is in building-integrated photovoltaics (BIPV).  BIPV traditionally has been a smaller market due to high module cost and the fact that nearly all products were glass-based rigid products with either crystalline or polycrystalline silicon absorbers that were not particularly aesthetically pleasing.

That is not the case today.  Many new BIPV products are beginning to enter the market that are flexible and can cover curved facades.  They are often available in custom shapes that can cleanly cover building surfaces.  They are also more pleasing to the eye, with a uniform dark appearance. 

This new wave of BIPV products represents an attractive opportunity for new encapsulation materials.  The current materials for flexible modules are relatively expensive to manufacture compared to the glass used in rigid modules. 

However, for BIPV applications, where product lifetimes are 20-30 years, they represent a good value proposition for high-end applications today, and will have much wider appeal as costs come down.  The larger opportunities will be in the newest generation of materials, which promise to reduce costs without reducing product lifetimes.

BIPV encapsulation opportunities exist for both rigid and flexible modules. 

• In the near term, the outlook is good for rigid modules, as they are the lowest cost solutions available today.

• Long-range growth, however, will be in the flexible area. 

• The trend towards CIGS in flexible modules will also be a big driver for BIPV encapsulation growth.  CIGS encapsulation requirements are greater than those for a-Si (the current flexible BIPV absorber material), and module manufacturers are looking for the next advances in encapsulation materials for emerging CIGS BIPV applications.    

After years of rapid growth, the flat-panel display (FPDs) industry is slowing down.  This is due to sluggish economies worldwide, in part.  But another force is at work too; market saturation.  When LCDs first reached the market at affordable prices – some 15 years ago or so now – there was a huge installed base of CRT monitors and televisions just ripe for the picking.

Today, the old CRTs are mostly gone. The display industry is looking for new strategies to restore growth.  One of these is to bring to market new display technologies that offer something that LCD cannot.  The hope is that with the next big display technology hitting the market, consumers will be willing to swap out their old LCDs for “what’s next.” This might revive the display industry’s flagging fortunes.

A successful new display technology must offer a sufficient improvement over LCD and at an attractive enough price to incent consumers to behave as the display makers would like them to.  This is not an easy goal to achieve when one considers that LCD can now boast a couple of decades of manufacturing and product engineering experience to its credit.

The Problem with AMOLEDs

A key example of what we mean here is active matrix OLEDs (AMOLEDs).  Because they promise more vibrant color than LCD, as well as flexibility and dramatic thinness, they have long been touted as a successor to LCD.  They are already present in the market place in small area applications like smartphones, but are expected to make a concerted push into the market segments where the display area is significantly larger, such as TVs.

But AMOLED displays have had trouble making it to commercialization. This has been especially true in large area displays, where production issues have been plaguing the technology. Additionally, AMOLED displays need high mobility backplanes because of the high current levels needed to drive light emission from the organic diodes.

Amorphous silicon (a-Si) backplanes, which are commonly used in LCD displays, have not worked well in the AMOLED environment and until recently, the only other high mobility backplane material available to the AMOLED market low temperature poly-silicon (LTPS).

LTPS is feasible in small area applications, and is in fact the backplane used in the AMOLEDs displays in the smartphone market at present.  But it is prohibitively expensive to manufacture for large area screens.  It has potential issues with uniformity and stability in such applications.

Enter Metal Oxides

If AMOLEDs cannot be deployed for large-area applications, then, by definition, AMOLEDs cannot replace LCDs as a dominant display technology.  Worse, if AMOLEDs are restricted to small mobile displays then economies of scale for both OLED material manufacture and the production of AMOLEDs themselves cannot kick in, again thwarting high hopes for AMOLED technology. NanoMarkets believes that the technology that will cut through this Gordian knot are backplanes that are based on metal oxide thin-film transistors (TFTs).  Such TFTs will also be sold into the conventional LCD sector and will generate more revenues from LCD applications than for AMOLED applications.  But in the AMOLED sector, they will be more essential and will prove a key enabling technology for AMOLEDs.  Here’s what metal oxide TFTs can offer the AMOLED business. 

• A high mobility, with big enough currents to drive AMOLED displays and respond to the higher refresh rates of next generation displays;

• Relatively cheap large-scale production, that is easily scalable to large substrates;

• Small pixel sizes and hence, high-resolution displays; and

• Larger aperture ratios compared to a-Si, allowing for higher transmission through the backplane which can increase the brightness of the display without an increase in power requirements.

Growing Industry Interest in Oxide Backplanes for AMOLED TVs

We note that hardly a display industry conference goes by these days without multiple papers being read on oxide TFTs.  And NanoMarkets’ believes that oxide TFT-based backplanes may well be the technology that propels AMOLED displays into the display mainstream. There can be no doubt that – after many years in the R&D wilderness – oxide TFTs are attracting considerable attention from big name firms such as Sharp and Samsung, the latter being especially important because it dominates OLED display manufacturing.

The primary focus of much of this activity is television sets.  As we have already noted, this is where the backplane challenge is the greatest.  It is also where the willingness of the consumer to switch technologies would have the most impact; because TV displays are so much larger and more expensive than mobile displays.  And while all the focus on AMOLED TVs in the large OLED display space at the present time, can OLED computer displays be far behind?  

However, NanoMarkets is not suggesting that in either the computer sector nor in the TV sector will change come quickly.  Both computer displays and TVs are products with relatively long lifetimes and, in any case, there are other problems with large OLED displays that need to be overcome.

On the other hand, the intrinsic economics of oxide backplanes will be pushing display manufacturers to adopt such backplanes quite quickly.  What oxide backplanes bring to the table are an attractive combination of low capital expenditures and low-cost manufacturing process:

• From the capital expenditure point of view, the dollar requirement for refitting a production line for large area LTPS production can run into the low billions of dollars. By contrast, oxide TFTs plants are about a sixth to eighth of that capital expenditure.

• While AMOLED prototypes were demonstrated early in 2012 with both LTPS and oxide TFTs, it is the opinion of NanoMarkets that in going forward, AMOLED TVs will favor oxide TFTs, as their low cost and production scalability are enabling factors in the AMOLED TV reaching a reasonable level of penetration. 

And Smartphones Too

The role of oxide TFT backplanes in the smart phone sector is a little different than in the TV sector.  On the one hand, we are talking about a sector that is much more of a reality than the AMOLED TV sector.  Millions of smartphones using AMOLEDs are now shipped every year and they seem to be doing quite well in the marketplace.

In addition, metal oxides backplanes are ideal for satisfying important requirements of smartphone (and tablet) displays including:

• Low power consumption.  Obviously important in a handheld device with limited battery life and where the display is a major contributor to the drain on the battery.

• Screen resolution.  This has been of growing importance as consumers expect better image, photo and video quality out of their handheld devices. This, in turn, has been due to the evolution of handheld devices into entertainment products, with cameras, games and applications becoming strong selling points

• Sunlight readability.  Unlike in indoor large area screens, is an important consideration for handheld displays and implies a requirement for a high degree of brightness.

NanoMarkets believes that Oxide TFT backplanes can help in all these regards; at least to some extent.  This because of the inherent high mobility of the material, combined with the small pixel sizes that it can be used to create.

However, all these positive factors for the use of oxide TFT backplanes must be balanced against the fact that – unlike in the large display sector – oxide backplanes can expect to face significant competition from LTPS.

This is not to ignore the disadvantages of LTPS that we have already mentioned. However, as we have also indicated, these are less of an issue where LTPS is used in small displays, such as those found in smartphones. 

But what might deter the use of oxide backplanes for smartphones is that:

• LTPS is already common in AMOLED displays for smartphones and displays makers in this sector may be quite reluctant to shift to oxides, since many of them have only recently established LTPS facilities. 

• While making such a switch in the long run may be cost advantageous, equipment will have to be amortized first.  Since oxide TFTs do meet the mobility requirements of AMOLED displays could still place oxide TFTs in a strongly competitive position with TFTs in the smartphone sector over the course of the next decade.

• In addition, while oxide TFTs are superior to a-Si TFTs along a number of dimensions, they are superior to LTPS TFTs only on cost.  Metal oxide backplanes cannot match LTPS on mobility and driving currents.  So any future switch from LTPS to oxides would have to be justified from the perspective of cost efficient production alone.

NanoMarkets believes that high mobility backplanes have a very important role to play in the AMOLED display industry over the course of this forecast period and beyond. As should be clear from the analysis above metal oxide TFTs represent a technology that offers value propositions for the AMOLED sector that are hard to match with any other available technology.

NanoMarkets has covered the market for dye-sensitized (solar) cell (DSC) photovoltaics (PV) for several years, but believes that since our last report—and certainly in the last two years, the DSC PV market has come of age and has moved into the early commercialization phase:

• Pilot line-produced commercial cells are being made and shipped to customers.

• The laboratory performance of DSCs is now comparable with amorphous silicon (a-Si) (PV), but with much more potential than a-Si PV for performance improvements down the road. 

• In addition, DSC PV is compatible with flexible modules, solution processing, and roll-to-roll (R2R) production processes, which widens its applicability beyond that of most conventional PV technologies. 

But these facts, which mean that DSC can expect to start generating significant revenues in the near future, are, NanoMarkets believes, obscured in the eyes of much of the PV industry (perhaps including investors) by history.

A Market in Early Commercialization

In the past, the DSC market has frequently been seen as a subset of the organic PV (OPV) industry.  Most superficially, this viewpoint has existed because “pure” OPV and DSC use organic materials.  More significantly "pure" OPV and DSC for many years exhibited the same low performance characteristics that relegated both technologies to the same low-end addressable markets.
This association made some kind of sense a few years ago, when both “pure” OPV and DSC had very similar performance and commercialization characteristics: 

• However, DSC, as we have already noted, is beginning to look more and more like a commercially viable PV technology, while OPV seems to be mired in a permanent R&D phase, and has a measurably worse efficiency performance. 

• Today, the DSC industry largely consists of a handful of firms that share a common history. Most of the dyes for DSC projects, for example, have come from Dyesol technology and intellectual property, while the basic structure itself is based on the original École Polytechnique Fédérale de Lausanne (EPFL) Grätzel/O’Regan-type cell.  This kind of concentrated industrial structure has reinforced the idea that DSC is niche technology.

To the extent that DSC is amalgamated with OPV then, and seen as an industry sector made up of tiny firms, its image suffers. But NanoMarkets believes that the DSC industry will be able to break away from at least some of that negative image, based on its improving performance, which in turn will lead to broader addressable markets and a less niche-like industry structure:

• For a while DSC and OPV seemed to be suitable primarily for marginal products such as solar handbags or solar umbrellas; DSC seems to have made somewhat more progress in the building-integrated PV (BIPV) space than OPV.

The Dyesol-Tata partnership announced achievement of several technical milestones in 2011 at their product development facility in Wales. In addition, Dyesol and U.K. glassmaker Pilkington (owned by Japanese glass firm Nippon Sheet Glass (NSG)) formed DyeTec Solar to produce and commercialize semi-transparent BIPV modules based on DSC technology.  DyeTec Solar announced in August 2011 that its production facility was fully equipped and ready to start prototype production.

• Although the materials focus is still with Dyesol, several other large and mid-sized specialty chemical firms have entered the DSC materials business, including German firms BASF and Merck, as well as Japanese firms Showa Denko and Fujikura.

There are a number of potential explanations why things have slowed down a bit in the OLED lighting market. Almost certainly the state of the worldwide economy has something to do with it. The ultimate goal is to sell OLED lighting on the basis of its energy efficiency, but for now OLED lighting is more or less a luxury item and such items do not easily succeed in difficult economic times. 

In this context, NanoMarkets is particularly concerned about the economic situation in Europe, which seems to us to be especially negative for the OLED lighting market because so much of the OLED lighting industry seems to be Eurocentric.  The largest suppliers at the present time are Philips and Osram and many of the OLED luminaire companies are also based in Europe. 

Of course, most of these companies trade internationally, but European firms of all kinds understandably tend to have a disproportionate part of their business in Europe.  And in the case of lighting firms, we note that Europe has always been the focus of high design content lighting fixtures of all kinds. 

While the growth rates in the countries that are likely to be the sources of the overwhelming majority of the demand for OLED lighting will inevitably rise and fall over the next decade, the likelihood is that the high growth rates that existed in the economy when OLED lighting was first thought up are not going to reoccur for some time. 

And with that in mind, NanoMarkets believes that it is certainly time to rethink our forecasts for the OLED lighting market in a lower economic growth world going forward.

Prospects of inflation:  The benefits of long-term efficiencies from using SSL products of any kind are heavily discounted in an inflationary situation and we expect such a situation to arise as the result of governmental monetary policies hurting the prospects for growth in the OLED lighting market.

This kind of monetary-derived inflation needs to be distinguished from the impact of real price rises for energy and a return to hyper-growth in India and China would seem to ensure that higher real energy prices are also on the horizon.  This could prove positive for OLED lighting as it will for any technology promising energy efficiency.

High unemployment: High unemployment in developed countries means less disposable income available for higher-priced lighting fixtures, which, for the time being, is what OLED lighting is.  On the other hand, the highest unemployment in Europe and the U.S. is not found in the demographics where OLED lighting is most likely to be sold.

Continued problems in the worldwide construction industry:  Such problems rob the OLED lighting industry of new construction opportunities; new buildings are an obvious opportunity for new types of lighting to be installed.  If measured by the ratio of rents to capital values, among the major nations, only the U.S. and Japan have residential property markets that can be said to be undervalued and even there, construction markets are slow to recover.

Capital market uncertainties:  Continuing uncertainties have reduced venture capital funding for OLED lighting companies that would have been common had the OLED lighting "revolution" occurred ten years ago.

Uncertainties about the phasing out of incandescent bulbs:  When NanoMarkets began covering OLED lighting markets a few years back, we took it as a given that incandescent lighting would be phased out in all major countries during the 2011 to 2014 period. 

We still think this is the most likely scenario.  However, in the past year, U.S. consumers and their representatives seem to have become much more aware that an incandescent lighting phase out is planned and have expressed some displeasure at the plans.  This may even become a minor issue in the 2012 national elections. 

We also note that several Asian nations have general administrative plans to phase out incandescent lighting, but no actual formal regulatory or legal plans.  This means that current expectations that incandescent lighting will be quickly phased out in these countries could easily remain unfulfilled.  However, there are uncertainties of a more positive kind too.  In Japan, following the earthquake and nuclear disaster, there is considerable talk of special government stimulus funding that might include subsidies for installing LED lighting.  While, at the time of writing, this was merely speculation, it is hard to imagine subsidies for LED lighting that excluded OLED lighting.

The photovoltaics (PV) market has for the past several years been a big consumer of silver; in fact, it is now the single largest consumer of silver printing pastes, beating out even the big traditional markets like printed circuit boards and polymer thick-film membrane switches. Partly thanks to government subsidies, the solar industry has grown dramatically, including a significant growth spurt in 2010 followed by strong growth again in 2011, even in the midst of a worldwide recession.

But NanoMarkets anticipates significant challenges to the status quo in the PV market in the coming decade. The PV sector as a whole is entering a period of flat or moderate growth in the next couple of years, the industry remains highly cost sensitive, and government subsidies are waning. Meanwhile, the ongoing shift in market share toward thin-film PV (TFPV) is changing the nature of the addressable market for silver materials in PV. Specifically, there is an ongoing shift in demand for silver in PV applications from market-dominant crystalline silicon (c-Si) PV, which uses large quantities of silver printing pastes for front electrodes, to TFPV that, in most cases, requires far less silver.

There is some good news, however, and in our report we identify areas in which suppliers of silver-based materials have opportunities to expand their business. Most of the opportunities center on providing new silver-based products that help the panel makers reduce manufacturing costs.  Examples are: new silver printing pastes with reduced silver loadings that do not sacrifice performance; new printable silver materials that enable the fabrication of finer resolution silver traces; and new nanosilver-based options that enable low-cost, solution-processable and/or printable fabrication of transparent front electrodes.

Changes in the PV Market That Affect Silver Consumption

First, the success of the PV industry is closely tied to the construction industry, which is still struggling in several important markets. According to a fairly recent issue of The Economist, there are a number of important countries where residential real estate is still overvalued, including Australia, Canada, France, Sweden, Spain and the U.K. And this slow construction growth affects the c-Si PV market the most—the sector that today uses the largest quantities of silver materials.

Second, governmental support in the form of consumer subsidies, tax breaks, and loan guarantees is under considerable challenge around the world, as governments look for ways to reduce budget deficits.  We think that in most countries, many of the incentives that have supported the PV industry over the last several years will be reduced significantly. In some cases, subsidies are being supported with renewable energy mandates, but there are no guarantees that these mandates will be successful in achieving their goals in the long run.

All of these factors could have very serious consequences for firms selling materials into the PV sector. Germany, currently one of the largest PV markets, recently announced sharp cuts in feed-in-tariffs (FITs) that support its PV industry.  The ramifications of these cuts are not yet fully known, but when the Spanish government took this step a few years ago, the PV market in Spain declined by 75 percent.

NanoMarkets continues to believe that there are opportunities for commercialization of smart coatings in the photovoltaics (PV) sector, even though the PV market is quite different today than it was just a year ago, both from an economic and a political perspective.

Starting in 2012, the PV market is entering a period of reduced growth.  This new market is very different from the one of the last several years, in which year-to-year growth in production doubled (or more), even in the midst of a worldwide recession.  Today, however, a glut of conventional crystalline silicon (c-Si) PV modules on the market after over-production by the Chinese PV panel makers, along with dropping prices, is expected to significantly slow growth rates in PV production starting in 2012 and for the next few years.

