The e-paper market is an exclusive one as the basic electrophoretic display technology behind most e-paper displays is based on IP owned by E-Ink Holdings (8069.TT), with that company’s subsidiary also producing e-paper film.  E-ink has partnered with or licensed the technology to a large number of companies who use the displays in consumer products, such as e-readers, or commercial products such as ESLs (Electronic Shelf Labels) or signage.  While this technology has very different characteristics than LCD or OLED displays, it also has some characteristics that make it ideal for certain circumstances, particularly where power consumption is a significant consideration.
E-paper displays reflect light rather than generate it as LCD or OLED displays do, which allows them to be used in high-brightness environments (sunlight), but this also limits their use in dark environments.  However, the most significant characteristic of e-paper displays is their power usage.  LCD and OLED displays are active devices in that in order to operate, every pixel needs to be electronically ‘refreshed’ many times each second.  While this allows for rapid changes and smooth image movements, it requires constant power, either from a battery or a line source, regardless of the information being displayed.  E-paper displays only draw power when the image is changing, which means static images, such as the price of an item in a store, do note draw power, and therefore would allow a battery to last far longer than an active display, especially in situations where there is little or no change in what the display shows.
An obvious example of an effective use of e-paper is the e-reader, made popular by Amazon’s (AMZN) Kindle and the Barnes & Noble (BNED) Nook, with Amazon still the leader in the e-book space, followed by Kobo (4755.JP) and others.  While e-readers are popular on a global basis, that market has developed slowly in China, both because of the intense focus on smartphones as indicated by the many Chinese smartphone brands, but also a cultural preference for physical books over electronic readers, although that seems to be changing.
China’s e-paper tablet market (online) generated sales of 1.834m units last year, a small number compared to the country’s population and the ~290m smartphones that were sold on the mainland last year, but that number was up 49.1% y/y and far exceeded expectations (1.56m units), and online e-reader unit volume increased by 34.4% to 834k.  The two other main segments of the Chinese e-paper tablet market, smart office books and smart learning books also grew, up 21.1% and 199.3% respectively.   That said, both the e-reader and smart office tablet segments saw sales down as prices for those devices declined, while sales in the e-paper educational tablet segment grew 18.5% y/y, making it the largest category (42.8%) in terms of sales.
The major Chinese e-paper tablet brands also saw significant growth last year, with the top 5 brands generating 89.3% of sales for the category, up 11.9% from the previous year, and as can be seen in the table below, generated significant improvement in y/y sales.  The number of new e-paper tablet products released in China last year also increased, but we believe the most significant change in the Chinese e-paper market is color.

We collect lots of data, and some of that data relates to e-paper displays, otherwise known as electrophoretic displays or devices using electrowetting.  The technology behind these displays is simple, based on the movement of ink particles in an oil with an electric charge.  Once the ink particles have been moved, they stay in position, so the display uses no power until the image needs to be changed, making it ideal for situations where power is unavailable or not feasible.  While the average consumer might know e-paper based on the Amazon (AMZN) Kindle, the most popular application for e-paper is electronic shelf labels, which accounts for ~87% of e-paper unit volume.  These devices replace the paper price labels that have been used in stores for years, allowing prices to be changed at will and without any physical movement to create sales on overstocked items, give product information, or warn consumers about pending stockouts.
Signage is also becoming a target application for e-paper, and when compared to LCD displays or physical paper signage, the power saving capabilities of e-paper standout, and looking at the carbon emission impact of 32” paper advertisements, LCD displays, and e-paper on outdoor digital signage is even more impressive.  Here is how they compare, so from an environmental perspective there is not much else to say.  If you are looking to save the planet, e-paper displays are certainly an option.

• 100,000 e-paper billboards that run for 20 hours a day and update ads 20 times per hours for 5 years would reduce CO2 emissions by ~500,000 tons when compared to LCD displays.
• 100,000 e-paper billboards that run for 20 hours a day and update ads 20 times per hour for 5 years would reduce CO2 emissions by 4,000,000 tons when compared to paper displays.

​E-Ink (8069.TT), the de facto licensor of e-paper technology and materials has been expanding its production capacity to keep up with demand.  The company has plans to expand capacity by 30% to 50% by the end of this year and began building out the first of 4 new material production lines late last year.  That line is expected to begin production in April, after a few months of trial production and qualification, followed by a second line, which has been under construction and is expected to begin production in May/June.  The 3rd line is expected to be in production by the end of the year and a new building is being constructed for further expansion.
E-Ink last expanded capacity in 2020 and at that time received commitments from customers to fill that capacity however this expansion has been more the result of broader demand for ESL (Electronic Shelf Labels) and e-readers, which are among the least expensive available ‘entertainment’ products available other than TV.  While the company has buffer commitments from customers for this expansion they stated that they expected to fall short of demand, even after the capacity expansion, as overall demand has increased beyond their original expectations.
As E-ink is the primary supplier of electrophoretic materials, they tend to participate in the expansion of e-paper applications and the recent announcement that Walmart (WMT) has entered into a partnership with SES Imagotag (SESL.FP) an E-ink partner that produces ESL systems and tags to expand the use of ESLs across Walmart’s stores in the US has likely added to E-ink’s confidence that the market for electrophoretic materials will continue to grow.  ESL tags and systems allow retailers to connect all store shelf labels to the cloud where they can be updated at will, allowing for almost instant mark-ups and mark-downs to meet store inventory and profitability objectives. 
Typically such changes are made with paper labels that must be printed and physically placed at the appropriate location, a time-consuming and inefficient process.  Given that ESLs only consume power when the display information is changed, they require little or no maintenance and allow the store to change product configuration and location electronically. They can also be fitted with cameras to capture product count or inform the store of shelf-outs, can provide detailed product information for customers, and advertise specials and sales as customers approach, giving them a path toward recouping the initial hardware and software investment.
All in, E-ink seems to be expanding into growing demand, which has been developing as the materials improve and applications become more flexible and cost efficient.  Hopefully global macro conditions will continue to improve, pushing demand higher, but for now it would seem that the long wait for ESLs to catch on has finally reached an inflection point and with little or no competition in the space, E-ink should have little worry about filling the new lines as they begin production.