NanoMarkets Report

Markets for OLED Encapsulation Materials 2012-2019

Nano-573

Published Oct. 2012

Entire contents copyright NanoMarkets, LC. The information contained in this report is based on the best information available to us, but accuracy and completeness cannot be guaranteed. NanoMarkets, LC and its author(s) shall not stand liable for possible errors of fact or judgment. The information in this report is for the exclusive use of representative purchasing companies and may be used only by personnel at the purchasing site per sales agreement terms. Reproduction in whole or in any part is prohibited, except with the express written permission of NanoMarkets, LC.

Table of Contents
Executive Summary ............................................................................................1 E.1 What Has Changed in OLED Encapsulation in the Last Year ................1 Page | i
E.1.1 Encapsulation as a Key Enabler for Large-Area and Flexible OLED Panels ..................1 E.1.2 The Challenge of Pricing and Investment Strategies for Advanced Encapsulation Materials ....................................................................................................................................2 E.1.3 Glass Continues to Dominate OLED Encapsulation .......................................................3 E.1.4 Non-Glass Technologies Performance vs. Price Tradeoff ...........................................4

E.2 Firms to Watch in the OLED Encapsulation Space.................................5

E.2.1 Glass and Flexible Glass Firms .......................................................................................5 E.2.2 Dyad, Laminate, and ALD Firms to Watch ......................................................................6

E.3 Summary of Eight-Year Forecasts for OLED Encapsulation .................7 Chapter One: Introduction to OLED Encapsulation Technologies ................9 1.1 Background to This Report .......................................................................9
1.1.1 Increased Production and Larger Panel Sizes Lead to New Encapsulation Needs ........9 1.1.2 New Strategies for Encapsulation ................................................................................. 10 1.1.3 Opportunities in Glass Encapsulation ........................................................................... 11

1.2 Objectives and Scope of This Report .....................................................11 1.3 Methodology of This Report ....................................................................12 1.4 Plan of This Report ..................................................................................12 Chapter Two: Markets for OLED Encapsulation Technologies Designs, Materials, and Suppliers ...................................................................................14 2.1 OLED Markets and Vulnerabilities ..........................................................14 2.2 Glass Technologies and OLED Encapsulation ......................................15
2.2.1 Analysis of Specialized Current and Future OLED Glass Products ............................. 15 2.2.2 The Promise of Flexible Glass: Lightweight and High Performance, But When Will the Cost Be Right? ....................................................................................................................... 16 2.2.3 OLED Glass Suppliers .................................................................................................. 18

2.3 Multilayer Films for OLED Encapsulation ..............................................19

2.3.1 Dyads: Reducing the Number of Layers ....................................................................... 20 2.3.2 Multilayer Barrier Films as Laminates or Monolithic Coatings ...................................... 20 2.3.3 Barrier Film Suppliers.................................................................................................... 21

2.4 Prospects for Metal Foil Encapsulation .................................................23

2.4.1 Opportunities for the Use of Metal on PMOLED Displays ............................................ 23

2.4.2 Can Metal Foil Encapsulation Find a New Home in Larger-Format OLEDs?............... 24

2.5 Emerging Encapsulation Technologies .................................................25

2.5.1 The Future of ALD in OLED Encapsulation Conformal Coatings .............................. 25 2.5.2 Special Considerations for Flexible OLEDs .................................................................. 25 2.5.3 Suppliers of New(er) Encapsulation Technologies ....................................................... 27

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2.6 Key Points from This Chapter .................................................................28 Chapter Three: Eight-Year Forecasts for OLED Encapsulation ...................30 3.1 Forecasting Methodology and Assumptions .........................................30
3.1.1 Methodology.................................................................................................................. 30 3.1.2 Scope of the Forecast ................................................................................................... 30 3.1.3 Information Sources ...................................................................................................... 31 3.1.4 Forecasting Assumptions .............................................................................................. 31 3.1.5 Alternative Scenarios .................................................................................................... 34

3.2 Eight-Year Forecasts of OLED Encapsulation Technologies by Addressable Market .......................................................................................37

