In another sign of consolidation in the emerging display technology industry, E Ink Holdings announced its intention to purchase SiPix Technology Inc. Combined with Bridgestone’s exit from the electrophoretic display (EPD) business, this means that E Ink, the first company to mass produce EPD, will be the sole manufacturer of the technology. SiPix started out in Silicon Valley and later sold a large share to and entered into a strategic partnership with AUO, mirroring the evolution of E Ink from a start-up to integration into the former PVI.
As opposed to Bridgestone, which attempted to produce large size, high-pixel density EPD, and to SiPix, which developed an approach to integrate pigments to produce full color, E Ink has focused on making incremental improvements to its EPD technology used in the Amazon Kindle, Barnes and Noble Nook, and other basic e-readers. These improvements have included higher reflectivity, higher resolution and gray scales, faster switching speeds, and the ability to pan across a page. These improvements, as well as E Ink’s ability to mass-produce the EPD material and integrate into a module, have enabled the company to ride the wave of e-readers and stay ahead of its competition.
The consolidation in EPD has been driven by the challenges of scaling up the different technology approaches, but perhaps more importantly by a shift in demand for EPD. Apple’s iPad opened up a new market for tablet PCs that could bridge the gap between mobile PCs and e-readers. Tablet PCs have offered consumers the ability to have full color and video capability, in a form factor that is similar to e-readers and with battery life, while not in weeks like e-readers, is good enough for most use cases.
Competition from tablet PCs has caused Amazon and Barnes and Noble, the leading customers for EPD, to offer tablet-like color e-readers using TFT LCD. This resulted in a significant slowdown in the EPDmarket starting at the end of 2011. According to our report, EPD revenues totaled $973 million in 2011, 43% Y/Y growth; however, Q4’12 revenues did not grow Y/Y, and Q1’12 revenues fell by 84% Y/Y. There are many other applications for EPD and other low-power display technologies, but e-readers accounted for more than 90% of EPD revenues in 2010 and 2011.
The impact of LCD (and potentially OLED) based tablet PCs on the demand for e-readers with low-power displays may also be impacting Qualcomm’s strategy for its MEMS-based mirasol technology. In the company’s Q3 earnings call, CEOPaul Jacobs announced that Qualcomm will be shifting to a licensing strategy for mirasol.
Qualcomm, which itself consolidated the MEMS display space through its acquisition of Pixtronix, has been building a fab to make the mirasol technology in Taiwan, but has not publicly commented on the fate of that fab or on their strategy for integrating Pixtronix, which has been developing a slightly different MEMS display technology. While Pixtronix has been focusing on licensing its technology to mobile phone display makers, Qualcomm has been trying to enter the e-reader market, announcing design wins with e-reader companies in China and Korea, but has not begun volume shipments.