Category: The Front Line

UHD-TV, Small OLEDs, and Market Forecasting

Forecasting the market for technologies and for product categories early in their commercial lifetimes is a very tricky business.

First there are no straight lines — or even curved ones — representing historical sales data that can be projected forward. Of course, reputable market intelligence companies, and there are some, don’t make their predictions based only on the projection of historical data. They also interview individual manufacturers and supply-chain participants to obtain their predictions of their own output, and add up the results for a grand total. In addition, they interview major purchasers, such as Fry’s and Best Buy, for estimates on how many units they expect to buy in the future. There is, of course, no guarantee that the number of units manufacturers expect to sell equals the number retailers expect to buy, which provides the opportunity for some creative number-crunching.

All of this assumes that everybody is giving honest answers to the market intelligence firm’s questions, which may or may not be the case. One can easily think of situations in which one company or another would think it is in its interest to high-ball or low-ball the numbers. But even if everybody is providing their speculative numbers as honestly as they can, there is still plenty of room for a market intelligence company to get its projections spectacularly wrong. One of our leading display-industry prognosticators — which is still very much in business — was wildly optimistic in predicting the ramp-up of small OLED displays, which were, and still are, produced almost entirely by Samsung. It then revised its estimates of the timing and volume of the market ramp-up, and was once again spectacularly wrong. These cycle repeated several times before sales actually began to take off.

The problem was that virtually everybody, including the people in Samsung, did not anticipate how difficult it would be to manufacture small OLED displays at high yield and low cost. Fortunately, it was Samsung, with its deep pockets and impressive corporate patience, that was carrying the ball. Ultimately, the problems were solved and the products and manufacturing processes continually refined. Now, small OLEDs for smart phones please handset makers and end consumers, and constitute a successful and profitable business for Samsung.

Which brings us to Ultra High Definition Television (UHD-TV), otherwise know as 4K-TV. There are still a few analysts around who say that UHD-TV is being over-hyped and will, like 3D-TV before it, fail to be an important product. These analysts are wrong.

UHD-TV MarketNow, Displaybank IHS has published an interesting market projection for UHD-TV display panels in its “LCD Market Tracker — Q3 2013.” Please remember what I said about the reliability of market projects early in a product category’s lifecycle, but this one is (mostly) okay because it supports my position. IHS reports that 0.4 million UHD-TV panels were sold in Q2’13, with 0.8 million forecast for Q3’14. Market penetration by units is projected to be 1% is 2013, rising to 8% in 2017. IHS goes on to predict that penetration by revenue will rise much faster, and reach 20% by 2017. Panel makers would love that to be true, because it would mean they have a product to sell with more than a paper-thin margin. Maybe. The history of the display industry cautions us that high-performing panels generally command a higher margin for a relatively short time before becoming commoditized. But the unit penetration projections strike me as realistic.

We will soon see how UHD-TV prices will shake down for the holiday season. It will also be interesting to see if the very-low-price UHD-TV sets from China and (in one case) Japan will offer acceptable 4K image quality.

It’s “Fade To Black” for Plasma and Projectors in Japan

Are we seeing the end of a golden era for display manufacturing in Japan? It sure seems so.

Earlier this month, Reuters published a story quoting sources inside Panasonic that state they are finally pulling the plug on plasma TV production. The exit is to be complete by the end of March 2014, otherwise known as the end of the company’s current fiscal year.

According to the Reuters story, Panasonic has been unable to stem the tide of red ink resulting from its television operations. In the past two fiscal years, Panasonic has lost $15 billion, with TV operations accounting for a $913 million hit in fiscal 2012.

I can’t say this decision was all that surprising. Ever since plasma TV shipments hit their peak in the mid-2000s, market demand has shifted rapidly to LCD technology. In fact, during FY 2012, there were more CRT TVs shipped worldwide (6.9% market share) than plasma (5.7% market share), according to NPD DisplaySearch.

Of course, LCD technology remains king of the hill with an 87.3% market share – an increase from last year, even though overall TV shipments dropped by 6% worldwide. And LCD still has plenty of legs – witness the advancements in TFT design (IGZO), backlights (quantum dots), and resolution (4K) that are now breaking into the market.