3.2.1 Encapsulation for Small and Medium OLED Displays Phones, Tablets, Notebooks, Computers, and Related ........................................................................................................ 38 3.2.2 Encapsulation for OLED TVs ........................................................................................ 54 3.2.3 Encapsulation for OLED Lighting .................................................................................. 57

3.3 Eight-Year Forecasts of OLED Encapsulation by Product Type ..........61

3.3.1 Rigid Cover Glass Encapsulation ................................................................................. 61 3.3.2 Flexible Glass ................................................................................................................ 62 3.3.3 Multilayer Barrier Films ................................................................................................. 64 3.3.4 Conformal Coatings ...................................................................................................... 66 3.3.5 Metal Foils ..................................................................................................................... 68

3.4 Summaries of Eight-Year Forecasts of PV Encapsulation ...................70 Acronyms and Abbreviations Used in This Report .....................................74

List of Exhibits
Exhibit 2-1: Important OLED Glass Suppliers .......................................................................... 18 Exhibit 3-1: Estimated Average Prices of Different Encapsulation Technologies 2012- 2019 ($/m2) .................................................................................................................................... 32 Exhibit 3-2: Analysis of Small and Medium OLED Display Market by Application 2012-2019 ....... 39 Exhibit 3-3: Encapsulation of OLED Displays in Smartphones 2012-2019 .................................. 40 Exhibit 3-4: Encapsulation of OLED Displays in Tablets 2012-2019 ........................................... 42

Exhibit 3-5: Encapsulation of OLED Displays in Notebooks & Related Devices 2012-2019 .......... 44 Exhibit 3-6: Encapsulation of OLED Displays in Monitors 2012-2019 ......................................... 46 Exhibit 3-7: Encapsulation in Small Passive Matrix OLED Displays 2012-2019 ............................ 48 Exhibit 3-8: Summary of Encapsulation in Small & Medium OLED Displays by Technology 20122019 ............................................................................................................................ 50 Exhibit 3-9: Summary of Encapsulation in Small & Medium OLED Displays by Display Type 20122019 ............................................................................................................................ 51 Exhibit 3-10: Encapsulation in the OLED TV Display Market 2012-2019 .................................... 55 Exhibit 3-11: Encapsulation in the OLED Lighting Market 2012-2019 ........................................ 58 Exhibit 3-12: Rigid Cover Glass Encapsulation by OLED Application 2012-2019 ......................... 61 Exhibit 3-13: Flexible Glass Encapsulation by OLED Application 2012-2019 ............................... 63 Exhibit 3-14: Multilayer Barrier Film Encapsulation by OLED Application 2012-2019................... 65 Exhibit 3-15: Conformal Coating Encapsulation by OLED Application 2012-2019........................ 67 Exhibit 3-16: Metal Foil Encapsulation by OLED Application 2012-2019 ..................................... 69 Exhibit 3-17: Summary of OLED Encapsulation by Application 2012-2019 ................................. 70 Exhibit 3-18: Summary of OLED Encapsulation by Technology 2012-2019 ................................ 72 Page | iii

Executive Summary
E.1 What Has Changed in OLED Encapsulation in the Last Year
NanoMarkets projects that the value of the organic light emitting diode (OLED) encapsulation Page | 1 market will grow from just over $20 million in 2012 to over $850 million by 2019. Why do we expect so much growth? The OLED market has finally taken off in the past two years, and there are more reasons than ever to believe that the prospects for OLEDsand for their materials supplierswill just get better over time. OLEDs have been mainstreamed with the arrival of widely available smartphones with OLED displays. OLED lighting and TVs seem to be on their way. And since this market is still quite small when one considers the overall size of the display market, there is much room for growth.

