OLED Encapsulation Markets

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In this new report, NanoMarkets, analyzes and quantifies the opportunities for encapsulation materials and technologies in the fast-growing OLED market. The report covers the commercial implications of technical developments in both materials and deposition equipment, and we identify the key factors for success for encapsulation materials suppliers in this space.

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OLED Encapsulation Markets

  1. 1. NanoMarkets www.nanomarkets.net Markets for OLED Encapsulation Materials—2011 Nano-421 Published October 2011 © NanoMarkets, LCNanoMarkets, LCPO Box 3840Glen Allen, VA 23058Tel: 804-360-2967Web: www.nanomarkets.net NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  2. 2. NanoMarkets www.nanomarkets.netEntire contents copyright NanoMarkets, LC. The information contained in this report is basedon the best information available to us, but accuracy and completeness cannot beguaranteed. NanoMarkets, LC and its author(s) shall not stand liable for possible errors of factor judgment. The information in this report is for the exclusive use of representativepurchasing companies and may be used only by personnel at the purchasing site per salesagreement terms. Reproduction in whole or in any part is prohibited, except with the expresswritten permission of NanoMarkets, LC. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  3. 3. NanoMarkets www.nanomarkets.netTable of ContentsExecutive Summary: Markets for OLED Encapsulation Technologies ..................................... 1 E.1 Available Opportunities in OLED Encapsulation ........................................................... 1 Page | i E.1.1 Opportunities for Encapsulation in OLED Lighting .................................................................................... 2 E.1.2 Opportunities for Encapsulation in OLED Displays ................................................................................... 3 E.1.3 What About Flexible OLED Encapsulation? ............................................................................................... 4 E.2 Firms to Watch in the OLED Encapsulation Sector ....................................................... 5 E.3 Investment Opportunities in the OLED Encapsulation Business ................................... 8 E.4 Summary of Eight-Year Forecasts for OLED Encapsulation Technologies 2011-2018 ... 10Chapter One: Introduction to OLED Encapsulation Technologies ........................................ 15 1.1 Background to This Report: Where Are the Opportunities for OLED Encapsulation Materials?...................................................................................................................... 15 1.1.1 Preamble ................................................................................................................................................. 15 1.1.2 Finally, A Growing Market for OLEDs Emerges ...................................................................................... 15 1.1.3 OLED Encapsulation Strategies ............................................................................................................... 17 1.2 Objectives and Scope of this Report .......................................................................... 20 1.3 Methodology of this Report ...................................................................................... 20 1.4 Plan of this Report .................................................................................................... 21Chapter Two: OLED Encapsulation Technologies................................................................ 22 2.1 Conventional Encapsulation Materials ...................................................................... 22 2.1.1 Cover Glass Technologies........................................................................................................................ 23 2.1.2 Multilayer Barrier Films for OLED Encapsulation .................................................................................... 24 2.1.3 Overview of Selected Suppliers of Multilayer Encapsulation Technologies ........................................... 26 2.1.4 Vapor-Deposited Conformal Coatings .................................................................................................... 31 2.1.5 Metal Encapsulation ............................................................................................................................... 32 2.2 Flexible Encapsulation Coatings ................................................................................ 33 2.2.1 Flexible Dyad Films On Plastic Substrates ............................................................................................... 34 2.2.2 Flexible Glass ........................................................................................................................................... 35 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  4. 4. NanoMarkets www.nanomarkets.net 2.3 Key Points Made in this Chapter ............................................................................... 36Chapter Three: Applications for OLED Encapsulation Technologies .................................... 38 3.1 Likely Opportunities for Encapsulation Technologies by Application Type ................. 38 Page | ii 3.1.1 Small, Rigid Displays ................................................................................................................................ 39 3.1.2 OLED Lighting .......................................................................................................................................... 41 3.1.3 OLED TV Displays—Are They Finally Becoming a Reality? ...................................................................... 43 3.1.4 Flexible Displays—When Will They Become a Factor? ........................................................................... 45 3.2 What Kinds of Advancements in Performance—and in Performance Validation—are Needed? ........................................................................................................................ 46 3.3 The OLED Encapsulation Supply Chain ...................................................................... 48 3.4 Key Points Made in This Chapter ............................................................................... 52Chapter Four: Eight-Year Forecasts for OLED Encapsulation Materials ............................... 55 4.1 Forecasting Methodology ......................................................................................... 55 4.1.1 Scope of the Forecast.............................................................................................................................. 56 4.1.2 Pricing Assumptions ................................................................................................................................ 59 4.2 Eight-Year Forecasts for OLED Encapsulation Technologies by Type of OLED Application ...................................................................................................................................... 