Transparent Conductor Markets; ITO Remains Dominant....

NanoMarkets has released a new report, "Indium Tin Oxide and Alternative Transparent Conductor Markets". The following is an excerpt from the report.

The transparent conductor industry is dominated by a single material-indium tin oxide (ITO). Manufacturers of flat panel displays (the largest users of ITO) have relied on this material for years but have always griped about ITO's inability to meet their requirements. When used as a conductor, ITO is not very conductive, and as a transparent layer, it is not very transparent. Beyond this fundamental shortcoming is the fact that ITO is generally difficult and expensive to apply as a thin film of sufficient quality. Once it is applied, it is brittle, and therefore can easily wear out or crack when used in applications where bending is involved. The price for this mediocre performance is quite high, since ITO is dependent on indium, which has been priced at $350 to $1,000 for the last several years.

ITO's many faults would seem to create a ripe environment for competition-new transparent conductor materials offering improved performance in the areas where ITO falls short, and different methods of using and applying ITO to address these issues.

These things should happen, and presumably they will some day, but we are not there yet. Since NanoMarkets issued its first ITO report in 2008, ITO has shown little sign of fading away, and because of the price decline due to the worldwide recession, its end is even further out than we might have previously expected. We did warn in that report, however, that alternatives to ITO would make progress, but only slowly; this has proved to be true, and it probably would have been so even without the recession. However, the ITO market is very large, so that even small inroads into the market by ITO alternatives can lead to substantial revenue opportunities. In addition, some of the new applications that are emerging are only enlarging the challenges that ITO is facing.

New Applications Challenges to ITO: Displays, Lighting, and PV

Touch-screens: Touch screens routinely use ITO in the touch subsystem as well as in the LCD frontplane from which they are usually built. Resistive touch-screens, which dominate the market, are ripe for an alternative transparent conductor. All one must do to verify this firsthand is walk into a local high-volume retail establishment and attempt to sign on the old, worn-out point-of-purchase display device. ITO cannot stand up to the repeated poking and flexing that is involved with this type of touch screen without deteriorating or cracking.

Capacitive touch screens are a different story. These are emerging as the high-end version of the touch-screen category, especially since the launch of Apple's iPhone, which uses capacitive technology. Capacitive technology offers higher clarity and quality of the display image and since it does not work by poking with (say) a stylus, the capacitive screen can more easily make use of ITO. However, resistive technology is likely to take most of the touch screen market for some time to come and will be one of the first areas to adopt an ITO substitute in a significant way.

Makers of ITO substitutes seen the touch screen market is seen as a big opportunity; in addition to the business and engineering reasons supporting the adoption of such a technology, the addressable market is already very large. As a result, NanoMarkets expects ITO to lose market share in the resistive touch-screen segment fairly quickly, although, absent some kind of breakthrough in the transparency and conductivity of an alternative, NanoMarkets expects ITO to dominate the capacitive touch-screen market throughout the forecast period.

Flexible displays: Flexible displays would be an attractive market for ITO substitutes, because, like touch-screen displays they also place important physical demands on the transparent conductors that they use. However, despite the impression that one might get from a superficial read of the trade press, there is really no such thing as a fully flexible display on the market today.

There have been demonstrations (in late 2008 an issue of Esquire magazine was released with an e-paper display on its front cover), as well as announcements of such displays, but none are commercially available. For instance, the first flexible e-book reader, Readius by Polymer Vision, was scheduled for release in 2008 but now is not expected until later in 2009.

And in terms of flexible OLED displays, these are even further behind. While Samsung has announced that it expects to introduce flexible OLED displays in 2010, flexible OLED displays have far fewer backers than flexible e-paper displays and indeed the term "flexible display" and "e-paper" have become closely related, if not synonymous.

With the plethora of product delays throughout the thin-film electronics industry, NanoMarkets has a healthy skepticism with regard to claims of imminent releases of revolutionary devices. Thus, NanoMarkets doesn't expect flexible OLED displays to gain a foothold in commercialization until 2011 or later.

Thin-film photovoltaics (TFPV): TFPV stands out as the only one of these five major application areas for transparent conductors in which ITO does not start off as the dominant market leader. Only organic photovoltaics (OPV) and closely related dye-sensitized cell (DSC) PV--the lowest-volume technologies and the furthest from commercialization--use mainly ITO for their transparent conductors. The most recent entries onto the TFPV commercial landscape, CdTe PV and CIGS PV, mainly use alternative TCOs (fluorine-doped tin oxide for CdTe and aluminum-doped zinc oxide for CIGS). And the long-established amorphous silicon (a-Si) PV industry, although it used mainly ITO prior to about 2000, now uses alternative TCOs (AZO and FTO) as much as ITO.

