QMC Turns Up the Heat on Quantum Dot Marketplace!
Clay Chase
SD Torrey Hills Capital
June 29, 2015
Quantum Materials Corp. Update - (OTCQB: QTMM) - Two Tonne/Year Reactor Online and QDX™ Dots Attain 260°C Heat Resistance Threshold
Late last week Quantum Materials Corp. announced another major milestone crossing with news on their recently acquired, increased manufacturing capacity and high temperature stability of the Company's proprietary QDX™ line of cadmium free quantum dots. With the commissioning of their 2 tonnes per year capacity "continuous flow chemistry" reactor, Quantum Materials Corp. has joined (and is very likely the President of) a very exclusive club of quantum dot manufacturers that have the current capability to produce commercial quantities of these "atomic sized" cadmium free nano-crystalline semiconductors. As big as this news is (and we will break down the importance of that in a minute), the part of this release that we found even more compelling is the announcement that QDX™ quantum dots are showing temperature stability at a whopping 260° celsius!
Commenting in the release, Quantum founder and CEO Stephen Squires stated: "Our capacity expansion has been implemented at just the right time as demand for QDX™ takes off. We recognize the hurdles required to integrate Quantum Dots into exciting new display and lighting applications and our scientists' focus on engineering the appropriate characteristics into our offerings is yielding solid and tangible results. We are particularly pleased with achieving heat resistance to 260°C Celsius, which not only fulfills display market demands, but also opens up the entire LED lighting market to Quantum Dot integration."
To save everyone the task of googling the conversion rate on this - 260°C is equal to 500°F - a temperature level that is higher than the melting point of tin (449°F) and getting very close to the melting point of lead (622°F). So why is this so significant? Well these temperature stability numbers are crucial when talking about applications in both flat panel displays and solid state lighting due to several factors, the first of which is that during the manufacturing process of building flat panel LCD's quantum dots are processed with resins into a film material and must maintain their level of performance (especially as it relates to quantum yield - a measure of how bright they emit light when activated by a light or electical source) post processing - and from what we have heard the current class of quantum dots available in the cadmium free variety (which based on we have gleaned of late is where this market is now headed) have been showing major performance degredation during these manufacturing processes. The other important feature of this heat stability news is the fact that Quantum Materials has reached, or is rapidly approaching the heat stability threshold which will enable flat panel designers to position the quantum dots directly on the surface of the LED light source. This is the desired design variant of utilizing quantum dots in flat panel displays to increase the color gamut of next generation 4K flat panel displays as it is our understanding that this design works much more efficiently than the current display surface film and edge capillary designs on the market at this time. The other very exciting result of this higher level of temperature stability is the potential to now use quantum dots to power the next generation of SSL (solid state lighting) by coating LED bulbs with quantum dots to "engineer" light that appears to the human eye as warm, incandescent light but with the heat and energy saving attributes of LED and/or the unpopular curly-que CFL type lighting. In fact, this latest technological breakthrough now opens up the SSL industry to move into the quantum dot realm much more aggressively, just as we are seeing the flat panel display industry embrace quantum dots to move the quaility of their products up to a more desirable level, emulating the type of viewer experience once reserved only for OLED design panels, but at a much lower consumer price point.
Yes, there are some in the videophile community that still argue that OLED is still a better display technology, and while that may be the case (we saw plenty of 4K OLED's at CES this year and yes, they are truly incredible products) - ultimately this comes down to consumer price metrics and with 4K OLED panels still commanding sky high retail price points (LG's newest 4K OLED line retails for roughly US$7K for the 55 inch and $9.5K for the 65 inch) there looks to be no clear end in sight to high pricing over the next couple of years especially now that LG is really the only major CE group spending material capital to move OLED design forward and lower costs - which swings the barn door wide open for QD technology to gain a foothold and strong market share/consumer acceptance during that time. For all those still screaming that OLED is better and will eventually take over the market, I would like to mention past technologies like Beta and plasma sceen displays. They were both clearly better than the standards that overtook them (VHS and LCD) in mass consumer acceptance/sell through, but you just don't hear much about them anymore.
