How Big Will The Oled Lighting Industry Be In 2017

How Big Will The OLED Lighting Industry Be in 2017? Three Possible Scenarios Prepared for 3rd LED/OLED Lighting Technology Expo January 2011NanoMarketsthin film l organic l printable l electronics www.nanomarkets.net © 2011NanoMarkets, LC

2 About NanoMarkets LC • NanoMarkets provides industry analysis of emerging markets in energy and electronics enabled by new developments in materials science. We have been covering OLED lighting markets for four years and provide coverage of both materials and the OLED panels and luminaires themselves • Our work includes market, company and technology analysis, market forecasting and due diligence. NanoMarkets provides an updated forecast for the OLED lighting market every six months. • Offerings include reports, custom consulting, seminars/webinars and in-house training. NanoMarkets is based in U.S., with extensive contacts all over the worldNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

3 NanoMarkets’ Recent OLED Lighting Reports• The Business Case for OLED Lighting (12/10)• Transparent Conductors in the OLED Industry: 2011 and Beyond (11/10)• OLED Lighting Materials Market: Trends and Impact (10/10)• OLED Lighting: An Eight-Year Market Forecast (8/10)• OLED Lighting Products and Market Strategies (3/10)• Markets for OLED Materials (1/10)NanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

4 Questions Answered in Today’s Presentation • Where can OLEDs find competitive advantage in the lighting market? • What segments of the lighting market can they compete in? • Two plausible low-end market scenarios for OLED lighting: – Scenario one: The worst that can happen – Scenario two: How far can niche markets take OLED lighting • How can OLED lighting replace “light bulbs”? • OLED lighting market as mass market: Some market forecastsNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

5 A Little Help from Our Friends in the Right Places? • European Union – with have phased out incandescent bulbs by 2012, with halogens gone by 2016. U.K., Ireland and Finland have faster timetable • Australia – most sales of incandescent bulbs banned in 2010 • Canada -- Plans to ban incandescent bulbs in 2012 • U.S. Federal government -- Lighting must be 25-30 percent more efficient than today’s bulbs beginning in 2012. More draconian requirements expected for 2020. California will phase out all incandescent bulbs by 2018 • India -- No complete ban but will replace 400 million incandescent bulbs with CFLs by 2012NanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

6 The Downside of Regulation: Market Distortions • Early market maturity. Government regulations accelerate the market opportunity, but also market maturity and saturation. This must be taken into consideration in corporate strategies. Even on optimistic scenarios, saturation of general lighting market begins to impact the market by 2014. • Perverse economics. California utilities have chosen to meet regulatory mandates by heavily subsidizing CFLs to a point where they are almost as inexpensive as incandescent lighting. So a lot of CFL bulbs are being bought in California and sold in other states.NanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

Comparison of Light Source Parameters Fluorescent ILED OLEDEfficacy 80-100 lm/W 80-130 White Currently 25-60 lm/W but could rise to over 100 lm/W.Wattage CFL 15 W 1.1W Packaged white LED Presumably wattages of OLED luminaires will Linear fluorescent 95W 10.5 W LED lamp emerge in the 5W to 15 W rangeLuminous Output CFL 950 lm 85 to 140 lm Packaged white LED. Current standard for OLED panels is 3,000 Linear fluorescent 2,900 lm 650 lm LED lamp lm/m². To expand to 10,000 lm/m² by 2015. (DOE)CRI 80-85 80 –white 95 has been achieved at 40 lm/W. OLED 90 warm white materials promise some competitive advantages in this areaGlare Mediocre N/A Potentially excellentCost of Low because of high volumes Low because of high volumes Potentially very low through the use of R2R andmanufacturing printing processesTotal cost of Mediocre but better than At present somewhat better than Potentially excellentownership incandescent a CFLEnvironmental/Safet Dubious because of mercury Burns very hot, otherwise good Potentially excellentyForm Factor Gas filled tube (traditional or Chip – high intensity point light Large area ultra-thin panel compact) sourceLifetime (LT70) 8 50-60 5-20 at present. Big improvements expected;(khours) 30-50 expected in the next few years. 100 is possibleDimmable Yes, with special dimmers but Yes and efficiency increases when Yes and efficiency increases when dimmed efficiency degrades dimmedColor tunable No Yes YesFlexible No Limited Inherently flexible NanoMarketsNoise YesSwitching llifetime l printable l electronics thin film organic Poor No © 2011, NanoMarkets, LC Excellent No Excellent www.nanomarkets.net