E.1.1 Encapsulation as a Key Enabler for Large-Area and Flexible OLED Panels
OLEDs are notoriously environmentally sensitive, so encapsulation barriers have always been a challenge to the manufacturing process. Encapsulation of OLEDs today is mostly accomplished using relatively simple cover glass technologies that use getters to absorb water vapor and oxygen and epoxies for edge sealing of the devices. This strategy has worked well for the small displays in smartphones and the like, but going forward, NanoMarkets does not believe that conventional encapsulation strategies will be sufficient to keep the OLED market expanding. Larger area panels: As we have noted, OLEDs are now also shifting into additional applications, specifically into OLED lighting and OLED television displays, both of which are expected to have larger areas and longer lifetime requirements. This shift will be a challenge, since OLEDs so far have been mostly used for small mobile displays that can be encapsulated easily and are not expected to have long lifetimes; the average cell phone lasts 12-18 months. NanoMarkets' forecasts indicate that sales of encapsulation materials for OLED TVs and OLED lighting will grow from nearly zero in 2012 to almost $150 million and $475 million, respectively, by the end of the forecast period in 2019. Flexible displays: Although flexible OLED displays have yet to appear on the market, they have been touted at trade shows for about a decade, and there seems to be a reasonable chance that they will reach stores in the next one to two years. These flexible displays have been suggested as having some practical purpose, both as rollable mobile displays and for larger displays that can easily be stored. A full discussion of whether such flexible display concepts are really going to take off lies well beyond the scope of this report, but it is quite obvious that flexible OLED displays cannot be encapsulated using rigid glass. Thus, if the apparent opportunities that these newer types of OLED products present are to be fulfilled, they will need newer/better types of encapsulation. Put another way, NanoMarkets believes that encapsulation has emerged as a key enabling technology that will allow these new, OLED applications to thrive:

Of course, improved encapsulation is a necessary, not a sufficient, condition for the OLED products we mention above. Even with such better encapsulation in place, there is no guarantee of the market success of any of the OLED products listed above. There are also still plenty of technical hurdles still to overcome with respect to water vapor barrier performance in the non-glass encapsulation technologies, let alone with respect to Page | 2 flexibility, which will be important in future generations of OLEDs made in flexible/bendable formats and/or on roll-to-roll (R2R) production lines.

E.1.2 The Challenge of Pricing and Investment Strategies for Advanced Encapsulation Materials
Suppliers of the newer encapsulation technologies also face two key pricing challenges. The first challenge is their ability to recover R&D investments in a short period of time. Understandably, encapsulation firms want to achieve this goal, but start-ups in this space have openly said that they have had problems doing so. For example, Vitex, an early developer of multilayer barrier films, had this problem. And, at a recent technical workshop on encapsulation, a representative of Tera-Barrier Films (Singapore) voiced the same concern. Of course, this problem is one that any start-up technology firm might have, but it seems to be a bigger problem in the encapsulation sector than in others. The reasons are not entirely clear, but part of the issue is that advanced encapsulation firms are unable to charge what they need to charge OLED firms to get good margins. Vitex complained about this challenge for many years before going out of business. Today, it appears that the situation has not changed that much, even though the importance of good encapsulation is more widely appreciated. Another related factor is that demand for advanced encapsulation systems is just not that great at the present time; as we discussed above, rigid cover glass systems are meeting encapsulation requirements now, and will continue to do so for the near- and mid-term. Our forecasts predict that the market in OLEDs for nontraditional encapsulation materialsflexible glass, multilayer barriers, ALD conformal coatingswill remain quite small for some time, not exceeding $100 million until at least 2017. In other words, there is just not enough revenue to justify the building of a full-scale manufacturing plant for advanced encapsulation systems, which would surely cost tens of millions of dollars. In this scenario, scaling up is a shaky value proposition, and few investors are willing to take the risk. What, then, are encapsulation firms to do? One possibility is that such firms simply keep on trying to recover R&D costs. But this approach may not end well, and some may go under. Since R&D costs are largely sunk costs, the only alternative for encapsulation firms would be to marginal cost price and hope that the end result is impressive enough in terms of increased sales volumes and long-term profitability to justify the changed pricing policy. These challenges have some important implications for the financing of current and future encapsulation start-ups. Investors in this business must be willing to have a long-term view, which does not sound like a good description of the average venture capital firm, especially not at the present time.