If you have been monitoring the quantum dot market since they had a strong showing at this year's CES Consumer Electronics Show in Las Vegas (January), you know that they have generated a tremendous amout of buzz in the industry and that early interest level has followed through with a number of the large panel manufacturers producing display's incorporating quantum dot designs to power eye popping high gamut color spectrums. We expect that trend to continue and to even accelerate as we start to approach the 2015 holiday season and 2016 numbers could really move north with a meaningful percentage of 4K displays (which is now approaching a significant percentage of overall panels sold estimated at 30 million 4K displays selling in 2015) moving off the production floor with quantum dots inside. The market for quantum dots is forecast to grow sharply over the next few years. A new report from n-tech Research (formerly Nanomarkets) entitled 'Market Opportunities for Quantum Dots: 2015 to 2022' estimates the market for quantum dots (QDs) will grow from +$400 million in 2015 to $5.5 billion in 2020 and $12 billion in 2022.
As mentioned above the ramifications of increased capacity at Quantum Materials positions the Company to supply a large amout of this difficult to manufacture product in the event they sign an agreement with one of the major panel manufacturers and/or chemical companies that supply these groups. As you can likely imagine, these large consumer electronic's manufacturerers need to ensure they have rock solid supply agreements in place to supply large assembly line systems - as a disruption in supply of any one component could grind everything to a halt which is a situation that none of these groups can afford. With the now inplace topline capacity of 2.25 tonnes/year (and just as importantly the ability to move capacity up in increments of 2 tonnes per year with short lead times is critical to have in place prior to engaging for large supply contracts), these large groups can now look at future supply/JV agreements with QTMM with much more confidence and it's our belief that having this capacity in place to manufacture high performace characteristic cadmium free quantum dots was a neccesary catalyst for garnering a commercial contract with one of these large consumer electronics firms and/or materials suppliers.
Unit pricing for quantum dots is still a bit of a mystery and closely guarded secret at this time but we have heard some anecdotal information on this front and the conventional wisdom out there is that the likely range of pricing for these nano-crystals based based both on performance quality as well as quantity could range from as low as $100/gram to several hundred or more dollars per gram. Just to get an idea of scale if you chose a number in the middle of that range and multiply by QTM's current capacity of 2.25 million grams/year that number gets big very quickly and based on the fact that their proprietary process is not labor or capital intensive they would likely maintain some very compelling gross margins that we feel confident could be well north of 50%.
We have been talking and writing about the Quantum Materials story for some time now and have noticed that while the Company has made significant fundamental progress during that time and there has been good interest in the stock and decent buying, that the price has stayed in a fairly tight trading range. Generally when we see this situation it means there is a large seller in the works and by checking some recent SEC documents we did notice that a group that at one time had a large position of well over 20 million shares has shaved that position to under 5 million shares over the past quarter or two - so it looks as if that seller could soon be out to of the market and change what we have been seeing as a major force in keeping the share price where it's been trading of late. Shares settled today at just under $0.17 per share, up $0.016 or 10.2% for the day.
With the advent of these recent technology advancements, Quantum Materials has been very busy of late and clearly referenced that situation in the recent news release with the following line:
To address this market need, Quantum Materials has shipped QDX™ trial orders this week to six of the leading global display manufacturers to support ongoing market-driven joint development efforts.
Quantum Materials has started trading at much higher volume levels over the past week or so with roughly 6 million shares traded in the last six sessions topping out with today's volume of 1.8 million shares. Quantum Materials has had a strong core of cult shareholders for several years that saw very early on the "game changing" capability these infinitessimaly small particles hold for disrupting several large entrenched industries and changing the design and efficiency of just about anything in the realm that requires converting light to energy (or energy to light) including but not limited to flat panel displays, SSL and solar energy cells. From the recent technological breakthoughs notched by QMC's technical team combined with the breakneck speed of the rapidly emerging quantum dot powered LCD display revolution, we expect that this group's long standing patience is about to pay off in a big way! The big question now is what will happen in the event Quantum Materials' hard work in the lab over the past 8 years results in a supply agreement with one or more of the groups they have been in talks with. Well there is no way to predict just where this goes in the event that happens, we just know that we wouldn’t want to be on the wrong side of that trade.
Now that the new reactor is online and they are setting up shop in their new Star Park facility, we have been invited down later in July to tour the new facility. We will be putting together an extensive site visit report complete with photo's of the facility and management interviews - and will be sure to send you the Quantum Materials Corp. Travel Digest Report once completed.
