Materials for OLEDS - Market Update

Nov 7 2012

Introduction
Escalating Demand
The dominance of UDC
The Role of China
Solution Processing of Small Molecules
Polymers in OLED lighting
Technology Gaps and Recent Developments
Objectives and Scope of this Report
Methodology and Information Sources for this Report
Plan of This Report
About NanoMarkets

Introduction

OLEDs have broken through in the past 18 months, and there are now clear signs that they will finally live up to their long-promised commercial potential. In this new, booming environment, the demand for OLED materials will also continue to grow, and the next few years will present plenty of opportunities for OLED materials suppliers to break out of their niche, specialty status and start to enjoy significant, and profitable, revenue streams.

Trend indicators include the following:

OLED displays are now part of the mainstream mobile computing sector, with Samsung’s Galaxy brand smartphones and tablets leading the way.
Large size OLED TVs from both LG and Samsung are entering the market this summer and fall, and other manufacturers like Taiwan’s AUO are likely to follow in the near term.
Finally, OLED-based lighting is also already on the market, and although OLED lighting products currently consist almost entirely of designer kits and low-volume luxury lighting, the industry is striving toward larger panels that may just be the next big things in the general and architectural lighting markets.

Escalating Demand

All of these trends mean that the addressable market for OLED materials is rapidly growing and will continue to do so. Not only is the number of modules growing, but also the average sizes are getting steadily larger. This growth in average size, along with the ongoing shift from simple, passive matrix sub-displays of the past to the relatively small, active matrix mobile phone displays on the market today, and now toward TV and lighting applications that, by definition, require even larger displays, means that materials suppliers to the OLED industry will have expanded opportunities to generate revenues selling their materials—from substrates and transparent conductors to organic semiconductors, emissive materials, and encapsulation technologies.

Some of the most important current issues that materials firms must navigate in the OLED space are:

The dominance of phosphorescent emitters from Universal Display Corporation (UDC)
The increasingly important role of Chinese OLED materials suppliers as competition for existing suppliers in developed regions;
The likelihood of a growing role for solution-processable small-molecule OLED technologies in order to reduce manufacturing costs; and
The continuing failure of polymer OLEDs in the market.

The dominance of UDC

Presently, 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 manufacturers, notably Samsung, which today produces greater than 90 percent of the active matrix OLED products on the market, to employ UDC technology through partnerships and licensing deals. However, the recent invalidations of a UDC PHOLED patent in Japan may mean that the market will open up to other materials firms. The long-term implications of this patent trouble have yet to become apparent, as there are many, more fundamental UDC patents that have not been successfully challenged. In the past, the ability of other materials firms to gain a foothold in phosphorescent 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 are also several firms in mainland China—BOE Co., First-o-Light, Visionox, etc.—producing OLED 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 will be of growing intensity.

Solution Processing of Small Molecules

The solution processing approach has the potential to deliver the low-cost/ease-of-manufacturing advantages of solution processing to the OLED industry without forcing the industry to shift to an entirely new kind of material (i.e., polymers)

DuPont and UDC are both actively pushing solution-processable small molecules to build OLED panels, and nanomarkets think that most of the OLED materials firms are at least considering ways to expand their capabilities in solution-processability. NanoMarkets believes that a shift toward solution processing will be necessary in the future to help OLED TV manufacturers like Samsung and LG to achieve manufacturing cost goals.
At the same time, GE has struggled to commercialize solution-processed materials on its roll-to-roll (R2R) lighting line, and the GE pilot line is being de-emphasized today and probably for at least the next few years. It is not yet entirely clear what this move will mean for the wider, future prospects of solution processing in OLEDs, but nanomarkets think it is safe to say that R2R processing—especially printing—has proven much harder to do than the industry initially expected.

Polymers in OLED lighting

Sumitomo Chemical, with its ownership of CDT, controls the nexus of polymer OLED emissive 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, major active-matrix OLED manufacturer is actually using polymers today. As a result, Sumitomo remains a marginal player in the OLED space.

However, NanoMarkets believes that polymer OLEDs might have a role for really large lighting panels at some time in the future. Indeed, Sumitomo has recently made an apparent strategic move toward OLED lighting as a target market for its OLED activities. Nevertheless, given the lack of activity in polymers outside of Sumitomo, and given polymers’ lackluster history within the overall OLED market, nanomarkets think that it is fair to say that betting on a vibrant market for polymer OLEDs is taking a big risk.

Technology Gaps and Recent Developments

The increasing demand for OLED materials will only continue as long as the materials industry keeps up with developments to close the remaining technology gaps. Specifically, the following are still needed:

Longer lifetime blue phosphorescent emitters, the industry, notably UDC, has made progress in the last year on the development of longer-lifetime light blue materials, but more work is needed. Light blue materials are suitable for OLED lighting applications, but high efficiency (i.e. phosphorescent) deep blue materials, which are needed for display applications, are still largely unavailable, at least with acceptable lifetimes.
Better, higher performance encapsulation technologies that will allow greater penetration of plastic substrates, and of flexible OLEDs, are still needed. While certainly the glass industry will continue to hold onto the greatest market share of both substrates, cover glass, and encapsulation for the timeframe of this report, a shift toward increased adoption of plastic alternatives would enable significant cost reductions and open up the addressable markets for OLEDs even more.
Finally, manufacturing methods that will enable production of larger-area OLEDs at reasonable cost present a significant opportunity for materials and technology suppliers.