A much better source of finance for encapsulation ventures would be strategic investments from larger firms willing to wait a while for returns. The market prospects also suggest that the large firms that are active in the encapsulation space3M, Corning, GE, etc.have measurable competitive advantages associated with playing the encapsulation game internally. There is also the issue of what level of pricing can be realistically charged for OLED Page | 3 encapsulation. In the encapsulation sector, one hears a very wide range of prices that the industry believes it can charge; $50 per square meter is something of a consensus figure. But some materials command prices as high as $100 per square meter, too. In NanoMarkets' opinion, however, these prices are too high. There is no doubt that conventional glass technologies would be difficult to replace at any priceglass is entrenchedbut, price parity with conventional glass would surely go a long way toward convincing OLED display makers to take a gamble and opt for a new (and unproven) technology. A differential pricing issue with regard to PV: Finally, there are also pricing issues related to the fact that the photovoltaics (PV) sector can use very similar materials for encapsulation, but OLEDs and PV have very different cost sensitivity when it comes to material pricing. Notoriously, the PV sector is extremely cost sensitive, and in the past two years it has become even more so. So, how can firms selling advanced encapsulation systems into the OLED sector diversify into the PV sector and still price effectively? That an encapsulation firm would want to diversity is hardly surprising; the pickings in the encapsulation business are quite slim at the moment and will be for a few more years, so adding addressable markets for one's technology is an obvious strategy. With respect to different pricing strategies, there are two possible options here. Either the encapsulation firm must create branded products that are specifically tuned to the PV and OLED markets separately and priced accordingly. Alternatively, a more overt differential pricing regime could be established, in which PV makers and OLED makers openly pay different prices, but in which the differential pricing is guaranteed by contract.

E.1.3 Glass Continues to Dominate OLED Encapsulation

Despite the development activity surrounding advanced and alternative encapsulation technologies, glass will continue to dominate the market for the timeframe of this report. Today's biggest market for OLEDs are the smartphones, tablets, and other mobile computing devices made by Samsung and others, and conventional rigid cover glass encapsulation has been able to meet the needs of these relatively small-sized products. NanoMarkets forecasts that the market for rigid cover glass encapsulation will grow from its moderate size of about $20 million in 2012 to over $432 million in 2019. Within this sector, there are opportunities for the glass industry to create new competitive advantages based on better glass encapsulation. Opportunities for glass encapsulation firms will come from efforts to improve getter/epoxy configurations and to reduce weight and cost. For example:

Top-emission OLEDs, common in small devices, are not compatible with desiccant-heavy cover glass. An approach that solves this problem is to develop cover glasses with either edge-only desiccant, or that are desiccant-free. Asahi Glass Company's (AGC) Dragontail product and Corning's (U.S.) Vita cover glass use a ceramic frit instead of epoxy as the edge sealant, which, at least in the case of the Page | 4 Corning product, provides a hermetic seal strong enough that additional getter inside the cavity is not required.

Alternatively, printable getters, localized at the edges, could greatly reduce processing costs, especially if cavity-less designs are proven possible. DuPont Displays' (U.S.) Drylox cover glass products follow this approach.

Flexible glass: The glass industry is also responding to the needs of the OLED market by developing flexible versions of glass, available in roll format and, presumably, compatible with R2R manufacturing of displays. The selling point of flexible glass is that, like plastic-based films, it can, at least in theory, provide a lighter weight/lower cost alternative to rigid glass, yet deliver the superior barrier performance, transparency, temperature stability, and familiarity of glass. AGC, Corning, Nippon Electric Glass (Japan), and Schott (Germany) all have flexible glass roll products available at varying stages of development. The market value of flexible glass encapsulation in OLEDs is expected to reach a value of over $25 million by 2016 and over $270 by the end of the forecast period in 2019. The opportunities for flexible glass can be summarized as follows: Top-emitting devices found in small and medium OLED displays would benefit from incorporation of a thin, flexible glass encapsulation format by providing a lighter-weight, and potentially easier to use option. To date, the use of flexible glass has been held back by its high cost, but if the glass industry can convincingly demonstrate cost reductions while also including adhesive and desiccant specifically designed for top-emission structures, the material could be adopted much more widely. Flexible glass may prove even more important to the market for larger area, bottomemission OLEDs, in which the OLED devices are fabricated over a transparent TFT array. First generation OLED TVs are made using bottom-emitting formats, and flexible glass can survive the TFT fabrication process. whereas plastic-based barrier films cannot.