9 Business Challenges for OLED Lighting • Immature technology with no settled manufacturing approach or customer awareness. Unusual form factor makes comparisons difficult • OLEDs significantly lag the competition. Past improvements have been swift. But how far can we go? Efficacies above 100 lm/W? • Costs per kilolumen are now so high as to rule out useful comparisons on a total cost of ownership basis • LEDs can directly capitalize on standard semiconductor industry processes. Can printing R2R processes deliver lower costs? • Light output (i.e., luminance) needs to be higher to achieve significant market penetration in general lighting and backlighting sectors • No clear product strategy to make OLED lighting into plug and play replacement for conventional lightingNanoMarketsthin film l organic l printable l electronics © 2010, NanoMarkets, LC www.nanomarkets.net

10 OLED Lighting and the Economy • Positive: Energy prices. Energy prices rising again and are likely to continue to rise in real terms as the Indian and Chinese economies grow. • Negative: Lack of investment money. Large lighting/electronics firms are investing in OLED lighting, but better times might have seen more VCs. Future inflationary conditions could hurt investment once again. • Negative: Slump in new construction. The construction market in the U.S. and Europe is improving only slowly at best. Boom in China is ending. Lighting expenditures are strongly tied to construction activityNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

Unique Value-Added Features of OLED Lighting OLED lighting special Immediate Impact Long-Term Impact featureForm factor Large-area panel Ability to replace Larger panels than can be achieved format and thinness existing recessed now with more total light output. lighting panels with Eventually, there is the possibility more even lighting and of very large light panels that cover no need for recessing an entire wall of ceiling.Conformability Flexible Novel designs for Conformal panels for large area chandeliers and table coverage, mobile/rollable lighting lamps of various kinds. Also lighting flexible signage and packagingTransparency OLEDs are potentially Novel designs for Smart windows and window transparent lighting treatmentsTunability Color tunable. This Could be used for Could also be used in smart capability is shared adjustable mood windows and window treatments with ILEDs and lighting NanoMarkets thin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

Business Cases for Flexible OLED Lighting ProductsProduct Business CaseResidential lighting Flexibility may play the role of more effectively creating new aesthetics or better creating the mood lighting effect. This is an area waiting to be explored by lighting and interior designers.Large lighting panels OLED lighting is uniquely capable of providing large lighting panels that could cover an entire wall or ceiling. As the size of OLED panels increase they will have to be mounted on surfaces that are not entirely flat which will provide good reasons for OLED lighting panels to be flexible or conformal. This need would be enhanced if OLEDs were used on outdoor surfaces, but this is also not yet possibleIntegrated lighting Incorporating lighting into both curtains and clothing is not well developed. Such products have used collections of ILED lights stitched to fabric. OLEDs would be a good substitute. Business cases for OLED lighting for fabrics can be based on aesthetics and fashion, but there will also be practical advantages such as visibility of people who work or travel in dark areas.Extended light strips These can be used to provide low levels of light to guide people in darkened area such as movie houses. They currently exist and use small fluorescent lights or ILEDs. OLEDs might make an attractive replacement for these technologies.Brand enhancement Not a road much travelled, but we believe that if costs for OLED lighting are reducedand packaging sufficiently (perhaps using printing), it could be added to smart packaging either for brandproducts enhancement or more practical applications such as indicating package tampering or (for pharma packaging) amounts of pills used. NanoMarkets thin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

