E-Ink Expansion Update
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.
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.
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