Markets and Technologies for Switchable Ferroelectric, Electrochromic and Optical Materials

Report Highlights

REPORT HIGHLIGHTS

• The total market for applications based on switchable materials in 2001 is $400 million, could increase over $13 billion in 2006.
• Ferroelectrics, while making up only 12% of the market in 2001, are expected to dominate by 2006, with sales rising to several billion, as their use in memory chips expands.
• Electrochromic applications are the most established, but will show the most modest growth rate (8.9%), rising from $333.7 million in 2001 to $513.1 million in 2006.
• Current markets for optical switching technology are estimated at $18 million in 2001 and may grow to $50 million in 2006, at an AAGR of 22.7%. Technological breakthroughs could dramatically increase this market.

INTRODUCTION

The focus of this report is on the market for switchable materials and their applications. There has been enormous interest in the commercialization of switchable materials in a variety of industries, and a few applications have met with commercial success. This report focuses on three types of switchable materials, ferroelectrics, chromogenics (electrochromics), and materials used for optical switching. This report evaluates the markets and applications for these materials primarily in the U.S. In most cases, the U.S. remains the leader of the technological development of these goods, and the largest current market.

Switchable materials have been generating a certain amount of interest in the media for the past few years, but there is still a fair amount of mystery as to their purpose and function. Since switchable materials are so disparate, it is not surprising that conferences, reviews, and academic publications describing these goods are rather rare. Thus, there is no switchable materials industry (although there are firms producing switchable materials), no switchable materials society, and relatively few academics style themselves "professor of switchable materials." Nevertheless, there is a fair amount of "buzz", and an increasing level of interest, especially as these materials are poised to have major impacts on a number of different markets.

Given that switchable materials covers a lot of ground, it is not surprising that the materials covered in this report are found in a wide variety of applications. Ferroelectrics have been developed into nonvolatile memory that can be found in electricity meters, office equipment, and automobile airbags, with more applications on the way. Electrochromics are used in automotive mirrors and a few architectural and aerospace applications, while optical switching materials are key components in optical switches already installed in telecommunications networks. In most cases, these are nascent applications of these goods, thus if certain technological barriers are overcome, it is possible that these materials will play an increasing role in these markets.

Like a number of materials used in modern applications, such as semiconductors, switchable materials will not be required in large volumes. Quite often, 10 pounds of a switchable material would be sufficient for a particular application for several years, even at full production.

This report takes a long hard look at switchable materials, and finds reasons for both excitement and caution. Years of research and development are beginning to bear fruit. Products based on ferroelectrics, electrochromics, and even optical switching materials, have some measure of commercial success. This is a qualified success however, and for these materials to justify the enormous costs of development, further commercial success is required.

However, a cautious approach to evaluate switchable materials and their applications is still warranted since vapor markets for these materials abound. Switchable materials are fascinating, such as electrochromics that change color when a voltage is applied. These goods can seem straight out of the pages of science fiction, and it is clear that some investors have thrown caution to the wind when providing capital to firms attempting to make commercial products from these goods. Conventional materials often prove more attractive when economics enters the picture. In some cases, switchable materials would find a market in architectural applications if production costs were decreased, but success is by no means assured. As a further cautionary note, firms trying to develop optical switches based on switchable materials received large infusions of cash from investors, often over $100 million for relatively small firms with no saleable products. These investors expected a rapid return on their investment, but to date, most have been faced with high losses instead of large returns.

This report covers the industries that use switchable materials, which include ferroelectrics, chromogenics, and materials used for optical switching. Different models abound in these industries. Ferroelectrics are being used to produce ferroelectric random access memory (FRAM) chips. In this case, the switchable material is fully integrated into the production process. Chromogenics can either consist of a coating applied to a glass substrate during the production process, or they can be applied as a film to a polymer post-production. Optical switching materials can be purchased from outside vendors, or they can be fully integrated into the production process as well. Some firms have tried to use vertical integration to produce these goods, since the largest profits are generally seen in applications. The report compares products that make use of switchable materials with conventional counterparts, and shows why a particular application of a switchable material may be successful, where other applications of switchable materials will probably fail.

With this information, readers with interests can then make sound judgments regarding marketing strategies, investment decisions, or strategic plans concerning the markets of switchable materials. This report has been written to be readily accessible to those readers with a background, but accuracy concerning the technical aspects of switchable materials has not been sacrificed.