E.1.4 Non-Glass Technologies Performance vs. Price Tradeoff

Multilayer barrier films: The most common non-glass approach to OLED encapsulation is the use of a multilayer barrier film of alternating polymer and oxide layers (dyads) deposited by physical or chemical vapor deposition (PVD or CVD), which may be applied in roll or laminate form or as a directly-deposited coating on top of OLED devices.

These films have the potential to greatly reduce costs compared to rigid cover glass designs through use of cheaper materials, thinner layers, and easier processing, and they are also compatible with R2R methods and flexibility. Low costs have not yet been achieved in most cases, however, but the industry is making progress, largely through efforts to reduce the number of layers (and thus cost) without sacrificing Page | 5 performance. For example, 3M (U.S.) has a commercially available film in roll format at a reasonable price, although it still has work to do to improve the barrier performance. Other firms working on this problem are Tera-Barrier Films, which is commercializing a dyad film with minimal layers using a nanoparticulate "sealing" layer in the stack, and Universal Display Corporation (UDC, U.S.) which is commercializing what it describes as a "single layer" barrier film technology. Assuming that these efforts prove acceptable to the OLED industry, NanoMarkets forecasts predict that multilayer barrier films in OLEDs can grow from zero today to over $10 million in 2016 and to nearly $75 million in 2019. ALD barriers: Atomic layer deposition (ALD) strategies for multilayer barrier films have also garnered much interest in recent years. ALD is considered to give better film qualities than CVD or PVD methods; the number of film defects is reduced, so both layer 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 concurrent reduction in the cost of the layers. NanoMarkets believes that there is great promise in this area, but remains skeptical about the ability of ALD manufacturing to handle the high throughput, wide widths, and R2R processingespecially for flexible and/or larger format OLEDsat the lost costs needed by this market. For these reasons, ALD's rate of penetration into the OLED encapsulation market will remain low over the forecast period. NanoMarkets' forecasts indicate that the market value of conformally-coated barriers based on ALD can grow to just over $10 million by the middle of the forecast period in 2016 and to over $60 million by 2019.

E.2 Firms to Watch in the OLED Encapsulation Space E.2.1 Glass and Flexible Glass Firms
Conventional Glass: NanoMarkets projects that for the timeframe of this report, glass-based encapsulation will continue to dominate. For this reason, opportunities for glass firms will be abundant, especially for those that can provide significant improvements in getter/epoxy configurations, reduce weight and cost, and improve manufacturing processes. The big glass firms like AGC, Corning, Nippon Electric Glass, and Schott clearly have the advantage in this sector. Of these, Corning and AGC are both supplying novel cover glass designs that go beyond the simpler versions of the past. But DuPont Displays (U.S.) is also a firm to watch in the cover glass sector, with its cavity-less, Drylox technology that uses an integrated getter.

Flexible glass: Corning, NEG, AGC, and Schott all have lines of thin, flexible glass products with an eye toward R2R processing and lower costs. Of these firms, Corning has made the biggest splash in the last year with its commercial launch of Willow Glass. Corning's expertise in optical glass fiber production, as well as its leadership position in the display glass (and OLED cover glass) market in general, gives it an advantage in the OLED industry. Overall, we note that the prospects for flexible glass are bolstered by the fact that many of the next generation OLED displays (TVs) will be bottom-emitting, larger-format panels, and these devices, with their front-side TFT arrays, are not compatible with plastic-based barriers. Page | 6

