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1 OLED Lighting: Moving from Market Entry to Volume Manufacturing Presented at The Plastic Electronics Conference, 2012, Dresden By Craig Cruickshank (CEO) 11 October 2012 cintelliq Limited St. John s Innovation Centre Cowley Road Cambridge CB4 0WS : :info@cintelliq.com

2 cintelliq ltd St John s Innovation Centre Cowley Road Cambridge CB4 0WS Tel: Fax: sales@cintelliq.com All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publishers. Whilst every effort has been made to ensure the high quality and accuracy of this report, cintelliq makes no warranty, express or implied concerning its content which is provided "as is". In no event will cintelliq be liable for direct, special, incidental, or consequential damages (including, without limitation, damages for loss of business profits, business interruption, loss of business information or other pecuniary loss) arising directly or indirectly from the use of (or failure to use) the content of this report. 2

3 OLED Lighting: Moving from Market Entry to Volume Manufacturing Abstract OLED lighting is commercially available, but as a young and emerging industry it faces a number of challenges as it moves through three key phases of development over the next 10 years; namely: Phase I - market entry Phase II - manufacturing scale Phase III volume manufacturing This presentation aims to provide a summary of the industry today, describe the three manufacturing phases, and to highlight challenges facing the industry as it moves from market entry to volume manufacturing. 3

4 The lighting industry is making a rapid transformation to solid-state lighting, and OLED technology to set to become a major lighting technology The lighting industry in 2010 was estimated to be worth 52bn euros with lamps/electronics worth 30% and luminaires/solutions worth 70% In terms of markets the lighting industry can be split as a consumer segment worth 23bn euros (44%) and a professional segment worth 29 bn euros (56%) The lighting industry is undergoing a major technology shift from traditional to solid-state lighting the transition will be both rapid and significant Opinions differ of how large the overall lighting market will grow over the next 10 year, it is forecast to be in the range US$ 80 bn US$ 120 bn by 2020 This transformation is attracting new OLED panel manufacturers who are challenging traditional lighting companies The number of companies actively committing to OLED lighting panel development, includes both panel and luminaire manufacturers As OLED lighting evolves from niche lighting to general illumination it will move through three periods of development and manufacturing scale-up 4

5 The lighting industry in 2010 was estimated to be worth 52bn euros with lamps/electronics worth 30% and luminaires/solutions worth 70% Figure: Lamps and luminaires as % of total lighting market [Source: Philips corporate annual reports, cintelliq, 2011] 36bn 70% 52bn 30% 16bn Lamps and electronics The market can be divided in to two main market segments Lamps, modules and ancillary electronics Luminaires and solutions In the traditional lighting industry Lamp segment is highly concentrated with four manufacturers accounting for the majority of output Luminaire segment is highly fragmented Luminaires is an opportunity for consolidation the major lighting companies are seeking to secure their position in this segment Philips and Osram are making concerted efforts to secure a share of the luminaire market this is supported by ongoing acquisition of companies in this space Luminaires and solutions Source: Philips investor presentations 5

6 In terms of markets the lighting industry can be split as a consumer segment worth 23bn euros (44%) and a professional segment worth 29 bn euros (56%) Figure: Lighting industry market segmentation revenues 2010* [Source: various corporate annual reports, cintelliq, 2011] 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Consumer Lamps Lighting electronics Luminaires/Applications Professional Consumer segment worth 44% - predominantly the home market Professional segment worth 56%, and consists of Office Outdoor Retail Industry Hospitality Healthcare Entertainment Leading lighting companies provide no real distinction between revenues and market share of traditional lighting vs. SSL-LED 0% Home Outdoor Industry * estimated Office Retail Hospitality Excludes automotive lighting Healthcare Entertainment 6

7 Revenues (billion euros) The lighting industry is undergoing a major technology shift from traditional to solid-state lighting the transition will be both rapid and significant Figure: Lighting industry revenues [Source: Philips, cintelliq, 2011] 90 The lighting industry is estimated to be worth 52bn euros in 2010, and set to grow to about 80bn euros by solid-state lighting (SSL) be responsible for the growth SSL-LED lighting Although the overall lighting industry is considered to be a mature industry with a CAGR expected to fall within the range 7% to 9% - the figure on the left is based on 9% - the underlying trends for SSL- LED lighting and conventional lighting show a different picture SSL-LED lighting is growing fast it will have grown from about 5bn euros in 2010 to more than 45bn euros by Conventional lighting Conventional lighting is declining fast it is expected to account for 35bn euros in less than 50% of the total market 10 At present the major lighting companies involved in SSL only discuss SSL-LED revenues