61 4.2.1 Small, Rigid Displays ................................................................................................................................ 61 4.2.2 Encapsulation in OLED TV Displays ......................................................................................................... 63 4.2.3 OLED Lighting Encapsulation................................................................................................................... 66 4.2.4 Encapsulation of Flexible OLEDs ............................................................................................................. 69 4.3 Eight-Year Forecasts by Encapsulation Technology .................................................... 75 4.4 Summary of OLED Encapsulation Eight Year Market Forecasts .................................. 83 4.5 Alternative Scenarios................................................................................................ 88 Acronyms and Abbreviations Used in This Report ........................................................... 90 About the Author ........................................................................................................... 91 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  5. 5. NanoMarkets www.nanomarkets.net List of ExhibitsExhibit E-1: Summary of Total Market Value of OLED Encapsulation by OLED Application, 2011-2018 ................. 12Exhibit 4-1: OLED Shipments by Application, 2011-2018 (OLED Panel Area, Millions sq m) .................................... 57Exhibit 4-2: Estimated Average Prices of Different Encapsulation Technologies, 2011 – 2018 ($ per sq m) .......... 60 Page | iiiExhibit 4-3: Encapsulation of Small, Rigid Displays for Mobile Devices and Other Miscellaneous Applications ..... 62Exhibit 4-4: Encapsulation of OLED TV Displays by Encapsulation Technology, 2011-2018 .................................... 64Exhibit 4-5: Encapsulation of OLED Lighting by Encapsulation Technology and By Application, 2011-2018 ........... 66Exhibit 4-6: Encapsulation of Flexible Displays By Encapsulation Technology, 2011-2018 ...................................... 70Exhibit 4-7: Encapsulation of Flexible OLED Lighting By Encapsulation Technology, 2011-2018 ............................ 71Exhibit 4-8: Summary of Encapsulation of Flexible OLEDs By Encapsulation Technology and by Application ......... 73Exhibit 4-9: Cover Glass Encapsulation by OLED Application, 2011-2018 ................................................................ 76Exhibit 4-10: Metal Encapsulation (Rigid and Flexible) by OLED Application, 2011-2018 ....................................... 77Exhibit 4-11: Dyad Film Encapsulation (Rigid and Flexible) by OLED Application, 2011-2018 ................................. 79Exhibit 4-12: Directly-Deposited Multilayer Barrier Encapsulation (Flexible and Rigid) by OLED Application ......... 80Exhibit 4-13: Flexible Glass Encapsulation by OLED Application, 2011-2018 ........................................................... 82Exhibit 4-14: Summary of Total OLED Encapsulation Area by OLED Application, 2011-2018 (Millions sq m)......... 84Exhibit 4-15: Summary of Total Market Value of OLED Encapsulation by OLED Application, 2011-2018 ............... 85Exhibit 4-16: Summary of Total OLED Encapsulation Area by Technology, 2011-2018 (Millions sq m) ................... 87Exhibit 4-17: Summary of Total Market Value of OLED Encapsulation by Technology, 2011-2018 ($ Millions) ..... 88 NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  6. 6. NanoMarkets www.nanomarkets.netExecutive Summary: Markets for OLED EncapsulationTechnologiesE.1 Available Opportunities in OLED EncapsulationNanoMarkets projects that the value of the organic light emitting diode (OLED) encapsulation Page | 1market will grow from a relatively modest $7.4 million in 2011 to over $850 million by 2018.Why do we expect so much growth? The OLED market has finally taken off after languishingfor many years without meeting its early expectations. Today, OLEDs have beenmainstreamed with the arrival of widely available smartphones with OLED displays. And sincethis market is still quite small when one considers the overall size of the display market, thereis much room for growth.There is little doubt that OLEDs are here to stay in small displays for smartphones and the like,but the real question has been whether or not OLEDs will shift beyond these devices towardlarger display panels, specifically for OLED lighting and for television displays. We think theanswer is "yes," contingent upon performance improvements in OLED materials, and for thepurposes of this report, in OLED encapsulation technologies.OLEDs are notoriously environmentally sensitive, so encapsulation barriers have always beenpart of the manufacturing process. Encapsulation of OLEDs today remains heavily dominatedby relatively simple cover glass technologies that use getters to absorb water vapor andoxygen and epoxies for edge sealing of the devices. But as noted, the OLED device market ischanging, and going forward these conventional strategies will not be sufficient for emergingOLEDs, which are expected both to be larger-format and to have longer lifetime requirements.Specifically, as the performance requirements for OLEDs with respect to lifetime areincreasing, new barrier strategies are needed, and thus there are now significantopportunities for materials firms to make money selling more advanced, better performingOLED encapsulation technologies.  Encapsulation is a core enabling technology for the larger-format OLEDs in both TV displays and lighting that will be entering the market in the near- to mid-term. The same is also true for flexible OLEDs, which are still further down the road, but clearly cannot rely on conventional glass encapsulation.  In fact, better encapsulation is the key to achieving the lifetimes required of these new, larger-format OLED panels and flexible OLEDs, and thus can unlock entire market segments. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  7. 