​About a year ago we noted that there were rumors that quantum dot leader Nanosys (pvt) was rumored to be in talks with a SPAC firm in order to bring the company public.  Those rumors died down, particularly as the SPAC market slowed and while we had our doubts about the story in the first place given Nanosys’s investor list, which includes Samsung (005930.KS), BOE (200725.CH), and LG Display (LPL) giving them both considerable technology credibility and financial access, we note that the company has just announced the completion of a $50m financing round with new investors Fortress Investment Group 9984.JP), Centerbridge Partners (pvt), and Kilonova Capital (pvt). 
While we miss the opportunity to get detail on Nanosys’s financials, we believe a private financing was certainly more beneficial to the company’s timelines and goals than a SPAC IPO would have been, especially to the growth of the company’s quantum dot business, both as it relates to extending the life of LCD technology and its application in the micro-LED space and the potential for self-emitting quantum dot displays.  Quantum dots seem to be a solution that solves some of the complexities surrounding a number of RGB self-emitting materials and systems, which gives the technology sustainability across all of the current display technologies and those being developed over the next few years and should provide ample room for R&D and product expansion for Nanosys with the additional financing, along with the potential for quantum dots themselves as a self-emitting material.

QD III.5
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​One point that we feel obligated to make concerning quantum dots is safety.  The highest efficiency quantum dots are based on Cadmium Selenide.  Cadmium is a metal similar to zinc, however it is extremely toxic to humans and the environment, with indications that cadmium mining operations going back to pre-WW II had contaminated water sources, leading to health problems for local populations.  It is one of only 6 materials banned by RoHS (EU Restriction of Hazardous Substances) and is considered a carcinogen by the International Agency for Research on Cancer.  There are alternatives to using Cadmium in quantum dots, with Indium and Zinc among the alternatives, although they do not have the same characteristics. 
While both Cadmium based and Cadmium free QDs are produced, we found it unusual that there was a very significant disparity between where each type of QD is used.  According to the largest supplier of QDs globally, Cadmium free quantum dots are used in almost all display products produced by non-Chinese display producers, while Chinese display products seem to use Cadmium based QDs.  There is a cost to using Cadmium free QDs, as they tend to be more expensive and less efficient, but are free of toxic materials, so one might look at the trade-off between the development and use of Cadmium free QDs as one that has slowed the overall development of QDs over time.  That said, we would rather see the development of Cadmium free QDs as a global standard than a bifurcated development scenario even if it extends the developmental timeline. 

​In previous notes we have spoken about quantum dots and some of the current and future applications that present themselves for quantum dots, but in all of the application mentioned previously the dots have been stimulated optically, that is by the light coming from another source.  In some cases it was from LEDs (QDEF film or Mini-LED/QD), in some cases it was from OLED (QD/OLED), and in the future it could be from micro-LEDs, but in each of these applications, the quantum dots were shifting colors as they were being stimulated by optical sources.  Quantum dots have another characteristic that gives them a potential life even further down the road and that is the ability to be a self-emissive light source without being stimulated by another optical source.
Quantum dots are similar to OLED materials in that they can be made to ‘luminesce’ when stimulated by an electrical voltage, without the necessity of being ‘pumped’  by a light source.  In such a circumstance they produce the same narrow band color that they would in an optically stimulated situation, creating the ability for an RGB display.  That said, just as it was difficult for researchers to come up with a mechanism (stack) for OLED materials that could produce stability and consistency over the life of the device, it is the same for quantum dot EL materials, and such a device continues to be researched by a number of companies and educational institutions across the globe.
When it comes to making quantum dots for EL (Electro-luminescence) applications there are different challenges than those facing engineers designing materials for light-pumped applications.  In order to produce an efficient QD EL material, large numbers of QDs must be squeezed into a small space, which makes their shape, a result of the ‘shell’ that is used to protect the quantum dot materials, a focus point.  As ‘dots’ would imply spherical partials, that has been the typical shape for quantum dots but some have found a way to create a cube shell, which allows for more stable and more easily packed QDEL materials.
But there are still obstacles to overcome for EL QDs, and that tends to come down to the balance between  material efficiency, the ability to convert as much of the electrical energy put into the material to light, and the lifetime of the material itself.  Again similar to OLED materials, there is a balance with each new Quantum Dot structure that shows the relationship between applying additional voltage and the light output of the material.  At a certain point, increasing the voltage produces little or no additional light, making the device actually less efficient, while also reducing the lifetime of the material, so QD EL developers are always looking toward developing new QD materials and structures that  have a high efficiency and a long lifetime..
Thus far such materials are still in development, although red QD EL materials that have a lifetime and efficiency that can meet commercial specifications are becoming available from industry leader Nanosys (pvt), with a full stack (RGB) potentially available in 2024 and commercial production in 2025.  While there are certainly a number of obstacles that need to be overcome before such materials can compete with other display modes, the progress seen in developing QD EL materials over the last few years leads us to believe that quantum dot EL materials will find a place in the display world alongside quantum dot applications used today, and can present another way in which displays might improve and become even more pervasive than today.

