Dr Khasha Ghaffarzadeh, Research Director, IDTechEx
IDTechEx Research believes the conductive inks and pastes market is subject to major change with long-lasting consequences on the business models of many large incumbent suppliers. The decline and/or sluggish growth coupled together with intense competition in core markets has forced many suppliers to re-think their strategy, and pursue niche and nascent segments that previously would have been dismissed as simply being too small. This profound change in approach has given additional impetus to scouting, identifying and cultivating new and emerging markets.
Addressing this need is the philosophy behind our report Conductive Ink Markets 2016-2026: Forecasts, Technologies, Players which covers 17 market segments in detail including photovoltaics, touch screen edge electrodes, RFID tags, electronic textiles, desktop PCB printing, in-mould electronics, ITO replacement, conformable printing, 3D antennas, sensors, and so on.
Core markets experience fundamental change
Solar panel metallization pastes and touch screen edge electrodes traditionally represented core markets for large firms. These markets are however subject to major change. Let's take the example of solar panel metallization pastes in this article.
End users or solar panel manufactures started shifting to China from 2005/6. This was because China had expanded its capacity to produce approximately 70% of the total global solar panel by 2014, up from a mere 5% in early 2005. The market transition helped create an intense period of consolidation during which (a) many thin film PV technologies were effectively rendered obsolete in the face of relentless cost challenges posed by wafer based silicon PVs, and (b) many manufacturers outside China closed down one way or another.
The writing is on the wall
The material supply chain into the silicon PV production is now following suite and also migrating to China, albeit at a slower pace. The Japanese still retain their dominance in powder supply thanks to their continued superior performance, although in the long term IDTechEx Research thinks that maintaining this pole position will be untenable. Indeed, the process of diversification has already begun because the recent factory interruptions have changed the market's frame of mind: the end users now simply demand a broader suppler base.
The paste supply business will also follow suite, sooner or later. The market leadership is already changing with new players rising to the top. The new players were once low quality and low cost but are now good enough but still low cost, and are thus winning market share in a highly price sensitive market where end users often make little or no margin.
This period of upheaval will not stop here as the supply base is likely to become controlled by Chinese entities in the long-term. The strategy of being always ahead of the curve by being the first to bring out an incrementally better paste is not sustainable as the technology has matured and comparative performance advantages are either small and/or exceedingly short-lived. IP protection will also not be effective as the entire market for this mature technology is in China. The CapEx required to get a foothold in this market is also not prohibitively high so that alone will not keep the game in the hands of a few rich incumbents.
No choice but to go niche again
Large incumbents increasingly face critical challenges as they begin to lose their dominance in their traditional core sectors. They have little choice now but to use the time left to innovate and create new market opportunities.
This means focusing on niche and nascent segments that previously would have been dismissed as being too small. This also means a total re-thinking in many quarters. In particular, outsized R~D and marketing efforts will have to be dedicated to niche and speculative markets in the hope of growing with the market by being the first to develop the ecosystem, the first to understand the client needs, and the first to solve the technical challenges. This explains why many larger suppliers now rush to plant their flags in as yet non-existent markets and to do so across multiple sectors in the hope that one will soon win and save the day.