REASONS FOR THIS STUDY

While there has been some interest in the popular press concerning the wonders of switchable materials, it is often difficult to get solid information on where and how much of these materials are being sold. Many popular sources have presented a very incomplete picture, especially since some estimates for the size of the switchable materials market have been based more on wishful thinking than careful calculations.

CONTRIBUTION OF THE STUDY

This report shows the size of the markets for switchable goods in the U.S. and their applications in specific industries. Most of the research and development of these materials has been done domestically because the U.S. market remains the largest single customer for some of the more lucrative switchable material applications.

Readers of this report will be able to distinguish the hype concerning the uses of switchable materials from the reality of the market. Many of the successful applications of these materials have received relatively little press. This report covers the probable markets for these goods, and discusses realistic time frames for the development of successful applications. It must be noted that in many cases, the technology of switchable materials is immature, and predicting when a technological breakthrough will occur is, by its nature, a highly speculative process. This report does not focus on vapor applications that may occur a decade away, instead this report focuses on market developments relevant for the next 5 years.

SCOPE AND FORMAT

In order to generate the information needed to construct a reasonable future market for switchable materials, it is necessary to take a hardheaded look at the potential advantages and pitfalls of the current crop of switchable materials compared with conventional materials. Some applications of switchable materials that are possible within 5 years are also discussed.

This report covers switchable materials in two categories:

• Switchable materials which have been developed for years, such as ferroelectrics and chromogenics, and are now, finally, finding some commercial success.

• Materials used in optical switches, such as MEMs liquid crystals, integrated silicon chips and polymers. These materials are largely adaptations of materials developed for other markets that are now being used or developed for switchable products.

This report does not cover all types of switchable materials, or new compounds that could conceivably be used in switchable applications, instead this report is restricted to materials currently being used in products or being developed for commercial use. This report does not cover developments in academe, which may have potential applications some years away. It is important to realize that nearly all of the materials being developed for optical switches are based on developments in other industries. MEMs technology, liquid crystals, and most of the polymers being used in optical switches were all developed for applications other than optical switches. PZT is widely used outside the FRAM industry. Clearly, all of these materials have been developed for non-switchable applications and the use of these materials in these other applications falls outside the scope of this report. Therefore, this report does not cover the entire market for MEMs products, liquid crystals or polymers.

The report is broken into five sections. First there is an overview which gives the working definition of switchable materials, along with some of the theory and restrictions on how these materials function. This overview also contains general characteristics of the applications utilizing switchable materials. Next there is a thorough description of the industries of switchable materials manufacturers with company profiles. Following this industry section, there is a description of the available switchable materials, and switchable materials that have a strong possibility of commercialization in the near future. The report concludes with the market applications of these materials. This report does not include extensive sections on the patent literature of switchable materials. While there are commercially relevant patents in the field, most patents describing applications of these materials are valueless. Furthermore, rarely do patents on switchable materials indicate future directions of the marketplace.

METHODOLOGY AND SOURCES OF INFORMATION

This report is the end result of 5 months of concerted effort by the author. The primary sources of information for writing this report came from interviews with several dozen people in industry and academe. Many of the people interviewed are recognized authorities in the field, and provided invaluable assistance and insight, and I would like to thank all who took the time to speak with me for their help with this project.

Secondary sources include a number of publications put out by the federal government, and also include items on the Internet, corporate literature, publications in the peer-reviewed literature, and meetings.

Dollar amounts are in constant 2001 dollars, and average annual growth rates (AAGR) are calculated using standard tables.

It should be noted that this report was being compiled when the September 11, 2001 terrorist attacks on the U.S. occurred. It is probable that, short term, the fallout of the weakened economy from these attacks will affect many industries, but wartime economies frequently become stronger. While there is a great deal of uncertainty concerning world events at the present time that will dampen enthusiasm for new materials and products, it is unlikely that any of the materials and products covered in this report will be directly affected by world affairs. Instead, end markets may not grow as quickly as forecast, but that is difficult to quantify.

ANALYST'S CREDENTIALS

The analyst has published over 10 reports at BCC, several of which relate directly to this report. The author has also performed custom studies for BCC, and presented original research to corporate clients. The author earned a Ph.D. in inorganic chemistry researching the formation of chromium complexes in an interdisciplinary group and is a member of SAMPE.