​Quantum Dot supplier to the stars Nanosys (pvt) is said to be in talks with a SPAC firm to bring the company public, which we find somewhat surprising as the company has access to capital through a wide variety of investors that have participated in the company’s private funding, including Samsung (005930.KS), BOE (200725.CH), and LG Display (LPL).  The company’s recent acquisition of Glo (pvt) gives the company a leg up in the development of micro-LEDs and is a part of the Samsung’s QD/OLED program, along with the potential for development of quantum dots as direct emitters in the future.
While we hear SPAC rumors all the time, this one was among the most surprising as we would have expected Nanosys, if they were to SPAC out, to choose a high quality SPAC that has produced better results for investors, but we quote an old Thom McCann quote that is usually attributed to defunct CE retailer Crazy Eddie, “Money talks, Nobody Walks”.  See our recent notes for more information on Nanosys.

Quantum Dots are a very significant display technology, are at the core of large panel displays and TV sets developed by the world’s largest manufacturers and California based Nanosys (pvt.) is the leader in the space, providing QD materials and IP to the industry.  So why would such a company buy a Swedish company, Glo AB (pvt) a VC backed developer of micro-LEDs, a technology that some say will obviate the need for quantum dots in the future?  In order to understand why this acquisition makes sense and why it is significant to the display and CE space, it is necessary to understand some of the basic technology that surround both companies.
First, Nanosys is a pioneer in commercializing the use of quantum dots as materials that act as color shifters, converting light of one color into another.  In typical usage the quantum dots are incorporated in a film (QDEF or Quantum Dot Enhancement Film) that replaces the diffuser, a translucent sheet that sits between the LED backlight and the liquid crystal, and spreads the light evenly across an LCD display.  These embedded quantum dots, particularly ones that generate red and green light, are ‘stimulated’ by the blue light of the LED backlight and give off their respective colors, and when you mix red, green, and blue light, it turns white.  This is important as the color purity of non-QD LCD systems is considerably lower than its competitor, OLED, a factor that limits the longer-term viability of LCD technology.  However, not only do the quantum dots take a single color blue light and convert it to a white light, but are very precise in how they actually convert the light, giving LCD displays a shot at competing with self-emissive displays such as OLED that have a high level of color purity.  Sustaining the life of the massive LCD infrastructure that the industry has built and paid for is of utmost importance to all LCD producers and underlies their adoption of quantum dots.

As quantum dot materials become more commonplace, their role changes.  In some cases they can be used to replace the colored phosphors in LCD or WOLED color filters, which are sheets of red, green, and blue dots that create full color images out of the white dots of an LCD display.  By replacing the phosphors with quantum dots, the color purity can again be enhanced, but the ultimate goal for quantum dots is to be self-emissive.  That is, to directly generate color by electrical stimulation rather than by converting other light into another color.  Similar to the way in which OLED materials are stimulated, quantum dots could provide an alternative to OLED materials that require a rather complex production process, but using quantum dots commercially as self-emissive emitters is still a few years away, and in the interim quantum dot companies like Nanosys are looking for better ways to help a vast LCD infrastructure compete against new technologies.