7. NanoMarkets www.nanomarkets.netWe should note that there are plenty of technical hurdles still to be overcome, particularlywith respect to water vapor barrier performance and flexibility. And, even more importantly,the days in which manufacturers were willing to pay high premiums for good encapsulationstrategies are long gone; OLEDs have now been around long enough that they are demandinglow-cost options for encapsulation. Page | 2Today, the average cost of encapsulation is too high to support sustained, long-term growth inboth the display and the lighting sectors. In both of these markets, competition is fierce, andOLEDs have a long way to go to reach cost parity with the incumbent technologies, which areliquid crystal displays (LCDs) in the display sector, and either fluorescent lights or lightemitting diodes (LEDs) in the lighting sector. To make way for the larger-format OLED panels,the market must shift toward simpler, better, and less expensive technologies. And majorimprovements in performance and manufacturing processes are needed to make this shiftrealistic.The bottom line is that there is plenty of room for suppliers to gain market share by offeringnew and better barrier solutions. Not only will the number of OLED units grow significantlyover the next decade, the panels are going to get larger. An OLED TV or lighting panel has anarea that is many times the size of a mobile phone display. This growth in area is very goodnews for encapsulation materials firms because it means that there is potential for volumeslarge enough to support economies of scale, and to finally get materials costs in line withexpectations. E.1.1 Opportunities for Encapsulation in OLED LightingIn the nascent OLED lighting industry, the focus is on efficiency and reducing total cost ofownership. Just as in other OLED markets, encapsulation is currently dominated by coverglass/getter/epoxy schemes, which have proven sufficient, if not ideal, for making the rigidlighting luminaires in production today.However, the relatively early-stage nature of this market, combined with the knowledge thathigh volume—and preferably roll-to-roll (R2R)—manufacturing will be necessary to competein the long-term, has meant that OLED panel manufacturers have been quite willing to exploredevelopment of non-glass encapsulation technologies. For this reason, OLED encapsulationsuppliers can distinguish themselves by developing proprietary solutions that will give themlong-term competitive advantages.In addition, encapsulation strategies that enable partial flexibility, or at least some measure ofbendability or conformability, may be of particular interest. For example, multilayer dyadlaminates that enable conformability may be useful for creating a competitive advantage and NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  8. 8. NanoMarkets www.nanomarkets.netgrowing market share. On the other hand, small volume, niche OLED applications withextremely high performance requirements and fewer cost pressures may preferentially adoptconformally-deposited dyad layers, such as are possible using ALD methods. E.1.2 Opportunities for Encapsulation in OLED Displays Page | 3NanoMarkets expects the value of the encapsulation market in displays to grow from about$7.3 million today to over $120 million by 2018. This growth will come from increased sales ofboth the small, rigid displays—mostly full-color, active matrix devices—found in variousmobile computing applications (smartphones, tablets, netbooks, etc.) that have already begunto take off commercially, and of OLED TVs, which are expected to finally be on the market in2012-2013 and become a significant factor within the next several of years.Active-matrix OLED displays are largely being marketed in the consumer electronics space onimage quality and vibrancy of color. This approach raises the question of how encapsulationmaterials makers can improve their products sufficiently to meaningfully help their customerssell more OLED displays in both mobile computing and TVs. In NanoMarkets opinion, this canbe done by developing proprietary encapsulation solutions that preserve the benefits of OLEDdisplays while keeping manufacturing costs minimized.TV displays have much higher expectations for performance than small displays, especiallywith respect to lifetime, which means that first and foremost the encapsulation barrierperformance must be improved to enable real growth. However, improvements in barrierperformance cannot be so expensive that they hinder OLEDs ability to be cost competitive.Cost competition from LCDs will be particularly fierce; the LCD sector has thus far been able toovercome all of its competitors (plasma, especially), and OLED TVs will not be spared thischallenge.As previously discussed, for most OLEDs commercialized over the next decade, theencapsulation strategies of choice will continue to be based on glass because the performanceof glass is simply too far ahead of the others to expect anything else. However, we also firmlybelieve that different types of glass encapsulation schemes will become important in differentOLED display sub-sectors.  There is, for example, no compelling reason to suggest that small, rigid displays like those currently found in most smartphones will not continue to be dominated by conventional cover glass, with opportunities for glass firms supplying improved cover glass technologies to succeed. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  9. 9. NanoMarkets www.nanomarkets.net  On the other hand, larger-format panels in applications where cost competition is very fierce, such as in OLED TVs, may be better served by high performance/reduced-cost glass options like lightweight, flexible glass.In summary, despite the challenges, we believe that the opportunities are great in the OLED Page | 4encapsulation business for both displays and lighting, as long as one keeps in mind that theearly days of hype and promise have passed. Now, materials suppliers must be able to providereal solutions that solve both lingering performance issues and the pervasive issue of the highcost of most currently available encapsulation strategies.It is one thing to supply materials to an industry whose end product is mostly a type of non-critical OLED display that shows a clock or date on one side of a mobile phone, wheredeterioration of that display is annoying but not catastrophic to the consumer. It is quiteanother to supply materials to an industry whose goal is to produce large, high definition videodisplays or attractively designed lighting that offers both high-efficiency and improved totalcost of ownership. E.1.3 What About Flexible OLED Encapsulation?It has long been the dream of the OLED industry to provide high quality, low cost, flexiblepanels manufactured in a R2R process on plastic substrates. These OLEDs would offer a newvalue proposition to customers through unique geometries and design possibilities. Theviability of flexible OLEDs built on (relatively) porous plastic substrates relies on the ability toencapsulate them with adequate environmental barriers.Yet the performance of flexible encapsulation is still very much unproven. Many prototypesexist, but the ability to manufacture truly flexible displays on a large scale, with reasonablemanufacturing yields, remains elusive. Thus, flexible encapsulation of OLEDs is too far downthe road to be much of a factor in the OLED encapsulation market today.NanoMarkets estimates that the flexible encapsulation market will grow from nonexistenttoday to about $50 million in 2018. However, upon closer inspection we believe that most ofthis growth will come from sales of partially flexible, or bendable displays, rather than fromtruly flexible or crushable displays.However, to achieve partial flexibility—let alone true flexibility—suppliers of encapsulationmaterials still have much work to do. Flexible displays will never be possible withoutimprovements in flexible encapsulation, which is one of the key missing ingredients forflexible displays today. Clearly, conventional glass/getter/epoxy will not suffice; somethingelse is needed. