A recording from our June 29th conference call on ITO and alternative transparent conductor markets is now available. If you are interested in receiving the link to download the audio file please contact us.
NanoMarkets' just-published analysis of the ITO alternatives market suggests that this market - much touted for several years - is ready to take off. We have been following ITO alternatives for several years now and have generally been quite bullish on their long-term prospects. In our latest report, however, we show that news from the alternative ITO "industry" is pointing towards accelerating commercialization.
In terms of hard cash we see revenues from ITO alternatives growing from about $140 million in 2010 to $1.1 billion in 2015 and then going on to reach almost $2.0 billion in 2017. And while almost all of the 2010 number will come from low-margin/commodity transparent conducting oxides, much of the future opportunity will come from more exotic and certainly more profitable nanomaterials; especially carbon nanotube films and nanosilver films.
The PV industry has already shifted its interest from ITO to other TCOs on cost - and cost stability - grounds. But, while alternative TCOs inevitably have cost advantages over ITO, they are usually far less transparent and conductive. We continue to believe that nanomaterials--especially nanosilver inks and carbon nanotube coatings--represent the only materials category where there is a significant likelihood of achieving materials that outperform ITO in terms of both transparency and conductivity while also reducing costs. Such materials either realistically promise very low materials costs (carbon nanotubes) or low-cost processing (nanosilver inks) or both. Other advantages that these alternatives may offer are cost stability (nanotubes again) and flexibility (good for touch-screen and flexible displays).
Research and development in these areas has been ongoing for years and this has often seemed to involve mostly fairly obscure companies. However, dig down a little further and you find that there is considerable interest from larger firms too. Ascent, a major player in the CIGS PV space, is working with Cambrios to develop nanosilver materials as the transparent electrode for its PV cells. Meanwhile, Sumitomo has a tripartite relationship with Chisso and Cambrios to sell a similar material into the LCD industry. Sumitomo, through its CDT subsidiary, has also announced the use of a copper formulation to replace ITO in OLED lighting.
And on the nanotube front, LG Display has a recently negotiated a joint development agreement with Unidym, which is also working with Samsung on nanotube transparent electrode film for e-paper displays. Then there is Novaled and Saint-Gobain Recherche, which announced as long as two years ago that they had developed a transparent electrode material for OLEDs with up to ten times the surface conductivity of ITO.
We believe that with the involvement of such companies, there is a very good chance that ITO alternatives will quickly reach a level of technological maturity that enables them to be a serious competitor to ITO in a number of important applications.
As far as this second point is concerned, according to NanoMarkets' analysis almost 90 percent (by value) of transparent conductor shipments, currently end up in the flat panel display (FPD) market; a market that is notoriously competitive. And the share of the transparent conductor market represented by FPDs is likely to fall to just over 75 percent in 2015, but from the perspective of transparent conductor makers, the price sensitivity of the markets into which they sell may actually get worse!
This is because, by 2015 almost 15 percent of the transparent conductor business will be accounted for by thin-film solar panels, OLED lighting, EMI shielding and antistatic materials. These are all areas where keeping prices low is vital; perhaps even more so than in the display industry. In the case of FPDs, solar panels and OLED lighting, continuing price declines are actually built into the long-term business model for these products.
This is in harsh contrast with the current realities of the ITO business. After price declines during the worst of the worldwide recession, ITO prices are beginning to rise again. So we are looking at expected rising prices for a material (ITO) that is being sold mostly into markets where price declines are expected for final products.
All of this suggests to us a useful "thought experiment." These are the kind of experiments that theoretical physicists often "perform" when they are trying to follow the logic of a piece of abstract thinking to its inevitable consequences. This kind of approach, we think, is useful to working out where the logic of rising ITO prices and declining prices for the final product actually take us.
Let us suppose that the factory cost of some kind of finished product (display, PV panel, etc.) is $500 and that value of the ITO used in this product is about 1.5 percent (i.e., $7.50). Assuming that ITO prices climb at an average of nine percent for eight years and the factory price of the finished product declines at eight percent, the price of the ITO used reaches $13.88 by the end of the period and the factory cost of the finished product reaches around $305.
The implications of these estimates are that the cost of ITO is now almost six percent of the factory cost of the product; four times its share at the beginning of the estimation period that we have considered here. These are arbitrary, but plausible, numbers and historically speaking prices (of both ITO and final products) have changed at much faster rates in many years.
A few years ago, there were projections by serious forecasters suggesting that Indium prices would reach $10,000 per Kg and that, of course, would raise the ITO to extraordinary price levels too. It was with numbers like this in mind that many firms who offer - or plan to offer - ITO alternatives launched their businesses. However, what our thought experiment above shows is that profit margins in the product areas into which ITO is sold can be seriously damaged by even modest price rises in ITO; prices rises that it seem highly likely to occur in the near term future.