Panasonic is a strong player in LCD, and operates a Gen 8 fab that cranks out IPS-Alpha glass in Himeji, Japan. In fact, they shipped more TVs last year than Sharp and weren’t that far behind Sony.  But Panasonic had already idled a good portion of its plasma TV fab capacity by the start of 2013, including a brand-new facility in Shanghai and about 50% of its Osaka operations.

The departure of Panasonic may also result in Samsung and LG dropping plasma from their TV portfolios. For each company, plasma TVs remain the “value” product offering, with 60-inch LG 1080p plasma sets going recently for about $800 while equivalent 60-inch LCD sets with some bells and whistles command about 10% – 30% higher prices.

Still, the market for TVs is expected to continue a slow decline, thanks to shifting interest in tablets and smartphones for media consumption. There just isn’t any more time (or money) left to indulge small niche display technologies. It’s enough of a challenge for Japanese TV makers to approach profitability.

And things will only get worse. Japan can’t compete with Korea, and now has to deal with Chinese LCD TV manufacturers. In Q1, China was the only country to show an increase in LCD TV shipments Y-Y, while in the rest of the world, TV shipments fell by 4%.  The Chinese have enthusiastically embraced LCD manufacturing and are now cranking out big 4K panels, with the current world’s largest model (110 inches) coming from the CSOT fab in Shenzen. And they’re enjoying the strongest profit margins in the industry, too.

One result of this trend is super-cheap LCD TVs, often selling for less than $40 per diagonal inch. And the commercial AV channel has taken notice: Instead of specifying front projectors and screens, they’re putting in 70-inch, 80-inch, and 90-inch 1080p LCD screens instead. No more lamp changes, no ambient light issues, and “set it and forget it” operation – these are all strong selling points that financial and higher education markets have now embraced.

It’s hard to make a buck selling projectors – margins are very slim, and a great deal of product moves through distribution channels these days. Combine those thin margins with a trend away from front projection, and you have the “beginning of the end” for more than a few notable projector brands.

Consequently, Mitsubishi Electric Visual Solutions announced on October 11 that they were pulling out of the projector market for good, and also ceasing sales of large LCD monitors. Previously, the company had enjoyed good market share across a number of projector categories and even announced a new line of hybrid and “cloud” projectors at ISE and InfoComm.

Now, that’s all history. Mitsubishi will instead concentrate on tiled displays and videowalls, categories where they’re still profitable.  But they won’t be the last company to bid adieu to projectors: Sharp’s InfoComm and ISE booths have focused almost exclusively on large LCD displays, but they still list projectors on their Web site despite dwindling market share and continued struggles with red ink and underutilization of their huge Gen 10 Sakai LCD fab. How long before Sharp throws in the towel on projection?

These are not happy times for Japan Incorporated’s once-dominant TV industry, which is undergoing the same sort of painful downsizing the U.S. TV industry endured in the 1980s and 1990s.

Back in the day, Ernest Hemingway wrote a famous novel titled, “The Sun Also Rises.” If and when some future author records the last days of Japanese display manufacturing, that account could well be called, “The Sun Also Sets”…

Financiers Focus on Flexible Displays

On Wednesday, October 16th — a day that came close to living in infamy — I stood on a New Haven Line station platform and, luckily, thought to check my email. I was on my way to a luncheon presentation for a large New York financial advisory group that wanted me to speak on the present and future of flexible displays, and answer questions about where the investment opportunities might lie.

Instead, I checked my phone, saw an urgent request to call my contact, and found that the threatened Congressional refusal to raise the debt ceiling had required the folks who would otherwise be attending my presentation to busily help clients navigate their ways through a volatile market. So, meeting rescheduled.

The interest in flexible displays goes far beyond the investment group I will eventually address. A quick look around the Web will show lots of interest from the investment and consumer electronic communities. Despite the intense interest, it seems many people don’t realize that using a flexible display doesn’t mean the end product will be flexible. The Samsung Galaxy Round, introduced last week to the Korean market, is a perfect example.