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  10. 10. NanoMarkets www.nanomarkets.netThus, there is great potential for encapsulation firms to commercialize better flexibleencapsulation technologies based on, for example, flexible glass, multilayer dyad laminates,and conformal coating technologies. But these firms should not necessarily aim too high atthis point: partial flexibility, if it can be delivered at low cost and with excellent barrierperformance, may be more than enough to enable growth of OLED lighting and TVs, and thus Page | 5grow sales for encapsulation suppliers.E.2 Firms to Watch in the OLED Encapsulation SectorThe OLED Manufacturers: The firms that clearly have the most influence on whichencapsulation firms will succeed, and which will not, are the OLED panel manufacturers. Inother words, there is little doubt that de facto industry standards in OLED encapsulation willbe established largely by the big firms like Samsung (Korea), Sony (Japan), LG (Korea), andMatsushita (Japan) on the display side and OSRAM (Germany), Philips (The Netherlands), andGE (U.S.) on the lighting side.Most of the big OLED panel makers are not traditional materials firms, so their influence onthe encapsulation market will come in the form of their selection of particular encapsulationstrategies and manufacturing processes. In addition, these firms are in the position ofbecoming kingmakers by selecting encapsulation technology developers who then move frommarginality to significant size.Of course, those manufacturers that have a stake in both markets are likely the mostimportant ones to watch. In this case, we are talking mainly about the giants—theconglomerates like Samsung and GE, for example—that have both OLED manufacturinginterests and active encapsulation development programs.  Although they have not been heard from in a while and appear to be struggling with meeting commercialization deadlines, GE is developing R2R plastic barrier films in cooperation with DuPont (U.S.).  Samsung, which is the largest OLED manufacturer active today, effectively acquired the barrier technologies of Vitex Systems (U.S.) in 2011, announced that it expects to sell more than one billion OLED displays (for both mobile computing and TVs) within the next five years, and has invested over $2 billion in a next-generation plant set to come online in 2012.The glass firms: NanoMarkets projects that for the timeframe of this report, glass-basedencapsulation will continue to dominate. For this reason, opportunities for glass firms will be NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  11. 11. NanoMarkets www.nanomarkets.netabundant, especially for those that can provide significant improvements in getter/epoxyconfigurations, reduce weight and cost and improve manufacturing processes.The big glass firms like Nippon Electric Glass (Japan), Asahi Glass Company (Japan), Corning(U.S.), and Schott (Germany) clearly have the advantage in this sector, although we believe Page | 6that DuPont—not a traditional glass company—is also one to watch. DuPont is promising alower-cost cover glass system that uses a printable getter to enable air-gap freeencapsulation, and if they can partner with the right OLED manufacturer, they could takesome market share from the others.Flexible glass: The promise of flexible glass is that it could eliminate the need for flexible dyadencapsulation layers, which have thus far proven insufficient to meet the encapsulation needsof the OLED market. The idea here is that the benefits of glass—higher conversion efficiency,heat tolerance, pinhole-free surfaces, and better barrier properties—might be preserved asthe glass is made thin enough to be reasonably flexible. Corning, NEG, AGC, and Schott allhave lines of thin, flexible glass products with an eye toward R2R processing.Thus far, the focus of the glass companies with respect to flexible glass has been directedtoward the touch-screen and PV markets instead of OLEDs, and there is additionaldevelopment work required to get the performance of flexible glass where it needs to be forflexible OLEDs. However, the possibilities are great:  Cost in glass manufacturing is directly related to the cost of the energy required to melt the glass, so the material cost is proportional to the volume of glass produced. Although first-generation flexible glass products are today very expensive, since flexible glass aims to greatly reduce the thickness of glass used for OLED encapsulation, the cost of flexible glass encapsulation has the potential to go much lower than one might expect.  Although they are currently behind other glass companies, notably the major Japanese firms, the deep expertise within Corning especially with respect to optical glass fiber production and handling gives it an advantage in the effort to develop flexible glass capable of meeting the needs of the OLED industry.  What is clear is that since plastic-based flexible encapsulation systems with high barrier performance are still not commercially available at a large enough scale to offer tangible cost benefits, flexible glass technologies may win out in the end. As already noted, especially in OLED lighting applications, true flexibility is probably NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  12. 12. NanoMarkets www.nanomarkets.net not really required, so simpler bendable displays with very long lifetimes enabled by the use of glass may be just the thing that is needed.The multilayer barrier firms: Despite the apparent lack of progress in multilayer dyads overthe last five years or so, their great promise for reducing costs has meant that many firms Page | 7have continued to pursue them. The firms to watch are those that are focusing on reducingcosts without sacrificing performance, such as by reducing the number of dyads (or layers)required to hit the barrier performance targets of the OLED industry.In addition to GE, which as noted above has apparently delayed launch of its OLED lightingproducts manufactured using its own (flexible) multilayer barrier encapsulation, the key firmsto watch in this space are 3M (U.S.), Tera-Barrier Films (Singapore), and Universal DisplayCorporation (UDC, U.S.).  3M is pursuing bendable OLED device encapsulation films suitable for R2R manufacturing. Currently commercially available 3M films have insufficient barrier performance for most OLEDs, but efforts are underway to supply better films for small, rigid displays, where the replacement of glass with a plastic material would bring great savings to customers via reduced thickness. The firms focus on small, simple, rigid displays instead of emerging displays is not particularly exciting, but this market is clearly accessible, and 3M has existing supply channels into the display market. This strategy focuses on the here and now; existing revenue streams can be invested back into technology development so that 3M is ready to serve the market when larger and/or flexible OLEDs materialize.  