Meanwhile, the political environment has also changed. Lingering fiscal concerns in the United States and the European Union, coupled with slow growth and high unemployment, have led governments around the world to pursue serious cost-cutting measures in an effort to reduce debt. To date, most subsidies, feed-in tariffs, and other tax incentives for PV remain in place. However, their future is uncertain; governments are likely to see these subsidies as targets for the cost-cutting axe.  (At the time of this writing, Germany has just announced a more aggressive FIT reduction of 30% vs the previously targeted 15%)

But what does all of this mean for smart coatings in PV applications? First of all, it means that suppliers of materials and technologies to the PV market cannot simply rely on high growth rates for organic growth of their products.  It also means that the ongoing commoditization of PV, especially in the market-dominant c-Si PV sector, will encourage PV panel makers to do one of two things:

• Look for ways to cut prices in order to stay competitive and keep sales volumes up, or

• Look for ways to add value to their products and create differentiation in the market in order to maximize profit margins.

That portion of the PV sector that opts for the latter strategy—addition of value-added features to their PV products—is where the opportunities can be found for smart coatings suppliers.  To capitalize on these opportunities, coating suppliers must actively make the case to their customers, and potential customers, that the additional cost of adding a smart coating to a PV panel or module is worthwhile to the bottom line.

In summary, NanoMarkets believes that there are significant opportunities for smart coatings suppliers in the PV business.  The sheer size of the PV market as a whole means that the addressable market for smart coatings in PV is potentially large; even modest penetration in the PV market for smart coatings can lead to significant revenues for coatings and coatings technology suppliers. In addition, the adoption of smart coatings in PV can help PV panel makers accomplish two key goals important to the future success of the PV sector:

• Integration of smart coatings can cost-effectively increase conversion efficiencies for PV, and/or,

• Smart coatings can provide additional functionality that enables PV panel makers to create "premium" products and differentiate themselves in a rapidly commoditizing, and homogenizing, marketplace.

NanoMarkets' eight-year forecasts suggest that the market for transparent conductors (TCs) in both inorganic and organic thin-film photovoltaics (TFPV) applications will be about $90 million in 2012 and grow at a compound annual growth rate (CAGR) of over 30 percent to a value of over $635 million by the end of the forecast period in 2019. NanoMarkets anticipates this growth despite the current difficult overall environment for PV, in which government subsidies are under threat and in which there are huge pressures to reduce TFPV costs to make TFPV competitive with c-Si PV and with other sources of energy in general. 

The biggest change since the last NanoMarkets report on this subject is the very different economic situation surrounding PV in general. By all accounts, the PV market in 2012 is entering a period of lackluster growth, which is in stark contrast to the last several years that saw year-to-year doubling (or more) of the market, even in the midst of worldwide recession.  But now a glut of conventional crystalline silicon (c-Si) PV modules on the market after over-production by the Chinese PV panel makers, along with dropping prices, is expected to significantly slow growth rates in PV production starting in 2012 and for the next few years.

The other big change is in the political environment. Lingering fiscal concerns in important global markets in the United States and the European Union coupled with slow growth and high unemployment have led governments around the world to consider serious cost-cutting measures in an effort to reduce debt. To date, most subsidies, feed-in tariffs, and other tax incentives for PV remain in place. However, their future is uncertain; governments are likely to see these subsidies as targets for the cost-cutting axe. And the Solyndra scandal in the U.S. in 2011 didn't help matters with respect to public opinion related to government support of particular companies or technologies.

But what does all of this mean for TCs in PV applications? TCs are used principally in the thin-film and organic PV sectors rather than in the c-Si sector.  And since TFPV in general is gaining share versus c-Si PV, the market prospects for TCs in PV applications are better than they might appear at first glance.  We believe that the pace of growth in the TFPV markets will offset declines related to decreasing government support and slow overall economic growth, but we also believe that the days of really rapid growth are over, especially in the more established TFPV sectors of thin-film silicon (TF-Si), cadmium telluride (CdTe), and copper-indium-gallium-(di)selenide (CIGS) PV.

That said, opportunities exist for TCs to create value for leading-edge PV technologies. To capitalize on these opportunities, TC suppliers need to implement active business development plans designed to make the case that costs can be reduced without sacrifices in performance. Examples of the kinds of arguments that can be made in favor of particular TCs or TC suppliers include the following:

• Indium-free transparent conducting oxides (TCOs), or the "alt-TCOs", can replace whatever expensive ITO is left in the PV sector with minimal impact to existing production methods. Some TCOs are better suited than ITO to particular PV types based on their lower cost, commodity-scale availability, processing temperature window, or work function match to the rest of the TFPV cell.  For example, fluorine-doped tin oxide (FTO), which is widely available in pre-coated glass sheets, is a natural fit for most rigid, superstrate PV configurations; on the other hand, aluminum-doped zinc oxide (AZO) is a good fit for substrate-configured cells that require lower temperatures for TCO deposition and a lower work function metal.

• Implementation of new target systems or new deposition processes, such as by transitioning from conventional planar targets to more efficient rotary targets wherever possible, could greatly improve utilization rates and directly affect the bottom line.  In addition, TC (and equipment) suppliers can partner with panel makers on the optimization of existing deposition processes to maximize TC mobility, which would improve cost-per-watt values and improve the competitiveness of a particular TFPV technology for on-grid installations.

• For the most cost-sensitive and for indoor or shorter-lifetime applications, conductive polymer TCs can offer prospects for big reductions in cost, especially if high efficiency is not the most important factor for commercial success. Recent advancements in the conductivity of conductive polymer-based TCs, long a problem for these materials in the most demanding applications, make this argument more convincing.

• In the long-term, solution-processable nanomaterial-based TCs, such as those based on nanosilver, another nanoscale metallic coating, or carbon nanomaterials, make economic sense.  Solution processing can be especially attractive for new PV lines where existing vapor deposition equipment is not already entrenched, and solution processable TCs will become an even bigger factor as the relative importance of flexible PV increases over the next decade.

• Finally, anticipated growth in the "premium" building-integrated PV (BIPV) market is opening up new opportunities for TC suppliers to expand or gain entry in a subsector of the PV market that is less cost-sensitive than the market as a whole.

The Aesthetic and Cost Promise of BIPV

Building-integrated photovoltaics (BIPV) is one of the biggest hopes for turning PV into a substantial industry that might eventually be self-sustaining without government subsidies:

·       By spreading costs across both the building energy system (or part of it anyway) and the building fabric, it becomes possible to create a new economics for PV that—at the very least—will increase the size of its addressable market.

·       The improved aesthetics associated with BIPV is also another factor that NanoMarkets expects to grow the BIPV market.  For those whose tastes are distinctly in the modern era of architecture (or perhaps in the post-modern era), the BIPV buildings that have been built to date would certainly also qualify as beautiful.  Certainly they are in contrast to a large—and very visible—panel on a rooftop rack that might be considered ugly by many different tastes.

However, while BIPV may be the best hope for a PV industry that can survive without so much government largesse, this should not be taken to mean that the BIPV market is free from government influence.  In particular, we see a growing role for BIPV to satisfy building codes that call for zero-energy buildings.  BIPV may also be important in obtaining LEED certification.

In addition, it is perhaps worth mentioning that while direct subsidies for PV are under threat, there are too many of them, and they are too diverse, for them to disappear completely.  And there are some subsidies that specifically apply to BIPV.  Such special BIPV subsides are available in China, France and Italy.  Germany had them, but they have gone now; perhaps this is a sign where the other BIPV subsidies are eventually headed.

Is Transparency a Selling Feature for BIPV?

Most BIPV products are not transparent, rather they are opaque products—principally siding and roofing products—into which PV functionality has been integrated in some way.  Transparent BIPV products—by contrast—address a very different marketplace. These are used not for siding or roofing, but rather for skylights, spandrels, facades and shading structures.

But even such applications are in fact, only partially transparent and while they could not be addressed by other kinds of BIPV product, high levels of transparency in BIPV glass are not achievable without a loss of efficiency and often an increase in cost.  Nonetheless, transparency is the major factor that distinguishes the BIPV glass from other kinds of BIPV and, as a result, it will receive growing attention from BIPV glass firms, both as a way to compete against each other and against other forms of BIPV.

The “smart lighting” concept means different things to different people, but distilling its essence, what seems to be intended is lighting with an additional layer of intelligence that provides enhanced functionality; creating opportunities over and above the simple provision of light where it is needed:

• Smart lighting systems today, generally consist of sensors located at light fixtures, which are networked back to a central controller. They distinguish themselves in the marketplace by the nature of the sensor, how the networking is provided and the degree to which they provide management information.

• For the immediate future, smart lighting opportunities are strongly focused on improving energy efficiency, but NanoMarkets believes that the addressable markets for smart lighting will expand to include environments where the benefits being sold will include improved aesthetics, comfort and even improved health.

Some Embarrassing Questions for Smart Lighting Vendors

All of the above hints that a lot of money is going to be made in the smart lighting space and NanoMarkets believes that this will ultimately be the case.  Nonetheless, NanoMarkets notes that manufacturers of smart lighting systems must—as part of their business case—answer some questions about what is new and different about their systems:

• Although presented as something new under the sun, smart lighting is clearly related to the residential and commercial building automation systems that have been touted by various firms since the oil crisis of the 1970s.  These systems cannot be said to have been abject failures; they are certainly used in commercial and industrial buildings to some extent.  But building automation is not the huge industry it was supposed to be.  And for one reason or another, building automation systems have not often been used to control lighting systems.  They are more likely to control HVAC.  This raises the issue of whether there is now enough incentive for automated lighting systems to be widely used and what that incentive is.  What does today’s smart lighting systems have that the old building automation systems lacked.

• One can also see something of the smart lighting system concept in the simple sensor that switches on and off lights in rooms.  These are especially common in rest rooms in relatively low occupancy buildings where these rest rooms are not used all the frequently. These systems are clearly useful, but can hardly be considered an opportunity.  There do not seem to be large addressable markets for this kind of simple sensor plus light system that remain untapped.  But given that, does the market need a more complex system, such as implied by the smart lighting concept?

NanoMarkets anticipates significant challenges to the status quo in the photovoltaics (PV) market in the coming decade. The PV sector as a whole is entering a period of flat or moderate growth in the next couple of years, and the industry remains highly cost sensitive. Meanwhile, the ongoing shift in market share toward thin-film PV (TFPV) is changing the accepted landscape of available PV technologies. This movement, in turn, is causing a shift in demand for transparent conductors (TCs) in PV applications from market-dominant crystalline silicon (c-Si) PV that uses little or no TCs to TFPV that, in most cases, requires the use of high performance TC electrodes.

Changes in the TFPV Market that Affect TCs

The PV market has, for the past several years, been a boon to the materials industry.  Partly thanks to government subsidies, the solar industry has grown dramatically, including a significant growth spurt in 2010. NanoMarkets believes, however, that the boom days are over for the PV sector, and the outlook for the next decade is much different from that of the last.  First, the success of the PV industry is closely tied to the construction industry, which is still struggling in several important markets, such as Australia, Canada, France, Sweden, Spain, and the U.K.  Second, we think that, in most countries, many of the subsidies and tax incentives that have supported the PV industry for a number of years are going to be reduced significantly.  Recall that when the Spanish government took this step a few years ago, the PV market in Spain declined by 75 percent. 

This slow growth affects the c-Si market the most, but the TFPV market is not immune.  And the penetration of TFPV will happen gradually, rather than sharply, and we are not certain it will happen rapidly enough to overcome sluggish overall growth prospects. The end result of this analysis is that the TC industry can no longer rely on the TFPV industry to provide new business based on rapid growth. Complicating the picture, too, is the fact that growth will occur only as long as the TFPV industry is able to keep up with the continuing cost reductions in the c-Si sector, and as long as the flood of low-cost Chinese silicon modules cause minimal disruption to the TFPV business models.

The expected trajectories of the different PV sub-sectors and their impact on the TC business are quite different:

• The success of cadmium-telluride (CdTe) PV, driven by a single firm, First Solar, has created a de facto entrenchment of a single TC type, namely fluorine-doped tin oxide (FTO) in this PV technology. Until now, this situation has meant that there were few opportunities for other materials (or other suppliers) to gain entry.  However, with the recent entry of GE into the fray, things may be changing in CdTe PV.  And since First Solar’s success has proven that CdTe PV can effectively compete with c-Si PV, we expect that other panel makers may also explore implementation of CdTe PV. This new scenario could present opportunities for TC suppliers to gain entry by offering products that provide an additional efficiency, cost or other market-differentiating advantage beyond that which FTO can offer.

• The situation has not been so great at firms producing copper-indium-gallium-(di)selenide (CIGS) PV. The shuttering of Solyndra in 2011 and the exiting of Veeco in 2010 caused some concern that CIGS was headed for failure, but we think instead that the struggling industry needed the consolidation.  Those that remain may be in a better position now to learn from the mistakes of the failed firms, and innovative firms will look for new ways to reduce costs and improve performance, both of which are very much tied to the choice of TC.

• Thin-film silicon (TF Si) is still around, and still accounts for the biggest chunk of the TFPV market.  We expect this sector to remain large throughout the period covered by this report, but we also anticipate that its market share will continue to shrink as other more cost-effective PV technologies take hold. In this market, we think that cost cutting, rather than innovation, will rule the day, which means that low-cost alternatives that require minimal changes to implement—i.e. principally transparent conductive oxides (TCOs)—will see opportunities to expand or gain entry.

• Meanwhile, organic PV (OPV) and dye-sensitized cell (DSC) PV have struggled to take off as quickly as expected, and the outlook for these sectors, although promising, remains somewhat uncertain. OPV and DSC have thus far mostly used ITO TCs based on legacy rather than strategy, while these technologies have developed. However, OPV and DSC are now entering a do-or-die commercialization period during which the realities of scale-up are front and center, and where the need to keep costs down and performance high will favor evaluation of many different TCs, including those like nanosilver and conductive polymers that promise low-cost, sputter-free processing.

In NanoMarkets' upcoming report on conductive coatings, we identify two key growth areas:

• Fast growing and highly dynamic application areas such as solar panels, emerging electronics, etc., where the needs for conductive coatings are still in a state of flux.  NanoMarkets firmly believes that some conductive coatings firms are going to make considerable amounts of money in these sectors, where they will benefit from growth in the underlying addressable markets; but the flip side of this scenario is that these markets are constantly shifting ground, and demand for new materials can disappear here as fast as it appears.  Put in economic terms: they are quite risky!

• Legacy applications, where there are still plenty of examples of existing coating technologies that are less than perfect. Electroless copper for electromagnetic interference (EMI) shielding coatings and indium tin oxide (ITO) transparent electrodes for displays could be cited here.  There are fewer risks for entering coating manufacturers, but also less opportunity to build a very large new business.  Still, we think that it is encouraging that conductive coatings firms that look hard into existing markets are likely to find some new ways to make money.

While in a broad sense the applications for conductive coatings haven’t changed much in years, there are some important trends that are shifting demand patterns.  In the solar energy sector, NanoMarkets expects to see a growing emphasis on energy conversion efficiency as solar subsidies begin to go away.  This shift translates into a need for more effective electrodes and hence for improved electrodes.  With energy storage also becoming more important, there are new kinds of batteries and supercapacitors on the market that also need higher performance electrodes.  These demands for better electrodes obviously translate into new opportunities for conductive coatings of various kinds going forward.

Meanwhile, the display industry is itself looking for ways to adjust to the fact that the boom days for LCDs are over.  On the one hand, this effort includes trying to squeeze the biggest possible margins out of the (still gigantic) demand for LCDs that remain.  On the other hand, it means looking for entirely new business opportunities outside the mainstream LCD industry.  To date, these opportunities have included e-paper, OLED displays, transparent displays and flexible displays.  All of these new types of displays have appeared on the market (with varying degrees of success) or are about to do so. 

The details of these changes in the display industry are not all that important here, but suffice it to say that all of these new kinds of displays represent a challenge to the dominant transparent conductive coating: indium tin oxide (ITO).  No one – and certainly not NanoMarkets -- believes that ITO is going to be anything other than the dominant transparent conductor for a long time to come.  However, it is also impossible to doubt that the trends described above in the display industry will not enhance the opportunities for new conductive coatings of various kinds.

While these developments in the display and solar panel industries are new – or at least new-ish – and, we think, deserving of immediate attention for market strategists in the conductive coatings industry, it is also important to recognize that trends in the electronics and communications industries continue to promote growth in the conductive coatings market.  Thus, there is nothing really new in the following items, but they continue to counteract the core maturity in the conductive coatings space:

• The expansion of electronics, especially of electronics that support pervasive wireless computing, is fueling growth in the market for EMI and radio frequency interference (RFI) coatings.  Legacy products will continue to do well, but new solutions for shielding are also expected to grow.  This application was once considered slow growth, but has transformed into one that has greater potential than ever before.

• Electrostatic dissipation (ESD) and antistatic markets are benefitting from the trend toward pervasive electronics, and are further fueled by the onward march of Moore’s Law, which makes errant charges ever more harmful in electronics manufacturing and assembly.  Antistatic coatings for packaging and industrial clothing are likely to see a boom as feature sizes decrease.

Lithium-ion batteries are a technology poised to see a large growth in revenue in the next five years because of their potential in applications such as electric vehicles (EVs), consumer electronic devices and Smart Grid applications. That there is a clamoring in the market for a drastic improvement in lithium-ion battery technology is obvious to see:

• EVs are trying to compete with the internal combustion engine, an established technology that is likely not going to be beaten in the mass market anytime soon. 

• Smart and application laden consumer devices are rife and are only becoming more application heavy, which is a huge draw on battery life. 

• Additionally, power companies are pushing to respond to residential and industrial energy needs with smart energy grids to reduce the number of brown outs and blackouts and the ability to integrate renewable energy sources into the grid. 