8 Revenues (Euros billions) Opinions differ of how large the overall lighting market will grow over the next 10 year, it is forecast to be in the range US$ 80 bn US$ 120 bn by 2020 Figure: Lighting industry revenues [Source: Philips, Osram, cintelliq, 2011] Osram Phimils-H Philips-L Osram-P Conventional lighting LED lighting Analysing market and public data provided by Philips suggest they expect the market to reach 80bn by 2015 assumes a 9.0% CAGR nearly 66% bigger by 2016 More recently they revised their long-term view and forecast the market may grow to 90bn to 120bn by 2020 Analysing market and public data provided by Osram suggest they expect the market to reach 65bn by 2016 assumes a 6.3% CAGR nearly 44% bigger by 2016 At 6.3% by 2020 the market would be worth about 80bn Our assessment is the future market will lie between the highest and lowest values 80bn 120bn 8

9 This transformation is attracting new OLED panel manufacturers who are challenging traditional lighting companies Figure: Industry players - traditional lighting companies, new entrants and technology providers [Source: cintelliq, 2011] Traditional Lighting Companies OLED lighting suppliers with own fab Panasonic (JP) GE (US) OLED Lighting (JP) (Lumiotec) New entrants OLED lighting suppliers with outsourced fab Philips (NL) Showa Denko (JP) Ledon OLED (DE) (IPMS) Osram (DE) Kaneka (JP) Polyphotonix (UK) Konica Minolta (JP) Fraunhofer IPMS (DE) Blackbody (FR) (Astron Fiamm) LGChem (KR) Universal Display (US) Novaled (DE) New entrants OLED lighting suppliers with own fab Lumiotec (JP) Cambridge Display Technology (UK/JP) (Sumitomo Chemical) Technology Providers OLED lighting suppliers of knowhow and IP with own fab 9

10 The number of companies actively committing to OLED lighting panel development, includes both panel and luminaire manufacturers Figure: OLED lighting industry company activity grid [Source: cintelliq, 2011] Companies are actively involved in a range of activities from lamp manufacturing to solutions Solutions Luminaires Lamps Some are choosing to be fully vertically integrated companies, while others are adopting either a foundry or fabless business model Solutions Luminaires 5 21 Only the major traditional lighting companies have adopted a full and vertically integrated business model Luminaires Lamps Lamps Panel manufacturing is an important part of the industry without OLED panels there is no industry Organisations entering into panel manufacturing are initially building and commissioning pilot line manufacturing capability Only four of the OLED panel manufacturers have prior lighting industry experience and infrastructure Confirmed Announced Fabless Foundry 1. Philips 2. Osram 3. GE 4. Panasonic 5. Zumtobel 6. PPML 7. Organic Lighting 8. Ledon OLED 9. Blackbody 10. Lumiotec 11. Pioneer Pilot Line Vertically integrated Full Line 12. Moser Baer 13. Polyphotonix 14. Verbatim 15. Doosan 16. Konica Minolta 17. LG Chem 18. Modistech 19. Showa Denko 20. Fraunhofer IPMS 21. Acuity Brands 22. Jusung Engineering The very structure of the lighting industry is undergoing a significant change and transformation 10

11 As OLED lighting evolves from niche lighting to general illumination it will move through three periods of development and manufacturing scale-up Figure: OLED lighting industry evolution [Source: various, cintelliq, 2011] market approach product development and capability process development and capability Period 1 Period 2 Period Market entry R&D line Niche lighting Pilot line Market traction Volume business Functional lighting Full-scale line General illumination Three periods of product and process development Period 1 years 0-2 market entry Niche products R&D lines with a transition to pilot lines Period 2 years 3-5 market traction Niche products with the transitions to more functional lighting Pilot line production the norm with some transition to large scale production (larger substrate size) Period 3 years 6-10 volume business Functional lighting becoming more established General illumination now gaining market acceptance Production facility large substrate and high throughput volume manufacturing Lower-cost and higher performing products 11