Tera-Barrier Films has also been developing multilayer dyad films with a development focus on R2R barrier coatings for flexible displays. At this point in time, Teras films have not been scaled commercially, but the company reports that it is working with partners and customers in both Asia and Europe and hopes to see its films in commercial products within the next year. The key differentiator of Teras technology is that it can achieve high barrier performance with only a few layers, which keeps the anticipated costs low. Of course, this performance is currently achieved using slow-speed sputtering, and it remains to be seen whether Tera can translate its small-scale, pilot successes into faster, larger-scale, truly low- cost production, which it hopes to be able to do using electron-beam technology.  UDC announced in 2011 the development of its own barrier film that it describes as a "single layer" hybrid organic/inorganic system suitable for both rigid and flexible OLEDs. We note that this development, if proven, is significant, because a single NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  13. 13. NanoMarkets www.nanomarkets.net layer system with adequate performance should go a long way toward reducing the cost of encapsulation and make growth in the OLED industry all the more certain. In addition, UDC is in a very good position to get its technology into the marketplace, since it is one of only a few suppliers that already has seen their emissive products appear in commercialized consumer goods. Page | 8E.3 Investment Opportunities in the OLED Encapsulation BusinessThis report is not intended as a guide for venture capital (VC) or strategic investors, but it ispossible to identify some market needs in the OLED encapsulation sector that may be ofpotential interest. The key factors that lead us to believe that there are some realopportunities for investment are the following:  After many years of languishing, OLEDs have finally emerged as a real market, and the opportunities for growth are great, especially for firms that can offer encapsulation technologies with tangible performance and cost benefits over the market-dominant cover glass strategies in use today.  The biggest growth sectors for OLEDs are in larger-format panels, both in OLED TV displays and, even more importantly, in OLED lighting. Therefore, the total addressable area for OLED encapsulation is set to expand greatly as these markets grow, which will lead to higher volumes for materials suppliers.  In the highest growth markets—OLED TVs and OLED lighting—requirements for encapsulation barrier performance are greater than found in the smaller displays on the market today. As a result, the opportunities are greater for firms to differentiate themselves and gain market share based on encapsulation that enables better lifetime performance.Given the above factors, NanoMarkets believes that there are some potential areas wherenew or additional investment might be justified:  Multilayer, or better yet, single layer, laminates that actually deliver on the promise of low cost manufacturing using polymers and polymeric substrates without sacrificing barrier performance.  Truly flexible OLEDs, which would require truly flexible encapsulation, are still far in the future, but there is real opportunity to expand the capabilities of OLED devices by offering partially bendable or conformable encapsulation options. If partial flexibility is all that is really required, then there are probably already several dyad NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  14. 14. NanoMarkets www.nanomarkets.net and similar technologies available today that just need a slight nudge to get them into the market.  Flexible glass should not be ignored. The performance benefits of glass are simply too great to overlook. And since glass manufacturing costs are closely linked to Page | 9 weight, thin flexible glass may be able to reduce costs even more that might be expected at first glance. Furthermore, since truly flexible OLEDs seem to be perpetually several years away from commercialization, the partial, yet real, flexibility of thin, flexible glass may be just what is needed for larger format, high volume OLED manufacturing of OLED TVs and OLED lighting.From where will the investment originate? We do not anticipate any new outside investmentin cover glass encapsulation. Instead, we expect that the major glass companies—Asahi Glass,NEG, Corning, etc.—will continue to dominate cover glass technology improvements throughofferings like air-gap free or frit-sealed covers. There is just no compelling reason for any newfirms to enter. The expertise within the glass industry is extensive, the competition amongthem is already fierce, and all the major firms have broad, active R&D programs aimed at newsectors like OLEDs.However, there may be significant opportunities for productive outside investment in non-glass encapsulation. There are several factors that will positively impact investment in non-traditional technologies:  Clearly, investors will only act if they believe that the OLED market will grow well beyond its size today. Fortunately, the indications are that it will. OLEDs in smartphones are taking off, with Samsung leading the way; OLED TVs are expected to finally be widely available in the very near term; and OLED lighting is poised to grow to be the largest addressable market of all. And all of these markets could benefit from encapsulation technologies that improve barrier performance while also reducing costs associated with heavy, batch process cover glass.  Although investors are attracted to companies with demonstrated sales, which are hard to come by at this point, they may also be attracted to technologies that demonstrate big performance advantages with the promise of large investment gains down the road. As we have already noted, non-glass encapsulation strategies based on low-cost, R2R-compatible barrier laminates could gain significant market share in the mid- to long-term. The growth sectors for OLEDs in TV displays and in lighting will both rely on high volume manufacturing to realize economies of scale NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  15. 15. NanoMarkets www.nanomarkets.net sufficient to bring costs down to levels that support truly widespread consumer adoption, and R2R production would clearly be a step in this direction.  Since the barrier performance requirements in OLED encapsulation are stricter than in almost any other sector, the addressable market is even larger than it Page | 10 seems at first glance. Of particular interest is the photovoltaics industry, which is itself in an upward growth trajectory, and which significantly expands the market for encapsulation. Investors can capitalize on this expanding market as way to leverage their specific technology across two industries—one which is "easier" (photovoltaics) and the other which is perhaps more of a stretch initially (OLEDs).But what kind of investors are we really talking about? Are these venture capitalopportunities, or something else? In NanoMarkets opinion, we think that additional or newVC investment is unlikely, if for no other reason than that the OLED industry has already beenaround long enough for VC firms to get in (and get back out, in some cases); the time for highrisk/high return investing has probably passed. Investment from angel investors is more likelythan VC investment, but again here we think their time has largely passed.In contrast, investment in the form of takeovers by large industrial firms, especially bigconsolidated firms in the display or lighting device or materials industries, is far more likely.  