Latest From Clay
Quantum Materials Corp Update (OTCQB: QTMM) - Major News - Joint Development Agreement with Global Chemical Group Nitto Denko Corp. (Japan)
September 23, 2015 - We were extremely pleased to see yesterday's news out from Quantum Materials Corp. wherein they announced the signing of a funded "Joint Development Agreement" (JDA) with Japan based chemical giant Nitto Denko Corporation (we wanted to get this post out yesterday but with the number of calls and emails we got, there was just no way!).
Make no mistake, this is a watershed moment and major tipping point for QMC as it represents a significant milestone in validating the Company's QDX™ quantum dot materials - and we see this as a huge step forward in their ultimate goal to become a major global supplier of quantum dot nanoparticles - with the first market developing around the present rush by consumer electronic OEM's to supply "next generation" (combo of 4K, HDR & WCG or "wide color gamut"
premium flat panel displays.
Here is a link to the PR: http://finance.yahoo.com/news/quantum-materia...46781.html
and here's a link to the 8K filing including the mention of JDA partner Nitto Denko: http://www.sec.gov/Archives/edgar/data/140357...erials.htm
Nitto Denko Corp. is a very big company with offices around the world (2014 net sales of just under US$7 billion) and is a film/component supplier to many of the world's largest consumer electronics groups. You can learn more about this major optoelectronic film supplier from their website at: www.nitto.com with detailed information on their display component/film division at: http://www.nitto.com/markets/displays/
We have been on the Quantum Dot train for just over a year now and it's been an exciting ride so far, with a number of meaningful advancements/milestones ticked off by the group during that timeframe. With this release we anticipate that the next six months will see the Company start to really accelerate and move materially towards their stated goal of becoming the world's largest supplier of semiconductor nanoparticles (aka quantum dots).
The website NewMaterialsNews.com reported on yesterday's news release with an exclusive interview and that article included some brief comments from Quantum founder and CEO Stephen Squires - which pretty much sums up their current positioning in the quantum dot marketplace. We have included an excerpt from that report below:
When questioned about the company’s position in relation to Nanoco, Nanosys and QD Vision, Squires added: “First, in terms of Quantum Dot production capability I believe we have right now greater capacity than at least two of the aforementioned competitors and possibly all three.”
“I believe our QDX Quantum Dots are a superior product and Quantum Materials Corp has already proven that we can scale up production much more quickly than our competition. When you factor in our production cost advantages we have a value proposition that display manufacturers cannot ignore, and quite frankly they aren’t.”
The quantum dot industry is really starting to heat up and we are now seeing a constant stream of quantum dot related news stories coming out with analysts commenting on this new "super material" that can improve the performance level of a myriad of products across a wide spectrum of industries (displays, solid state lighting, batteries, solar energy just to name a few). Here is an excerpt of one of these reports published earlier this year from Wintergreen Research predicting that the quantum industry will grow to $6.4 billion by 2019. Some of the predictions made back then are now becoming a reality:
According to Susan Eustis, "The commercialization of quantum dots using kilogram quantity mass production is a game-changer. High quality, high quantity and lowest price quantum dots increase product quality in every industry. The rate of change means speeded products cycles are evolving."
Once manufacturers learn to integrate higher efficiency luminescent quantum dots into their products, each vendor will need to follow or dramatically lose market share. This level of change brought by quantum dot and quantum dot displays (QLED) represents a new paradigm that will create new industries, products and jobs in science and industry. The list of possible quantum dot applications is ever expanding. New applications are waiting for the availability of more evolved quantum dots.
From reading our past posts on quantum dots you are likely up to speed on what these nanocrystals are, and what they can do (if not, just send me an email and we can get you up to speed quickly) so let's jump into the macro end of this for a moment and look at how both the market for quantum dot's and QMC have progressed over the past 9 months - and where we see them both headed going forward from here:
Quantum Dot/Quantum Materials Corp Key Value Driver Timeline in 2015:
A - January 2015 - At the mega CES Consumer Electronics in Las Vegas, a number of major OEM panel manufacturers displayed quantum dot based panels with Samsung and LG also showing a solid brace of OLED technology panels. (we were there and did a full report of that event, if you would like to see that report send me an email and we will send you a copy).
