ITO and its alternatives: the next major growth phase will come?
Oct 26, 2017
ITO and ITO alternative have, in recent years, faced challenging market conditions. Sluggish growth, together with increased supply and the threat of substitutes, led to price falls, even price wars, forcing an industry consolidation. Many emerging applications undershot industry expectations, particularly affecting alternative suppliers who had counted on them opening the space for them. Within the alternatives, after more than a decade of commercialization, the best performing solutions became known, positioning themselves as sustaining technologies. Other alternatives looked to exploit non-standard features such as stretchability or formability, targeting, for example, emerging 3D touch surface applications.
Now, the industry is asking itself, what comes next? Will it remain trapped in this stagnant low-margin business where competition is rife? Our report "Transparent Conductive Films (TCF) 2017-2027: Forecasts, Markets, Technologies" finds that the short-term prospects are very much business as usual. However, the long-term prospects are promising, with the transparent conductive film (TCF) industry set to experience a second major growth phase. This transition will start, slowly, from 2019 onwards.
Our market forecasts are shown below. Here, the market size for each application is normalized w.r.t. its 2015 value. Observe the short term stagnation but the long term growth. This is perhaps better demonstrated in the inset. It shows the percentage of the market captured by today's dominant applications (i.e., mobile phone, tablet and notebook touch screens). Note how these markets will see their total dominance diminish over the coming decade. Refer to "Transparent Conductive Films (TCF) 2017-2027: Forecasts, Markets, Technologies" for more information.
Here, in this article, we briefly describe the major changes that underpin our growth forecasts. In particular, we will examine how large area capacitive touch surfaces will create demand whilst some currently nascent applications will fail to register substantial growth. In our report "Transparent Conductive Films (TCF) 2017-2027: Forecasts, Markets, Technologies", we provide a more detailed analysis, assessing all the different existing and emerging technologies and applications, providing ten-year market forecasts segmented by technology and application and detailed interview-based company profiles.
The figures show the market size for each sector, in different years, normalized to the total market size in 2015. It is evident that the market will experience some growth, albeit a slow one in the short-term. The market will however start its second major growth phase from 2019 onwards. A major driver for new growth stems from the rise of new applications. This is shown in the inset. Here, the share of mobile, tablet, and notebook touchscreens as a function of the total market size are plotted, showing their diminishing dominance. Note that this market is for mobile phones, tablets, notebooks, AiO/desktop/standalone touch monitor, smart watches, OLED lighting, OPV/DSSC/Perovskite PV, In-mould touch, and automotive touch screens. LCD screens are excluded. This market covers ITO glass ITO PET, Ag nanowires, metal mesh, PEDOT, CNTs and graphene. For exact values refer to "Transparent Conductive Films (TCF) 2017-2027: Forecasts, Markets, Technologies"
Will OLED lighting come of age?
OLED lighting is a promising energy-efficient solid-state surface-emission technology. It has however always faced one major challenge: it got to the market second after inorganic LEDs. Compared to this market reference, it is today an underperforming and over-priced technology. Indeed, finding a way to differentiate has been the major struggle. The manufacturers focused on rigid glass only or on the high brightness end of the market appear wrongly positioned.
The long term differentiator will be in truly flexible rolls of OLED lighting. This will ultimately have its place in the global lighting market, which already sustains multiple technologies and can make room for another given the diversity of uses and designs. The road towards this prize is however not technically straightforward and may require taking the long view.
An enabling technology for such flexible OLED lighting will be highly-conductive and flexible TCF technology. The current ITO falls short on both accounts thus leaving the door open to alternatives. Our forecasts suggest that the OLED lighting market will remain a small market for TCFs in the medium part, but ultimately we anticipate that OLED lighting will come of age, reaching annual sales in excess of one billion dollars by 2027. This, then, starts to become a sizable target market for TCF suppliers.
3D-shaped touch surface: has its time come yet?
User interfaces are rapidly evolving. Take the white good appliance sector as an example. Here, first, mechanical switches were used as inputs. Next came membrane switches, and now elegant capacitive touch surfaces are coming. Many such objects are non-flat and have little space for bulky implementation. Herein lies the opportunity.
The idea is to combine printed electronics and thermoforming/moulding technologies to form 3D-shaped touch surfaces. In this technology, called in-mold electronics or IME, a TCF is deposited on a substrate which is then formed into the desired final 3D shape. This technology therefore requires a TCF technology that can stretch without losing its conductivity.
In this approach, the touch capability will become structurally integrated, saving space and opening up new design opportunities. It also means that the value chain will be shortened with some assembly steps of separate rigid components eliminated.
The IME technology has previously experienced false starts. We, however, think that its time has come. Consequently, we anticipate growth in the coming years, creating a new market for some, not all, TCF suppliers.
Will large area touch surface disappoint again?
The biggest driver of demand will be the penetration of capacitive touch into large-area displays. This trend began some years ago, going from small music players to photos to tablets and then to notebooks (note: automotive touch surfaces are also growing in size and number). This trend in size growth and underlying unit sales expansions fuelled the market towards its boom years.
This trend then didn't progress as fast as before towards large sizes such as desktops, All-in-Ones, interactive TVs or touch tables. This was partly down to technology reasons. The incumbent was not able to address the requirements, especially the sheet resistivity requirements. The alternatives could, on paper, address the issue but some had not invested in large area production tools whilst other technologies suffered from other side challenges such as doubted reliability or concerns over availability of alternative suppliers.
However, the technology side is now ready. There are many ways of manufacturing large-area capacitive touch surfaces. Within metal mesh alone, there are multiple approaches. Several suppliers have made it their business to focus and foster this market sector alone. The use cases are therefore emerging, and seeing such large-area touch surfaces is now commonplace at tradeshows around the world.
The trend had not progressed as fast as expected because of weak market pull. This, too, is likely to shift. For example, our analysts envisage a market scenario where smart phones evolve into a wearable device. Here, a cloud-connected portable USB-powered device, akin to a computer-on-a-stick, will emerge. This, in turn, will mandate that touch monitors become ubiquitous. There are many other such possible scenarios.
Of course, the major threat facing this industry as a whole, and not just this or that TCF technology, is a technology change away from capacitive touch. There are today many emerging options with voice being the leading alternative. For now however, it appears as a complementary interface option. In the meantime, touch screens themselves are evolving past sensing just touch points, to include other parameters such as force.
To read more see the IDTechEx report "Transparent Conductive Films (TCF) 2017-2027: Forecasts, Markets, Technologies".