Recently IDTechEx attended the solid-state lighting workshop in San Jose, California. This workshop was organised by the US Department of Energy and brought together companies active across the value chain in the OLED and LED lighting industries in the US. Here are some impressions:
The OLED lighting industry is still in its infancy. The price points are several orders of magnitude above those projected by industry roadmaps and even more off cost targets that are required for widespread market uptake. Today, OLEDs cost some 5,000-20,000 $/m2, offer panel efficacy values in the range of 25-60 lm/W, and have lifetimes between 15,000-20,000 hrs. Contrast this with LEDs: 400-800 $/m2, 45-70 lm/W, and life time >50,000 hrs. It is clear that OLEDs suffer from unfavourable cost structures. This is despite the fact that OLEDs have already achieved reasonable efficacy values.
There is still no set of standards or consensus in the industry on optimal device architecture (stack, double layer, etc), manufacturing technique (evaporation, solution processing or hybrid) or manufacturing toolkit. It is not even clear how OLED lighting can borrow from techniques developed and scaled for the OLED display industry. It is expected that the OLED industry will iron out these issues with time and government subsidy. It however yields little control on major external cost drivers.
One such cost driver today is integrated substrates (encompassing the substrate, the transparent conductor and external light extraction layer), which constitute 45-50% of the overall cost.
OLED manufacturers would like to be supplied with the integrated substrates because there is little added value for them in its manufacture. It currently appears that the market-pull and volumes are too small in the OLED space for large glass suppliers to commit to specifically serving the OLED market. In the absence of leverage, prices will remain high.
The second major cost driver is the encapsulation. OLED materials are highly sensitive to ambient conditions, including water and oxygen species. There is agreement that barriers need to offer ultrahigh performance on the order of 10E-6 g/m2day. This can be achieved using glass, but comes at a cost. The glass used is a special type that is sandblasted so that the desiccant can be inserted into it. The encapsulated glass is then attached to the substrate using special adhesives that are highly impermeable to moisture. Typical cost estimates for the encapsulant are that 100 $/m2 for the adhesive, 100 $/m2 for the desiccant and 300 $/m2 for the special glass.
This type of barrier only enables the manufacture of rigid luminares. This could be a handicap going forward because a significant selling point for OLEDs vis-à-vis LED is better form factor. Realising flexible barriers is even more challenging. Currently, the industry is pursuing a number of approaches, including the multiple dyad technique. None, however, offer a satisfactory price-performance compromise. We assess that the pull from the photovoltaic industry will accelerate the developments on this front, but we are not there yet.
The governments have a critical role to play to help the technology down the learning curve. They will need to increase funding in order to transfer some of the risk and cost into its books. This way the government will spend on cleantech, helping create high-value jobs. The risk here is that this job creation may not be sustainable in the long term if the investment is too little and/or too late/spread. This is because jobs are likely to migrate to Asia, which offers a more competitive manufacturing base and is likely to receive more generous government subsidies.
The LED technology is many years ahead of its OLED counterpart. It was already a $10billion market in 2011, up from $5.5billion in 2010, according to Strategies Unlimited. In 2001, there were only 38 manufacturing sites globally; this rose to 169 in 2012. Today, manufacturing takes place mostly in far Asia. Indeed, China, Japan and Taiwan offer 52.2% of the global manufacturing capacity. The increase in sales and manufacturing experience is expected to reduce costs by 35-45% in 2011. In addition to end users, luminaire manufactures are expected to reap the most benefit from price cuts, mostly due to their design added value.
Not all however is well with the LED industry. Similar to the photovoltaic industry, the market today is currently experiencing a supply glut. China has heavily subsidised manufacturing capacity (indeed it has committed more money to LED lighting in its 12th Annual Plan). The industry itself has created excess capacity in anticipation of market pull from the LED-LCD industry. In addition to this, the demand is also expected to slow. This CAGR is forecast to drop from 45% to 10%.
Going forward, the most difficult challenge lies in meeting the tough cost targets set by the incumbent technology. The enormity of the challenge can be appreciated when one thinks that LEDs, with all their complexity, will need to be cost competitive with an incandescent lamp that is essentially a simple resistor.
The magic cost market for widespread market adoption is still not clear. The consensus previously was that 10 $/klm would do. This however is being revised now and the post is moved further away. A more realistic switching threshold may be 3-5 $/klm. Some cost reductions will inevitably stem from further process automation, but it is still not clear how the technology can reach such stringent cost targets.
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