Of all the battery chemistries contending for a place in these markets, the lithium ion is arguably the best poised to enter and capture sizeable portions of these segments or at least has a fighting chance to do so, but a performance increase is necessary to assure this battery chemistry gains a strong foothold.

The Importance of Electrodes for Lithium Battery Performance Improvement

A fact worth noting here is how mature the lithium-ion market is. It is not a market where disruptive, performance enhancing technology is common. But with a sudden projected increase in unit volume and performance demand, there is now potentially a very large market that is not having its needs ideally met.

The realizable market opportunity exists because of the plateau that the current industry standard electrodes have reached. Technological innovation currently provides a minimal increase in performance year to year in current lithium-ion batteries:

• It is more processing improvements and improvements in cell design that have been providing incremental improvements in battery performance in the recent past.

• However the performance demands of the market are growing at a pace too quick for the tweaks that can be made to the current battery to match. This mismatch between the expectations and needs of the market and the inability of the current industrial state of the art has provided a technological gap that needs to be filled. Since performance of the lithium-ion battery is so heavily performance driven, a large opportunity here exists for developers of anode and cathode materials.

To successfully enter and maintain its hold in the newer market segments listed above before strong inroads are made by other battery chemistries, the lithium-ion battery, NanoMarkets believes, needs materials advancements to propel it out of the performance plateau that the current industry standard has found itself in.  As a result, the time is ripe for a profound improvement in the performance of the lithium-ion battery, and novel electrode materials are being investigated to provide this:

• The current graphite anode, and the lithium-cobalt cathode used in the most common lithium-ion chemistry are at the point of being phased out because they are nearing the limit of technological innovations that significantly improve their performance.  The fact that the lithium-ion battery hasn't had a strong performance boost in recent years, leaves the door open for other battery chemistries to make strong cases for themselves.

• Nonetheless, there is no outstanding novel electrode material technology that has made it to the production line and satisfies the expected increasing demands in battery performance.

• Additionally, certain technologies have proved to be better at addressing specific value propositions. There are inherent tradeoffs when attempting to improve the performance of the lithium-ion battery, and this makes it nearly impossible to find a material improvement that will provide an improvement on all fronts. Each technology addresses the needs of particular market segments, and with targeted efforts, material developers will see a real revenue opportunity from potentially high volume and/or high growth market segments.

The development of advanced materials that will replace the current state of the art anodes and cathodes is based on the improvement in energy density and/or (depending on the market segment) power density provided to the battery. Having mentioned the "make or break" nature of the energy and power density properties, it is important to note that each market segment will identify certain key secondary properties that materials developers need to have a very strong handle on. Weight, form factor, life cycle and environmental impact are a few such examples. This is where product differentiation among electrode technologies will decide which materials will excel in a given market segment. While the differences may be subtle between market segments, it is the deciding factor between materials producers not aligning the value proposition of their product with the demand of their target segment.  

Cathode improvements:  Cathode materials tend to provide more diversity in terms of the cell characteristics they have an impact on. While anode materials are being investigated mostly to improve the energy density of the cell, various cathode materials can either improve the energy or the power density, provide faster charging times, more safety and/or lower costs.

The cathode reaction in the lithium-ion cell is also a safety concern, and while the potential to improve the energy density must be considered, the stability of the materials in the cell environment is a crucial concern.

A lithium-manganese based cathode is right now the furthest penetrating competitive technology to the conventional lithium-cobalt cathode. Other materials that bear looking at are:

• Lithium iron phosphates and their derivatives.

• Composites of nickel, manganese and cobalt are being developed specifically for the automotive market segment. With development being pushed in tandem by established companies in both the battery and automotive spaces, we can expect this technology to be a frontrunner to capture the opportunity in that segment.

Anode improvements:   Next generation anode technologies are typically identified by their potential to hold lithium ions. In general, replacement anode materials have been less common than those for cathode materials:

• At this stage silicon, nanostructured carbon, and oxides of titanium and vanadium have been identified as viable alternatives to graphite for this enhanced ability.

• The metal oxide materials are seeing development in the labs of the larger, more established materials suppliers. Hence, their entry time into the market is expected to be quicker due to ease of integration with current battery manufacturing processes.

• Silicon has the highest theoretical capacity for lithium ions, but until recently has had problems with durability. However structural modifications to the silicon electrode have let it become a potentially disruptive technology in this market. The silicon anode is a materials technology that is being pioneered by smaller, early stage companies hoping to make a strong impact in the industry. While it has a longer development timeline, its potential to make an impact is sizeable, making it a materials technology worth investigating.

Nanomaterials: The manipulation of the physical structure of the active electrode material also creates another opportunity in this space. In an effort to increase the surface area for the storage of charge and to address issues with durability (due to the significant expansion and contraction of some materials when they take up or release lithium ions), developers are using processing techniques to create nanostructured versions of electrode materials.

Nanoparticles or nanotubes in the form of a powder are examples. The opportunity that could be realizable here is for producers of binding materials that provide a conducting matrix in which the nanostructures can be embedded. Binding materials are already being used in batteries to hold together powder based electrodes and improve conductivity, and will continue to see applicability as electrode materials are pushed towards powdered forms to increase surface area for lithium-ion absorption.

Finally, a big question materials developers will need to answer as they see a realizable opportunity before them in a very mature market is how they are going to integrate their product into the production line of battery manufacturers.

The more established companies like Sony, Sanyo and Samsung will already have this in mind when thinking of the materials they are developing but new entrants to this market will have the added burden of creating manufacturing processes compatible with current production processes unless they want to bear the manufacturing cost of the entire battery. A company's approach to this challenge will be a significant product differentiator and will determine of which market it can realistically meet the unit volume demands.

From NanoMarkets' upcoming report, CIGS Photovoltaics Markets 2012

Thin-film photovoltaic (TFPV) cells using Copper Indium Gallium Selenide (CIGS) as the absorber material have been promoted as the “next big thing” in PV for almost a decade.

After years of results that have been disappointing compared to consensus expectations,  it is high time to take a sober look at the market for CIGS going forward in light of the current state of the technology and competitiveness of CIGS compared to other PV technologies.  Other factors playing into the mix are the likelihood of decreased subsidies for PV going forward in North America and Europe, and the effect of significant increases in known reserves of natural gas, which have lowered and stabilized prices compared to the volatility and high prices seen in the 2007-2008 timeframe.

While there have been many disappointments for CIGS both with respect to the technology and its viability compared to competing products, the available data today is becoming much clearer with respect to:

• How close CIGS is to credible large-scale production than it has been before,

• Its price compared to other technologies, and

• The reliability of CIGS modules in real world applications.

As the efficiency of CIGS material is the highest of the thin-film PV absorbers, and it can be made into flexible modules, the key area where CIGS seems poised to dominate is in the building integrated photovoltaic area (BIPV).  Here its light weight and efficiency, which increases the amount of electricity generated per area, are significant advantages over competing technologies.

While some start ups in the field such as Solyndra have imploded, other large manufacturing firms have aggressive CIGS product ramps planned.  The increased competition from Taiwan and China will result in a shake-out in the industry, but ultimately will yield a price point that will likely lead to the adoption of CIGS in BIPV and others areas where module flexibility and high efficiency are key “care about” areas.

After many years of being no more than a niche, the smart windows market now seems as if it is about to generate major revenues for companies that are actively involved.  Drivers include:

• Growing consumer awareness of energy conservation, green building, fuel efficient transportation, and the desire for novelty and convenience. 

• Larger addressable markets as the result of emerging middle class populations in Asia (India, China) and Latin America (Brazil).

Meanwhile, new smart windows technologies are emerging that enable energy conservation through smart windows and hence are providing several growth opportunities for various companies in the smart window value chain:

• The smart windows market provides growth opportunities to everyone from materials/coatings suppliers to glass manufacturers to window manufacturers, and most importantly to end users such as builders, building owners, home owners, and transportation owners.

• No matter what technologies emerge as the winners, glass manufacturers are certainly going to be the beneficiaries of smart window growth.  One factor that will help with acceptance of the slightly higher cost of smart glass compared to the standard glass used in buildings and transportation is the already high current cost of standard glass;  substituting standard windows with functional smart windows with only a marginally higher cost will be more easily accepted by the consumer. 

• As the demand volume for smart glass increases, there will be further growth opportunities through cost reductions for smart coatings and materials and in smart glass manufacturing.

Passive Smart Windows

Although awareness of smart windows has only increased in recent years, in reality smart windows have existed for at least the last 15.  These older smart windows were produced by retrofitting existing windows with window films based on low-e coatings that provide energy savings. We classify these retrofitted windows as passive smart windows;  while these films are functionally smart, they do not provide their functional benefits “on-demand”.

• There are many retrofit window film products that impart functionality and provide other benefits to windows.  These benefits include the blocking of harmful UV radiation from sunlight, the blocking of heat coming inside through the window in the summer, and the retention of heat inside a room and the maintenance of the ambient indoor temperature in the winter.  They all enable energy conservation by reducing the use of energy to keep buildings warm in the winter and cool in the summer. 

• There are other window film products that also improve the aesthetics of the room.  These films eliminate the need for traditional window treatments such as blinds, shades, curtains, etc. and save on maintenance costs.

Although the films designed for retrofitting of windows have been available for a long time, due to their evident additional installation costs, the market for these products has started growing only in recent years along with the increasing awareness of energy conservation.

A note on self-cleaning windows: Yet another category of passive smart windows is self-cleaning windows.  These windows offer more convenience than energy savings.  Owners of buildings (commercial and residential) spend quite a bit of money and time to maintain the windows so that they provide a clear, aesthetically pleasing view of the exterior environment.  However, while self-cleaning windows do provide the benefit of eliminating the labor costs associated with maintenance, the cost of applying these coatings vs. the savings in maintenance costs is difficult to justify for existing windows. 

NanoMarkets therefore believes that self-cleaning windows will be more easily adopted in new construction where the impact of the additional cost of self-cleaning coatings can be softened with the overall cost of a smart window.  As the self-cleaning window concept becomes more accepted in new construction, the cost of self-cleaning coatings will decrease and enable growth in the retrofit market as well.

Supporting the case for a future in which nanometals generate new business opportunities is the fact that they have—under other names—been around for some time already.  This means that there are established technical skillsets, supply chains, etc., that can be brought to bear on the current nanometal opportunities.  What one must take into consideration in assessing the market potential for nanometals are:

• Very thin layers of metals are routinely deposited using vacuum evaporation, sputtering, etc. in the semiconductor industry.  Although this industry regularly operates at dimensions under 100 nm, it is not usually considered to be “nanotechnology,” presumably on the grounds that sub-100-nm microelectronics is part of a mature pattern that follows Moore’s Law, while nanotechnology is supposedly something leading edge.  Nonetheless, the above indicates that the fabrication machinery exists to set down metals that are nanometals in at least one dimension.

• Some nanometals are now used routinely in medical and healthcare applications.  Nanosilver powders are a powerful antibacterial and antifungal agent and colloidal nanosilver has been used in a variety of treatments for decades.  Nanogold has some interesting applications (at least potentially) in the treatment of cancer and other diseases.

These established uses for nanometals again suggest established skillsets that can be leveraged into other applications spaces; electronics and energy applications. But there are also other ways in which the use of nanometals in medicine has implications for the energy and electronics space.  One of these is the fact that developments of new materials for medicine have implications for medical electronics.  Another is the fact that history here has implications for how much it may be possible to regulate nanosilver and therefore restrict its use/sale in electronics and energy applications.  The regulatory powers of government agencies are often defined in terms of their power over “new” materials and it has been argued that—because of the longstanding use of colloidal silver—nanosilver is not new.

• There is also already a supply chain of sorts for nanometals for energy and electronics applications. However, these applications are today found mostly in the R&D/university research community.  This is a start, but it is important to remember that this community has entirely different needs than the commercial electronics and energy industries.  Most obviously we are talking about much smaller volumes in the research community and higher prices than the commercial electronics and energy industries could support.

Less obviously, the research community is anxious to have available as many nanomaterials as possible so that they can explore as many different directions as possible.  By contrast, mainstream industries want to standardize on as few materials as possible, so that experience curves can be climbed and economies of scale achieved.  One implication of this situation is that there are opportunities for firms to develop reformed supply chains for nanometals that are more appropriate to the higher volume markets that NanoMarkets sees appearing in the near future.

There is nothing intrinsically new about transparent electronic materials.  Glass and (more recently) transparent plastic have been used as substrates for displays, solar panels and large-area sensors for years.  In addition, a range of transparent conducting materials—notably indium tin oxide (ITO)—has been developed for use in transparent electrodes.  And, of course, optoelectronic materials—of which there are many—must be transparent to some degree.

Until quite recently the statements above were at best a set of interesting, but unconnected, observations.  Over the past decade new transparent electronic semiconductor materials—primarily metallic oxides—have appeared and there are now increasing signs that a complete transparent materials set may emerge in the electronics sector. These materials, NanoMarkets believes, will serve as an important enabling factor for new products in the display, smart windows, lighting, solar panel and large-area sensor markets; perhaps other sectors too.

Despite appearing to be very different, these application areas actually have quite a lot in common; in fact they overlap.  A smart window could also be a display, lighting or solar panel, for example.  And all of the areas mentioned above qualify as large-area electronics in some sense.  Finally, displays, smart windows, solar panels, panel lighting and large-area sensors are similar enough that they share a number of important desirable features such a strong aesthetics, efficiency, etc. 

While each of these product types has its own requirements, the similarities among them seem sufficient for this entire group of applications and products to benefit in similar ways from a coherent and comprehensive transparent materials set.  Such a materials set would serve as a key enabling technology adding features and functions to transparent electronics.  In other words, there is an opportunity to develop a more comprehensive and higher performing transparent materials set that could enable transparent electronic products to evolve to a point where they themselves can generate more revenues.  This, of course, is also an opportunity in its own right.

Oxides, Organics and Nanotech:  Materials for Transparent Electronics

Parts of the electronics suite are already well developed. This is particularly true for transparent conductors, which have received considerable attention over the past few years.  This high level of interest, however, has occurred not so much because of transparent electronics in the sense that we are using the term here, but rather because of the need for improved transparent conductors in the display and solar panel industries more generally.  In particular, these industries have looked for ways to get around the lack of flexibility and high cost associated with the industry standard transparent conductor, indium tin oxide.  Transparent conductors that have been proposed as an alternative to ITO include transparent conductive oxides other than ITO, conductive polymers and various nanomaterials.

The Effect of the High Price on Silver on the Industrial Inks and Pastes Market

Silver has always been an expensive metal and probably always will be.  But the most obvious change in the silver inks/pastes market since our last report is the seemingly persistent high price of silver, with no relief in sight.  Silver commodity prices have been pushed upward because of the uncertain global economic environment in which investors have shifted increasingly toward “hard” assets. Silver ETFs have accumulated large stores of silver in order to handle the increased demand for precious metal investments.

At the time of writing, silver prices have somewhat stabilized, but they have done so at a level nearly twice that of just two years ago (in inflation-adjusted dollars).  And there are no good reasons that the situation will change very much over the next five years or so.  

None of this is especially good news for the silver inks and pastes business, since the price of these materials is largely determined by the price of silver and these materials are often sold into moderately price sensitive environments.  Despite these negatives, however, there are some reasons for executives in the silver inks and pastes business not to feel too depressed:

• The high price of silver is now a fact of life for the electronics industry. On the one hand, its unique conductivity characteristics ensure that silver is hard to dispense with in many applications. 

• Where silver inks and pastes can be dispensed with their high price will enable supplier firms to develop silver inks and pastes substitutes with an assurance that the market for them will persist.  In the past, silver ink/paste substitutes have appeared and then disappeared when the price of silver fell again.  Given the current economic climate, it seems that the manufacturers of silver ink/paste substitutes are in for the long haul this time around.

• Counteracting ongoing worldwide economic sluggishness will be increased industrialization and urbanization of the developing world; which is likely to increase the per capita expenditures on the kinds of products in which silver inks and pastes are used.  And, of course, silver inks and pastes are now used in so many consumer products that the increase in the world population is itself a spur to demand for silver inks and pastes.

• There are a number of interesting applications for silver inks and pastes that are just emerging.  They include, for example, OLED lighting, and sensors.  NanoMarkets believes that there are real opportunities here, but we also caution that some traditional applications that use quite a lot of silver paste at the present time are likely to experience at best modest growth, and this could hurt the silver inks and pastes business in the next few years.  Examples here are plasma TVs (in long-term decline) and crystalline silicon solar panels (a market likely to see a decline in government support).

In a touch display, the touch sensor sits on top of the display (or potentially it is integrated into the display) and the display itself is most likely to use conventional LCD technology, although e-paper and OLEDs are also a possibility.  Both the sensor and the display will use transparent electrode material and in both cases this material at the present time is likely to be indium tin oxide (ITO), but alternatives to ITO are increasingly a realistic possibility.

In fact, it is possible for the sensor and the main display in a “touch screen” to use a different kind of transparent conductor.  This possibility is reinforced by the fact that the touch sensor is typically manufactured by a specialist sensor firm, which is not the major LCD firm that makes the underlying display.  Indeed, among the manufacturers of transparent conductors, touch-screen sensors, these days, are everyone's favorite market for ITO alternatives.  The reasons for this are easy enough to understand:

• The touch-screen display market is exploding.  Touch screens have been found in niche applications since the 1960s, but with the arrival of iPhones and tablet computers, touch has become ubiquitous.  Almost all touch display technologies make use of ITO, so there appears to be a growing opportunity/addressable market for ITO alternatives for the touch sensors used in touch displays.

• Touch-displays seem to have a special and immediate need for ITO replacement.  ITO is notoriously fragile and inflexible. Touch displays are—by definition—touched frequently and therefore the sensors are at risk of damage.  This would seem to enhance the need for ITO alternatives in this sector.