B - February 2015 - The two main players in the arena (Samsung and LG) made public their opposing strategies relating to premium (large form) flat panel display design - with Samsung pursuing a path towards incorporating quantum dot materials along with 4K (UHD) glass and HDR technology and LG pursuing a path that favored OLED technology (with new heavy capex spending) but also incorporating quantum dot based sets as well.
C - March-April 2015 - Samsung announced their new line of premium quantum dot infused displays known by the SUHD packaging designation - exhibiting "OLED like" viewing quality (albeit with a few minor differences that don’t seem to be slowing down sales) driven by nanocrystalline technology (quantum dots) retailing for roughly 50% of the price of similar sized OLED panels.
D - May 2015 - Members of the European Parliament voted against a proposed extension of an exemption to the Restriction of Hazardous Substances Directive (RoHS) which would have allowed the use of cadmium-containing quantum dots in Europe. At this point it looks as if other countries are following suit, with OEM's looking to source cadmium free products to stay in front of these cadmium restrictions.
E - May-June 2015 - Quantum Materials announced their QDX™ line of cadmium free quantum dots with high performance specifications (in both line width and quantum yield) that most importantly remained stable at high temperatures as well as stable when exposed to oxygen and moisture - environments that traditionally have been highly detrimental to quantum dot longevity and performance quality. QMC also announced upgrading capacity of cadmium free quantum dots to 2.25 metric tons per year (2,250,000 grams/year). Samples of QDX™ quantum dots shipped to six of the leading display and television manufacturers for testing and evaluation.
E - July 2015 - Quantum Materials Corp announced a JDA (Joint Development Agreement) with one of the world's top flat panel display manufacturers which represented a very solid endorsement of the QDX™ product.
F - September 2015 -This most recent announcement with global chemical group Nitto Denko is a second major "third party" endorsement for QDX™ cadmium free quantum dots and partners QMC up with a firm that is both deeply entrenched in the optoelectronic supply chain business (with a very comprehensive catalogue of existing display film products/components) and likely even more importantly already has a long customer list including many of the world's largest flat panel/handheld OEM consumer electronics manufacturers.
So What Happens Next?
When you connect these dots (sorry), it starts to become fairly clear to us where this is all likely headed. When you combine a high performance, low cost quantum dot supplier with an extremely well positioned chemical company/film manufacturer that is already supplying many of the world's largest flat panel display OEM's with products - we're really not sure if we could come up with a more ideal scenario for getting QMC products into this major market that is now developing quickly for quantum dot driven display's.
With Samsung leading the way towards higher quality displays with their expanding SUHD line, we are now seeing many of the other OEM groups jump on board with quantum dot driven offerings of their own such as Hisense and AU Optronics, and while each of these groups are presently sourcing quantum dot film/and or components from competing groups (or fabricating them in house), we believe that as soon as Nitto Denko can bring a high quality, cost competitive alternative to some of these OEM's - and the volume requirements start moving north as the popularity of these sets accelerate at the consumer level (and demand ramps up for qd film) - it will put the Nitto Denko/Quantum Materials Corp partnership in a very strong position to grab market share in this dynamic and lucrative marketplace.
Regarding capacity, Quantum Materials is already in position to produce 2.25 metric tons from their San Marcos, TX wet lab/corporate headquarters and are able to ramp up capacity quickly with low capex modularly by sourcing additional 2 metric ton/year processing equipment as needed. To get some perspective on this capability, we are still waiting for the Nanoco/Dow collaboration to announce their readiness to supply cad free quantum dot materials at volume from their recently completed(?) Cheonan, South Korea facility - which is now running at least six months late from previously announced opening dates - and we have heard from several analysts covering the Company that when this plant does open they will be at an initial capacity level of around 800 kg/year, which is roughly 1/3 of QMC's current nameplate capacity.
The key takeaway here is that quantum dot driven flat panel displays are being embraced by the consumer (as well as the display OEM's) and with demand ramping up in 2016 for this format Quantum Materials Corp is in an ideal position to build solid market share in this business. As discussed in prior posts, the revenue potential for quantum dots is extremely compelling. At the rumored pricing level of roughly $200/gram range (bear in mind this price point is purely a guess cobbled together from several online market commentating sources) and a present capacity of 2,250,000 grams per year, you just have to do some simple multiplication to get a sense of how quickly this could get interesting for QMC (and its shareholders). How long will it take to break material sales levels and then fill up this capacity? That's a great question and we certainly don't pretend to know the answer to that at this time, but what we do know is that if this format continues to move forward like it has over the past couple of months, the industry will need tons of material to make enough film to supply the OEM's many LCD fabs, and as exhibited by today's release QMC is working smartly (and we imagine that this joint development effort is going to move forward quickly to take advantage of the present market opportunity) to get in a position to command as much of that business as they can.
