Find out where profits may be found when working with inks based on this precious metal.
Suppliers of silver printing materials are facing a big problem today related to the high price of silver. Suppliers of silver inks and pastes to the electronics industry face the challenge of how to maintain profitability and market share in a world with persistently high silver prices with no clear end in sight.
Average silver prices were higher than ever in 2011, at just more than $35 per ounce. A high level of investment offtake of silver for monetary hedging is keeping silver prices high. Silver prices rose more than 140% over the 2009-2011 timeframe, and some industry experts are predicting that the metal will go even higher in the next few years. It seems almost certain that low silver prices will not reappear any time soon. Fiscal uncertainty and high debt in important markets in the U.S. and Europe, along with lackluster economic growth, is keeping investment in silver metal high.
In this new environment, NanoMarkets is in the unusual position of predicting a decline in global silver inks and paste consumption, in both value and volume terms. Specifically, our forecast for silver inks and pastes consumption for 2012 is about $7.5 billion, and we see the value of the market softening to about $7 billion by 2019.
Suppliers of silver printing materials are facing a new world, one that is much different from the one they have been in for the last 50 years or so. Overall, this industry has had a very good run over the last several decades, in which the post World War II boom in consumer electronics, appliances, microwaves, refrigerators, etc. were the first big users of printed silver. When that market started to stabilize, the computing revolution arrived, and with it came a whole new addressable market for printed silver for microcircuitry in cell phones, computers, and the like (Figure 1). Then, in recent years, the crystalline-silicon PV market emerged. The question now is: What’s next thing that will increase the size of your addressable market for silver?
Changing markets for silver
We believe that, eventually, the next big thing for printed silver will be printed, flexible, and perhaps transparent electronics applications, especially for applications that enable ubiquitous and/or wireless sensing and computing for the internet of things in both the medical and everyday consumer information spheres. The potential for these kinds of applications deserves some skepticism, but we think that the tide may be turning in their favor in the mid-term. We also think that these new applications are not going to develop quickly enough to offset declines.
A breakdown of the market reveals that two applications dominate consumption: the traditional thick-film, printed-circuitry applications, and the photovoltaics market (Figure 2). In recent years, the photovoltaics market has overtaken traditional thick-film applications as the single biggest user of silver inks and pastes. But both of these applications are very cost sensitive, and both, in different ways, are facing difficult times ahead.
The PV market had a very good year in 2010, with nearly 150% growth over 2009. For 2012 and forward, we anticipate, obviously, much lower growth rates, around 15% per year. Meanwhile, for a couple of reasons, we are also predicting a decline in consumption of silver in the PV market. First, there is an ongoing, gradual shift in relative importance of thin-film PV, which uses very little silver, compared to crystalline silicon PV, which uses a lot of printed silver. At the same time, the way that silver is consumed in crystalline-silicon PV is changing. While front-side printed silver grids appear safe, and even growing, backside electrodes are facing serious competition from aluminum, and printed silver tabbing strips are being increasingly replaced with solders.
In addition, government support for PV is waning. Governments around the world are looking for ways to cut their budgets, and of course things like tax incentives, feed-in tariffs, and subsidies for PV are a natural target for the axe. Panel makers cannot be so certain anymore that governments around the world will continue to provide financing for PV.
The other big consumer of printed silver is the thick-film ink and paste market. The thick-film printed-silver market is not in decline, but we are expecting relatively slow growth over the next decade. A contributing factor to the slow overall growth is that plasma display panels are in decline. They are being gradually displaced by LCDs, which will account for almost $300 million in lost revenue between now and 2019. Meanwhile, high silver prices do encourage substitution away from silver. In the past, when silver prices spiked, cheaper conductive alternatives have always increased in popularity, but they usually faded into the background when silver prices fell again. Today, however, persistently high silver prices may present a sustained opportunity for some of the cheaper alternatives to actually make a dent in silver inks.
Opportunities amidst the trouble
Of course, the news is all bad. First of all, there is no reasonable substitute for silver in most applications. Other metals with reasonable conductivity are available, but they are, for the most part, insufficiently conductive or too oxidation-prone for the most demanding printed silver applications. Nonmetallic conductors—conductive polymers, carbon nanotubes, graphene, etc.—are also often cited for their potential in printed-circuitry applications. But all of these also are very small players, at least for now, and probably can only threaten printed silver on the fringes of the market.
Second, the thick-film legacy applications will benefit from global industrialization that will drive growth in consumer electronics. And the general trend toward miniaturization in electronics provides new opportunities for suppliers to provide value-added materials that enable higher resolution.
So, how does a supplier get into this market? Suppliers may also seek to offer drop-in replacements for the existing competition, but finding customers with sufficient incentive to switch to a me too product is difficult. Alternatively, they may offer products that require a change in process, but the costs and risks associated with switching existing production lines over to a new kind of process are often understated.
Instead, NanoMarkets thinks that a better approach is to products that enable new applications, in markets that are not yet fully formed. Examples are: nanosilver inkjet inks that enable miniaturization for new kinds of sensors for pervasive electronics, inks that will enable flexible interconnection in flexible displays, or inks that enable larger panel sizes in the nascent OLED lighting market. There are also opportunities in new ink and paste markets that aren’t really fully formed yet. Supplying emerging markets is risky, but the rewards can be great, and the emerging nature of these markets also means that suppliers have time to work closely with customers to get into the development cycle.
The case for nanosilver
Nanosilver has been on the scene for a while now. When it first emerged, there was a lot of hype surrounding it, and the expectations were that it would revolutionize the electronics industry. The nanosilver revolution did not happen, and it became reasonable to ask whether it ever would.
Thus far, economies of scale for nanosilver have not been achieved. Nanosilver also faces an uncertain and potentially complicated regulatory environment, especially in the EU, and, to a lesser extent, in the U.S. Market pull for printed-electronics applications for nanosilver has not materialized.
There is good news for nanosilver, though (Figure 3). The aforementioned miniaturization trend and need for high resolution in electronics is tailor-made for nanosilver. In addition, the sustained high silver prices have a less negative effect on nanosilver than on conventional silver printing materials. These factors mean that there is an opportunity opening up for nanosilver to be more seriously evaluated in different kinds of applications.
How to stay afloat
In summary, the market for silver inks and pastes will decline over the next couple of years, but that doesn’t mean there aren’t places to make money. First, products that reduce costs through reductions in precious-metal usage are in demand, especially in the conventional thick-film and PV applications. Next, materials that enable miniaturization through high-resolution, fine-line printing will see increased demand, as will materials than that enable ubiquitous electronics, sensing, and computing. Finally, for suppliers that depend on the PV market, diversification into other markets may be necessary to maintain revenue levels.
Overall, the market for printed silver is entering a period of reduced volume. Suppliers will need to reorganize around newer businesses and newer applications, and marketing and business development strategies will require rethinking. Increased partnering and collaboration will be necessary to identify new applications, which may be increasingly found in riskier, yet higher value, products.
Jill Simpson, Ph.D., NanoMarkets
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