Key Markets for OLED LightingMarket/Niche Business Case Challenges TimingLuxury lighting Capitalize on existing channels and There is only so much that Some products now, but take-off wealthy consumers. Price not can be done with small rigid likely in 2011 and beyond major factor. Product types OLED panels establishedMood lighting Fits well with the panel format/low- Cost, achieving flexibility, Expect to see product luminance of OLEDs. Flexibility and and establishing marketing development in the 2012 and tunability also important channels for new product beyond timeframeOffice and factory Offers a replacement for Luminance, energy Higher luminance and largerlighting fluorescent lighting with smoother, efficiency and panel size panels than can now be higher quality light and improved achieved. Perhaps not until 2014 aesthetics or 2015Architectural Likely to include premium products The need for large panels is Some projects soon. SignificantLighting and large panels a major challenge market evolution beyond 2012Smart Windows Novel products, such as windows Transparency , flexibility and Not a focus of any firm atand Textiles that are lights at night, may offer integration technology. present. Could emerge beyond cost savings and aesthetic Marketing for novel 2015 advantages products may be hardAutomotive Replacement of existing EL Automotive industry is cost Several firms working in thislighting technology in dash with higher sensitive with regard to space now, but first products not luminance products. Mood lighting components likely to emerge until 2012 or so for cars NanoMarkets thin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

14 Other OLED Lighting Markets • “Designer kits.” Osram, Philips and Lumiotec currently offer. Attempt to create market. Not a product in itself • Signage. Mainly EL replacement for emergency lights, etc. Some products available already. OLEDs not the best choice for outdoor signage • Backlights. Mainly alternative for simple backlights for watches, segmented displays, etc. Replacement of backlighting for AM LCD displays seems unlikely, although widely talked about at one point • Packaging, toys and novelties. Includes everything from high-value (pharmaceutical or perfume) packaging to Christmas ornaments • Outdoor lighting and signage. Main challenge is encapsulationNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

15 Key Forecast/Scenario Assumptions • Regulation. Regulations phasing out incandescent bulbs will open up markets for OLED and LED penetration. Note: There are still some uncertainties about how fast regulations will actually be implemented • Addressable markets. Lighting unit shipments will decline as SSL deployment raises average lifetimes go up. So OLED lighting business cases must be built around a declining addressable market. • Pricing. Most uncertain part of the forecast is pricing. Even the basis for OLED lighting pricing is uncertain. It is hard to compare with conventional and ILEDs, because of panel format. $ per square is not appropriate to other kinds of lights.NanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

16 Pricing Issues and Strategies • OLED lighting is further behind other kinds of lighting in terms of pricing than any other parameter. • Fluorescent lights are just $2-4 per kilolumen and LEDs are about $130 per kilolumen. But OLEDs are around $300 per kilolumen (DOE numbers) • Major improvement expected and DOE says $8-9 for OLEDs by 2015. This assumes a lot about processes, materials and economies of scale, but would make OLEDs competitive for premium general lighting products • In NanoMarkets’ forecasts we assume that something like the DOE pricing scenario can be achieved. Some observers believe that OLEDs will be able to do better than thisNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

17 OLED Lighting Scenario I: The Worst That Can Happen • The actual worst that could happen would be that OLED lighting never proves viable and disappears as a research program in a few years. • But OLEDs seem to be superior to EL lighting in many applications and also seem suited to luxury lighting; they are getting the attention of designers • Luxury lighting can never be a big market. A few thousand units at $1,000+ per luminaire and over, puts market in the tens of millions of dollars once developed. • EL lighting is a slow-growing market of around $200-300 million. If OLED lighting gets 70% share it would generate up to $210 million; a lot more than luxury lights • In this scenario OLED lighting industry resembles the EL lighting industry todayNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

18 OLED Lighting Scenario II: Mood Lighting --Mass Market • Mood lighting is the first possible mass for OLED lighting. It’s performance fits market needs and addressable markets are large; potentially many millions of units • The “proof” is that the luminance of OLED lighting is already close to being suitable for mood lighting and the panel format is also a fit. Flexibility would also be helpful, but not essential. • Addressable markets would expand rapidly as price declines. But there are relatively price insensitive markets (transport, prestige buildings, etc.) that are ready for it now. • Mood lighting markets could reach several hundred million dollars, making OLED lighting a significant opportunity for major lighting, electronics and home products stores.NanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