Looking forward
Clay Chase
SD Torrey Hills Capital
June 29, 2015
Quantum Materials Corp. Update - (OTCQB: QTMM) - Two Tonne/Year Reactor Online and QDX™ Dots Attain 260°C Heat Resistance Threshold
Late last week Quantum Materials Corp. announced another major milestone crossing with news on their recently acquired, increased manufacturing capacity and high temperature stability of the Company's proprietary QDX™ line of cadmium free quantum dots. With the commissioning of their 2 tonnes per year capacity "continuous flow chemistry" reactor, Quantum Materials Corp. has joined (and is very likely the President of) a very exclusive club of quantum dot manufacturers that have the current capability to produce commercial quantities of these "atomic sized" cadmium free nano-crystalline semiconductors. As big as this news is (and we will break down the importance of that in a minute), the part of this release that we found even more compelling is the announcement that QDX™ quantum dots are showing temperature stability at a whopping 260° celsius!
Commenting in the release, Quantum founder and CEO Stephen Squires stated: "Our capacity expansion has been implemented at just the right time as demand for QDX™ takes off. We recognize the hurdles required to integrate Quantum Dots into exciting new display and lighting applications and our scientists' focus on engineering the appropriate characteristics into our offerings is yielding solid and tangible results. We are particularly pleased with achieving heat resistance to 260°C Celsius, which not only fulfills display market demands, but also opens up the entire LED lighting market to Quantum Dot integration."
To save everyone the task of googling the conversion rate on this - 260°C is equal to 500°F - a temperature level that is higher than the melting point of tin (449°F) and getting very close to the melting point of lead (622°F). So why is this so significant? Well these temperature stability numbers are crucial when talking about applications in both flat panel displays and solid state lighting due to several factors, the first of which is that during the manufacturing process of building flat panel LCD's quantum dots are processed with resins into a film material and must maintain their level of performance (especially as it relates to quantum yield - a measure of how bright they emit light when activated by a light or electical source) post processing - and from what we have heard the current class of quantum dots available in the cadmium free variety (which based on we have gleaned of late is where this market is now headed) have been showing major performance degredation during these manufacturing processes. The other important feature of this heat stability news is the fact that Quantum Materials has reached, or is rapidly approaching the heat stability threshold which will enable flat panel designers to position the quantum dots directly on the surface of the LED light source. This is the desired design variant of utilizing quantum dots in flat panel displays to increase the color gamut of next generation 4K flat panel displays as it is our understanding that this design works much more efficiently than the current display surface film and edge capillary designs on the market at this time. The other very exciting result of this higher level of temperature stability is the potential to now use quantum dots to power the next generation of SSL (solid state lighting) by coating LED bulbs with quantum dots to "engineer" light that appears to the human eye as warm, incandescent light but with the heat and energy saving attributes of LED and/or the unpopular curly-que CFL type lighting. In fact, this latest technological breakthrough now opens up the SSL industry to move into the quantum dot realm much more aggressively, just as we are seeing the flat panel display industry embrace quantum dots to move the quaility of their products up to a more desirable level, emulating the type of viewer experience once reserved only for OLED design panels, but at a much lower consumer price point.
Yes, there are some in the videophile community that still argue that OLED is still a better display technology, and while that may be the case (we saw plenty of 4K OLED's at CES this year and yes, they are truly incredible products) - ultimately this comes down to consumer price metrics and with 4K OLED panels still commanding sky high retail price points (LG's newest 4K OLED line retails for roughly US$7K for the 55 inch and $9.5K for the 65 inch) there looks to be no clear end in sight to high pricing over the next couple of years especially now that LG is really the only major CE group spending material capital to move OLED design forward and lower costs - which swings the barn door wide open for QD technology to gain a foothold and strong market share/consumer acceptance during that time. For all those still screaming that OLED is better and will eventually take over the market, I would like to mention past technologies like Beta and plasma sceen displays. They were both clearly better than the standards that overtook them (VHS and LCD) in mass consumer acceptance/sell through, but you just don't hear much about them anymore.