12 This raises many questions about the OLED Lighting industry to understand how current products, pricing, capacity, and costs will evolve into the future Products: What OLED lighting products are entering the market? What OLED lighting products segments are emerging? What is the performance of these products? How will product performance change over time? Pricing: What is the price of OLED lighting products entering the market? What is the price of panels, and price in unit area? How will prices change with increases in the number of manufacturers? How will pricing change with improvements in product performance? Capacity: How much capacity is currently available? How does capacity translate into shippable volumes? How does capacity translate into panel sizes? How will capacity evolve? What equipment generation is currently deployed? What equipment generation will be used in the future? Cost: What manufacturing costs are possible? How will costs change with increases in volume? How will costs change with improvements in product performance? How will costs change with improvements in process capability? 12

13 Current OLED panels being produced are typically square in shape and white in colour variations in shapes and colours are becoming available Figure: Selection of OLED panels commercially available [Source: various, cintelliq, 2011] Lumiotec Philips Verbatim Osram Ledon OLED Fraunhofer OLED lighting panels are basic building blocks (akin to lamps), and available in square shapes rectangle shapes hexagonal shapes circle shapes colour mainly white some multi-colour Seen as a replacement for incandescent and fluorescent lamps However, replacement not just for cost reasons, but because OLED panels can provide greater energy efficiency extended lifetime creative design luminaires/fixtures 13

14 OLED luminaires are available in limited quantities mainly as niche products, concepts and prototypes primarily used for testing market acceptance Figure: Selection of OLED luminaires commercially available [Source: various, cintelliq, 2011] Blackbody Osram Acuity Brands Acuity Brands Benwith Philips OLED luminaires are available in limited quantities and are mainly present as niche products, product concepts and prototypes used for evaluating market acceptance Early luminaires integrate the panels directly into the fixture giving rise to the expression The OLED is the luminaire As OLED panels are an integral part of the luminaire it is suggested these afford greater competition to LED based luminaires LEDs need heatsinks, driver circuits, mountings, case, etc OLEDs do not need so much in the way of ancillary components Although integrated panels may have economic advantages, there need to replace OLED panels that fail still remains 14

15 Although $ per m 2 is a convenient metric it has been proposed that $ per kilolumen is better as it combines performance and cost in one number Figure: Two key parameters influencing $/lm pricing [Source: cintelliq, 2011] $/Lm Performance Lm/m 2 $ Lm = $/m 2 $ m 2 Manufacturing cost Increase panel performance by increasing light output per unit area x m 2 Lm Decrease manufacturing costs by decreasing cost per unit area Essentially $/lm (or /lm) combines manufacturing price and device performance into a single number It removes performance differences It removes area differences Driving down the cost $ per kilo-lumen ($/klm) requires either the amount of light to increase per unit area or the manufacturing cost per unit area to fall or ideally both Therefore to improve $/klm manufacturers can decide to Increase panel performance by increasing light output per unit area Decrease manufacturing costs by decreasing cost per unit area 15

16 Efficiency of OLED panel have plenty of headroom for further improvements, ensuring higher efficiency available during the course of the next 10 years Figure: OLED panel efficiency and improvements [Source: DoE, cintelliq, 2011] 0% 10% 20% 30% extraction 40% electrical 50% internal quantum efficiency spectral 30% 60% 70% 20% 80% Panel efficiency improvement 375 lm/w considered to be maximum possible 68 lm/w 17.34% 90% 10% 9% 191 lm/w 50.54% 100% According to a report by the US DoE OLED panels still have plenty of room for improvement Four key components can be improved to increase efficiency Light extraction Electrical efficiency Internal quantum efficiency Spectral efficiency The biggest gains in device efficiency can be obtained from improving light extraction (outcoupling) electrical efficiency Panel efficiency could improve from the current 18% to 51% if the highlighted (light blue) improvements where achieved Source: DoE, cintelliq 16