The Samsung Galaxy Round curved phablet was introduced to the Korean market on October 9, 2013.  (Photo:  Samsung Electronics)

The Samsung Galaxy Round curved phablet was introduced to the Korean market on October 9, 2013. (Photo: Samsung Electronics)

The Round uses a flexible 5.7-inch, Full HD, Super AMOLED display, which is used to enable a product that curves gently around a vertical axis. The curved case, however, is every bit as rigid as comparable flat cases. Indeed, Samsung seems to have struggled to figure out what a rigid curved case night be good for. Reportedly, this rather large phablet fits comfortable in a user’s hand, thanks in part to the curve. Samsung has also designed the software to respond to the case being rocked when its convex side is lying on a flat surface. (When the device is rocked in sleep mode, basic information appears on the home screen.) LG Electronics has also promised a curved phone for 2014.

Why is the Round being offered only in the Korean market, at least at first? We can speculate that Samsung wants to work out any bugs while volumes are relatively small, or that manufacturing capacity is limited, or that manufacturing yield for the flexible display is low. If capacity or yield (the two can be related) is low, why might that be? One possibility is that flexible OLED displays require flexible moisture barriers. Effective flexible barrier films have been expensive and may not be available in large quantities. However, the fact that this flexible display is of the “bend-once” variety may allow the use of a simpler barrier-film structure.

When many people think of a flexible display, they think of the “flex-many” type, which could be rolled up inside a small cylinder and unrolled whenever you want to use it, assuming the particular design allowed the display to be rolled to a small radius of curvature multiple times without deterioration of performance.  Although we have seen technology demonstrations of such concepts, there are no commercial products now and probably will not be for some time. When we do see the first flex-many products, they will probably have limited flexibility, such as the concept shown in the graphic.

Samsung Round, end view  (Photo:  Samsung Electronics)

Samsung Round, end view (Photo: Samsung Electronics)

Cambrios flexible phone concept  (Graphic:  Cambrios)

Cambrios flexible phone concept (Graphic: Cambrios)

What is delaying the introduction of flex-many products? The answer is: almost everything. Not only must the display itself (including the backplane and barrier film) be flexible and not deteriorate over many flexing cycles, but so must the other components of the device, including the touch screen, circuit boards, and battery. Hard switches and buttons must either be eliminated or designed to work with a flexing substrate and, perhaps, case. None of this is easy, but solving the problems are where the product and investment opportunities lie. That is what I will be discussing with the New York investment group when the current economic tensions die down.

A True Revolution in Display and Touch-screen Manufacturing Begins

On the morniing of October 3rd, three companies announced the formation of a joint venture that will place into volume production a transparent conductor that is much more flexible, more electrically conductive, more optically transparent, and less expensive than the material that has been the standard solution for decades, and still is.

That standard solution is indium tin oxide (ITO), and it is used in most of the touch screens and electronic displays manufactured today, from LCDs and OLEDs for cell phones to the giant LCDs in the largest TV sets, digital signs, and public information displays.

Concept of what an early-generation flexible phone might look like.  (Graphic:  Cambrios)

Concept of what an early-generation flexible phone might look like. (Graphic: Cambrios)

In the U.S., Cambrios (Sunnyvale, California) announced the formation of TPK Film Solutions, Ltd. (TPKF), a joint venture with TPK, the world’s largest touch solution provider, and NISSHA, a leader in film-based touch sensors. TPKF’s mission is to “produce ClearOhm silver nanowire-based film in a roll-to-roll process allowing original equipment manufacturers (OEMs) to bring to market cuttng-edge touchscreens for new products and applications worldwide,” Cambrios announced in its press release. The joint venture agreement, which expands upon an existing agreement with TPK, was formerly signed on Oct. 3rd; volume production is anticipated beginning in Q2’14.

All of this may not sound too exciting until you understand not only that transparent conductors are essential components of most displays and touch screens, but also that ITO has significant limitations. As a result, the industry has wanted a viable replacement for ITO for some time; now, one is finally available.

So, what’s wrong with ITO? First, one of its key ingredients, indium, is relatively rare and is found in very low concentrations in various metal ores. As a result, it can be economically extracted only as a by-product of mining these higher-volume ores, primarily zinc sulfide. Roughly half of the world’s indium supply currently comes from China.