Large and mid-size firms already in the display or lighting markets can more readily be pulled into strategic deals based on synergies that lead to larger cash flows than pure equity investors would realize.  In addition, NanoMarkets believes that it will continue to be important for encapsulation firms to be sufficiently linked into the OLED supply chain, and that it will be increasingly important for all existing and new encapsulation suppliers to partner closely with end-users.  In fact, we have already seen OLED manufacturers acquire encapsulation firms with Samsungs de facto takeover of the Vitex Barix technology, and we expect this trend to continue with other encapsulation firms.E.4 Summary of Eight-Year Forecasts for OLED Encapsulation Technologies 2011-2018Overview of market segmentation by encapsulation technology: Today, OLED encapsulationis almost entirely achieved with cover glass/getter/epoxy technologies. Although efforts areunderway to develop alternative thin film and/or R2R encapsulation approaches, at presentthe alternatives invariably cost more than glass covers. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  16. 16. NanoMarkets www.nanomarkets.netIn order for an alternative technology—whether in the form of a laminated barrier film, adirectly deposited coating, or a flexible glass film—to displace cover glass encapsulation in alarge segment of the OLED device industry, the cost of the alternatives must come downsubstantially. NanoMarkets does not anticipate that prices for non-glass and flexible glassencapsulation will come down much in the near term, but we are hearing from the industry Page | 11that there are reasons to believe that costs can and will decline over time.This expectation is not breaking news; most encapsulation materials are already in a patternof declining prices. It is a generally accepted necessity that the costs of OLED materials mustdrop for OLEDs to meet their market potential and compete with other display and lightingtechnologies. In general, encapsulation materials are currently produced in limited quantitiesat relatively high prices.The hope, of course, is that as OLED demand increases, production volumes will increase andmanufacturers will realize economies of scale and faster recovery of initial development costs.Such changes may also attract more competition among producers of encapsulation products,which could help lower prices even further. Additionally, there may be technicalbreakthroughs that lead to very much lower prices.Overview of encapsulation market segmentation by OLED application: In Exhibit E-1 wepresent a summary of the eight-year revenue forecasts for the OLED encapsulation market.This forecast separates the OLED encapsulation market in two ways. First, the market isseparated into two broad categories, displays and lighting, each of which is further divided byOLED application. Second, the market is divided into rigid vs. flexible displays.These summaries highlight two major trends, each of which is discussed in more detailthroughout the report:  Although the OLED lighting sector is quite small today, growth in OLED lighting is expected to outpace other sectors so that revenues from encapsulation of OLED lighting panels will dominate starting in about 2016.  Rigid OLEDs, both in displays and lighting, will be the major factor in OLED encapsulation throughout the forecast period. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  17. 17. NanoMarkets www.nanomarkets.net Summary: Value of Encapsulation by OLED Application 2011-2018 ($ Millions)900800 Page | 13700600 Flexible Lighting500 Rigid Lighting400 Flexible Displays300 OLED TVs Small, Rigid Displays200100 0 2011 2012 2013 2014 2015 2016 2017 2018© NanoMarkets 2011 Year Total OLED Encapsulation Market 900 800 700 600 $ Millions 500 400 300 200 100 0 2011 2012 2013 2014 2015 2016 2017 2018© NanoMarkets, LC NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  18. 18. NanoMarkets www.nanomarkets.netChapter One: Introduction to OLED Encapsulation Technologies1.1 Background to this Report: Where Are the Opportunities for OLED Encapsulation Materials? 1.1.1 Preamble Page | 15OLEDs are highly vulnerable to oxygen and water vapor, so they present an encapsulationissue; developments to improve barrier performance have been discussed in the OLEDindustry since its earliest days. Until recently, however, OLED encapsulation materialsrepresented a relatively small market for chemical companies and a few start-ups. For manyyears there were few signs that OLEDs were going to break out of their niche market pattern,with almost all of the OLED market being accounted for by passive matrix displays for MP3payers, cell-phone sub-displays, etc.The situation was further complicated by the popular notion among OLED manufacturers thatencapsulation was the least of their worries, since most OLEDs could be successfullyencapsulated in a stack that often also included desiccant under glass using epoxy adhesivesfor edge sealing. The simple glass and epoxy encapsulation approach was not only all that wasrequired for small displays, it was all that display makers were willing to pay for, and itcontinues to be the principal encapsulation strategy in place today.Even as the size of the passive matrix OLED business grew, true opportunities for OLEDencapsulation were highly limited, and few materials firms were able to sustain a businessbased on encapsulation materials alone. And although materials suppliers were initially happyto supply these applications, they did so with the expectation that markets large enough tojustify their efforts would eventually emerge. 1.1.2 Finally, A Growing Market for OLEDs EmergesFortunately (at least for encapsulation systems makers), the opportunities have grown inrecent years in important ways:  OLED displays have at last been "mainstreamed" with the arrival of mass-market cell phones containing active-matrix OLEDs as primary displays; NanoMarkets has estimated that the size of the total OLED materials market exceeded $300 million in 2011.  Meanwhile, OLED lighting is now on the market in the form of "designer" chandeliers and table lamps, and larger segments of the lighting market are likely to be penetrated by OLED lighting in the next few years. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  19. 