17 To be competitive with incandescent bulbs, fluorescent lamps and SSL-LED OLED panels need to be much cheaper and operate at higher brightness Table: Incumbent lighting pricing per klm, target pricing for OLED to achieve comparable $/klm [Source: cintelliq, 2011] Pricing per klm Parameter Incandescent Fluorescent SSL LED* (75W) Watts lumens 930 1,350 1,100 Price (US$) price/klm Cost per m 2 Panel area required OLED pricing per m 2 to achieve comparable $/klm lumens per m 2 Incandescent Fluorescent SSL LED* (75W) 3, per m per m per m 2 6, per m per m per m 2 10, per m per m per m 2 15, per m per m per m 2 lumens per m 2 Incandescent Fluorescent SSL LED* (75W) 3, m m m 2 6, m m m 2 10, m m m 2 15, m m m 2 To compete with bulb, fluorescent or SSL-LED then OLED panels need to be cheaper and brighter To match SSL-LEDs - OLED prices need to achieve $614 per m 2 at an output of 15,000 lm per m 2 To match fluorescents - OLED prices need to achieve $29 per m 2 at an output of 15,000 lm per m 2 To match incandescent bulbs - OLED prices would need to achieve $19 per m 2 at an output of 15,000 lm per m 2 The higher the brightness means the cost per m 2 can be higher and the size of the panel can be smaller A 300mm x 300mm OLED panel would be equivalent to a single fluorescent lamp - if it is priced at US$ 2.60 if it is priced at $28.89 per m 2 if it generates 15,000 lm per m 2 output At these prices OLED panels would be strong competitor to SSL-LED 17

18 Over the next ten years manufacturers will increase production capacity as they make the shift from Gen 2.0 to Gen 5.5 Gen 5.5 ramp-up will be shorter Figure: OLED lighting panel production capacity ramp-up [Source: various, cintelliq, 2011] market approach Gen 2.0/2.5 production Gen 5.5 production Initial Period 1 Period 2 Period Process immature Output limited Yield low 20% of max output Market entry Market traction Volume business Initial Ramp-up Peak Sustaining Ramp-up Process maturing Output increasing Yield improving 40% of max output Initial Ramp-up Peak Peak Process mature Output near full capacity Yield high 80% of max output Sustaining Sustaining Process mature Output at full capacity Yield high 90% of max output New entrants and incumbents will initially all have similar equipment and similar capacity Timing of introduction will vary but expected to be fully operational by 2015 with yield and utilisation close to 80% Production capacity is set to gradually increase over the next five years as panel manufacturers establish Gen 2.0/2.5 facilities TACT will initially be about 4 minutes but is expected to fall to 2 minutes and then eventually 1 minute Traditional lighting manufacturer are expected to introduce Gen 5.5 production facility around 2015/2016 and this will see a production gap open up between new entrants and incumbents Moving to higher volume production will require significant capital investment for larger players it should be easier to secure the funding, for the smaller new entrants it may be more difficult 18

19 million m 2 per year Annual production capacity is forecast to grow to 350,000 m 2 by 2015, and then grow rapidly, achieving more than 5,600,000 m 2 by 2020 Figure: OLED lighting panel production capacity [Source: cintelliq, 2011] Gen 2.0 Capacity Gen 5.5 Capacity Production capacity is forecast to grow to more than 5,600,000 m 2 per year by 2020 Until 2016 Gen 2.0/2.5 equipment will provide the bulk of the production capacity From 2017 Gen 5.5 equipment is expected to account for the bulk of production capacity The transition from Gen 2.0/2.5 equipment to Gen 5.5 equipment will take a few years, starting from 2015/2015 and extending to 2017/2018 Gen 2.0/2.5 production forecast to be only about 300,000 m 2 as the assumption is those manufacturers who have established Gen 5.5 production would cease Gen 2.0/2.5 production due to cost and yield reasons

20 Summary Approach About cintelliq 20

21 About cintelliq Limited cintelliq provides strategic research and consulting for the needs of the organic semiconductor industry, including OLED lighting, organic photovoltiacs, and organic transistors cintelliq was founded in 2002 in recognition that as basic research in organic semiconductors moves from the research laboratories towards early commercialisation it is imperative that organisations with a vested interest in the development and commercialisation of the technology have access to sufficient industry information. 21