19 OLED Lighting Scenario III: Breaking Into General Lighting • LEDs have been made to fit in with existing formats. Consider LED “bulbs” and “tubes.” This will be hard – but not impossible – for OLEDs. OLED lighting is intrinsically panel-like • Breakthrough will come if OLEDs can be made into panels that can replace fluorescent panels. This probably won’t happen until 2015, when these panels are large enough (maybe 1,600 m²) and bright enough (10,000 lm/m²) to do the job • Replacing CFLs in residential lighting will require a radical acceptance of total cost of ownership by residential consumers. This will not be easy to achieve, because it is unclear how consumers discount for future cost savings. But light quality might be a compelling advantage for OLED lighting • Major firms including GE and Philips see mass markets emerging around 2015NanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

20 NanoMarkets’ OLED General Lighting Forecast ($ Millions) 2011 2012 2013 2014 2015 2016 2017 Worldwide consumption of 24.0 22.5 19.6 15.7 16.5 17.5 18.8 light bulbs (billions) Penetration by OLEDs (%) 0.006 0.05 0.3 1.0 1.3 1.7 2.1 OLED panels shipped (millions) 1.4 11.2 58.8 156.7 214.0 297.3 394.7 Price per panel ($) 100 60 40 20 15 11 9 Market ($ millions) 144 675 2,351 3,134 3,209 3,270 3,552 Source: NanoMarkets LCNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

21 The Devils Advocate: How Seriously Should You Take These Forecasts? • Assumes good technological progress on OLEDs over next few years, along with success of early manufacturing plants. Technological progress has been impressive so far, but we can’t be sure it will continue and OLEDs still lag behind LEDs and CFLs • Assumes good customer acceptance. This is far from proven as yet. Indeed, most potential customers don’t know that OLED lighting exists or even, in many cases, that incandescent lighting is being phased out • Ramp up to 2014-2015 mass market take off, could be too optimistic. This could make the years 2013-2015 much lower revenues than we show here. On the other hand, our penetration assumptions are quite modest, so eventual revenues could be significantly larger. The next iteration of the NanoMarkets OLED lighting forecast will take a more granular look at the likely market evolutionNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

22 Some Conclusions • The market opportunity for OLEDs is strongly contingent on regulations phasing out incandescent bulbs. But this will also lead to early saturation of the market • OLED lighting does not seem likely to compete with CFLs and LEDs on conventional parameters, except color quality in the foreseeable future. Must therefore compete on unique features: panel format, flexibility, tunability and transparency • Significant manufacturing, marketing and materials challenges ahead. Forecasts rely on economies of scale, R2R manufacturing successes, materials price declines and customer acceptance • At the very least, OLEDs should be able to capture EL alternative market, plus luxury lighting market. Mood lighting market seems likely too. To meet the expectations of large players, OLEDs need to create cost effective panel lightingNanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

23 Lawrence Gasman Lawrence Gasman is the Principal Analyst at NanoMarkets and heads up NanoMarkets’ OLED lighting industry research program. Mr. Gasman has been an industry analyst in the optoelectronics space for 25 years and his consulting clients have included (among many others) Analog Devices, Cabot, Hewlett-Packard, Honeywell, IBM, Intel, NEC, and Panasonic, as well as a large number of high-tech start-ups and investment firms. Mr. Gasman’s work has been carried out in Asia, Europe and North America. Mr. Gasman has been quoted in a wide range of trade publications as well as The Wall Street Journal and Investor’s Business Daily, Business 2.0, Red Herring and Small Times. In addition to his work in the optoelectronics industry, he has also written widely on telecommunications and IT and has authored three books in that area, as well as testifying to Congress on the future of the FCC. He is a member of the IEEE, and a Senior Fellow at the Cato Institute, a leading Washington, D.C. “think tank.” Mr. Gasman’s latest book is on the commercialization of nanotechnology for Artech House and he has been a speaker at many conferences on printable and organic electronics and nanotechnology, including Lighting Japan, the Optical Semiconductor Conference (OSC) and the annual Plastic Electronic Foundation (PEF) conference. Mr. Gasman holds a mathematics degree from the University of Manchester and advanced degrees from the London School Of Economics and the London Business School.NanoMarketsthin film l organic l printable l electronics © 2011, NanoMarkets, LC www.nanomarkets.net

How Big Will The Oled Lighting Industry Be In 2017

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How Big Will The Oled Lighting Industry Be In 2017 — Presentation Transcript

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