• It is easier to get into the touch sensor business than into the main flat-panel display business.  There are numerous firms in the touch sensor business, but far fewer flat- panel display (FPD) makers and in any case—given that they have invested huge amounts into display fabs—they are always reluctant to take on new materials or processes.  In addition, touch sensors often have somewhat lower performance requirements than FPDs, making market entry for novel materials makers somewhat easier.

Another related issue is that touch-sensor firms already buy-in their transparent conductor on a film and what the firms that sell alternative transparent conductors have on offer is, in a sense, "plug compatible."  Compare to the main LCD makers, who do their own sputtering and are unlikely to abandon their unamortized sputtering plant or take on the (potentially large) economic switching costs of entirely new transparent conductor materials and processing technologies.

Development of OLED technology for lighting markets is not as mature as for displays, but NanoMarkets still expects this sector to grow dramatically over the coming decade.  And because OLED lighting panels are likely to be a (1) a mass market and (2) consist of panels a lot larger than the average OLED displays, the market for OLED lighting materials should ultimately be a lot larger than those for materials in the display sector.  However, much more risk is associated with the lighting sector, for materials suppliers and just about everyone else.

NanoMarkets believes that materials suppliers will play a big role in whether the OLED lighting industry booms or settles into a niche pattern.  For real, sustained growth in OLED lighting, new, better materials and processes are needed to enable this growth.

OLED Lighting Manufacturing Capacity Shaping the Need for Materials

The OLED lighting materials business will be shaped initially by the needs and preferences of those pioneer firms that are bringing the first OLED lighting panels to market.  At the present time, the manufacturing infrastructure for OLED lighting is still at an early phase of development, but it has moved past the laboratory stage to pilot plants.  From at least some of the OLED manufacturing companies, there have also been statements of intent regarding both plans for expansion and the kinds of manufacturing facilities that they plan to deploy. However, these statements have been made over a period of years, and it is hard to know how seriously to treat them, especially in this era of financial instability.  

This uncertainly presents a real challenge to the materials firms hoping to supply the OLED lighting industry. The challenge consists of determining how much capacity there is likely to be for OLED lighting over the coming decade, who will be providing that capacity, and where the capacity will be built. It also includes determining which materials will be required.  Will the OLED manufacturing continue to largely run classic vapor deposition equipment, or will solution processing take hold?  If solution processing succeeds, will it be in the form of small-molecule materials or will polymer OLEDs finally make a play in lighting? 

OLED Lighting Materials:  Risks and Uncertainties

Some of the OLED materials firms that we have talked with, see exciting possibilities for their businesses in the OLED lighting market, but they also perceive the high risk.  For now these materials firms are now supplying relatively small amounts of OLED materials to these first OLED lighting manufacturing plants may well emerge as the materials market leaders later in the decade.  Among the most important current

issues that materials firms have tho think about in the OLED lighting space are:

• The dominance of phosphorescent emitters from Universal Display Corporation (UDC) in important sectors of the OLED lighting market;
• The increasingly important role of Chinese OLED materials suppliers;
• The significance of solution-processable small molecule OLED technologies; and
• The continuing failure of polymer OLEDs in the OLED lighting market.

The situation of all of these areas is very fluid and in all of them changes could completely reshape the opportunity profile for OLED lighting materials suppliers.

The dominance of UDC: At the moment, UDC holds an essential position with a dominant intellectual property (IP) portfolio focused on small-molecule phosphorescent emitter technologies. And even more importantly, UDC has been very successful in getting OLED lighting manufacturers to employ UDC technology, through partnerships and licensing deals.

However, the recent invalidation of a key UDC PHOLED patent in Japan may mean that the market will open up to other materials firms. This decision is under appeal, and its long term implications have yet to become apparent.  In the past, the ability of other materials firms to gain a foothold in emissive technologies for OLED lighting has been hampered by UDC’s dominance. 

The role of China:  There are now several Chinese firms making OLED materials, and there is at least one firm in Mainland China – Visionox – producing OLED lighting panels. Most of the principal OLED materials firms are in the developed world but given the determination of the Chinese government to create more domestically sourced IP and given that OLEDs are a particular topic of its attention, NanoMarkets believes that competition from Chinese companies in the OLED lighting materials space.

Solution-processing of small molecules: This solution processing approach has the potential to deliver the advantages of solution processing to the OLED industry without forcing the industry to shift to an entirely new kind of material (i.e., polymers):

However, at this time, only GE, in cooperation with DuPont, is planning to use solution-processable small molecules to build OLED lighting panels, and it not certain whom else DuPont – and any others developing solution processable small molecules like UDC – can persuade to buy into the idea.

At the same time, GE is struggling to commercialize the solution-processed materials, and the current status of the GE pilot line is uncertain.  It is not yet entirely clear what this will mean for the future prospects of solution processing in OLEDs, but we think it is safe to say that solution processing – especially printing – has proven much harder than the industry initially expected. 

Polymers in OLED lighting: Sumitomo Chemical with its ownership of CDT controls the nexus of polymer OLED EML material IP.  However, although Sumitomo and other proponents of polymer OLED technologies continue to push for polymers to gain entry into the market, not a single OLED lighting manufacturer is actually using polymers today. As a result, Sumitomo remains a marginal player in the OLED lighting space.

NanoMarkets believes that polymer OLEDs might have a role for really large lighting panels at some time in the future, but given the lack of activity with polymers in lighting today, we think that it is fair to say that betting on a vibrant market for polymers in lighting is taking a big risk.

How Materials Firms Can Win the OLED Lighting Battle

For now the only serious commercial markets for OLED lighting are to be found in the luxury luminaire market and that is where the OLED lighting business will stay unless costs can be reduced.  All projections – including ours – that show OLED lighting reaching revenues in the billions of dollars assume major reductions in OLED lighting costs from where they are now. This is not an entirely materials related issue. 

Nonetheless, it is closely related to materials and it presents opportunities for the materials makers:

Economies of scale that will come into being as the OLED business as a whole ramps up.  At the moment, pricing for OLED materials sits uncomfortably between the kind of pricing one expects for materials sold largely into R&D environments and ones that apply in commercial specialty chemical markets.  Opportunities exist for materials firms that can shift their pricing structure more towards the latter.

Initial costs for OLED lighting – as for other solid-state lighting – will be high and the only way that OLED lighting can be expected to prove in economically will be in terms of a total cost model.  This in turn depends heavily on lifetimes and also on luminance, both of which are heavily materials-dependent challenges. Several different materials in the OLED stack can affect lifetime, including the emissive technology used and the quality of the encapsulation scheme.

Indeed, cost is not the only factor critical to the success in the OLED lighting space that the materials firms can impact and with which they can achieve a competitive edge.  Much of the raison d’etre for OLED lighting in the first place is enhanced efficiency and that is very largely a materials issues.

There are also materials issues that relate to panel itself:

At the present time, OLED panels are quite small; too small to be competitive in the office lighting market, for example, which is where some observers of the OLED lighting scene, expect OLED lighting to get its big break.  Materials – both substrates and active organics – may have a role in taking OLED lighting to the next stage; that is larger panels. 

The stage after that, as many people see it will be flexible – or at least conformable – lighting panels.  This transition to flexibility is materials dependent and will rely on the availability of suitable substrates and, most importantly, on high performance/low cost flexible encapsulation materials.

Thus the future of the OLED lighting market is heavily dependent on materials selection, and the maturity—and prices—of available OLED materials remain a challenge to market. However, this should be seen as an opportunity for materials makers, especially since the potential volumes are so high. Assuming for the moment that OLED lighting is able to capture even just a few percent of the lighting market, the square footage of OLED lighting sold will be considerable and will easily outshine the amount of OLED material sold for displays.  This makes it a market that OLED materials suppliers cannot afford to miss.

The value that would be created by a flexible glass material has long been recognized.  Supposedly the Roman Emperor Tiberius was presented with a drinking bowl made of flexible glass.  The Emperor threw the bowl on the floor and it dented rather than shattered.  But not much seems to have been heard of flexible glass since.  NanoMarkets research has uncovered that over the past few decades the term “flexible glass” has come to be used in a metaphorical sense, to describe a series of materials that were made from resins and plastics and that otherwise had glass-like properties.  Unfortunately these flexible pseudo-glasses could seldom compete with actual glass in terms of transparency or in its barrier qualities. 

However, since the early 21st Century a handful of leading glass companies have been developing genuinely flexible glasses that are the heirs to Tiberius’ bowl.  The firms involved in this work include AGC (more commonly referred to as Asahi Glass), Nippon Electric Glass (NEG), Tokyo Electron Glass (TEG) and Schott Glass.  However, the firm that is most closely associated with flexible glass is Corning, which certainly has the greatest mindshare in this space and has done the most business development work to promote the concept of flexible device.

Nonetheless, actual flexible glass has proved slow to develop and bring into the marketplace.  This is surprising in a way in that all we are really talking about here is regular glass that has been made exceedingly thin so that it can be flexed.  Meanwhile, a few flexible pseudo-glasses remain out in the marketplace, but are sufficiently different from real glass to be a distinct category of product and to be clearly distinguished from regular glass in terms of the value they can offer.

Conversely, as the Tiberius story seems to suggest glass is highly and intrinsically valued, but its inherent rigidity would seem to detract from its value.  The story also suggests that flexible glass could address some very large markets indeed and this possibility shouldn’t be dismissed lightly.  However, for now the flexible glass will be used primarily within what would be regarded as the electronics industry. 

More specifically, there is an understandable connection made between flexible glass and flexible electronics, because flexible glass would apparently represent an excellent substrate and barrier material for flexible electronics products.  However, NanoMarkets believes that there are more immediate markets for the first wave of flexible glass offerings to tap into.

When NanoMarkets first started providing analysis of the transparent conductor (TC) industry, some six years or so ago, the industry was easy to characterize.  ITO ruled the roost, except where the market was looking for especially low-cost solutions; in antistatic applications.   True, executives in the display industry – and even in the transparent conductor industry itself – knew all the unkind things to say about ITO.  It cracked, it cost a lot, even that it had a yellowish tinge, etc., etc.

When one examined at the alternatives, ITO began to look pretty good.  None of them could compete with ITO on the crucial transparency and conductivity parameters.  In any case, most of the alternatives to ITO were not ready for prime time; at best they were in that limbo phase called sampling.  The threat to ITO from its rivals was negligible.

The one exception to this rule was in the thin-film PV (TFPV) application, where alternative transparent conducting oxides (TCOs) quickly made their mark.  First Solar the dominant supplier has adopted FTO as its transparent conductor, while most of the firms in the CIGS space use AZO.  In the a-Si PV sector, FTO and AZO are also used.  As an aside, there is an important takeaway from all this.  Applications that are relatively new – such as TFPV – are more likely to adopt new TCs.  By contrast consider the conventional – and highly established -- LCD industry, which continues to demonstrate considerable reluctance to ITO alternatives.

While the use of TCOs other than ITO in the TFPV industry is proof positive that, ITO doesn’t always get to win; it hardly represented a paradigm shift.  It was, after all, a just a switch from one TCO to another.  In the past year to two years, we have seen something genuinely new in the TC space; the rise of the nanomaterials.

Nano-TCs:  More Firms, More Materials, More Applications

By rise, we have in mind three things.  First, while there have been firms around developing nanomaterial approaches to rival ITO, there are now a lot more such firms and they appear to have been quite successful in attracting capital.  Second, there is now considerable diversity in the nanomaterials being offered in this sector.  A few years back nanomaterial challenges to ITO consisted entirely of carbon nanotube inks.  Take a look at this space now and you will also see silver nanostructures in solution, silver grids, copper-based solutions and graphene.  As NanoMarkets discusses in its upcoming report, we would not be surprised to see nanostructured polymers also enter this fray.

The third aspect of the rise of the nanomaterials materials that needs to be considered is that some of these materials might now reasonably be considers to be commercialized.  True, some of these materials remain well within the lab, but some are out there is products that you can buy now.  One of the important messages that have come out of the interview program that NanoMarkets has just completed with manufacturers of TCs is that several nanomaterials are now commercialized.  They are being used in a very small number of products and often in limited quantities.  But in the past year they have crossed an important barrier.

Marketing, Messaging and Conductive Nanomaterials

What all this means is that firms that have in the past focused on developing  materials that can be sold into the TC space must now change track and focus on marketing.  Until now such firms have largely been able to get away with vague statements about targeting the touch screen market, or “flexible displays,” or something of this sort.  But this won’t get them very far in terms of actually generating new business revenues.

One part of the marketing strategy for “nano-TCs” will certainly be to match the material’s capability to the opportunities.  A material that will make a superb antistatic coating for the outside of a touch panel may be completely unsuitable for the transparent conductive material in the touch sensor itself.  In a few cases, nanomaterials may actually facilitate new applications.  The example that is usually mentioned in this context is that of flexible displays; but flexible displays have challenges other than the TC one.  Where we are seeing nano-TCs going where ITO fears to tread is in the large panel sector, where ITO isn’t sufficient to bring the electricity to the outer limits of the panel.  Such panels exist in the PV sector and it is easy to imagine similar problems appearing in large displays or in the OLED lighting sector.

Above all, the nano-ITO firms are going to have to message effectively and this is something that they have never done especially well.  For example, we often hear about how ITO suffers from a yellow tinge.  But how much does this really matter in the marketplace, especially when your nano-TC has a blue tinge or a grey tinge!  One factor that does matter of course is cost and if you can show that your nano-ITO is lower cost than ITO you are in good shape.  But what does that really mean?  Are the old stories about the impact on the price on indium on the price of ITO just old wives’ tales?  Some people think they are.  But NanoMarkets analysis suggests that we just don’t know!

Messaging and marketing are going to be major challenges for firms offering new solutions (both literally and figuratively) in the TC marketplace.

While our recent report is not intended as a guide for venture capital (VC) or strategic investors, but it is possible to identify some market needs in the OLED encapsulation sector that may be of potential interest. 

The following factors that lead us to believe that there are some real opportunities for investment include:

• After many years of languishing, OLEDs have finally emerged as a real market, and the opportunities for growth are great, especially for firms that can offer encapsulation technologies with tangible performance and cost benefits over the market-dominant cover glass strategies in use today.

• The biggest growth sectors for OLEDs are in larger-format panels, both in OLED TV displays and, even more importantly, in OLED lighting. Therefore, the total addressable area for OLED encapsulation is set to expand greatly as these markets grow, which will lead to higher volumes for materials suppliers.

• In the highest growth markets—OLED TVs and OLED lighting—requirements for encapsulation barrier performance are greater than found in the smaller displays on the market today.  As a result, the opportunities are greater for firms to differentiate themselves and gain market share based on encapsulation that enables better lifetime performance.
Given the above factors, NanoMarkets believes that there are some potential areas where new or additional investment might be justified:

• Multilayer, or better yet, single layer, laminates that actually deliver on the promise of low cost manufacturing using polymers and polymeric substrates without sacrificing barrier performance. 

• Truly flexible OLEDs, which would require truly flexible encapsulation, are still far in the future, but there is real opportunity to expand the capabilities of OLED devices by offering partially bendable or conformable encapsulation options.  If partial flexibility is all that is really required, then there are probably already several dyad and similar technologies available today that just need a slight nudge to get them into the market.

• Flexible glass should not be ignored. The performance benefits of glass are simply too great to overlook.  And since glass manufacturing costs are closely linked to weight, thin flexible glass may be able to reduce costs even more that might be expected at first glance.  Furthermore, since truly flexible OLEDs seem to be perpetually several years away from commercialization, the partial, yet real, flexibility of thin, flexible glass may be just what is needed for larger format, high volume OLED manufacturing of OLED TVs and OLED lighting.

From where will the investment originate? We do not anticipate any new outside investment in cover glass encapsulation.  Instead, we expect that the major glass companies—Asahi Glass, NEG, Corning, etc.—will continue to dominate cover glass technology improvements through offerings like air-gap free or frit-sealed covers.  There is just no compelling reason for any new firms to enter.  The expertise within the glass industry is extensive, the competition among them is already fierce, and all the major firms have broad, active R&D programs aimed at new sectors like OLEDs. 

However, there may be significant opportunities for productive outside investment in non-glass encapsulation. There are several factors that will positively impact investment in non-traditional technologies:

• Clearly, investors will only act if they believe that the OLED market will grow well beyond its size today.  Fortunately, the indications are that it will.  OLEDs in smartphones are taking off, with Samsung leading the way; OLED TVs are expected to finally be widely available in the very near term; and OLED lighting is poised to grow to be the largest addressable market of all.  And all of these markets could benefit from encapsulation technologies that improve barrier performance while also reducing costs associated with heavy, batch process cover glass.

• Although investors are attracted to companies with demonstrated sales, which are hard to come by at this point, they may also be attracted to technologies that demonstrate big performance advantages with the promise of large investment gains down the road.  As we have already noted, non-glass encapsulation strategies based on low-cost, R2R-compatible barrier laminates could gain significant market share in the mid- to long-term. The growth sectors for OLEDs in TV displays and in lighting will both rely on high volume manufacturing to realize economies of scale sufficient to bring costs down to levels that support truly widespread consumer adoption, and R2R production would clearly be a step in this direction.

• Since the barrier performance requirements in OLED encapsulation are stricter than in almost any other sector, the addressable market is even larger than it seems at first glance.  Of particular interest is the photovoltaics industry, which is itself in an upward growth trajectory, and which significantly expands the market for encapsulation.  Investors can capitalize on this expanding market as way to leverage their specific technology across two industries—one which is "easier" (photovoltaics) and the other which is perhaps more of a stretch initially (OLEDs).