19. NanoMarkets www.nanomarkets.net  And while the first attempts to introduce OLED TVs stumbled, it seems that 2012 or 2013 will see the introduction of OLED TVs on the market with much greater chances of market success than the products that preceded them.These trends mean that the addressable market for OLED encapsulation materials is rapidly Page | 16growing and should continue to do so. Importantly, the fastest-growing applications forOLEDs involve larger-area panels that by definition consume relatively larger amounts ofmaterials. NanoMarkets predicts that the OLED materials market will reach over $5 billion insales by 2018, and at least 10 percent, or about $500 million, of this revenue will come fromencapsulation materials and technologies. But the success of the market is not a foregoneconclusion; better encapsulation technologies at reasonable costs are required if larger-formatOLEDs are going to meet their potential.Why? The glass and epoxy strategy may have worked for small format OLEDs—cell phones,smartphones, MP3 players, etc. But:  The consensus is that these materials will not be sufficient for the larger-format OLEDs that are now growing in market share;  Nor are these materials compatible with flexible and/or conformable OLEDs; and  Although it has been relatively easy to achieve the barrier performance goals for small devices, it has been very difficult to scale up the technology for high-volume commercial production of larger panels for OLED lighting and TV displays. It is not just the fact that OLED TV displays and lighting panels are large, but that such products are expected to last longer than cell phones and MP3 players.The new OLED markets have much higher product lifetime expectations, hence moresophisticated encapsulation technologies with better performance are required to enable realgrowth.As a result of the trend toward large panels, NanoMarkets believes that:  We are now looking at some real opportunities for the firms that have been working on the encapsulation issue, many of whom have poured resources into this area for several years.  Furthermore, the opportunity space for these firms will only get better when conformable and flexible OLEDs start to make it to the market, which we expect to happen in perhaps four to five years. Truly flexible displays have yet to take off, NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  20. 20. NanoMarkets www.nanomarkets.net and the lack of cost-effective encapsulation technologies capable of meeting the strict water and oxygen permeation barrier requirements is at least partially to blame. Firms in the lighting and display industry are therefore beginning to see encapsulation as an area of strategic importance and are looking increasingly at specialized value-added encapsulation materials to meet their needs. Page | 17Currently, displays that can be flexed in one or two dimensions are a huge challenge to theencapsulation business, but one that potentially will generate a lot of revenues to thoseencapsulation providers that can bring stable encapsulation solutions to this performancedimension. NanoMarkets believes that even conformable OLEDs, which are closer to marketthan truly flexible ones, present an opportunity for encapsulation firms. 1.1.3 OLED Encapsulation StrategiesCover glass for rigid OLED devices: As noted above, glass encapsulation strategies are themost prevalent today, and the dominant suppliers are Corning and DuPont.The majority of current OLEDs, especially bottom-emitting structures, are encapsulated usinga cover glass, desiccant (or getter), and an edge-sealing epoxy in a batch process strategy thatworks especially well for small displays like those used in cell phones, etc. First, in thesesmaller devices, the high barrier properties required are not so difficult to achieve, and theproduct lifetimes of many of these smaller OLEDs are relatively short anyway. NanoMarketsbelieves that even for larger, non-flexible OLEDs, glass/getter/epoxy encapsulation is likely tocontinue to be a leading choice for OLEDs.  This approach will benefit from its "tried and true" status, and without the need for flexibility or conformability, there are few compelling reasons to consider other options, especially if the glass/getter/epoxy suppliers can demonstrate reduction in processing costs and complexity.  While these arguments may be difficult to uphold for very large size panels and high-throughput manufacturing, this situation will not be the case for manufacturing of smaller and mid-sized panels used in smartphones, netbooks, tablets, etc.Flexible glass? For bottom-emission OLEDs, the emergence of viable flexible glass substratesthat are compatible with R2R processing cannot be ignored. Both Asahi Glass and Corninghave announced the development of 0.1-mm thick flexible glass rolls. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  21. 21. NanoMarkets www.nanomarkets.netIf the firms can also demonstrate ways to include adhesive and desiccant for top-emissionstructures, they could successfully overcome the biggest impediment to using glass forencapsulation, namely the cost.Multilayer barrier films: The most common non-glass approach to OLED encapsulation is the Page | 18use of a multilayer barrier film of alternating polymer and oxide layers deposited by physicalor chemical vapor deposition (PVD or CVD):  Multilayer barriers—whether in the form of pre-formed film laminates or monolithic thin films deposited directly onto the OLED devices—have been touted as having the potential to greatly reduce costs compared to rigid cover glass designs through use of cheaper materials, thinner layers, and easier processing.  Monolithic encapsulation has been more prevalent than laminates, since monolithic encapsulation of the OLED devices minimizes (but does not always eliminate) the need for adhesives and getters to improve edge imperviousness. Unfortunately, in reality the cost advantages have been elusive, often because so many layers are needed to achieve the required barrier performance that any processing cost benefits are lost.The fundamental problem with multilayer barriers is that defects such as pinholes, cracks andgrain boundaries are common in the thin oxide films used, especially when fabricated ontoplastic substrates.To solve this problem, multilayer barrier technologies have focused on using alternatingorganic and inorganic multilayers, or dyads, which stagger the defects in adjacent layers. Thiscreates a "torturous path" for water and oxygen molecules; the idea is to make the pathwaylong enough so that water and oxygen simply will not be able to make it to the sensitive OLEDstack.Unfortunately, the more layers that are employed, the less flexible is the finished product, soalthough multilayers are promising candidates for encapsulation based on their excellentbarrier performance, they have struggled to meet the needs of flexible, R2R-manufacturedOLEDs on plastic substrates.Today, 3M dominates the market, small though it is. Other firms with multilayer dyad filmsare Dow, GE, Alcan Packaging, and Fujifilm. An early developer of technology in this area wasVitex Systems, which made a strategic deal in 2010 with Samsung and now appears to have NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  22. 