Although there isn’t an overall shortage of indium reserves relative to demand, the price has been cyclical, with cycles since 1985 typified by rapid increases and gradual decreases. The last price peak, in 2005, was a high one, topping out at about $1100 per kilogram (kg). The bottom of the price cycle in 2009 was almost as much as the previous two peaks. In January 2011, the price of pure indium was about $800/kg. (Data courtesy of the Polinares Consortium, a project of the European Union. The U.S. Geological Survey normally provides similar data, but the USGS Website is currently inoperative as a result of the U.S. government shutdown.)

The rising price trend is due to the increase in manufacturing of flat-panel displays, touch screens, and solar cells. The 2006 spike was due in part to a downturn in the production of zinc. Bottom line: the price and supply of indium are largely outside the control of the companies in the display and touch-screen industries who buy it, and even, to a significant degree, of the companies that sell it. Thus, when a leading supplier of indium responds to the current tight supply by saying on its Website, “The Indium Corporation believes higher prices will draw forward additional supplies which will alleviate any scarcity,” the thinking sounds wishful.

Price and supply issues have aggravated ulcers in the display industry from time to time, but that would not be enough to motivate a transition to alternatives if ITO were a really good transparent conductor. Although it has been good enough for the most part until recently, the evolution of displays and touch screens are making its shortcomings more and more troublesome. Although ITO does have good optical transparency, it is not a particularly good electrical conductor. The electrical resistance of thin-film conductors is expressed by its sheet resistance, which is measured in “ohms/square,” a metric that describes the material itself and is independent of the area of the film or its thickness.

Silver nanowire technology is capable of considerable lower sheet resistance at high optical transmissivity than is ITO.  (Chart:  Cambrios)

Silver nanowire technology is capable of considerable lower sheet resistance at high optical transmissivity than is ITO. (Chart: Cambrios)

Optical transmission of a transparent conductor varies with its sheet resistance, so it is useful to characterize these materials by plotting their transmission vs their sheet resistance. (See chart.) The ClearOhm silver nanowire material itself has, impressively, an optical transmission of between 99% and 100% at sheet resistances from 50 ohms/sq up, and ITO is only a couple of percentage points behind at over 150 ohms/square. Note, however, that it is difficult to make ITO with low sheet resistance and still maintain acceptable transmission. Whether its ClearOhm, ITO, or an alternative, the transparent conductor has to be applied to a substrate. That substrate has often been glass, but is increasingly likely to be a flexible polymer. The most popular of these is polyethylene terephthalate or PET. As you can see on the chart, a 125 micrometer sheet of PET absorbs more light than either the silver nanowire ink or the ITO that is applied to it, but the overall transmission is still over 90%, and ClearOhm maintains that down to 25 ohms/square.

If you make a touch screen using a transparent conductor on a thin sheet of PET, it is thinner, lighter, and more rugged than a similar touch screen made on glass, so there is an advantage to using a PET touch screen even if it is applied to a glass display that is not designed to bend, and this is especially true for a portable device such as a cell phone or tablet. Another advantage is that PET is more amenable to inexpensive roll-to-roll processing than is glass. (Please note, however, that Corning and Asahi Glass now offer display glass that is so thin that it can be rolled.)

flexibility

The message here is simple: ITO is brittle; silver nanowires are flexible. (Chart: Cambrios)

But, ultimately, if you are making a touch screen on a flexible substrate, you would like to use its flexibility as well as its thinness and light weight. Here, brittle ITO falls flat. If you apply ITO to a PET substrate and wrap the PET around a rather small-diameter cylinder, cracks will appear in the ITO after only one wrap/unwrap cycle and the sheet resistance will rapidly increase by a factor of 1000 or more. The sheet resistance of silver nanowire ink, on the other hand increases only very slightly over 50 cycles. (See chart.)  ITO can survive a significantly more gentle bend, particularly in a “bend-once” application.

So, silver nanowire technology produces transparent conductors with lower sheet resistance, higher optical transmissivity, and much greater flexibility than ITO, but, in addition, it does so at lower cost. This may sound too good to be true, but it isn’t. Jason Heikenfeld, Director of the Novel Devices Laboratory and an Associate Professor in the School of Electronics and Computing Systems at the University of Cincinnati recently told me in a personal (but not secret) communication: “We have used ClearOhm here and validated it. It is amazing in performance and can be patterned quite well. Clear-Ohm already costs less than ITO and beats the competition in performance. It is a great product.”