But what kind of investors are we really talking about?  Are these venture capital  opportunities, or something else?  In NanoMarkets' opinion, we think that additional or new VC investment is unlikely, if for no other reason than that the OLED industry has already been around long enough for VC firms to get in (and get back out, in some cases); the time for high risk/high return investing has probably passed. Investment from angel investors is more likely than VC investment, but again here we think their time has largely passed.

In contrast, investment in the form of takeovers by large industrial firms, especially big consolidated firms in the display or lighting device or materials industries, is far more likely.

• Large and mid-size firms already in the display or lighting markets can more readily be pulled into strategic deals based on synergies that lead to larger cash flows than pure equity investors would realize.

• In addition, NanoMarkets believes that it will continue to be important for encapsulation firms to be sufficiently linked into the OLED supply chain, and that it will be increasingly important for all existing and new encapsulation suppliers to partner closely with end-users.

• In fact, we have already seen OLED manufacturers acquire encapsulation firms with Samsung's de facto takeover of the Vitex Barix technology, and we expect this trend to continue with other encapsulation firms.

NanoMarkets will be releasing a new report in November on flexibe substrates.  See here for details.  

Flexible electronics have attracted a great deal of interest in recent years. At least in theory, they offer a number of important advantages for displays, lighting, solar panels and sensors.  In addition, flexibility to some degree is implied in the notion of R2R processing.  Each of these applications requires different strategic thinking about the appropriate flexible substrate to use, but there is also an important commonality which NanoMarkets believes will create a vibrant market for flexible substrates of all kinds.

The Big Problem With Selling Substrates into the Flexible Display Market:  Flexible Displays Don’t Exist!

Flexible displays have been proposed for about a decade now and have been on show at display conferences and exhibitions for about as long.  They are frequently cited by literature in the printed and organic electronics disciplines as an important trend for the future.  In addition, within the community of firms making materials suitable for flexible substrates, there is a view that there is considerable potential for making sales to a vibrant flexible display market of the future.

For the time being this potential is just that - potential and little more:

• We think that substrate firms should be careful not to talk themselves into believing that there is more here than meets the eye.  Certainly, they should not expect much short term revenue from the flexible display sector.  As yet there have been no flexible displays that are commercially available and promises made by a few firms to bring such displays to market have been broken. 

• That said, flexible displays do seem to have the potential for real world applications -- if anyone could build them, that is -- and the recent announcement by Samsung that it plans to introduce these displays to the market has lent them considerable credibility.

The main application for flexible displays would be to enable portable displays of reasonable size that can be plugged into a cell phone to serve better as a video device or IT tool.  The first real rollable displays now look like they will as likely be OLED displays, since OLEDs can provide superb color, while the most common e-paper technologies are color-challenged:

• Conformability only would seem to be good enough for flexible substrates used in signage applications.

• From the substrate perspective, rollability will probably suffice for now in the display sector, but the idea of a display that can be crumpled up and put in one’s pocket, implies three-dimensional flexibility - a technology that doesn’t exist yet.  

• Three-dimensional flexibility would seem to fit well with the e-paper concept, since real paper is flexible in this sense.  For a time, “e-paper” and “flexible displays” seem to be synonyms for each other.  

Substrates for flexible displays may be relatively undemanding in terms of durability, at least at first when they are used with cell phones; cell phones generally last between a year and two years.  However, electrical and optical requirements for substrates used in displays may be more stringent.  For example, a substrate that stretches a bit might be acceptable for a PV panel, but with a display it would tend to distort the picture.  Very tight electrical specifications are required for much the same reason.

OLEDs are highly vulnerable to oxygen and water vapor, so they present an encapsulation issue; developments to improve barrier performance have been discussed in the OLED industry since its earliest days. Until recently, however, OLED encapsulation materials represented a relatively small market for chemical companies and a few startups. For many years there were few signs that OLEDs were going to break out of their niche market pattern, with almost all of the OLED market being accounted for by passive matrix displays for MP3 payers, cell phone sub-displays, etc.

The situation was further complicated by the popular notion among OLED manufacturers that encapsulation was the least of their worries, since most OLEDs could be successfully encapsulated in a stack that often also included desiccant under glass using epoxy adhesives for edge sealing. The simple glass and epoxy encapsulation approach was not only all that was required for small displays, it was all that display makers were willing to pay for, and it continues to be the principal encapsulation strategy in place today. 

Even as the size of the passive matrix OLED business grew, true opportunities for OLED encapsulation were highly limited, and few materials firms were able to sustain a business based on encapsulation materials alone.  And although materials suppliers were initially happy to supply these applications, they did so with the expectation that markets large enough to justify their efforts would eventually emerge.

Finally, A Growing Market for OLEDs Emerges

Fortunately (at least for encapsulation systems makers), the opportunities have grown in recent years in important ways:

• OLED displays have at last been “mainstreamed” with the arrival of mass-market cell phones containing active matrix OLEDs as primary displays; NanoMarkets has estimated that the size of the total OLED materials market exceeded $300 million in 2011.

• Meanwhile, OLED lighting is now on the market in the form of “designer” chandeliers and table lamps, and larger segments of the lighting market are likely to be penetrated by OLED lighting in the next few years.

• And while the first attempts to introduce OLED TVs stumbled, it seems that 2012 or 2013 will see the introduction of OLED TVs on the market with much greater chances of market success than the products that preceded them.

These trends mean that the addressable market for OLED encapsulation materials is rapidly growing and should continue to do so.  Importantly, the fastest-growing applications for OLEDs involve larger-area panels that by definition consume relatively larger amounts of materials. NanoMarkets predicts that the OLED materials market will reach over $5 Billion in sales by 2018, and at least 10%, or about $500 Million, of this revenue will come from encapsulation materials and technologies.  But the success of the market is not a foregone conclusion; better encapsulation technologies at reasonable costs are required if larger-format OLEDs are going to meet their potential.

NanoMarkets predicts that the OLED materials market will increase from $317 million in 2011 to just over $5 billion in 2018, with revenues from cathode, anode and encapsulation materials gaining in importance over the period.

This strong growth is fueled by a sea change in the status of the OLED industry.  For many years, the industry has been plagued with the low volume/high price conundrum for several years.  Bu that that situation appears to be changing, according to NanoMarkets’ recent report Markets for OLED Materials-2011.  Cell phones with OLED main displays are now completely mainstreamed, there are perhaps as many as 20 different kinds of OLED luminaires available for purchase and the large display makers look like they are going to put a serious effort into marketing an OLED TV in the next year or so.

Hopeful Signs

For the better part of a decade, OLED materials have represented little more than a niche opportunity for specialty chemical companies and a few start-ups. These firms existed solely to serve the needs of the slow growing market for passive matrix (PM) OLED displays used in some niche applications.  What is clear now, however, is that active matrix (AM) OLEDs have now matured to the point that they are about to explode into the consumer electronics marketplace.  As a result, the addressable market for OLED materials will expand considerably:

• The arrival of mass-market cell phones that use OLEDs for their primary displays – the widespread use of active matrix OLEDs in Samsung phones in particular – has dispelled any doubts about the market potential for AMOLED technology.

• The potential for OLEDs is possibly greatest in the large television market, an area where color quality obviously means a great deal.  Samsung, Sony and LG have all produced OLED TVs. Panasonic (in conjunction with Sumitomo) and Seiko Epson have also have worked on developing OLED TVs. LG executives have been quoted as saying that they expect to ship a 40-inch OLED TV by 2012 and that the company will build a plant capable of producing 50-inch OLED TVs with a completion date in 2012. It will not begin mass producing OLEDs until 2014, however.

• Considerable attention is now also being given to lighting using OLED panels.  The high efficiency of OLEDs has attracted the attention of governments around the world that are funding programs to promote solid-state lighting (SSL) as a replacement for the incandescent bulb. At the present time there are about 20 different OLED luminaires on the market costing in the $2,000 to $5,000 range.  There have also been a slew of customized showroom installations and light sculptures that have used OLED lighting.

Despite these encouraging signs, technical issues must be addressed. New equipment and processes are necessary if traditional vapor deposition techniques are to be employed. And blue OLED materials with longer lifetimes are needed for red, green, blue (RGB) full-color displays. And these developments will need to stay ahead of continuing advances in LCD technology. Significant research programs within the industry are making progress, though, and NanoMarkets believes these technical issues will be addressed in an effective manner within the next eight years.

Emerging technology markets are difficult to forecast in part because new applications often depend on several component innovations. Each of these technologies evolves independently, but the application cannot emerge until all of the components are sufficiently mature.

Smart labels for shipping and logistics are such an application. They incorporate RFID tags, sensors, and batteries. For cost reasons, the ideal smart label would use printing technology for all three components. Yet printed electronics are just beginning to become commercially important, and as a result the technology needed to support smart labels is only starting to emerge.

The first element, the RFID tag, is probably the most mature. In its most basic form, an RFID tag is simply a remotely readable memory. It stores anywhere from a few bits to several megabytes, depending on the tag, and draws the current it needs via induction, from an RF coil in a reader device. While it’s generally agreed that future supply chains will depend on RFIDs to track everything from work-in-progress to shipping containers to individual retail packages, concrete applications have lagged behind forecasts. 

RFID tagging requires a substantial investment in both the tags themselves and the supporting infrastructure of readers, data management software, and so forth. The benefits of tagging may not be realized until every item that moves through a facility is tagged, which often means that many different vendors and customers must support the project. In an airport baggage handling facility, for example, untagged pieces of luggage might have to be placed in tagged bins. The added costs of handling untagged items would offset some of the benefits of tag-based handling.

Meanwhile, ongoing weak global economic conditions have slowed all forms of business investment. Expensive projects with uncertain financial returns will continue to move slowly as long as economic conditions remain poor. At the same time, even with relatively slow adoption rates of adoption the market has already progressed to the point where many businesses and consumers are at least somewhat familiar with RFIDs. Millions of people use RFID-based tags to pay highway tolls and transit fares electronically; millions of dollars worth of high-value manufacturing depends on RFID-based WIP tracking.

Applications like RFID-based toll payment systems often add a battery, the second of our three components. While passive tags are only readable from a relatively short distance, powered tags can actively transmit to a reader some distance away. Powered tags are also appropriate for locations — such as inside vehicles and shipping containers, or inside livestock — where large quantities of metal or water reduce signal strength. These tags often appear in permanent or semi-permanent installations, and as a result the required battery life can be between three and five years or even longer. Such tags are expensive, however, and therefore not really suitable for disposable applications like smart shipping labels.

Hence the importance of our second key innovation, printed batteries. While conventional button batteries encase the electrodes and electrolyte in a metal can, printed batteries typically screenprint these layers onto a plastic (or even paper) substrate, then seal the battery with a second plastic film. Though they offer less storage capacity than conventional batteries, their solid-state nature makes them more durable and easier to integrate with smartcards, smart labels, and other low profile devices. Simplified integration, in turn, helps drive down the overall cost of systems containing printed batteries. While printed batteries do not yet offer the performance needed by active RFID tags, they offer compelling cost reductions for disposable applications. A battery-assisted tag may offer a compelling compromise between the performance and lifetime of active tags and the low cost of passive tags. Indeed, Nanomarkets expects battery-assisted RFID tags will be one of the leading markets for printed batteries for the duration of our forecast.

Once an inexpensive power source is available, many other applications become possible. With a battery, an RFID-tagged shipping label becomes an autonomous device, able to perform independent tracking and monitoring functions as the package moves through the global shipping system.

Cold chain management is one of the first smart label applications to appear. More than $30 billion in meat, seafood, and cheese is lost to spoilage each year, along with a similar amount of fruit and vegetables and more than $5 billion in pharmaceuticals. While it is easy to tell if a frozen package is thawed when it reaches its destination, cold chain failures are usually less obvious. A package of fish might have been sitting on a sunny loading dock for several hours in transit, for instance. Though re-frozen by the time it reaches the destination, it might already have degraded, or might have a shorter remaining storage life than expected. A medicine intended for a remote village might become less effective or even dangerous if not stored properly. Without in-package monitoring, there’s no easy way to tell that the cold chain was compromised somewhere along the way.

Which is where our third important innovation, sensors, enters the picture. Once a power source is available, combining a temperature sensor with a timing circuit allows the smart label to record its temperature at regular intervals, storing the information in the RFID tag’s memory where it can be read at the destination. Because the label is remotely readable, it can be sealed inside the package, at the same ambient temperature as the contents. Given the thermal history, the recipient can decide whether to accept the shipment without inspecting the contents. A more sophisticated device could generate an electronic alert if it detected an out-of-specification temperature, allowing corrective action before degradation of the package contents occurred.

One commercial example is the Sealed Air Turbo Tag, powered by a battery from Blue Spark. PowerID, spun out from Power Paper in 2007, focuses on tagging and smart packaging applications as well. In addition, Enfucell is collaborating with Finland’s RFID lab to develop tagging and smart packaging applications of RFIDs. This spring the company shared in a grant to Europe’s Ropas consortium, aimed at development of wireless sensors printed on paper.

The basic combination of a battery, a sensor, and an RFID tag could be applied to other types of packages as well. Precision optical and mechanical devices are very sensitive to vibrations; incorporating an accelerometer into the shipping label could show whether a package had been shaken or dropped. With potentially hazardous cargo, smart labels could alert the shipper to possible leaks or to conditions that might rupture the shipping container.

As the key components of smart labels mature, we expect what is now novel — as is often true — will become commonplace. Devices once used for high value shipments could eventually make their way into picnic coolers and boxes of holiday cookies. But for now, printed batteries are helping smart labels take the first steps from concept to commercial reality.

Forms of zinc and tin oxide have been proposed as an alternative to indium tin oxide (ITO) in the display and PV industry for many years, with mixed commercial success.  In the thin-film PV (TFPV) space, alternative TCOs (alt-TCOs) have done well with fluorine tin oxide (FTO) and aluminum zinc oxide (AZO) becoming quite common at this point in time.  However, attempts to sell indium zinc oxide (IZO) into the display space have not succeeded to any strong degree.

The motivation for using alt-TCOs is usually that money can be saved on materials, and  most often because large amounts of indium can be avoided.  This matter has taken on a new urgency in view of recent Chinese industrial and trade policy, which favors controls on exports of indium.  The Chinese government has also shut down environmentally unsound indium extraction facilities.  The potential opportunities for alt-TCOs seem to have grown as a result, although these TCOs also now have to compete increasingly with next-generation transparent conductors that will almost certainly outperform them given time.
Adding to the fun are new applications for alt-TCOs and the emergence of new kinds of TCOs.  One new application that we see as being of considerable importance for these materials is so-called smart windows.  Such windows have enjoyed niche status for many years, but may well emerge as a mass market product if the green building movement continues to fulfill it's promise.

Finally, with the help of a semantic stretch, one might consider the use of the metal oxide materials considered in this report in thin-film transistors (TFTs) as part of the opportunity space for alt-TCs.  Here one is, in effect, saying that a transparent conducting oxide is also a semiconducting transparent oxide.  Taken literally, these statements are simply a contradiction in terms. However, given that these alt-TCOs are neither very conductive nor very semi-conductive, we hope that the reader will forgive our embracing of this contradiction.  We should perhaps mention that some of the most interesting new alt-TCOs are emerging in the context of TFTs.

The Joys and Otherwise of Sputtering

While such new applications are certainly the most interesting from a purely intellectual point of view, and we think may also turn out to be the most profitable opportunities for alt-TCOs in the end, they are certainly also the most risky.  It also seems likely that they will take quite a while before they generate significant revenues.

Given the extraordinarily difficult business climate that pertains at the present time, it seems that many makers of alt-TCOs will be looking for more immediate and less risky opportunities.  The least risky of these opportunities is certainly in the TFPV space, where suppliers of AZO and CIGS can simply expect to see sales rise as CIGS and CdTe continue to experience growing revenues.  This application is a low risk opportunity in that all the alt-TCO has to do is follow the TFPV industry onwards and upwards.

In the past two years, the OLED lighting business has shifted from being one entirely consumed by R&D to the production of actual products.  For now, however, these products are confined to luxury table lamps and chandeliers with price points measured in thousands of dollars and volume sales measured in the thousands of units, if that.  Production issues are secondary considerations for such products; from the production standpoint, OLED lighting is currently a cottage industry.

One reason for OLED lighting being so niche-like is that, at today's costs, OLED lights can be no more than playthings for the rich.  True, there has been some progress.  Two years ago, the one or two OLED luminaires that were on the market were affordable only by billionaires.  Today there are more than 30 such luminaires available and they can be purchased even by millionaires.  But no one is expecting to see OLED lighting at their local supermarket—or even their local department store—before 2015 or so.

There are some commentators (without any demonstrated history in this market ) who apparently believe that OLED lighting will never get beyond the luxury market.  Today, for example, you can buy OLED lighting from a very high-end furniture store such as Roche Bobois and some analysts believe that is where they are going to stay.

NanoMarkets are not in this group of analysts and, more importantly, it seems safe to assume that it is unlikely that firms of the caliber of GE, LG, Osram, Panasonic Philips, Samsung and so on would have gone into the OLED lighting business with luxury luminaires made by craft workers solely in mind.  Almost certainly, their assumption is that eventually OLED lighting will reach a point where it is generally affordable and that, along with LEDs and CFLs, OLED lighting will be used widely in general illumination applications. 

Certainly, most of the firms that NanoMarkets has talked with as part of its ongoing research into emerging markets in the OLED lighting space have bigger visions of where OLED lighting is headed. Most observers of the OLED lighting scene believe that OLED lighting will present a genuine challenge to more mature forms of lighting by 2015 or so, although much will depend on the ability of the OLED lighting firms to come up with OLED lighting product designs—including the luminaires—that will make this possible, both in terms of design (including form factor) and price point.  Even if OLEDs take just a very small share of the global lighting market, we think this technology will ultimately generate billions in new business revenues. At least some of the large firms that have entered this space clearly seem to believe the same thing.