If you have been monitoring the quantum dot market since they had a strong showing at this year's CES Consumer Electronics Show in Las Vegas (January), you know that they have generated a tremendous amout of buzz in the industry and that early interest level has followed through with a number of the large panel manufacturers producing display's incorporating quantum dot designs to power eye popping high gamut color spectrums. We expect that trend to continue and to even accelerate as we start to approach the 2015 holiday season and 2016 numbers could really move north with a meaningful percentage of 4K displays (which is now approaching a significant percentage of overall panels sold estimated at 30 million 4K displays selling in 2015) moving off the production floor with quantum dots inside. The market for quantum dots is forecast to grow sharply over the next few years. A new report from n-tech Research (formerly Nanomarkets) entitled 'Market Opportunities for Quantum Dots: 2015 to 2022' estimates the market for quantum dots (QDs) will grow from +$400 million in 2015 to $5.5 billion in 2020 and $12 billion in 2022.
As mentioned above the ramifications of increased capacity at Quantum Materials positions the Company to supply a large amout of this difficult to manufacture product in the event they sign an agreement with one of the major panel manufacturers and/or chemical companies that supply these groups. As you can likely imagine, these large consumer electronic's manufacturerers need to ensure they have rock solid supply agreements in place to supply large assembly line systems - as a disruption in supply of any one component could grind everything to a halt which is a situation that none of these groups can afford. With the now inplace topline capacity of 2.25 tonnes/year (and just as importantly the ability to move capacity up in increments of 2 tonnes per year with short lead times is critical to have in place prior to engaging for large supply contracts), these large groups can now look at future supply/JV agreements with QTMM with much more confidence and it's our belief that having this capacity in place to manufacture high performace characteristic cadmium free quantum dots was a neccesary catalyst for garnering a commercial contract with one of these large consumer electronics firms and/or materials suppliers.
Unit pricing for quantum dots is still a bit of a mystery and closely guarded secret at this time but we have heard some anecdotal information on this front and the conventional wisdom out there is that the likely range of pricing for these nano-crystals based based both on performance quality as well as quantity could range from as low as $100/gram to several hundred or more dollars per gram. Just to get an idea of scale if you chose a number in the middle of that range and multiply by QTM's current capacity of 2.25 million grams/year that number gets big very quickly and based on the fact that their proprietary process is not labor or capital intensive they would likely maintain some very compelling gross margins that we feel confident could be well north of 50%.
We have been talking and writing about the Quantum Materials story for some time now and have noticed that while the Company has made significant fundamental progress during that time and there has been good interest in the stock and decent buying, that the price has stayed in a fairly tight trading range. Generally when we see this situation it means there is a large seller in the works and by checking some recent SEC documents we did notice that a group that at one time had a large position of well over 20 million shares has shaved that position to under 5 million shares over the past quarter or two - so it looks as if that seller could soon be out to of the market and change what we have been seeing as a major force in keeping the share price where it's been trading of late. Shares settled today at just under $0.17 per share, up $0.016 or 10.2% for the day.
With the advent of these recent technology advancements, Quantum Materials has been very busy of late and clearly referenced that situation in the recent news release with the following line:
To address this market need, Quantum Materials has shipped QDX™ trial orders this week to six of the leading global display manufacturers to support ongoing market-driven joint development efforts.
Quantum Materials has started trading at much higher volume levels over the past week or so with roughly 6 million shares traded in the last six sessions topping out with today's volume of 1.8 million shares. Quantum Materials has had a strong core of cult shareholders for several years that saw very early on the "game changing" capability these infinitessimaly small particles hold for disrupting several large entrenched industries and changing the design and efficiency of just about anything in the realm that requires converting light to energy (or energy to light) including but not limited to flat panel displays, SSL and solar energy cells. From the recent technological breakthoughs notched by QMC's technical team combined with the breakneck speed of the rapidly emerging quantum dot powered LCD display revolution, we expect that this group's long standing patience is about to pay off in a big way! The big question now is what will happen in the event Quantum Materials' hard work in the lab over the past 8 years results in a supply agreement with one or more of the groups they have been in talks with. Well there is no way to predict just where this goes in the event that happens, we just know that we wouldn’t want to be on the wrong side of that trade.
Now that the new reactor is online and they are setting up shop in their new Star Park facility, we have been invited down later in July to tour the new facility. We will be putting together an extensive site visit report complete with photo's of the facility and management interviews - and will be sure to send you the Quantum Materials Corp. Travel Digest Report once completed.
Looking forward
