Changing Opportunities for Transparent Conductors in the Touch-Screen Industry

This article is based in part on research from Touch Screens: Technologies, Materials and Markets - 2010

Touch-screen displays, a target for the ITO-alternatives business for a few years now, were singled out as a special opportunity for ITO alternatives because of their particular vulnerability to ITO's tendency to crack. Polymers and nanomaterials, which are much more flexible than ITO, have been presented as ITO alternatives that do not crack. And while most ITO alternatives currently are not as transparent or as conductive as ITO, this fact may be outweighed by the non-cracking capability of these alternatives for certain applications.

The cracking problem is most relevant in the case of analog resistive touch-screen technology in which touch is sensed by moving ITO sensors. Over time, sometimes over an unacceptably short period of time, this movement causes ITO cracking. Other types of touch-screen displays are less vulnerable to the cracking problem, but until recently virtually all touch-screen displays used analog resistive technology.

Blame it on Apple

The arrival of Apple's iPhone (and now the Apple iPad) has changed the opportunity space for transparent conductors in the touch-screen display market in several ways. Most obviously, Apple has made touch mainstream. Touch-screen technology in one form or another has been around for about five decades, but has never taken off as a versatile mainstream input technology for computing. That this is changing rapidly is evidenced by the number of touch-driven tablet computers that appeared at the recent Consumer Electronics Show in Las Vegas.

More touch-screen displays, of course, means that more transparent conducting material will be used for touch sensing subsystems. However, the "touch revolution" that the iPhone set off was not with analog resistive technology, but instead with projected capacitive touch technology mainly because it offers the multi-touch capability that analog resistive technology does not. But ITO is used in projected capacitive in quite a different way from the manner it is utilized in analog resistive, one where cracking is less of an issue. Projected capacitive technology operates with the user interacting with an electrical field and the ITO layers do not have to bend.

Thus, the rise of projected capacitive technology at the expense of analog resistive technology means that it is harder to make the case for ITO alternatives. Although analog resistive technology continues to be widely used, "crackability" is just that much less of an issue.

Price on the Rise

In addition to the improvements that ITO alternatives can make with regard to the worrisome physical properties of ITO, their other claim to fame is that they are less expensive than ITO and also less subject to price fluctuations. ITO suffers in this area because its price is very much tied to the price of indium. To the extent that display makers have gone with alternatives to ITO, it has usually been because of price issues.

The cost advantage of ITO applies to all kinds of displays, not just touch displays, but in the current market environment, touch-screen display makers have special reasons to be concerned about the price of ITO.

First, ITO is used in most (but not all) touch-screen technologies. (There are now almost 20 kinds of touch-screen technologies; analog resistive and projected capacitive are by no means the only ones.) This means that each touch-screen display generally uses more ITO than a regular LCD screen; ITO is used in the LCD display and in the touch sensor. Because of this extra use ITO pricing is more important in touch screens than in regular displays.

Secondly, the goal of the touch-screen display industry is now to take this technology, which until recently has mostly been associated with kiosks and ATM machines, into computers, appliances, automation controls, etc. For this to happen, that is for touch-screen technology to become ubiquitous, the premium paid for a touch display over a similar device without touch must be minimal. The high cost of ITO is therefore an obstacle to this goal.

Eliminating the Transparent Conductor

For the last year or so, ITO prices have declined somewhat as a result of the worldwide recession, but they are bound to start rising again as economic growth returns to the developed world. Some check on ITO prices may emerge if more zinc processors decide to produce indium as a by-product of their business, but it seems pretty certain that barring the appearance of some very inexpensive source of indium, polymer and nanomaterial alternatives to ITO will always be less expensive. Nanomaterials also hold out the potential for improved transparency, flexibility and conductivity over ITO, but they are a long way from achieving this objective.

It is also worth mentioning the possibility that transparent conductors of any kind may be eliminated from touch displays. We note that some high-end touch-screen technologies use infrared or piezoelectric sensors, which are not based on conductive coatings, and these technologies could be deployed in mass markets at some time in the future.

In at least one case, a firm has built a touch-screen display using the existing LCD electrodes for capacitive sensing. (This type of thing becomes increasingly possible as the trend toward having the entire touch screen manufactured by a single firm proceeds. At present, OEMs purchase touch screens from an integrator that "glues" the touch sensor to a regular LCD display source from one of the leading FPD manufacturers.) Finally, instead of an ITO layer or ITO strips, projected capacitive touch displays (especially large ones) sometimes use conductive wires. Such wires are durable, but are also visible and are really only appropriate for displays that are used intermittently.

Why Price Matters

The possibility that transparent conductors will go away completely in the touch-screen business in the foreseeable future is one that no one seems to be seriously considering. However, as we have indicated above the substitution of polymers or nanomaterials for ITO in touch screens seems highly likely. At NanoMarkets, we have run cost models in which ITO exhibits only modest price rises, but in which touch-screen technology continues to decline in price at current or near-current rates. Under these assumptions, ITO would end up accounting for a very large share of materials costs with declining gross profit margins the inevitable result.

Our conclusion is that, while it may not seem to be happening at present, touch-screen makers will increasingly turn to ITO alternatives. We also think that, while nanomaterials hold out great promise, they are not going to outperform ITO for quite some time. With this in mind, we expect a two-tier market to emerge in which ITO is used for high quality products and its alternatives are used in areas where image quality may not be as important. Industrial controls and ATMs would seem to fit into the latter category.