But large-scale manufacturing methods, such as would be enabled by greater adoption of solution-based materials deposition or by R2R manufacturing, are still unproven, as exemplified by the failure of GE to make progress on its R2R line. In addition, all projections that show OLEDs reaching revenues in the billions of dollars assume major reductions in OLED manufacturing costs. This issue is not entirely materials-related, but is closely related to materials, and it presents opportunities for the materials makers:

Bigger economies of scale will be realized as the OLED market ramps. At the moment, pricing for many OLED materials sits uncomfortably between the high pricing one expects for materials sold largely into R&D environments and the more moderate pricing typically found in commercial specialty chemical markets. Opportunities exist for materials firms that can shift their pricing structure more towards the latter.
Reducing costs will be especially important for OLED lighting applications. Although initial costs (and prices) for OLED lighting products are quite high, the only way that OLED lighting can be expected to compete against other alternative lighting sources will be in terms of a total cost model. Reducing the cost, in turn, depends heavily on lifetimes, luminance, and efficiency, all of which are heavily materials-dependent challenges. Several different materials in the OLED stack can affect these characteristics, including the emissive material used and the quality of the encapsulation scheme.

There are also materials issues that relate to the OLED panels themselves, especially when considering the larger addressable markets of OLED TVs and OLED lighting:

At the present time, most commercial OLED panels are quite small. As noted above, it will be important to closely watch the OLED TV industry to assess the viability of large-area panel production, especially for the cost-sensitive OLED lighting industry. Materials, both substrates and functional organics—may have a role in taking OLED lighting to the next stage; that is, toward larger panels.
In the longer term, the opportunities for even greater penetration of OLEDs will be in flexible or at least conformable 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 market is heavily dependent on materials selection, and the Maturity and prices of available OLED materials remains a challenge to the market.

However, this should be seen as an opportunity for materials makers, especially because the potential volumes are so high. Assuming for the moment that OLED lighting and OLED TVs are able to capture even just a few percent of their respective markets, the square footage of OLEDs sold will be considerable and will easily outshine the amount of OLED material sold for smartphone displays.

Objectives and Scope of this Report

NanoMarkets has been providing industry analysis of the OLED community for six years, and is the leading supplier of analysis in the OLED lighting space. The goal of this report is to analyze and forecast the prospects for OLED materials in the coming eight years. Specifically, the objective is to examine the OLED materials sector and analyze what nanomarkets see as the new directions that OLED materials will be taking in the coming years for both displays and lighting. It is also to identify and quantify the opportunities that are emerging in this space. This report is the latest update from NanoMarkets on the OLED materials markets. In it, Nano quantify the opportunities that are emerging from the booming OLED display industry and in the nascent OLED lighting market, where the key determinants of success will be device efficiency, lifetime, and reduction in total cost of ownership. Finally, the report contains detailed volume and revenue forecasts for materials used for OLEDs broken out by material type and functionality, as well as by application and by deposition method, wherever possible.

The materials discussed include all of the major materials used in the OLED stack, as well as the substrates and encapsulants. Materials are discussed in the report from the perspective of the pioneer OLED panel manufacturers—Samsung, Sony, Osram, AUO, etc—to the smaller and nontraditional firms making a play in OLEDs, such as Kaneka, Lumiotec, Visionox, and others. In addition, the report contains detailed forecasts of materials used for major OLED categories— displays and lighting—in both revenues and volume terms. The forecasts are developed from our forecasts of both OLED shipments and OLED manufacturing capacity, and nanomarkets utilize our insider's understanding of what the major OLED firms are likely to need from their materials suppliers.

Methodology and Information Sources for this Report

This report is based on NanoMarkets' ongoing research in the area of OLEDs and OLED materials, and on ongoing discussions with key players throughout the OLED community. Nanomarkets also draw on extensive secondary research, including an analysis of the relevant applications markets within the OLED lighting and display space.

Additional research for this report was drawn from the World Wide Nanomarkets, commercial databases, trade press articles, SEC filings, and other corporate literature in order to further elucidate what is going on in this sector. The forecasting approach taken and the assumptions made when preparing the forecasts in this report are explained in more detail in Chapter Four. This report is entirely international in scope. The forecasts are worldwide forecasts and nanomarkets have not been geographically selective in the firms that nanomarkets have covered in the report or interviewed in order to collect information.

Plan of This Report

Chapter Two reviews the various applications for OLEDs and contains our panel area forecasts for those applications, which form the basis of the materials forecasts later in the report. Chapter Two also contains a discussion of some of the key end users of the OLED market, with a particular focus on those firms that shape the needs of the industry.

Chapter Three examines the OLED materials supply chain. In this chapter, nanomarkets discuss the ways that materials suppliers are planning to serve the growing OLED lighting market. Nanomarkets also analyze the strategies of some of the major players in this space, ranging from giant chemical firms such as BASF, DuPont and Sumitomo to important specialty firms such as UDC, Novaled, and Plextronics.

In Chapter Four, NanoMarkets provides detailed forecasts of the OLED materials sector with breakouts by layer functionality and by type of material, from the substrate and emissive layer to encapsulation technologies. The forecasts are organized primarily by layer functionality in the OLED materials stack, with consideration given in each layer to the dominant small- molecule vapor-deposition approach, solution-processable small molecules, and the polymer approach to making OLEDs

About NanoMarkets

NanoMarkets is a leading provider of market research and industry analysis of opportunities within advanced materials and emerging energy and electronics markets. Since the firm’s founding, NanoMarkets has published over one hundred comprehensive research reports on emerging technology markets. Topics covered have included OLED displays, lighting and materials, thin-film electronics, conductive inks, transparent conductors, renewable energy, printed electronics and other promising technologies. Our client roster is a who’s who of companies in specialty chemicals, materials, electronics applications and manufacturing.