When you sit back a bit from the market and think about this "revolution" in flat panel display design . . it really does make a lot of sense. When you give LCD based OEM manufacturing groups the ability to create an "OLED like" viewing experience display by upgrading the color gamut with low cost quantum dots while upping the resolution with 4X the number of pixels (using the same fabs they are already producing LCD sets), and then you offer that display to the consumer at roughly half the retail price point of OLED - what's not to like? (unless you've invested billions in capex to produce high cost OLED display's). Are we calling out the demise of OLED? Certainly not. We see a number of markets that will embrace OLED technology for their ability to make super thin, flexible substrate panel displays that can be contoured and folded for wearables plus their ability to produce high quality smaller form solutions such as the handheld market (let's face it, the early adopter "hipster crowd" always needs some cutting edge product to stand out from the rest of us like the Apple Watch). That being said, it certainly looks as if the LCD technology incumbents are planning to give large form OLED technology players a real run for their money - and so far it looks like the momentum is squarely in the quantum dot/UHD camp as the ultimate arbiter in these "arguments" is always the consumer, and right now it looks like they are leaning heavily towards "OLED like" quality at "LCD like" prices.
Oh yeah, one more thing. Did we happen to mention that Nitto Denko is a supplier of optoelectronic components to Apple? Well, they are and of course the jury is still out on whether or not Apple will stay the course of their present retina display technology, or at some point go down the OLED path or possibly look to up their color gamut game with a quantum dot film solution (their recent product announcements made really no material changes to their current display design). Yes, we are aware of the rumors floating around the internet right now that Apple is now considering OLED based technology for the iPhone 8 series, expected to hit stores in 2017, but if they ever did look at the qd solution (and with a low cost, high quality quantum dot film now looming on the horizon from a big Apple supplier maybe they will) . . .there's always a chance to get QDX™ in an iPhone, and it's certainly something to think about now isn't it!
We will continue to keep you updated on QMC's developments in this rapidly evolving market for quantum dots. If you haven't already joined the qd revolution, we suggest you jump on board, get a good seat and hang on, as it looks like it's going to be one heck of an adrenaline ride going forward from here!
Regards,
Clay Chase
SD Torrey Hills Capital
858 456-7300
cc@sdthc.com
Disclaimer: This information is provided by San Diego Torrey Hills Capital to provide readers with information on selected publicly traded companies. The reader should verify all claims and complete his or her own due diligence before investing in any securities of profiled companies. San Diego Torrey Hills Capital has been retained to provide investor relations services for some of the companies mentioned in this email and receives compensation for those services. Further, San Diego Torrey Hills Capital and its employees and affiliates may own, or may purchase and sell, securities of the companies profiled. San Diego Torrey Hills Capital undertakes no obligation to inform readers about the ownership or trading activities of it or its employees or affiliates in the securities of the profiled companies. Neither San Diego Torrey Hills Capital nor anyone involved in the publication of this email is a registered investment adviser or broker/dealer. San Diego Torrey Hills Capital makes no recommendation that the purchase of securities of companies mentioned in this email is suitable or advisable for any person or that an investment in such securities will be profitable. In general, given the nature of the companies profiled and the lack of an active trading market for their securities, investing in such securities is highly speculative and carries a high degree of risk. An investor in such securities should be prepared and able to bear a loss of his or her entire investment. Nothing in this email should be construed as an offer or solicitation to buy or sell any securities of any profiled company.
Quantum Materials Corp Update (OTCQB: QTMM) - Major News - Joint Development Agreement with Global Chemical Group Nitto Denko Corp. (Japan)
September 23, 2015 - We were extremely pleased to see yesterday's news out from Quantum Materials Corp. wherein they announced the signing of a funded "Joint Development Agreement" (JDA) with Japan based chemical giant Nitto Denko Corporation (we wanted to get this post out yesterday but with the number of calls and emails we got, there was just no way!).