ITO is not heavily used in the TFPV sector, in part because this sector is very cost-conscious. This area is attracting considerable attention from makers of ITO substitutes for a number of reasons. One such reason is simply that PV is one of the few industries that has continued to experience growth during this recessionary period and so is seen as providing an attractive customer base. Another relates to flexibility. The TFPV industry is heading toward flexibility in higher-end products--a move that may bring about some opportunity for other alternative transparent conductors (besides TCOs). Especially in the pre-commercial fields of OPV and DSC, there is a lot of experimentation going on with flexible transparent conductors.

As such, NanoMarkets expects non-ITO TCOs to remain dominant in the TFPV segment throughout the forecast period. ITO is not expected to make any increase to its fairly low market share; instead, the more flexible alternatives (including polymers, CNTs, and the metal formulations discussed below) will make inroads into this market toward the latter part of the forecast period.

Solid-state lighting: OLED and electroluminescent (EL) lighting both employ ITO as the transparent electrode in most cases. If there is a reason to replace ITO in EL lighting it would be cost, since this type of lighting is used primarily in cost-sensitive areas such as automotive dashboard lighting and low-end signage applications. But EL is a mature technology that most people believe will gradually be replaced by better performing sold-state lighting technologies, so the opportunities are not that great in the long-term for transparent semiconductors of any kind.

The opportunities are much greater, however, in the area of OLED lighting, which is expected to yield higher-performance devices and to eventually become a major part of the general lighting market because of its energy efficiency and potential low cost in the future. OLED lighting is just emerging as a technology, and although ITO is usually used for its transparent electrodes, it is not firmly entrenched because of this early state of development. In addition to the usual drawbacks of ITO--cost and lack of flexibility--OLEDs can suffer aesthetic shortcomings due to ITO's fairly low conductivity. Large OLED panels, such as might be used in lamps, will show a brightness gradient as voltage drops along the length of the panel because of ITO's resistance. This non-uniformity of brightness can be addressed by adding a metal electrode grid, but that too often has aesthetic consequences.

NanoMarkets expects ITO to lose share of the OLED lighting market fairly rapidly. (And, of course, such a market barely exists anyway, so there is no established use of ITO as such.) In its place will be a variety of substitutes: other TCOs at the low end, as well as conductive polymers, CNTs, and composites. While the EL lighting market will go into decline toward the end of the forecast period, NanoMarkets expects lower-cost TCOs and polymers such as PEDOT to begin to take some share of what's left of the market, helping to extend its life.

Rigid FPDs: As we discuss below, rigid FPDs are not likely to see early inroads by ITO alternatives. However, even this area, we believe, will not be completely invulnerable to competition by ITO substitutes. The rigid FPD marketplace offers producers of ITO alternatives an opportunity to introduce their products one step at a time: first demonstrate performance on a standard platform (the rigid FPD), then go after the targets with greater payoff.

A couple of firms (e.g., Cambrios) seem to be adopting this strategy and NanoMarkets expects ITO alternatives to claim a small portion of the rigid FPD market fairly soon, albeit claiming an increasing market share at a slow pace. Instead, these products will be used as a jumping-off point into the other markets.

Where ITO Will Stay Unchallenged

Our analysis suggests that even by 2016, ITO will still have about 90 percent of the high-end transparent conductor market. (This may make efforts to come up with ITO substitutes seem rather pointless, but the OEM market for ITO is so large, that the 10 percent is worth chasing after.) While, this number is an estimate only, scenarios in which ITO's use declines significantly as a share of the market are simply not credible and are not often made even by manufacturers of ITO substitutes, although they are sometimes.

The applications for ITO where NanoMarkets expects ITO to retain its dominance well beyond the time period considered in this report are those in which its use is not hindered by ITO's brittleness and where cost concerns are overridden by a requirement for maximum transparency/conductivity performance. This would include rigid FPDs and high-performance capacitive touch screens, both of which are judged by their visual display quality and do not require bending.

That is not to say that other applications will not continue to use ITO in large proportion. But NanoMarkets expects the applications that require flexibility (touch screens and flexible displays) and ones that are extremely cost-sensitive (lighting and PV applications) to more quickly displace ITO with alternative transparent conductors. It is also reasonable to expect that the type of ITO substitute that will be most significant for each application will depend on the application itself. For instance, rigid applications that are mainly concerned with cost reduction are more likely to switch to less-costly TCOs since they are likely to be similar to ITO in application methods and processing (perhaps even using the same equipment), and flexible displays are more likely to switch to a material touted for its flexibility, such as PEDOT or CNT films.