22 Consulting from cintelliq cintelliq offer consulting services from patent analysis, technology forecasting, strategic reviews through to cost models. cintelliq has been helping clients from different industry sectors since 2003, and help them to understand the development of the emerging industry enabling them to make the best possible decisions based on our fact-based approach. cintelliq advises clients in many industry sectors Government Funding Agencies EU FP7 expert evaluator, FP7 project reviewer, investment and funding reviews, industry reviews Financial Institutions Supporting VCs with technical due diligence Technology Developers Industry reviews, market reviews, technology forecasting, technology strategy, patent strategy, patent landscapes, and competitor analysis Manufacturing Companies Supporting manufacturers with cost models, strategic reviews of industry development, technology forecast, and competitor analysis Material Suppliers Industry reviews, market reviews, technology forecasting, technology strategy, patent strategy, patent landscapes, and competitor analysis For more information please contact cintelliq or visit our website 22

23 Examples of recent and past projects Project Client Problem Solution Review of the Organic Photovoltaic (OPV) IP landscape Government funding agency on renewable energy Our client wanted to develop a broad and deep understanding of OPV patent landscape Using our knowledge and experience of organic semiconductor patents, cintelliq provided the client with a highly focused, detailed and substantial dataset on OPV patents Commercial and technical review of OLED lighting Major European lighting firm Our client wanted to develop a detailed understanding of commercial and technical opportunities in the OLED lighting industry and strategic options cintelliq provided a detailed overview of OLED lighting, including the technical developments, list of key players, licensing requirements, IP review, list of major patents, and the development of strategic options for manufacturing Ten-year OLED IP review Global management consultancy firm Our client wanted to develop a broad understanding of OLED patents Using our knowledge and experience of organic semiconductor patents, cintelliq provided the client with a highly focused dataset relating to OLED patents covering the past ten years Assessment of organic electronics technology and early applications World-leading technology, media and financial services company Our client required an overview of technology developments and early applications for the emerging organic electronics industry. cintelliq provided a review of these technologies, possible applications and industry sectors that are considered to be early adopters of organic electronics. Review of Organic Photovoltaic Technology Government funding agency on renewable energy Our client wanted a review of S.O.A. and technology trends of OPV Using our knowledge and experience of organic photovoltaics, cintelliq provided the client with a highly focused report of the current technology, future technology, players, research and manufacturing options Five-year Organic Photovoltaic (OPV) IP review World-leading photovoltaic technology and device provider Our client wanted to develop a broad understanding of OPV patents Using our knowledge and experience of organic semiconductor patents, cintelliq provided the client with a highly focused dataset relating to OPV patents covering the past five years 23

24 Examples of recent and past projects Project Client Problem Solution Review of technology and market for PEDOT IP review of out-coupling techniques for OLEDs IP review of hole transport and hole injection materials for OLEDs IP review of thin film encapsulation techniques for OLEDs Multinational European chemical business World-leading OLED technology and device provider World-leading OLED technology and device provider World-leading OLED technology and device provider Our client wanted a technology and market review of PEDOT Our client wanted to develop a broad understanding of out-coupling patents Our client wanted to develop a broad understanding of HTM and HTL patents Our client wanted to develop a broad understanding of thin film encapsulation patents Using our knowledge and experience of organic semiconductor technology, cintelliq provided the client with a highly focused report of the current technology, future technology, players, research and manufacturing options Using our knowledge and experience of OLED technology and organic semiconductor patents, cintelliq provided the client with a report and focused dataset relating to outcoupling patents and highlighting the different approaches to extract light Using our knowledge and experience of OLED technology and organic semiconductor patents, cintelliq provided the client with a detailed report and focused dataset relating to HTM and HTL patents Using our knowledge and experience of organic semiconductor patents and OLED encapsulation technology, cintelliq provided the client with a detailed report and focused dataset relating to thin film encapsulation patents Review of LCD technology evolution of the next 3 to 5 years World-leading OLED technology and device provider Our client required forecasts of the how LCD technology performance will evolve over the next 3 to 5 years cintelliq provided a detailed review of current and future LCD performance, enabling the client to set internal targets for the development of OLED technology. OLED technology due diligence European VC Our client wanted to technical due diligence prior to investment of a start-up cintelliq provided the client with a detailed review OLED technology being developed, giving the VC the confidence to client to undertake their investment 24