This we believe will provide strong incentives for product manufacturers to switch to ITO alternatives. Even where they are nervous about making such a switch on performance grounds, profitability arguments are, in the end, likely to speak more loudly than technological conservatism.
Also, it is worth noting that in response to higher ITO prices, more firms might get into the indium business, which would hold ITO prices down. Indium is a by-product of zinc mining - it is normally recovered from zinc concentrates - and there are certainly zinc mines that could be producing indium that are not doing so but will in the future. Indeed, Japan has recently been staking out indium rights in Australian mines and new indium-bearing mines are being developed--or at least readied for development--in Canada as well. There are also plenty of zinc mines worldwide from which indium is not extracted but where the recovery of indium would be economic at a somewhat higher price. (On the other hand, China, the dominant supplier of indium China has been closing mines.)
In a similar way, reclamation of previously used indium (e.g. from sputtering processes) and less wasteful deposition processes for ITO could also hold down the ITO price.
We don't doubt that all these improvements on the supply side would go a long way to keeping the price of ITO in check, but there seem to be no expectations in the display industry of an ITO price slump or ITO glut because of such moves and we will follow this consensus in this analysis.
Our conclusion, therefore, is that over the next few years, and absent some major decline in indium prices, price factors will serve as a major driver for ITO alternatives, and especially nanomaterials.
Glen Allen, VA: NanoMarkets, a leading industry analyst in advanced materials and emerging electronics and energy markets will be hosting a dial in teleconference to present findings from the firm’s new report on transparent conductor markets. The date of the event is Tuesday, June 29th at 10:00 AM EDT. Persons interested in participating in the event can request access to the call by contacting the firm via their website at http://www.nanomarkets.net/site/contact. There is no cost associated with attending the call.
About the Call:
The conference call will present NanoMarkets’ latest findings from its ongoing coverage of the market for indium tin oxide (ITO) and alternative transparent conductors. In a recent news release the firm stated that suppliers of ITO alternatives were facing extremely favorable market opportunities in light of changes in ITO prices as well as developments in application markets. On the call Dr. Paul Markowitz, the report’s lead author, and Lawrence Gasman, NanoMarkets’ principal analyst will address a host of questions surrounding where new opportunities are available for materials suppliers, how the competitive landscape has changed in the past year and what the implications will be for the next twelve to eighteen months. Further commentary on companies and specific product segments will also be provided.
About the report:
The NanoMarkets report, “Transparent Conductor Markets 2010: ITO and the Alternatives” analyzes the transparent conductor market, covering ITO, ITO inks, other TCOs, organic conductors, transparent nanotube and graphene coatings and nano-metallic coatings. The report examines how each of these materials fits into the current and future requirements for a broad variety products including flat panel displays, e-paper and flexible displays, touch-screen displays, OLED lighting, thin-film and organic PV and EMI/RFI coatings. In addition, it will be of interest to any firm that is concerned about the changing value propositions of transparent conductors, in the display, PV and lighting industries and it includes eight-year volume and value forecasts of ITO and ITO alternatives as well as a discussion of strategies for market success in this market.
About NanoMarkets:
NanoMarkets tracks and analyzes emerging market opportunities in energy and electronics markets created by developments in advanced materials. Visit www.nanomarkets.net for a full listing of NanoMarkets' reports and other services.
Glen Allen, Virginia: After years of playing second fiddle to indium tin oxide, ITO, alternative transparent conductors have reached their market takeoff point. So says a just-released report from NanoMarkets, an industry analyst firm based here that tracks the transparent conductor market. The report titled, “Transparent Conductor Markets 2010: ITO and the Alternatives” says that while alternative transparent conductors will account for just 5 percent of transparent conductor revenues in 2010, by 2015 that share will have grown to almost 20 percent. According to NanoMarkets latest projections, the entire transparent conductor market (including ITO) will be worth $5.6 billion in 2015.
On the face of it, OLEDs appear to have a lot of market potential. Their vibrant colors and thin format promise a new generation of televisions and mobile displays much superior in visual quality than LCD displays. And OLED lighting may a new technology that fills the gap when incandescent lights begin to disappear from the market in the 2012/2013 timeframe.
In both cases, price points are going to be crucial to the success of OLEDs and one way to achieve better prices is with printing. As we emphasize in this article, this is largely a matter of finding the right materials. Although printed OLEDs have never quite achieved the success that some have projected for them, as this article shows, a surprisingly large number of the world’s biggest materials and chemical firms are betting on them. The information for this article is drawn from NanoMarkets’ latest research report on OLED materials in which we forecast that sales of polymer OLED materials – the kind of OLED materials used in printed OLEDs – will reach $475 million in sales by 2017.