TPK Chairman Michael Chiang explained his company’s investment in the TPKF joint venture by saying, “Silver nanowires are a major part of our strategy to address the mid- and low-end segments of the mobile devices market. We will deliver high-volume manufacturing capacity for ClearOhm films for incorporation into leading consumer electronic devices including mobile phones, tablets and large-area touchscreen applications.”

On October 1st, Cambrios announced a significant design win. Lenovo will use ClearOhm in its new 20-inch-class All-in-One computer, the Lenovo Flex 20. “When seeking a technology to support our Flex 20 All-in-One computer touchscreen, we actively looked for a solution that not only delivered a high-performance experience, but also lowered the price point for our end-users. Cambrios’ ClearOhm transparent conductors answer this challenge and collectively, we delivered a best-in-class product,” said Sam Dusi, Director of Worldwide Strategic Alliances for Lenovo in the press release announcing the design win.

Cambrios has been is semi-stealth mode for most of its ten-year history. That time is clearly over and, with it, the unquestioned hegemony of ITO for transparent conductors.  That hegemony will be further eroded by other competing technologies, but, for now, only ClearOhm is commercially available in significant volumes.

Expect a series of new ClearOhm design wins to be announced over the next few months, including at least one very, very big one.

Tough Times Ahead For Toshiba

Toshiba, that industrial giant and manufacturer of everything from notebook computers to copiers, lighting equipment, and electronic components, is shutting down two of its overseas television manufacturing facilities and laying off about 3,000 employees worldwide from its “visual products businesses” (their words).

While we hear almost weekly about the struggles of Sharp, Sony, and Panasonic to attain profitability in the TV business, we don’t hear much about Toshiba. Given what we do know – they source their LCD panels from other manufacturers and have a worldwide market share below 5% – it should be no surprise that the company is struggling to make ends meet with televisions.

Last August, Toshiba’s CEO Hisao Tanaka stated in a Wall Street Journal interview that he would not “…pull the plug on the company’s unprofitable television and personal-computer operations, shunning the “easy option” of exiting cutthroat competition for a chance to reclaim its former prominence in the businesses.”

Another quote from the story is apt: “There’s a perception that a conglomerate with a lot of businesses may cancel out the benefits [of size],” said Mr. Tanaka, explaining the so-called conglomerate discount. “I think we can use a lot of the technologies that we as a conglomerate have by integrating or merging them and turn the discount into a premium.”

The WSJ story detailed how Toshiba had been profitable overall the past three fiscal years, lifted by sales in flash memory and power equipment. Those profits must have been substantial to overcome losses exceeding ¥50 billion ($512 million) at its TV operations in each of the past two years.

Tanaka’s plan in August was to move 400 Japanese employees out of the TV and personal computer operations and cut back on the number of TV models in the line. Well, it looks like things took a bit of a turn for the worse since then.

Toshiba’s 9/30 press release states that the company will “…increase products from original design manufacturers (ODMs) in the global market from the current rate of about 40% to 70% by FY 2014. The company further plans to reduce fixed costs and improve productivity by reducing the number of ODMs and models, and by integrating manufacturing facilities.”

Translation: Toshiba will out-source manufacturing of what remaining LCD TVs it sells to the tune of 70% of its product line, and it’s a good bet most of those TVs will come from Chinese factories. Toshiba also plans to merge its television and CE operations with its appliance operations, creating a new entity known as Toshiba Consumer Electronics Corporation.

Intriguingly, it also appears that Toshiba is going all-in with UHDTV. “Toshiba will allocate resources to large-screen Ultra HD (4K) LCD TVs, where growing demand is expected, to differentiated functions for viewing and recording…the company will also reinforce development of visual products for business applications, including digital signage, another area where demand is growing.”

More intriguingly, the press release stated that “…Toshiba will focus on emerging markets including Asia, the Middle East, and Africa, where growth in demand is expected. In addition, Toshiba will end sales in unprofitable regions.” Hmmm…could one of those “unprofitable regions” be North America?

In summary, another venerable Japanese TV brand has been decimated by the brutal economics of the 21st century, where Korean TV brands are playing Family Feud with curved OLED TVs while the Chinese are quietly but aggressively establishing a beachhead in 4K LCD TV manufacturing.

Toshiba sure talks a good game. Now, can they “walk the talk?”