Make no mistake, this is a watershed moment and major tipping point for QMC as it represents a significant milestone in validating the Company's QDX™ quantum dot materials - and we see this as a huge step forward in their ultimate goal to become a major global supplier of quantum dot nanoparticles - with the first market developing around the present rush by consumer electronic OEM's to supply "next generation" (combo of 4K, HDR & WCG or "wide color gamut"
premium flat panel displays. Here is a link to the PR: http://finance.yahoo.com/news/quantum-materia...46781.html
and here's a link to the 8K filing including the mention of JDA partner Nitto Denko: http://www.sec.gov/Archives/edgar/data/140357...erials.htm
Nitto Denko Corp. is a very big company with offices around the world (2014 net sales of just under US$7 billion) and is a film/component supplier to many of the world's largest consumer electronics groups. You can learn more about this major optoelectronic film supplier from their website at: www.nitto.com with detailed information on their display component/film division at: http://www.nitto.com/markets/displays/
We have been on the Quantum Dot train for just over a year now and it's been an exciting ride so far, with a number of meaningful advancements/milestones ticked off by the group during that timeframe. With this release we anticipate that the next six months will see the Company start to really accelerate and move materially towards their stated goal of becoming the world's largest supplier of semiconductor nanoparticles (aka quantum dots).
The website NewMaterialsNews.com reported on yesterday's news release with an exclusive interview and that article included some brief comments from Quantum founder and CEO Stephen Squires - which pretty much sums up their current positioning in the quantum dot marketplace. We have included an excerpt from that report below:
When questioned about the company’s position in relation to Nanoco, Nanosys and QD Vision, Squires added: “First, in terms of Quantum Dot production capability I believe we have right now greater capacity than at least two of the aforementioned competitors and possibly all three.”
“I believe our QDX Quantum Dots are a superior product and Quantum Materials Corp has already proven that we can scale up production much more quickly than our competition. When you factor in our production cost advantages we have a value proposition that display manufacturers cannot ignore, and quite frankly they aren’t.”
The quantum dot industry is really starting to heat up and we are now seeing a constant stream of quantum dot related news stories coming out with analysts commenting on this new "super material" that can improve the performance level of a myriad of products across a wide spectrum of industries (displays, solid state lighting, batteries, solar energy just to name a few). Here is an excerpt of one of these reports published earlier this year from Wintergreen Research predicting that the quantum industry will grow to $6.4 billion by 2019. Some of the predictions made back then are now becoming a reality:
According to Susan Eustis, "The commercialization of quantum dots using kilogram quantity mass production is a game-changer. High quality, high quantity and lowest price quantum dots increase product quality in every industry. The rate of change means speeded products cycles are evolving."
Once manufacturers learn to integrate higher efficiency luminescent quantum dots into their products, each vendor will need to follow or dramatically lose market share. This level of change brought by quantum dot and quantum dot displays (QLED) represents a new paradigm that will create new industries, products and jobs in science and industry. The list of possible quantum dot applications is ever expanding. New applications are waiting for the availability of more evolved quantum dots.
From reading our past posts on quantum dots you are likely up to speed on what these nanocrystals are, and what they can do (if not, just send me an email and we can get you up to speed quickly) so let's jump into the macro end of this for a moment and look at how both the market for quantum dot's and QMC have progressed over the past 9 months - and where we see them both headed going forward from here:
Quantum Dot/Quantum Materials Corp Key Value Driver Timeline in 2015:
A - January 2015 - At the mega CES Consumer Electronics in Las Vegas, a number of major OEM panel manufacturers displayed quantum dot based panels with Samsung and LG also showing a solid brace of OLED technology panels. (we were there and did a full report of that event, if you would like to see that report send me an email and we will send you a copy).
B - February 2015 - The two main players in the arena (Samsung and LG) made public their opposing strategies relating to premium (large form) flat panel display design - with Samsung pursuing a path towards incorporating quantum dot materials along with 4K (UHD) glass and HDR technology and LG pursuing a path that favored OLED technology (with new heavy capex spending) but also incorporating quantum dot based sets as well.
C - March-April 2015 - Samsung announced their new line of premium quantum dot infused displays known by the SUHD packaging designation - exhibiting "OLED like" viewing quality (albeit with a few minor differences that don’t seem to be slowing down sales) driven by nanocrystalline technology (quantum dots) retailing for roughly 50% of the price of similar sized OLED panels.
D - May 2015 - Members of the European Parliament voted against a proposed extension of an exemption to the Restriction of Hazardous Substances Directive (RoHS) which would have allowed the use of cadmium-containing quantum dots in Europe. At this point it looks as if other countries are following suit, with OEM's looking to source cadmium free products to stay in front of these cadmium restrictions.