E.2.2 Dyad, Laminate, and ALD Firms to Watch

Despite the apparent lack of progress in multilayer dyads over the last five years or so, their promise for reducing costs and/or enabling flexibility has meant that many firms have continued to pursue them, and now ALD coatings are in the mix as well. The firms to watch are those that are focusing on reducing costs without sacrificing performance. In addition to GE, which is seeking licensees for its flexible multilayer barrier encapsulation technology, the key firms to watch in this space are 3M, UDC, Tera-Barrier Films, Samsung (Korea), Beneq (Finland), and Cambridge NanoTech (U.S.). 3M: As previously noted, 3M is pursuing bendable encapsulation films suitable for R2R manufacturing, and is the only firm with a commercially available multilayer film on the market in roll form (albeit with a relatively low performance specification, for now). Tera-Barrier Films: Tera-Barrier Films has also been developing multilayer dyad films with a development focus on R2R barrier coatings for flexible PV applications. At this point in time, Tera's films have not been scaled commercially, and the firm is struggling to develop a business plan that will allow it to charge the prices that it wants to charge in order to recover R&D costs. UDC: In 2011, UDC announced the development of its own barrier film, which it described as a "single layer" hybrid organic/inorganic system, applied using plasma-enhanced chemical vapor deposition (PECVD), for both rigid and flexible displays. We note that this development, if proven, is significant. A single 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, because it is the key supplier of phosphorescent emitter technologies used in commercialized OLEDs. Samsung: Samsung acquired the intellectual property related to production and deposition of multilayer dyad from Vitex. However, we note that Samsung has also recently entered into a strategic deal with Corning, which may indicate that the firm is opting for flexible glass instead of dyad films for its flexible displays planned for launch in 2012-2013. Either way, this key OLED maker is a firm to watch, because its choices may ultimately signal the direction of the rest of the market. Cambridge Nanotech: While the technical challenges of ultra barrier deposition in our opinion tend to favor large multinationals with the capital resources to pay for fairly costly development of both new tools and processes and wait for a payoff that is multiple years down the road, there are

some small companies that are successful today, and may be able to expand in the ALD deposition tool space. Cambridge Nanotech is a small ALD deposition equipment/technology company that may be able to expand into the OLED market. Even though it is small, the firm has delivered over 300 ALD systems worldwide over the past nine years, and while most were small systems for university Page | 7 and industrial laboratory research, Cambridge Nanotech's level of expertise in the area may make it a firm to watch as ALD encapsulation becomes mainstream in OLED technologies. Beneq: Beneq of Finland is another smaller company that has a presence in ALD. The company has around 200 employees and is focused on ALD barrier and TCO materials deposition. Beneq has introduced a true roll-to-roll ALD deposition tool. In April of 2012, it received a 25 million investment from RUSNANO. Sales for 2011 were about 18 million (from mostly non-OLED encapsulation products & processes).

E.3 Summary of Eight-Year Forecasts for OLED Encapsulation

Exhibit E-1 contains a summary of NanoMarkets' eight-year forecasts for OLED encapsulation, broken out by application and by encapsulation technology. These summaries highlight two major trends, each of which is discussed in more detail throughout the report: Although the OLED lighting sector is quite small today, growth in OLED lighting is expected to outpace other sectors, such that revenues from encapsulation of OLED lighting panels will dominate starting in about 2018. Rigid cover glass will be the dominant choice for OLED encapsulation throughout the forecast period.