22. NanoMarkets www.nanomarkets.netbeen largely absorbed by Samsung Mobile Displays and Samsung Cheil, which continue towork on barrier systems.A second, and perhaps even more important, major problem for most dyad films on themarket today is cost, which can be as high as $70 to $100 per square meter. Efforts are thus Page | 19ongoing to reduce the number of layers required to achieve the desired barrier properties. Anadded benefit from reduction of the number of layers is that flexibility could also conceivablybe improved.Multilayer barriers based on ALD: Atomic layer deposition (ALD) strategies for multilayerbarrier films have also garnered much interest in recent years. ALD is considered to givebetter film qualities than CVD or PVD methods; the number of film defects is reduced, so bothlayer thicknesses and the number of layers can, at least in theory, be reduced.We note, however, that these advantages are meaningful only if there is a concurrentreduction in the cost of the layers. NanoMarkets believes that there is promise in this area,but remains skeptical about the ability of ALD manufacturing to handle high throughputs orR2R processing—especially for flexible OLEDs. Instead, ALD encapsulation strategies may bepractically limited to higher-end and/or batch process OLED lighting markets.Beneq Oy, an ALD equipment maker and technology developer, is the clear leader in this sub-market of the OLED encapsulation industry, but other firms including SunDew Technologiesand ALD NanoSolutions have also entered the fray.Other kinds of barrier strategies: To meet cost and flexibility goals, the development of a"single layer" barrier has been something of a "holy grail" in the encapsulation industry. Tothe best of NanoMarkets knowledge, this objective has not yet been achieved, but severalfirms appear to be getting closer:  Tera-Barrier Films is commercializing an innovative barrier film that is purported to solve the defect problem of traditional dyad films by literally plugging the defects in the barrier oxide films using nanoparticles, thereby reducing the number of barrier layers needed in the construction of the barrier film down to just two layers—an oxide and a nanoparticulate sealing layer.  In addition, Universal Display Corporation, a longtime advocate of Vitexs Barix, is now also advertising its own "single layer" system, which, if real and cost-effective, could revolutionize the industry. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  23. 23. NanoMarkets www.nanomarkets.net1.2 Objectives and Scope of this ReportIn this new report from NanoMarkets, we analyze and quantify the opportunities forencapsulation materials and technologies in the fast-growing OLED market. The report coversthe commercial implications of technical developments in both materials and depositionequipment, and we identify the key factors for success for encapsulation materials suppliers in Page | 20this space. This report is entirely international in scope. The forecasts are worldwide forecastsand we have not been geographically selective in the firms that we have covered in the reportor interviewed in order to collect information.The report also contains detailed, eight-year forecasts of the materials used for OLEDencapsulation broken out by product type and application wherever possible. Finally, weexamine the product development and marketing strategies of the major players in the OLEDencapsulation materials sector from large to specialty firms, and we attempt to indicate whichare the "companies to watch" and which will be the likely winners and losers in theencapsulation materials space.1.3 Methodology of this ReportNanoMarkets has been covering the OLED materials markets for several years and is widelyregarded as having reliable reports on this topic. To determine where the opportunities are,we have based this report on both primary and secondary research:  Primary information is gathered largely through NanoMarkets analysis of relevant applications markets and market trends based on ongoing discussions with key players in the OLED materials community, including entrepreneurs, business development and marketing managers, and technologists involved with OLED materials and emerging display products of all kinds.  Secondary research is drawn from the technical literature, relevant company Web sites, trade journals and press articles, and various collateral items from trade shows and conferences.Some of the applications-related market information in this report comes from our mostrecent reports on the covered applications areas. Reports from which some data have beentaken include "OLED Lighting Materials Market Trends and Impact" of June 2011, "Markets forOLED Materials" also from June 2011, "OLED Lighting Global Market Forecasts" from May2011, "OLED Lighting in Asia" from April 2011, "OLED Lighting in Europe" from May 2011, and"Encapsulation and Flexible Substrates for Organic and Dye-Sensitized Photovoltaics" fromJanuary 2011. Where information has been used from another report, it has been NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259
  24. 24. NanoMarkets www.nanomarkets.netreinvestigated, reanalyzed, and reconsidered in light of current information and updatedaccordingly.The forecasting approach used in this report is explained in more detail in Chapter Four, butthe basic approach is to identify and quantify the underlying OLED application markets, the Page | 21barrier requirements for those applications, and the technological and market pressures thataffect the ability of different encapsulation and barrier technologies to penetrate thosemarkets.We consider both the specific performance needs of the various OLED applications and thebroader economic developments that impact the size and rate of growth of the OLED marketsfor each application area. Activities and developments at key firms are of course of specialinterest, although NanoMarkets critically considers these claims in light of all available data.1.4 Plan of this ReportIn Chapter Two, we provide an analysis of the different materials sets and depositiontechnologies for OLED encapsulation. As part of this analysis, we briefly examine the focusand strategies of the principal manufacturers and suppliers, and we pay particular attention toinnovations and strategies being followed to reduce costs, increase performance, andcustomize products for particular markets and applications.Chapter Three of this report provides a more in-depth analysis of the major applicationswhere OLEDs are being used now or will be used in the future, from mobile-phone displays toflat-panel televisions and solid-state lighting. The idea here is not to provide a comprehensiveanalysis of OLED markets, but rather to offer a survey of the addressable markets for OLEDencapsulation suppliers.In Chapter Four, we provide detailed, eight-year forecasts of the OLED encapsulation marketswith breakouts by technology type and by application type wherever possible. NanoMarkets, LC | PO Box 3840 | Glen Allen, VA 23058 | TEL: 804-360-2967 | FAX: 804-360-7259

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