The recent announcement that Konarka Technologies, leader in the organic PV (OPV) space, has teamed with the ThyssenKrupp Steel Europe is a potential game changer for OPV.  Interest in OPV remains strong; new firms, new capacity and new products. Yet that OPV has not fulfilled its early promise is a conclusion that remains inescapable.  It was always understood that OPV would be low efficiency, but this was supposed to be compensated for by low dollars per watt too.  But it hasn’t happened. 

As a result, NanoMarkets’ expectations of OPV’s future have been less than optimistic.  We have gone on record as saying that revenues from OPV could be as much as $56.1 million in 2011 growing to $383.0 million in 2018.  These are not terrible numbers and suggest that OPV could probably keep a few moderate sized firms busy. But they aren’t numbers that could justify the amount of money that has been thrown at the OPV space by investors in recent years.

The problem with OPV has always been what to do with it; given its inherent limitations, that is.  In the recent past, the best that could be hoped for in terms of early revenues from OPV was a new generation of portable solar battery chargers where OPV’s flexibility would be an advantage and its low efficiency would not be too much of a disadvantage.  Beyond that, OPV seemed destined for use in novelties and oddities such as solar umbrellas.  The use of OPV in building- integrated PV (BIPV) has always beckoned, in part, because of OPV’s relatively small decline in efficiency in less-than-perfect light conditions. 

But “OBIPV,” as it were, has always been stymied by the need for lack of a really good encapsulation technology and NanoMarkets, in its recent forecasts, has not included the possibility of huge revenues flowing to the OPV makers from building-integrated applications.  We are not yet ready to completely revise our forecasts for OPV based on Konarka/ThyssenKrupp Steel arrangement, but it certainly gives us cause to re-examine them on the basis that two serious players now say they are developing “steel roof and other construction elements for BIPV.”

Inkjet once seemed well positioned to gain revenues, market share and expanded addressable markets as the result of the demise of contact printers in the office.  Ultimately, however, it lost much of that market to low-cost laser printers.  As a result, the inkjet industry has been pushed into looking for new opportunities.  Its most noticeable success has been in providing color printers for the home and small business markets at prices that make these printers almost throwaway items.  Far less noticeable has been the rise of industrial inkjet, initially for graphics and, more recently for functional printing. With the home computing sector reaching some level of maturity, functional printing in particular (which remains at a very early stage of its evolution) looks like a potentially profitable future direction for the inkjet industry.
Functional jetting already seems to be a major preoccupation for some makers of inkjet equipment and print heads and service bureau.  However, the specific opportunities for ink makers and specialty chemical companies that are inherent in “jetted manufacturing” are not always all that apparent.   NanoMarkets believes that these opportunities are obscured by the extreme diversity of applications that fall under the title of “functional inkjet” and the resulting lack of color on just what kinds of inks are needed for these applications.  One of the main objectives of this NanoMarkets’ analysis in the functional inkjet ink space, therefore, is to sort through this diversity and to analyze where the revenues will be generated in the functional inkjet inks business over the next eight years.

Here we define “functional printing” to include any kind of additive process that is intended to create things rather than images.  As has often been noted, the biggest difference between functional printing and graphics printing is that while graphics printing is intended to produce something that is judged by its aesthetics, functional printing is supposed to produce something that works.  In the view of the firms we have talked with in the functional inkjet space, making something is harder than decorating it!

Be that as it may, we believe that the revenue-generating opportunities for ink firms in the functional inkjet space fall into five different classes of printing.

The “New” Printed Electronics and the Ink it Needs

For the most part, this is what most of functional jetting is about at the present time; using industrial inkjet printers to create small devices or small parts of larger devices.  Included in this class are applications as simple as printed silver interconnects between panels or devices, all the way through to completely printed computing chips.

This kind of functional inkjet can, in effect, be considered as an extension of a trend that has been around for decades in the form of thick-film printing of circuitry for membrane switches, automotive heaters and printed circuit boards (PCBs). It has also been the mainstay of photovoltaics; the silver grids that distribute the electricity from conventional (i.e., crystalline silicon) solar panels are printed using thick film techniques.  Broadly, these otherwise disparate applications share the fact that they are created using screen printing and that they involve a fairly low level of patterning compared to what is the norm in the semiconductor industry.

The undoubted success of the thick-film type of functional printing helped fuel the discussions and activities of a few years ago around of the concept of “printed electronics” (PE).  PE was a kind of functional printing that supposed to lead to printed devices that were much more complex/smaller than what thick-film technology was (and is) capable of.  The hope of PE in general was that using printing instead of the classical fabrication technologies of the semiconductor industry would reduce the costs of manufacturing a wide range of devices including displays, sensors, PV panels, batteries, RFID chips, etc.

The argument behind this hope was that (1) printing is additive, supposedly lowering the operational and materials costs of fabrication and (2) printing machinery is, generally speaking, lower cost than classical vapor deposition and related patterning equipment used in the semiconductor industry.  Although many kinds of printing were suggested or actually utilized as part of the PE paradigm, inkjet—because of its ability to finely pattern—has been frequently cited as the printing technology of choice for PE.

As it turned out, things did not go the way that PE’s advocates hoped.  There were many reasons for this.  There were certainly macroeconomic and other exogenous factors that have little direct relevance to the markets and ink-related matters.  For one thing the PE of a few years ago seemed to seriously overreach in terms of applications.  While the thick film revolution in its early days was firmly grounded in the huge consumer demand for new and better appliances and automobiles of the 1970s, PE seemed to be chasing of applications—such as flexible displays and RFID tags—for which there was little pent-up demand and whose timetable for adoption was very speculative.  The world’s financial pains of the last few years have not helped much either.

However, there were more fundamental reasons why the original PE did not take off.  Printing of functioning electronic devices turned out to be much harder to do than most of the people involved thought would be the case.  Firms leaped into the business of printing display backplanes or PV panels and found that their early timetables proved unrealistic. Some of the early firms went forward with their general business plans but quietly started to use more conventional deposition and patterning equipment with the promise that they would eventually use printing as they had already suggested.  Where inkjet printing was specifically cited as part of a manufacturing strategy this sometimes proved problematic because of scaling to higher speeds or the availability of inks.

Still “printed electronics” in the form described above seems to be seeing something of revival in the past two years or so, but the “new” PE is of a more pragmatic kind than the older type of PE that we described above.  The firms and individuals in this space now seem to have much more modest expectations.  Instead of being satisfied with nothing less than the printing of a complete RFID tag, they are now much more likely to be content with successfully (successful in both the economic and technical senses) printing just the antenna.  We note also that representatives of PE firms are now appearing at conferences that are primarily intended for the traditional thick-film industry, suggesting that the new PE thinking is that it might make money by improving on existing business models rather than by creating an entirely brave new world of printing electronics.

Inkjet’s role in all of this has yet to be determined.  From a positive perspective, we note that most of the firms that we spoke with in the inkjet industry seemed to think that the new PE would be the market sector that would generate the largest revenues for functional inkjet in the near term future. We also note that inkjet is very well established as an R&D tool in printed electronics, in part because, as a maskless technology, it is very well suited to making just a few devices.

Assuming that the new PE proves to have “legs” the primary opportunity that it seems it will create will be for conductive inks—especially silver inks—but semiconducting and dielectric inks are also an important part of this story going forward.  Printing silicon has been talked about and researched for a decade and appears to be on its way to attainment, but only slowly.

Inks and Jetted Bio-devices:  From Test Strips to Organ Printing

The use of functional inkjet for creating bio-devices seems to have emerged not so much from a jetting industry push, but more as the end-user community discovered that inkjet was capable of depositing small quantities of delicate materials.  Indeed, one major functional inkjet provider has reported that as the first overenthusiastic wave of the PE “revolution” retreated a few years ago, it derived some sales comfort from what seems to have been something of a surprise—biomedical markets.

This segment of the market is fairly diverse in terms of both applications and in terms of inks.  The applications that are usually cited as near-term ones are diabetic test strips and DNA arrays.  These are already very high volume products, with good prospects for the future based on current health and demographic trends. Inkjet is already used for both these products, although there seems to be some disagreement about the degree to which it is used to create diabetic test strips.

The use of inkjet is also expected to expand well beyond test strips and arrays.  Jetted biosensors have been created in the lab for quite some time, so it seems that this market could expand quite soon.  It is also very much in tune with larger trends in medicine, national security and environmental monitoring. However, there seems to be considerable enthusiasm for the use of inkjet in regenerative medicine; particularly in organ and skin printing.  While no one really expects this to be common in the near future, there seems to be a sense in the inkjet community that regenerative medicine will create significant revenues for inkjet.

This raises the question of what materials can be made profitably into jetted bio-inks.  The answer seems to be that most can be.  At various time times inks have been made out of a wide range or organic molecules (including DNA), proteins, cells, etc., although primarily in a research context.  We also note that this application sector can overlap in terms of inks with the PE sector.  For example, silver inks may well be used in sensors of various kinds.  It also seems likely to us that for the regenerative medicine applications that some see as being jetted in the future a whole range of new inks will have to be developed.

Inks for printing on Non-Standard Substrates:  Tiles, Textiles and Beyond

Printing on non-standard substrates does not quite seem to fit the usual definitions of functional printing. This is because nothing is specified about function as such, leaving open the possibility that inkjet will be used to decorate rather than to add/increase functionality.

And this is precisely the case.  One opportunity that is mentioned frequently in this category is that of ceramic inks, that is inks that can coat ceramic substrates (primarily tiles) with color.  This is not an easy thing to do because ceramics are so porous, so special inks are needed.  The other non-standard substrate that receives significant attention in the inkjet community is fabric/textile.

In both cases, the motivation for printing onto these substrates is to create small runs of decorated substrates to respond to the consumer need for a wide range of colors and styles in tiles, fabrics and clothing and also to ensure that a specific color and pattern not be too widely distributed.  Everyone wants to be reasonably certain that his or her kitchen will look significantly different from that of friends and relatives!  The main reason why inkjet is seen as having an opportunity here lies in inkjet’s ability to create products in small numbers, because it is maskless.

A variety of specialized inks have been developed for these applications.  Pigments used for printing onto ceramic tiles are usually large particle size, stable inorganic powders that must be able to withstand a high-temperature firing step (up to 1300°C) required to fuse the powder into the molten surface of the ceramic tile. There are even specialized inkjet printers for ceramic printing, although these seem to use sol-gel inks rather than inorganic pigmented inks.  Meanwhile, some observers believe that inkjet technology has the potential to replace existing finishing and coating technologies and create new materials for the technical textiles sector.  Another use for functional inkjet in the textile sector is as tool for smart textiles to put into place the materials that enable the textile to respond to mechanical, thermal, chemical, electrical or magnetic stimuli.

Inks for 3D Printing:  New Life for Manufacturing

“3D printing” refers to creating a one-off (or limited volume) product, by building up the product one layer at a time.  This technique has been available for some time and has mostly been used for prototyping in a wide variety of industries.  However, the technique is now being expanded to the manufacture of products that are actually sold on the market.

This trend has led to 3D printing being heralded as a new form of manufacturing that might reindustrialize the developed world, create manufacturing industries in the less developed world and create an entirely new form of manufacturing environment in which a far greater variety of products than now can be highly customized, either at the factory itself, or by the end user.

Because 3D printing can be used for so many applications, the materials used for this kind of functional printing are very diverse.  In addition, we note that not all 3D printers are inkjet printers in a conventional sense.  There are specialist 3D printers which are inkjet-like in that they have nozzles but for large scale modeling these may enable large amounts of material to be deposited; quite the opposite to standard inkjet.

On the other hand, most 3D printing is done with more standard industrial inkjet machines and alternative approaches are available.  In one method—sometimes called the MIT method—the layers are built up starting with powders, but these powders are formed into a solid layer using liquid binders which are deposited with inkjet.  An additional resin may also be used to give the finished product more durability.  This approach is fast and relatively low cost, but tends to produce rough looking objects and, given the number of materials, is fairly expensive.

Another approach, which is superior in a number of ways, is polyjet printing.  In this process, as the name suggests, the printers have two or more jetting heads.  Typically, one builds the model, while the other jets the support fluids.  The support material is a gel-like substance, which is easily washed away.  The final model is said to have a smooth finish and be ready for sanding, painting, drilling, or tapping.

Inkjet and Fluid Micro-dispensing:  Not Quite Printing

In essence, functional inkjet machines are devices that can accurately deliver small quantities of fluid without much wastage.   This fact can be exploited by using inkjet as a dispensing tool and a market for doing just that has emerged.  Typically, the use of functional inkjet for micro-dispensing applications is not just to place small amounts of material, but also where they must be dispensed in the form of fine structures such as micro-lines, micro-dots, and three-dimensional structures.  Although micro-dispensing isn’t quite printing, this patterning aspect makes the line between microdispensing and printing quite small.

Using inkjet for micro-dispensing has a number of advantages and, of course, which of these advantages matters depends on the particular application.  However, in general, where inkjet shines in this regard is that it is a non-contact printing method (and hence can dispense onto delicate substrates) and it has the ability to cover large areas. Additionally, it is an on-demand process and conducive for printing multi-layer devices.

The fluids for which functional inkjet has been used to date include a variety of biological materials along with some non-biological materials such as solders and adhesives.  Within the biological sphere, inkjet is considered to be a good microdispensing technology for reagents, enzymes and other fluids that are deposited on biological substrates.  Microdispensing using inkjet has been demonstrated with a wide range of viscosity and rheological properties.

Functional Fluid Making Opportunities for Inkjet

The five areas outlined above will present considerable opportunities for materials firms and ink makers to produce fluids suitable for jetting.  None of the five areas are new.  Nonetheless, NanoMarkets believes that functional jetting is about see a resurgence for a number of reasons.

One of the most important of these reasons is that industrial inkjet machines have now reached a speed where they can be deployed for serious manufacturing applications, although it is important to note that we are talking about the larger and more expensive machines here.  Conversely, smaller and lower-cost machines, priced at well under $10,000 may open up the market to an entirely new kind of manufacturing—desktop manufacturing—that could parallel the success of the desktop publishing revolution of a couple of decades ago.

We also note that this isn’t the only important trend with which the process of functional inkjet may be aligned.  For example, within the scope of functional jetting comes a broad range of biomedical applications, all of which make small contributions to the urgent need to improve healthcare.  Also, some marketing experts see the need for industry and commerce to offer more customized products in the sophisticated markets of the developed world.  Here again, functional inkjet can be of help.

We believe that there is plenty of room for ink and materials firms to tap into these opportunities.  Eventually, these firms will start to offer off-the-shelf inks for functional inkjet, although this opportunity still seems to be one that will not produce significant revenue for quite some time to come; it will have to await the standardization of applications, which seems a long way off.  For the time being, we think that most opportunities for materials are going to require some customizing for specific applications or even specific customers.  Nonetheless, we have little doubt that these are real opportunities.

Building integrated photovoltaics (BIPV) is a new and dynamic market, with complex sub-markets, and very different market entities pulling diverse BIPV technologies into use. As an extension of the global photovoltaics (PV) market, both large established PV module suppliers as well as small niche architectural firms are trying to push BIPV into the market. Historically, the volumes sold of BIPV products—relative to PV products as a whole—have been low due to both a lack of demand and a lack of dedicated products for the building industry.  However, NanoMarkets believes that the demand for BIPV would have been greater had dedicated products been more widely available.

As additional dedicated BIPV products are released to the market, we think that the key decision-makers are discovering new ways to add value to buildings. Ultimately, for BIPV to yield solid business opportunities, architects, builders, and roofers all must work with proven solutions, and proven BIPV technologies provide another way to win new customers/clients. Grid-connected BIPV is not just for "enthusiast" or "Green" people anymore, and "bankable" BIPV can now provide an attractive return-on-investment (ROI) for many buildings in many locations. Depending upon incentives and lease-back financing schemes, BIPV can potentially reduce the total costs of constructing homes and commercial buildings, and may also add significant value to building retrofits.

The combination of dedicated and bankable BIPV products with proper financing can open up new addressable markets.  From the supply perspective, BIPV offers new revenue-streams for PV panel suppliers, and new differentiation in the market-space for architects, builders, and roofers.

BIPV Market Drivers

Aesthetics:  The first generation of BIPV systems was primarily architectural in nature.  It consisted of attempts to make the PV panels more unobtrusive, by choosing thinner panels and installing them parallel to the roof surface or even hidden on a flat roof.  In addition to helping PV appeal to a broader audience, the first generation of BIPV also was intended to meet the requirements of certain local governments, which have either mandated BIPV or required that PV panels be hidden from view, despite a lack of dedicated products designed to achieve these requirements.

These first-generation BIPV systems are not our primary concern in this report.  Rather, we are more interested in BIPV products as opposed to BIPV design.  The BIPV products we have in mind here are those that integrate smoothly with building surfaces.  At a minimum, they are laminated on roofing or wall materials; more specialized products also serve as roofing or cladding themselves or even as skylights or other building features.  Dedicated BIPV products, properly installed, simply look better to most observers than BAPV, and so provide a lasting value.

Costs:  Inevitably, the cost of a BIPV system will be higher than a standard PV panel of a similar performance. Due to the dedicated design of second-generation BIPV systems, and the distinctly different sub-markets for roofs, windows, and sidewalls in buildings, any given BIPV product will see lower volumes compared to mainstream "utility panels" and will thus not enjoy the same economies of scale.  However, with demand expected to steadily increase over the next eight years, NanoMarkets expects that BIPV products can be made on dedicated production lines and so will see steady reductions in manufacturing costs. 