GRAND TOTAL: Market Value of OLED Encapsulation 2012-2019 ($ Millions)

900.0 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 2012
NanoMarkets 2012

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2013

2014

2015 Year

2016

2017

2018

2019

Chapter One: Introduction to OLED Encapsulation Technologies

1.1 Background to This Report
The OLED encapsulation sector has changed considerably in the past two years. OLEDs have broken out of their previous niche market pattern, in which they were used mostly for simple, passive matrix displays for MP3 players, cell-phone sub-displays, etc., that had modest encapsulation needs well served by simple cover glass technologies. Today, however, the OLED industry is booming, with full-color, active-matrix (AM) OLEDs leading the way. Indeed, OLED displays have gone mainstream, and OLED lighting is not far behind: OLED displays are the fastest growing primary display type in mass-market smartphones, tablets, and other mobile computing products. Meanwhile, OLED lighting is now on the market in the form of designer light kits, as well as in luxury luminaires, and NanoMarkets is predicting that larger segments of the lighting market are likely to be penetrated by OLED lighting in the next few years. OLED TVs appear to befinallyon the verge of mass-market introduction, with products from Samsung and LG expected in 2012 and 2013, respectively. Page | 9

These trends mean that the addressable market for OLED encapsulation materials is rapidly growing and should continue to do so.

1.1.1 Increased Production and Larger Panel Sizes Lead to New Encapsulation Needs
Notably, these OLED market trends are accompanied by two shifts in the OLED panel demand patterns that will influence the market for OLED encapsulation. First, of course, increased production of OLED panels of all types is good for the encapsulation business. Second, there is an important, ongoing shift toward larger panels, especially in TV and lighting applications, both of which are expected to greatly increase the size of the addressable market for OLED encapsulation materials.

The fastest-growing applications for OLEDs involve larger-area panels that, by definition, consume larger amounts of materials. NanoMarkets recently estimated that the size of the total OLED materials market will exceed $600 million in 2013, and that the value will grow to over $4 billion in sales by 2018. Most importantly, over $500 million of this revenue will come from encapsulation materials and technologies. However, the success of the market is not a foregone conclusion; better encapsulation technologies at reasonable costs are required if larger-format OLEDs are going to meet their potential.

These larger OLED panels are expected to have much longer lifetime requirements, and the consensus is that today's dominant cover glass-plus-epoxy strategies will not be sufficient, particularly in cost-sensitive applications like OLED lighting. Thus, the OLED industry is looking toward encapsulation as an area of strategic importance, and as a key enabler for meeting its OLED commercialization expectations: Generally needed are encapsulation technologies that provide high barrier performance, yet are cost effective. OLEDs are notoriously vulnerable to degradation by water vapor, but good barrier solutions must be inexpensive enough to not hinder widespread commercialization. There is a need for barrier films and coatings that can withstand the high temperature processes used to make transparent thin-film transistor (TFT) backplanes for bottomemitting OLED display structures. Finally, there is also a growing need for flexible barrier technologies compatible with rollto-roll fabrication methods in order to meet the needs of next-generation displays, which may be rigid displays made in higher-throughput, roll-to-roll fabrication schemes or may be flexible/bendable displays.

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1.1.2 New Strategies for Encapsulation

Now is the time for the OLED industry to become better acquainted with opportunities emerging from the important encapsulation sector. As noted above, the new OLED markets have larger average panel sizes and much higher product lifetime expectations, hence more sophisticated encapsulation technologies with better performance are required to enable real growth. Several non-glass encapsulation technologies are evolving as potential solutions for the OLED encapsulation problem: Methods for vapor deposition of multilayer, dyad-style films are being pushed toward fewer and fewer layers without sacrificing barrier performance, thereby simplifying and reducing the cost of these technologies. For example, Tera-Barrier Films is reducing the number of layers by incorporating nanoparticles to "plug" the holes left in traditional dyad films, and Universal Display Corporation (UDC) is now marketing what it calls a "single-layer" barrier film deposited using a proprietary plasma-enhanced chemical vapor deposition (PECVD) method. Methods for atomic layer deposition (ALD) have become available for larger-area, high throughput production of OLEDs for the first time. ALD offers the promise of pristine, pinhole-free barriers with very high performance. Rolls of high performing dyad barrier films are now also available in commercial quantities, and in reasonable wide-web formats. In the last year, for example, 3M officially launched its barrier film, and is making it more widely available than in prior years. This move should enable faster adoption of barrier films in commercial OLED products.

