Cost and Efficiency: The Two Key Competitive Factors for OLED Lighting Materials
Published: October 19, 2010 Category: OLED Lighting
In NanoMarkets' judgment, the two key needs of the OLED lighting market that materials firms must play to with their lighting-oriented offerings are cost and efficiency. To win support from investors and senior management we believe that it is very important for these two factors to be part of any business plan to sell materials into the OLED lighting space.
Cost: Although most of the current OLED lighting products – and the ones that are likely to follow in the next few years – are premium products, the vision that most firms in this space currently have is for them to make a significant penetration of the general illumination space. It is very unclear how OLEDs will do this; what kinds of product designs they will use. But it does seem to require that the materials costs for OLEDs come down in cost. This would seem to be the only way OLED lighting could become a mass market consumer item, absent a lifetime for such lighting that is measured in many years.
There are a number of different strategies that could be adopted by materials makers that could be used to reduce costs:
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The most obvious strategy is for materials makers to simply lower their prices. In terms of the core OLED materials that go into the OLED stack, we note in this context that a key part of the organic electronics value proposition is that the cost of materials can be very low; although to date this has not really proved to be the case, mostly because OLED materials firms find themselves in a position that they must quickly recoup the cost of R&D. However, it is important to note that current cost structures for OLED materials do at least permit the possibility of materials firms adopting lower pricing. Eventually some materials firms may be willing forward cost price; that is price low in order to capture large orders which will justify their low pricing strategy; with R&D costs captured later in the market’s evolution.
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Cost breakthroughs are possible as the result of actual technical breakthroughs; we should remember that with both OLED displays and lighting on the ascendant more R&D money will be poured into the OLED space now.
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Lowering costs may also result from larger volume production, with the usual implication that fixed costs are spread over higher volumes
With regard to the main materials that go into OLEDs, the direction of pricing over time seems certain to downward, but this is not true of the ITO that is being used today in most OLEDs. OLED makers have shown a strong tendency to replace ITO for physical and cost reasons. If ITO goes up in price over the next few years, as we expect it will, and OLED lighting goes down in price, ITO could quickly find itself with an unacceptably high proportion of the BOM for OLEDs. This then means that OLED lighting may well be a serious market for the many ITO alternatives that have been proposed for the past few years. In addition, the OLED lighting space which has made no real investment in ITO deposition yet, because OLED lighting plants are only just beginning to be put in place, would be more likely than other sectors that use transparent coatings to use something other than ITO.
All the evidence from the market suggests that one way that will ultimately become ubiquitous for keeping down the cost of OLED lighting is R2R processing, which includes the possibility of printed OLED lighting. R2R manufacturing increases throughput and is probably the only way that the industry will get to the volumes needed for a significant penetration of the lighting market.
A detailed discussion of R2R processing lies beyond the scope of this report. However, what is important here is that as a result of the manufacturing trends described above, materials will have to be designed specifically for an R2R processing environment. This should bring some hope to firms that have been developing OLED inks, who have struggled long, but seen little for their efforts to date. In addition, R2R implies a measure of flexibility which in turn implies flexible substrates. These are likely to be supplied either by glass firms with novel flexible glass offerings or plastics/metals firms offering high value sheeted products.
Efficiency: In the same way that any OLED materials strategy aimed at the lighting space must have something to say about cost, so it must also address the issue of efficiency. Cost is intrinsic to whole OLED lighting business concept as currently conceived by most players in the market, because this concept implies mass markets. But efficiency is just as key in this space as a competitive factor, because OLED lighting is being pitched as specifically being promoted as an efficient form of lighting. And efficiency is, after all, the the reason why OLED R&D is being funded by the government. While for early OLED designer lighting, efficiency may not be the key factor driving the market, efficiency will be important to broadening OLED lighting’s appeal to larger segments of the general illumination market.
Efficiency is once again very much a materials issue and one that OLED materials firms can and do compete on. However, it is important to realize that the efficiency factor is perhaps most important not at the level of the individual materials, but at the level of the OLED materials stack. This means that efficiency can be better played for competitive advantage by materials suppliers who offer a particular view on how their materials should be stacked. It also means that OLED lighting makers themselves can design improved stacks around materials sets that they have completely specified even if they buy in the materials from outside suppliers
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