The ultimate goal for BIPV systems is that they can lower the total costs of construction of a BIPV-enabled building, since the cost of using BIPV materials will be lower than using conventional building materials in conjunction with conventional PV systems. However, for the BIPV market to establish itself what we are going to need to see in the next few years, is proof that this kind of economics can be established for BIPV.  And this is where the opportunities lie. If costs for BIPV begin to reach the point where BIPV products can be positioned as part of a standard portfolio of high-end building materials then the demand is expected to explode.

Since cost remains a significant part of the demand equation, the dynamics of pricing must be considered. NanoMarkets considers that BIPV suppliers will target certain price-points in reference to existing high-end building materials and options. In such a scenario, the demand is not particularly "elastic" with price, but instead should spike up once threshold levels are achieved.

Three Approaches to Building Integration:  Rigid, Flexible, Transparent

From a product perspective, NanoMarkets believes that the BIPV market fits best into three broad categories, based on the function that the BIPV products serve in the building envelope.  These categories are (1) rigid BIPV tiles and panels, (2) flexible BIPV products and laminates, and (3) transparent or semi-transparent BIPV glass products.  Each of these product categories are at a different level of technological maturity and also have significantly different addressable markets.

Rigid products:  Rigid BIPV products generally rely upon crystalline silicon (c-Si) or multi-crystalline silicon (mc-Si) wafers as the cells from which to build customized building cladding structures. The silicon wafers required may be obtained from any supplier, and the module manufacturing required may not be significantly different from that needed to create conventional PV panels, which are overwhelmingly rigid.
However, the aesthetic and functional and regulatory requirements of BIPV create new opportunities for product differentiation compared to mainstream PV panels. Consequently, NanoMarkets believes that there are distinct opportunities in this space that BIPV can tap into in a manner not available to conventional PV panels. 
Rigid BIPV products that are available or planned include tiles that are designed to interlace with conventional roofing tiles or cladding materials; larger tiles that serve as entire roof portions or wall portions themselves; and thin, flush-mounted panels that overlay conventional roofing or siding but are specifically designed for flush mounting on buildings.

Flexible products:   Flexible PV laminates are a newer direction for BIPV than the rigid systems described above.  Besides flexible PV laminates, which are designed to be glued onto existing building materials such as metal roofing, there are also products like flexible shingles that interlace with conventional asphalt shingles.  Also coming soon are flexible building materials with PV cells built or deposited directly onto them.  These products aim to integrate the PV panels more completely with building materials than today's laminates that are applied in a separate installation.

The flexible product segment of the BIPV market clearly involves novel products and as such represents a riskier business proposition than the rigid BIPV products described above.  They are also reliant on using newer materials platforms; primarily thin-film and organic PV, since these materials are flexible and conventional c-Si PV is not.  It is still an open question as to which of the several thin-film/organic approaches to PV is best suited to flexible PV.

Transparent:  BIPV glass products can generally be considered as a sub-class of "Smart Windows," specifically similar to electrochromic windows in that active electronics are involved in both functional types. In many cases, transparent BIPV based on thin-film PV technology is a way of using glazing to make PV cells and modules into decorative building features. Several companies have announced plans to integrate semi-transparent thin-film absorber materials with transparent conductors to compete directly with electrochromic glass windows. Both amorphous-silicon and CIGS thin-films have been explored as the PV absorber material.

The initial markets for BIPV glass are in skylights, facades, curtain walls, and shade structures such as canopies and it can often be easily built to custom dimensions and shapes, either by adjusting the number and spacing of crystalline silicon cells or by cutting thin-film PV panels to size.  The possibility of windows that are also PV panels should start being realized, but the manufacturing platforms necessary to produce glass of this kind in high volumes still seems quite far off. Initial BIPV glass windows will be created on pilot lines with limited yields and profitability.

Thin-film batteries can be defined in a number of ways.  For the purposes of this article, we will use the term “thin-film batteries” in the loosest and most literal sense to describe any battery that is thin.  Thin, in this case, refers to length scales on the order of microns.   By and large, this will be used to imply a battery that is all solid state in nature and is deposited by thin-film manufacturing techniques.  We make this distinction to differentiate thin batteries from printable batteries, which are covered as their own topic in a separate report published by NanoMarkets, though there are certainly devices in which the distinction begins to blur.  And, of course, both thin-film and printable batteries are very different in design and manufacture from the more usual kinds of small batteries found in stores.

We note that there is also another definition of thin-film batteries that is considerably more specific, although fairly frequently used.  This is the definition of thin-film batteries that refers specifically to the thin-film rechargeable lithium batteries that were developed by Dr. John Bates and his team of scientists and engineers after more than a decade of research at Oak Ridge National Laboratory (ORNL). In the view of some of the firms and individuals active in the thin-film battery space, and to whom we have spoken, only technologies based on ORNL’s design and chemistries are truly thin film. 

The New “Smartness” as a Driver for the Thin-Film Battery Market

The emphasis on such niceties is in some ways indicative of the way things used to be in the thin-film battery business.  NanoMarkets has been covering the thin-film battery market for five years now and has often indicated a sense of this technology being one that is in search of applications.  In such circumstances, it is no surprise that the thin-film battery industry dwelt on issues such as definitions.

The time when thin-film batteries can be characterized as a technology desperately seeking something to do has not yet passed.  But the fact that some of the firms in this space (Cymbet, IPS and Solicore) have received significant investments in the recent past seems to indicate that things are changing.  NanoMarkets believes that this “something” is the growing mega-trend towards “smartness,”  that is, the embedding of computer chips and sensors in everyday (and not so everyday) objects. 

We speak of smart grids, smart phone, smart appliances, smartcards, smart packaging, and smart medical devices.  These smart devices are appearing now and they all add additional—and presumably more useful functionality to earlier, dumber versions of the same device.  While such trends have been talked about for a while, they actually seem to be appearing in the real world at the present time.

There is an increasing use of smartcards, particularly for a stored-value card in public transportation systems.  Distributed and inexpensive sensor networks make it possible to monitor complex systems, such as traffic patterns or the health of a remote oil or gas pipeline, with as much fidelity as desired.  These sensors can report wirelessly in real time.  Radio frequency identification (RFID) tags track the location and contents of inventory, also in real time.

The new “smart world” can be powered in a number of different ways.  In some cases, completely conventional batteries can be used.  But in many cases; this is prevented by an inappropriate form factor, weight, or by lack of flexibility; this is the case with powered smartcards, for example.  In some cases, these devices may be powered to some extent by an energy harvesting approach or by an inductive field generated by some kind of reader system, but battery power installed in the electronic device itself usually enables such devices to provide a much higher level of functionality.  For example, battery-powered smartcards can have their own displays for one-time password security or to print the balance of the stored value—something that would be hard to achieve any other way.

The Business Case for Thin-Film Batteries

This is a wave that thin-film battery firms must catch, if they are finally to generate money for their shareholders. They cannot hope to make a success by simply improving their performance, since such an approach misses out on the crucial demand-side factor.  In addition, while some thin battery makers have attempted to create their own markets by inventing applications for their batteries—cosmetic patches for example—this is not an especially easy thing to do, especially for a small company.  And while thin-film batteries are solid-state batteries and hence safer than conventional batteries, the battery safety issue seems less of a selling point than it was a few years ago, after there had been several well-publicized incidents of exploding batteries.

To finally make money in the thin-film battery space, NanoMarkets believes that suppliers of these products will have to demonstrate that (1) their battery technology can enable new smart applications; that is, these applications will be either impossible or impractical without such batteries and/or (2) reduce the total cost of ownership of the powered device.

While these value propositions can be brought to bear on many different areas in the new world of smart technology, large sensor networks provide a good illustration of how they can be applied.

Consider the case of a sensor network that monitors the health and activity of a natural gas pipeline.  The pipeline snakes through a remote location for hundreds of miles.  Could these sensors be powered with conventional batteries?  Possibly.  But this raises the issue of the life of the battery being shorter than the life of the pipeline, so that there is the prospect of replacing hundreds or thousands of batteries along the length of the pipeline; a prohibitively expensive proposition.  A thin-film battery combined with an energy scavenging device can last for years and therefore significantly reduce the total cost of ownership of the sensor device, when the cost of battery replacement is eliminated.

Could energy scavenging devices be used on their own in such cases?  Again, possibly.  But if real-time data is required, this solution will not work as there may not be sufficient energy available at all times.  In this sense, the thin-film battery combined with an energy harvesting device is an enabling technology for a smart system that might not be able to be effectively powered any other way.

The Cost Issue:  The Elephant in the Room

While the smart “revolution” that is beginning to take shape is what is going to make profitable the efforts of the thin-film battery industry over the past few years, it won’t show the cost-related “elephant in the room” the exit.  That is, thin-film batteries are, for the most part, lithium batteries that are a lot more expensive than regular batteries.  This is partly because manufacturing of thin-film batteries is still in very small quantities, but also because thin-film battery technologies are at a relatively early stage of development.

Some firms have accepted that and gone for very specialized applications where cost isn’t really an issue. Medical implants need small, thin batteries and this is an obvious market for thin-film battery makers to chase after.  Other thin-film battery firms are looking at cost reduction strategies at the factory level.  For example, Solicore has coatable electrolytes.

Such developments are ongoing and may ultimately enable some thin-film makers to break into the market segments currently controlled by standard lithium-ion batteries.  This market is vast, and includes batteries for laptops, cell phones, and other assorted pieces of consumer electronics.  And as the technology is introduced into plug-in hybrid and pure electric vehicles, lithium-ion batteries will continue to sell in high volumes. 

But thin-film batteries attacking these mainstream markets do not seem likely to emerge any time soon. Thin-film battery manufacturers are not targeting these mainstream applications.  Traditional lithium-ion batteries have so many engineering hours behind their development, and are made in such bulk, that a thin-film battery will have a difficult time competing. 

Beating standard lithium-ion batteries is not something that thin-film batteries are about right now.  This may (or may not) come in time.  For now, NanoMarkets believes that the opportunity that thin-film battery makers will be able to tap into, will be the “new smartness.”  In the past year, we believe the buzz about smartness has finally begun to turn into action.

The whole of Asia must be considered a major opportunity area for the OLED lighting business.  Most of the countries in Asia are experiencing high economic growth and their manufacturing sectors are—generally speaking—moving to increasing levels of technological sophistication, both in terms of the products they supply and the kinds of manufacturing technology they deploy:  

The economic trends in Asia imply both expanding markets for OLED lighting in the form of larger middle classes that may be exactly the kind of consumers who buy the products of which the early wave of OLED lighting may consist.  All of the fast-growing economies in Asia have enjoyed vibrant construction markets, a very positive sign for the future of OLED lighting.  However, in many countries it remains to be seen for how long many of these property booms are sustainable.

Increased sophistication of the semiconductor industry in non-Japan Asia implies that OLED lighting could find a successful manufacturing home in Asia as it begins to reach volume production.  China is now focusing on building up its facilities to manufacture much more sophisticated products than in the recent past and other countries—Indonesia and Vietnam—are also anxious to develop new semiconductor industries.  Meanwhile, Japan is quietly building a competent and comprehensive OLED lighting industry.

Each country, of course, has its own demographics, its own opportunities and different timeframes for realizing those opportunities, as well as particularities in terms of market needs and the regulations impacting the OLED lighting market.  Each country also has a different story with regard to the size and sophistication of its indigenous OLED manufacturing sector and how that sector is likely to evolve going forward. 

Japan

Japanese consumer response to the arrival of LEDs also seems to have been relatively enthusiastic with one Japanese newspaper article talking about them "selling like hot cakes" and going on to talk about "the new generation of light bulbs . . . quickly empt[ying] store shelves."  This openness to new SSL lighting technology would also seem to bode well for OLED lighting as it comes onto the market in Japan. 

Japan is usually considered to be a market of early adopters, meaning that consumers in this country tend to adopt and legitimize new technologies before much of the rest of the world does.  Most electronics products are released in Japan very early in their market cycle and we expect this factor to apply to OLED lighting.  As an example of the kind of pioneering direction that OLED lighting might take in Japan, we cite the activities of Kenwood, the home and automotive electronics company that has demonstrated an ultra-thin stereo speaker that is also an OLED white-light panel. 

However, we note that the surge in demand for LED lights in Japan has mostly been in response to deep price cuts and the first wave of OLED lights in Japan are likely to be very expensive items.  In addition, the uptake of LED lighting has been specifically for LED bulbs and no equivalent OLED product yet exists.  Given this, the parallels between OLED and LED lighting can be stretched too far.

NanoMarkets believes that the power consumption issue driving OLED lighting markets in Japan is of special importance in Japan, which imports more than 80 percent of its energy.  We think this will be one of the key "triggers" in the Japanese OLED lighting space, the other one being the enthusiasm with which Japanese consumers adopt new technology, especially electronics technology.  Perhaps the most important regulations relating to the products covered in this report are those emanating from the Ministry of Economy, Trade and Industry, which require the ceasing of production and sale of incandescent bulbs by 2012 in Japan.  

Many of the major light bulb manufacturing firms (and even a few retailers) in Japan have already abandoned the incandescent bulb and the fact that these organizations have been quite proactive in this space may have helped shaped the enthusiasm for LED lighting in Japan and will also impact the development of OLED lighting in a positive way.  LED lighting is also mentioned specifically as an item preferred in government purchases as part of Japanese "green purchasing" regulations and these regulations may well be extended to OLED lighting in time.

The short-term impact on OLED lighting of the recent disasters in Japan does not seem to be all that great; for the most part, firms producing OLED products in Japan have been minimally affected by the earthquake and tsunami.  However, we believe that the events of early 2011 will leave a longer-term mark on the OLED lighting industry in Japan and that this mark will largely be positive.  One factor will be that the energy efficiency and renewable energy memes are likely to become more diffused in Japanese society as a result of the inevitable anti-nuclear sentiments that are likely to emerge in Japan.  In addition, with almost 50,000 buildings destroyed by the tsunami and earthquake there may be a construction boomlet in the country that could result in a need for next-generation lighting systems.

As a nation, Japan has emerged as perhaps the leading center of OLED lighting development and manufacturing in the world, with both giant multinationals and start-ups involved in its efforts.  Among the major Japanese firms that are directly involved in the manufacture of OLED lighting are Konica Minolta,  Mitsubishi, NEC, Panasonic, Pioneer, Rohm, Showa Denko, Sumitomo and Toppan Printing.

China

The Chinese market for OLED lighting could not be more different to the Japanese market.  The addressable market as measured by the number of homes is huge; there are 385 million households in China.  However, despite the surge in standards of living in China in the past ten years, per capita purchasing power in China remains very low; around 18 percent of per capita purchasing power in Japan.  This means that as a whole, the Chinese population is not in a position to rush out and buy the latest high-tech lighting innovations, including OLED lighting. 

At the present time, OLED lighting markets in China, to the extent that they exist at all, consist of purchases of high-value designer lighting for prestige buildings such as one finds in a few cities—most noticeably Shanghai, and perhaps some purchases by the urban wealthy.  And those in the OLED lighting business who want to model their future success on the LED industry in China should note that while the output of the Chinese LED industry at the present time is enormous, a significant proportion of them go into decorative mirrors, jewelry and other such items.  This may also represent a potential target market for OLED lighting in China.  We note that OLED lighting and mirrors have already been created as prototypes in other parts of the world.

Beijing Visionox appears to be the one prominent Chinese OLED company to be emphasizing OLED lighting products at the present time, although there are perhaps 20 more OLED producers currently active in China. However, NanoMarkets expects to see considerable efforts from the Chinese government to develop high-tech industries in China in the immediate future and this determination may well help grow the domestic OLED industry in China.  The need for more domestic technology development to serve Chinese consumers rather than exports is key to the latest—and all-important—Chinese five-year plan.

China does not yet seem to have a fully developed policy for phasing out incandescent lighting, which is perhaps a little surprising.  However, there have been major CFL promotional programs initiated in China, beginning in 2007.  And the Chinese government has also introduced measures to encourage public institutions to buy efficient lighting.  There are also local government incentives being offered to reduce the use of incandescent bulbs.

Korea

The evolution of Korean high-technology industries is characterized by (1) a high degree of coordination by the central government at all levels of the supply chain and (2) a desire to leapfrog other nations by opting for the "latest and greatest" technology.

The Korean government has been sponsoring the advancement of SSL since the mid-1990s.  Public programs boosting the LED business in Korea include the LED Lighting 15/30 Project, which aims to replace 30 percent of lighting devices in Korea with LED lighting by 2015.  NanoMarkets strongly believes that this kind of program will come into existence in Korea to support OLED lighting too. Also, much like Japan, Korea imports more than 80 percent of its energy, so energy efficiency could be an important trigger issue for the development of OLED lighting in this country. We also note that the Korean government is investing 30 billion won (US$26.8 million) in a fourth-generation in-line deposit system manufacturing process for white OLEDs.

The Korean industrial policy has not always been successful.  However, in the display space, the two leading Korean display firms have leapt to prominence in a very short space of time.  These firms—LG and Samsung—are also already involved in the OLED lighting space.  LG's OLED activities were significantly strengthened at the end of 2009, when LG acquired Kodak's OLED business.  Recently, Samsung started to develop OLED lighting modules and has already shown prototype panels that it claimed were built on existing PMOLED production lines. 

Taiwan

Taiwan is a powerhouse in both the LED and OLED display industry, which sets this country up ultimately to be a force to be reckoned with in the OLED lighting space. By 2012, incandescent bulbs are expected to disappear completely from the shelves of Taiwanese retailers, opening up the way for more solid-state lighting solutions including OLED lighting.