1.1.3 Opportunities in Glass Encapsulation

Despite the recent surge in new encapsulation approaches available to the OLED industrylike the thin-film deposition, barrier film, and ALD methods mentioned aboveOLEDs will be mostly encapsulated in glass for the foreseeable future. The glass industry already caters to the display industry on a very large scale, and is thus well Page | 11 positioned to serve the needs of the emerging OLED market. OLEDs, however, are different from mainstream displays and have characteristics that place special requirements on glass encapsulation to make it suitable for the OLED market. Toward that end, the glass industry is developing specialty glass products specifically designed for the OLED space: Better "classic" rigid glass formats, along with better and better getter and epoxy systems, are an opportunity for the glass industry to hold onto its market share in OLED encapsulation for quite a while. For example, Corning and OLED market leader Samsung created a joint venture in early 2012 to develop Corning's Lotus brand glass specifically for Samsung's OLEDs. In addition, the glass industry is developing newer flexible glass products. The selling point of flexible glass is that, like plastic-based films, it can, at least in theory, provide a lighter weight/lower cost alternative to rigid glass, yet deliver the superior barrier performance, transparency, temperature stability, and familiarity of glass. It also offers the promise of higher-throughput and R2R fabrication, which will be increasingly important in future generations of OLED panels.

1.2 Objectives and Scope of This Report

In this new report from NanoMarkets, we analyze and quantify the opportunities for encapsulation materials and technologies in the fast-growing OLED market. This report covers the commercial implications of technical developments in both materials and deposition methods, and we identify the key factors for success for encapsulation materials suppliers in this space. This report is entirely international in scope. We also examine the product development and marketing strategies of the major players in the OLED encapsulation materials sector from large to specialty firms, and we attempt to indicate which firms are the "companies to watch," and which will be the likely winners and losers in the encapsulation materials space. Finally, the report also contains detailed, eight-year forecasts of the materials used for OLED encapsulation broken out by product type and application. Encapsulation product types covered include: Rigid glass, Flexible glass, Multilayer thin films and laminates, Conformal coatings, and Metal foils.

Application sectors covered are:

Small/medium OLED displays (phones, tablets, etc.), OLED TVs, and OLED Lighting.

1.3 Methodology of This Report

NanoMarkets has been covering the OLED materials markets for several years and is widely Page | 12 regarded as having reliable reports on this topic. To determine where the opportunities lie, 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 websites, trade journals and press articles, and various collateral items from trade shows and conferences.

Some of the applications-related market information in this report, particularly that related to OLED panel shipments and area forecasts, comes from our most recent reports on the covered applications areas. Reports from which some data have been taken include: "OLED Materials Markets" from June 2012, "OLED Lighting: Companies, Products, and Strategies" from April 2012, "Markets for Optically Functional Films in Displays" from September 2012, and "NanoMarkets OLED Lighting Market Forecast Q2 2012" from March 2012.

Where data has been used from another report, it has been reinvestigated, reanalyzed, and reconsidered in light of current information and updated accordingly. The forecasting approach used in this report is explained in more detail in Chapter Three, but the basic approach is to (1) identify and quantify the underlying OLED application markets in terms of OLED panel shipments; (2) determine the barrier requirements for those sectors by converting the shipments to total OLED area; and (3) assess the technological and market pressures that affect the penetration rates of different encapsulation and barrier technologies in each sector.

1.4 Plan of This Report

In Chapter Two, we provide an analysis of the different materials sets and deposition technologies for OLED encapsulation. As part of this analysis, we briefly examine the focus and strategies of the principal manufacturers and suppliers, and we pay particular attention to innovations and strategies being followed to reduce costs, increase performance, and customize products for particular markets and applications. We also assess the likelihood of different encapsulation technologies to be used in various OLED applications. The idea here is not to provide a comprehensive analysis of OLED markets, but rather to offer a survey of the addressable markets for OLED encapsulation suppliers.

In Chapter Three, we provide granular, eight-year forecasts of the OLED encapsulation markets with breakouts by technology and by application, wherever possible. We also describe assumptions about pricing, market trends, and other factors that may influence the forecasts.

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