One of those competitive new technologies are micro-LEDs, essentially very small LEDs that would become the red, green, and blue sub-pixels of such displays.  As LED production technology (MOCVD) is well commercialized, it seems a logical progression that would not require building an entire new display infrastructure, something that would take many years, but there are some issues that surround micro-LEDs, and that is where the acquisition of Glo AB begins to make sense for Nanosys.
LEDs are produced on wafers, typically made of sapphire, silicon, or compound semiconductor materials, and are formed by depositing materials on that wafer primarily through the use of MOCVD (Metal Oxide Chemical Vapor Deposition) tools that vaporize the materials and deposit them on the substrate.  The LEDs themselves are stacks of materials with a space between them called a quantum well, where electrical energy is converted to light.  Once the LEDs are produced they are removed from the wafer and placed on what becomes the display substrate.  But all LEDs are not made of the same material, with green and blue LEDs based on InGaN (Indium Gallium Nitride) while red LEDs are based on AlGaInP (Aluminum Gallium Indium Phosphide), which means they must be produced on separate wafers and then transferred to the display substrate, creating a pixel made up of red, green, and blue LEDs.  Of course, if they were all made of the same material, and therefore could be produced simultaneously on one wafer, the process would be far simpler and less costly and time consuming, particularly as LED sizes go from normal to mini to micro.

Another problem facing the idea of using LEDs as display light sources is efficiency.  Normal LEDs are very efficient at converting energy to light, which makes them ‘bright’, but as they get smaller, they become less efficient and produce less light per mm2.  In large displays this is less of a problem because a 4K TV typically has ~68 pixels/in2, while a 4K AR/VR display (0.1”) would require a pixel density of ~10,000/in2, which means the individual red, green, and blue LEDs would need to be considerably smaller and therefore less efficient (‘bright’).  To overcome this problem some companies have developed LEDs that are based on nano-wires (think of them as LED ‘crayons’ in a box), which have the peculiar characteristic of increasing their efficiency as they get smaller, and, because there are many nano-wires in each micro-LED, if one is damaged, it does not generate a need for the entire LED to be replaced, which is the case with standard micro-LEDs.  One of the key companies developing nano-wire micro-LED technology is Glo AB, the company that Nanosys purchased.

Did Nanosys buy Glo AB to put the technology in a closet and try to eliminate potential competition to quantum dots? No, but understanding why the combination of the two makes sense, it is also necessary to understand that even if Glo AB were to commercialize a micro-LED process that could grow all three LED colors on a single wafer, it would be a slow process involving many steps to keep the particular material deposition for each color LED in the proper place, a very challenging task. So until the technology that could make single wafer multi-LED color growth commercially viable is developed, there is an interim solution.  By growing only one color micro-LED on a wafer, the process complexity can be significantly reduced, but that brings us back to creating a wafer for each of the three colors, again an expensive process.  However, say the one color is blue, by depositing red and green quantum dots on 2/3 of the blue micro-LEDs, a full color RGB micro-LED display is created.
As noted, this is an interim solution toward the ultimate goal of a self-emissive quantum dot display, but it presents itself as a way that the current limitations facing micro-LED technology can be ‘eliminated’ and commercial development can occur far sooner, but there is still one problem that remains, how do you move 24.88m micro-LEDs from a wafer to a display substrate for a 4K resolution device, especially when they are less than 20um each?  Typical pick and place tools, even if they could be adapted to such small structures, would take days to place that many LEDs, which is obviously not cost effective, and we have noted a variety of other micro-LED transfer techniques being developed in previous notes, but according to Glo AB, they have also developed a transfer process that is cost effective for moving such large numbers of small LEDs.  We believe the process is a laser based system that moves the micro-LEDs directly from the wafer and bonds them to the substrate without any interim steps, which are the bane of other techniques, but details have not been revealed, although we expect Nanosys will share some of that information at a later date.
All in, while the acquisition of Glo AB by Nanosys might seem antithetical on the surface, the acquisition gives Nanosys the ability to more closely develop quantum dot solutions for micro-LEDs and broadens its patent portfolio to 1077 world-wide grants or applications with the additional 298 from Glo AB.  While Glo was a spin-off of Lund University in Sweden and has its headquarters there, the company has a pilot production line in Sunnyvale, less than 20 minutes from Nanosys, and has partnered with a number of display and CE companies over the last few years in the development of backplanes and optical elements, all of which will be maintained by Nanosys.  We expect that the path toward commercialization of a combined quantum dot/micro-LED solution will be shortened by the acquisition.[1]


[1] Please note we have no financial relationship with any of the parties mentioned in this note nor do we have any obligation to or reason for mentioning this transaction, other than our understanding of its effect on the consumer electronics space.