The Taiwanese OLED industry, although very well established, seems to have gotten into the OLED lighting business relatively late.  Before 2010 there was very little activity in this space.  In the past year to 18 months, however, AU Optronics has gone into this space and there have also been OLED lighting-related announcements from Taiwanese researchers related to improving the CRI for OLED lighting.  We believe that Taiwanese OLED display panel makers should not find much difficulty in the transition into OLED lighting because of their wide experience and expertise in OLED technology.

Opportunities for International Business in the OLED Lighting Space

OLED lighting is likely to develop in Asia under the powerful influence of national industrial policies that strongly favor domestic suppliers for domestic markets:

• This is especially obvious in the case of China, whose current five-year plan is specifically intended to promote high-tech industries in China, with OLED lighting products almost certainly considered as one of the industries likely to receive support in this way.

• In Korea a focus on specifically Korean standards in high-technology industries in the past has tended to make it difficult for foreign suppliers to enter this market.  There are no specifically Korean standards for OLED lighting at the present time.  However, Korean Standards (KS) have been developed for LEDs and, once again, this may be indicative of the directions that standardization of OLED lighting finally takes.  There is a plan to make the Korean KS standard for LEDs part of the IEC process of international standardization for LEDs.

Finally, we note that the luminaire industry in any country is strongly dependent on local tastes and so tends to favor domestic suppliers, or at least suppliers with a domestic presence.

Materials, Equipment and Licensing:  More Open Borders

Where such barriers to entry appear to be less important is where materials' licensing arrangements or equipment is involved.  Here, the market seems to be much more open and opportunities easier to capitalize on.  It is true that some local governments in China have provided support for companies that produce equipment in their localities, but generally speaking, OLED lighting firms buy their equipment from whoever has the best equipment at the best prices:

• In recent news a Korean OLED plant that was about to go on stream, has had to delay because of shipping delays by a Japanese equipment company impacted by the consequences earthquake and tsunami in that country.

• Universal Display in the U.S. has signed a technology and licensing agreement with Moser Baer for OLED lighting panels. Universal Display will provide Moser Baer with OLED materials and technology assistance. This follows the two companies' joint project to design and build a white OLED lighting manufacturing facility in the U.S. This project was awarded $8.3 million from the U.S. DOE (total cost will be around $20 million)—and the first pilot line is scheduled to be online during 2011.

• UDC has been selling its materials to multiple Asian companies in the OLED displays and lighting space.  Among the firms to which UDC supplies OLED materials are NEC Lighting, Panasonic, Showa Denko and Sun Fine Chem.

Opportunities for Crossborder Alliances in OLED Lighting

In addition, formal crossborder alliances impacting the OLED lighting space are not uncommon and may become more common in the future.  Perhaps the most important one at the present time is the alliance between GE in the U.S. and Konica Minolta in Japan.  GE is one of the so-called "big three" lighting companies and is aggressively pursuing R2R OLED lighting manufacture.  GE's relationship with Konica Minolta has the goal of bringing OLED lighting products to market. 

The power of brands and design:   Finally, it is worth noting the power of brands in this space.  Some of the most important international consumer electronics brands are moving into the OLED lighting space and this will help them gain market share in the OLED lighting market worldwide.  Many of these brands bring with them established marketing channels primarily for consumer electronics products (rather than lighting products).

Yet another direction for international cooperation is in design.  While U.S. firms have long made use of European industrial designers, the novelty of OLED lighting may open up new possibilities.  Thus, KM has hired Mexican design studio Agent to produce two concept lights. 

Taiwan/China:  For cultural reasons, if for no other, Taiwanese LED manufacturers have built ties to LED manufacturers in China, where they can capitalize on the low cost of Chinese labor and Chinese government subsidies. 

That said, we note that Taiwanese-Chinese collaboration in the advanced lighting space may go beyond simple manufacturing arrangements.  For example, Taiwan's ITRI and the Beijing National Electric Light Source Quality Supervision and Inspection Center have signed a mutual agreement for cross testing of LED products.  Under the agreement, LED products tested by ITRI can be exported to China.  Such arrangements may not survive the current nationalism inherent in Chinese technology policy.  There again, if such testing arrangements cut both ways, pragmatism might dictate the survival of such arrangements.

While it was always understood that OPV would be tricky to encapsulate if its flexibility was to be preserved this has proved a high-cost exercise as well.

And functional printing, which was supposed to lead to low-cost electronics and PV of all kinds has proved to be a useful tool, rather than the harbinger of a manufacturing revolution.

Although early proponents of dye-sensitized cells (DSC) dreamed of a future in which DSC would compete primarily on cost, it now seems that this future is unlikely to come about.  As far as we can tell, First Solar is today's cost leader in the PV space and the company's CdTe panels also perform better than DSC.  Since the end of the silicon shortage, crystalline-silicon PV costs have fallen considerably and may even eventually approach the inorganic thin films in terms of cost. 

The market for transparent conductors sold into the photovoltaics (PV) sector for electrodes is currently made up of transparent conducting oxides (TCOs), including indium tin oxide (ITO).  PV, however, is the first major high-performance application for transparent conductors to largely shake its dependence on ITO in favor of less-costly TCOs, mainly tin oxide- and zinc oxide-based materials.  This places the PV industry in the somewhat comfortable position of having relatively few cost incentives for making changes to the transparent conductors used; the status quo—TCOs—are already cheap.

However, this should not be taken to mean that there is no incentive for PV manufacturers to switch to other transparent conductive materials, or even that there is never a cost incentive to do so.  Indeed, while non-ITO TCOs are cheap from a materials point of view, the processes used to form coatings with them are certainly not cheap.  Sputtering equipment and other similar vacuum deposition equipment is expensive, and the energy required to achieve the deposition conditions is certainly costly as well.

Thus, the next major shift in transparent conductor usage will be toward materials that can be deposited by cheaper methods—printing and coating, although obviously PV manufacturers will not pay heavy premiums for materials that can be processed in this way.  

Opportunities for ITO Firms—Are There Any?

ITO has been displaced by tin oxide and zinc oxide to a large degree in the PV industry, but there are still significant amounts of ITO used.  NanoMarkets believes ITO will continue to see a declining penetration over the next eight years.  But because the PV sector itself is growing, the revenues that ITO suppliers will derive from the PV sector will continue to grow as will the volumes of the material shipped into the sector.

The reasons for this thinking are: (1) ITO can still claim to offer superior transparency compared to other TCOs, and (2) because of the development of market segments that favor “premium” products.  One good example of where ITO is likely to be used is in BIPV glass.  BIPV is close to being a luxury product and is one where transparency is important for obvious reasons.  In addition, in BIPV glass, the cost is dominated by the glass itself so the cost of ITO is not such a big deal.

NanoMarkets believes that the PV technologies that will use the most ITO will be OPV and DSC.  This is despite the wide perception that these technologies will be made or broken primarily by the cost points that they can achieve.  In fact, OPV and DSC look less and less like they will be able to offer major cost improvements and their commercial success is now completely dependent on their ability to exploit their unique characteristics—primarily transparency and flexibility.  Transparency gives OPV/DSC an opportunity in the BIPV glass space and we have already noted why ITO might claim that market.  But we also noted that OPV/DSC no longer has cost as part of its stated unique selling proposition, so at least ITO is not going to be ruled out immediately on cost grounds.

Opportunities for Other TCO Firms in the PV Space

NanoMarkets believes that non-ITO TCO firms catering to the PV sector will see their volume shipments and revenues grow over the next eight years.  This is because substitution of ITO with other, less expensive, TCOs remains—and it will continue to throughout the forecast period—a major trend for transparent conductors in the PV industry. 

And while other transparent conductors—printable ones, conductive polymers and nanomaterials—will make some inroads into the PV market, the extent of their penetrations will not be enough to significantly concern the TCO industry.  The market share that is captured by these printable materials will remain quite small throughout the period considered in this report.  This is especially the case for the largest volume PV technologies in the thin-film PV space: CdTe and TF-Si.  The volumes they achieve will be significant for the firms involved, but not as significant for the TCO firms from which they capture share.

Non-ITO TCO firms have the opportunity to increase volumes by supplying the growing PV technologies that already use them—CdTe, thin-film silicon, and CIGS.  But they also have the opportunity to gain new footholds with two PV technologies that currently use only ITO: namely OPV and DSC.  Not all OPV and DSC applications are as well insulated from PV cost as BIPV is; in fact, many will remain very sensitive to cost.  TCO suppliers can gain volumes and make money by helping OPV and DSC move away from ITO in these applications as part of their cost reduction efforts.

Opportunities for Nanomaterials and Conductive Polymer Firms in the PV Space

Nanosilver-based transparent conductive films are on the verge of an opportunity not seen in the history of the transparent conductor industry: the ability to produce films that are both more transparent and more conductive than ITO, in commercial quantities and at lower cost.  The importance of this development in the long run cannot be overestimated; it will eventually have major implications for all of the industries that use transparent conductors.

Carbon nanotube-based transparent conductors appear to be approaching a similar game-changing opportunity in the long run.  Although the carbon nanotube itself is quite new and still not yet fully understood, it seems likely that these carbon nanotube-based materials will produce commercial-volume films exceeding ITO’s performance just a couple of years after the nanosilver ones do.

In the short run, adoption of such new technologies will almost certainly be rather slow and deliberate. In the PV industry, the differences in deposition processes between these nanomaterial-based materials and the standard TCOs are substantial, and somewhat risky considering the low cost of the non-ITO TCOs they would displace.  NanoMarkets sees an opportunity for these materials to capture a two-percent share of the transparent conductor market in PV by 2014.  And because the cost of these films is mainly in the value of the materials rather than the cost of depositing them—as is the case for TCOs—that two percent share will produce 10 percent of the transparent conductor revenues in the industry.

Conductive polymer firms also have opportunities for growth in the PV market, even though their low cost means that the revenue-generating potential is relatively small.  The best opportunities are in OPV and DSC, in part because OPV already widely uses the same conductive polymers as hole injection layers/planarization layers between the active material and an ITO electrode.  But both OPV and DSC will also benefit from these conductive polymers because both flexibility and cost are critical to many of the applications in which they are to be used, more so than PV performance.  As OPV shifts away from ITO and the need for HILs shrinks, the new electrode application of these materials can help to fill in the gap and even grow volumes and revenues beyond what was generated by the HILs.

How New Developments in the Transparent Conductor Space will Create Opportunities for PV Panel Makers

Among PV panel makers, the development of the transparent conductor industry will produce opportunities to reduce costs and improve performance.  The most immediate opportunity for PV panel makers is for thin-film silicon, OPV, and DSC manufacturers, the ones that still use ITO mainly because of its legacy.  These firms have the opportunity to reduce costs by switching from ITO to one of the lower-cost TCO— tin oxide or zinc oxide.  Doing so could save over 75 percent of the materials cost of the ITO, an amount that fluctuates with the price of indium and ITO.

A major approaching opportunity for PV firms is to use printing or coating to deposit the transparent conductors instead of sputtering or other vacuum deposition techniques.  The advantage of doing so is not in the savings on materials cost—when the alternative is a low-cost TCO like zinc oxide or tin oxide—but in reducing the cost of applying the materials.  This opportunity covers three classes of transparent conductors: conductive polymers, nanosilver-based films, and carbon nanotube films.  There have also been attempts to print both ITO and other TCOs, but the commercial impact of such work seems to be negligible.

Conductive polymers:  PV manufacturers have the opportunity to use conductive polymers in this regard, offering the greatest potential savings among the transparent conductive options.  Manufacturers that take advantage of this route will maintain materials costs similar to those of the inexpensive TCOs, but will take full benefit from the lower cost of printing versus vacuum deposition.  But this opportunity is mainly one for devices that do not require high performance, yet do require high flexibility and low cost.  The conductive polymers are not very conductive or transparent in comparison to the other options, and devices using them would trade a performance hit for the lower cost and greater flexibility. 

OPV is an especially good fit for using conductive polymers as electrodes because it already uses the same materials as HILs.  In an overly simplistic approximation, using conductive polymers as electrodes would involve little more than leaving off the ITO layer.

Nanomaterials:  The opportunities for PV manufacturers to use nanosilver- and carbon nanotube-based materials to print electrodes are geared more toward high-end flexible applications.  These materials are the ones with the potential to exceed the transparency and conductivity performance of ITO and other TCOs.  If they are able to achieve this higher performance, then there will be no performance hit for using them.  And while these materials are not yet commercialized in any sense that is useful to determine initial pricing, NanoMarkets expects their materials costs to be higher than those of ITO, but for the low deposition cost to approximately make up for it. 

Hence, the total cost of using nanosilver- and nanocarbon-based materials is likely to be greater than that of using tin oxide or zinc oxide.  But this is still a major opportunity because it can enable high flexibility in products that rely on both flexibility and performance.  This opportunity is closer—beginning in 2012 or 2013—for nanosilver films than it is for carbon nanotube films, which will begin to be used in significant volumes a year or two afterwards

NanoMarkets believes that the market for smart windows will grow substantially over the next eight years, becoming a billion-dollar market by 2015 and then more than doubling by 2018.  There are several driving factors for this growth, which are discussed in the main body of this report and outlined here:

Added value: The smart window product types we discuss in this report add significant value to conventional windows in certain important market niches.  Yet, the overall size of the worldwide flat glass market—some six billion square meters today,—is sufficient that even niches of well below 1 percent of the market can generate substantial sums of money from high-value smart windows.

Developing electrochromic coatings that are less costly and that provide a broader dimmable range.  The limited dimmable range of some electrochromic and similar technologies limits their usefulness, and increasing that range would drive faster adoption—and increased sales of the materials that allow it.  Electrochromic windows are also the most costly of the smart windows and lowering the cost of the coatings will also boost growth rates.

Opportunities for Architectural Windows Firms

The earliest opportunity for glass suppliers is for electrochromic glass, which is already established in self-dimming automotive mirrors.  The automotive market can be expected to begin using electrochromic glass in other places—like side windows and sunroofs—before too long.  Glass firms that have forged the right relationships with auto manufacturers will be the first to benefit. 

ITO and Costs: The Real Story

Despite the end of the silicon shortage and the economic problems that beset much of the developed world, and the construction industry in particular, the prospects for thin-film photovoltaics (TFPV) still look quite good.  The thin-film silicon sector is recovering from a bad couple of years as it has both adapted to the end of the silicon shortage and weeded out non-productive suppliers.  First Solar, which dominates the CdTe sector, seems to have survived the downturn quite nicely.  And the CIGS sector, while it has yet to keep its promise of high-efficiency with all the advantages of conventional solar panels, at least is still keeping that promise alive.  In addition, while the end of the silicon shortage may have got rid of one of the main reasons why TFPV experienced a boom in the first place, the fact that TFPV can offer flexible PV products for building-integrated PV (BIPV) applications is a new reason why TFPV might be chosen over conventional PV.

Often described as a class of “miracle” advanced materials that will transform electronics and photovoltaics, the actual record of conductive polymers has been decidedly mixed.  For example, the expectations for polymer-based photovoltaics, or conductive polymers as a transparent conductive coating, have never been met.  And in the one area where organic electronics has taken off commercially—OLEDs—it is organic small molecule materials that have been widely used, not polymers.  To the extent that conductive polymers have been used in commercial applications, they have tended to be low-value applications; notably anti-statics.

This underachievement of conductive polymers has not been widely recognized, especially by trade, business and popular science publications which go on reporting on these materials as if they were highly successful in the marketplace, or at least soon will be.  As we have noted, however, this does not seem to be the case.  But this is not to say that conductive polymers do not have a commercial future.  This future, NanoMarkets believes, will depend on the clear identification of specific high-value applications where the use of conductive polymers makes sense because of their unique properties; that is, all the advantages of plastics with conductivity too.  It also depends on the resolution of a handful of important technical problems that continue to beset the conductive polymer business.

In view of all this, NanoMarkets believes that there is a need for a careful and realistic assessment of the market potential for conductive polymers going forward and this is the main reason why we are publishing this report.  “Realistic” in this sense means not only taking into consideration the relatively low level of success that conductive polymers have had to date in the electronics world, but also (in a more optimistic vein) what improvements can be expected in conductive polymers of the future and where they may shine in the future.

The Future of Conductive Polymers:  Room for Improvement

NanoMarkets believes that a number of technical developments are taking place that will improve the performance of conductive polymers and will—as a result—expand the markets available to conductive polymers over the next five-to-eight years.  The most dramatic of these developments relates to nanostructuring conducting polymers in order to provide the advantages associated with higher surface area and better dispersability. 

But there are also plenty of other opportunities for making the value propositions of conductive polymers in the electronics industry more viable; ones that don’t stretch all the way to using nanotechnology.  Many of these revolve around the materials themselves or manufacturing processes.  For example, in many cases industry is looking for more consistent materials and improved (which means lower cost) synthesis techniques.  Improved materials synthesis might, for example, come from reducing the number of steps in the synthesis process; a relatively small step, but one that needs careful consideration.

Other improvements to look for are improved solubility of polymer materials.  Many doped polymer materials are salt-like, which diminishes their solubility in organic solvents and hence their processability. The current solution to this issue—the addition of solubilizing substituents—only tends to complicate the synthesis process, thereby adding to the problem mentioned above.  So other directions would be a welcome new direction for conductive polymers.  In addition, greater solubility opens up the way for the use of solution processing; one way to reduce manufacturing costs.

Yet another issue surrounding conductive polymers at the present time is their relative instability under normal atmospheric conditions, which implies the need for better conductive polymers or better encapsulation, or both. 

NanoMarkets believes that all of the above areas could represent significant opportunities for specialty chemical firms and even start-ups looking to expand their presence in organic electronics.  By coming up with improvements of the kind profiled above, these firms could also considerably expand the addressable markets for polymer electronics, which now represents a relatively marginal activity, dominated by low-volume or low-value products.