E - May-June 2015 - Quantum Materials announced their QDX™ line of cadmium free quantum dots with high performance specifications (in both line width and quantum yield) that most importantly remained stable at high temperatures as well as stable when exposed to oxygen and moisture - environments that traditionally have been highly detrimental to quantum dot longevity and performance quality. QMC also announced upgrading capacity of cadmium free quantum dots to 2.25 metric tons per year (2,250,000 grams/year). Samples of QDX™ quantum dots shipped to six of the leading display and television manufacturers for testing and evaluation.
E - July 2015 - Quantum Materials Corp announced a JDA (Joint Development Agreement) with one of the world's top flat panel display manufacturers which represented a very solid endorsement of the QDX™ product.
F - September 2015 -This most recent announcement with global chemical group Nitto Denko is a second major "third party" endorsement for QDX™ cadmium free quantum dots and partners QMC up with a firm that is both deeply entrenched in the optoelectronic supply chain business (with a very comprehensive catalogue of existing display film products/components) and likely even more importantly already has a long customer list including many of the world's largest flat panel/handheld OEM consumer electronics manufacturers.
So What Happens Next?
When you connect these dots (sorry), it starts to become fairly clear to us where this is all likely headed. When you combine a high performance, low cost quantum dot supplier with an extremely well positioned chemical company/film manufacturer that is already supplying many of the world's largest flat panel display OEM's with products - we're really not sure if we could come up with a more ideal scenario for getting QMC products into this major market that is now developing quickly for quantum dot driven display's.
With Samsung leading the way towards higher quality displays with their expanding SUHD line, we are now seeing many of the other OEM groups jump on board with quantum dot driven offerings of their own such as Hisense and AU Optronics, and while each of these groups are presently sourcing quantum dot film/and or components from competing groups (or fabricating them in house), we believe that as soon as Nitto Denko can bring a high quality, cost competitive alternative to some of these OEM's - and the volume requirements start moving north as the popularity of these sets accelerate at the consumer level (and demand ramps up for qd film) - it will put the Nitto Denko/Quantum Materials Corp partnership in a very strong position to grab market share in this dynamic and lucrative marketplace.
Regarding capacity, Quantum Materials is already in position to produce 2.25 metric tons from their San Marcos, TX wet lab/corporate headquarters and are able to ramp up capacity quickly with low capex modularly by sourcing additional 2 metric ton/year processing equipment as needed. To get some perspective on this capability, we are still waiting for the Nanoco/Dow collaboration to announce their readiness to supply cad free quantum dot materials at volume from their recently completed(?) Cheonan, South Korea facility - which is now running at least six months late from previously announced opening dates - and we have heard from several analysts covering the Company that when this plant does open they will be at an initial capacity level of around 800 kg/year, which is roughly 1/3 of QMC's current nameplate capacity.
The key takeaway here is that quantum dot driven flat panel displays are being embraced by the consumer (as well as the display OEM's) and with demand ramping up in 2016 for this format Quantum Materials Corp is in an ideal position to build solid market share in this business. As discussed in prior posts, the revenue potential for quantum dots is extremely compelling. At the rumored pricing level of roughly $200/gram range (bear in mind this price point is purely a guess cobbled together from several online market commentating sources) and a present capacity of 2,250,000 grams per year, you just have to do some simple multiplication to get a sense of how quickly this could get interesting for QMC (and its shareholders). How long will it take to break material sales levels and then fill up this capacity? That's a great question and we certainly don't pretend to know the answer to that at this time, but what we do know is that if this format continues to move forward like it has over the past couple of months, the industry will need tons of material to make enough film to supply the OEM's many LCD fabs, and as exhibited by today's release QMC is working smartly (and we imagine that this joint development effort is going to move forward quickly to take advantage of the present market opportunity) to get in a position to command as much of that business as they can.
When you sit back a bit from the market and think about this "revolution" in flat panel display design . . it really does make a lot of sense. When you give LCD based OEM manufacturing groups the ability to create an "OLED like" viewing experience display by upgrading the color gamut with low cost quantum dots while upping the resolution with 4X the number of pixels (using the same fabs they are already producing LCD sets), and then you offer that display to the consumer at roughly half the retail price point of OLED - what's not to like? (unless you've invested billions in capex to produce high cost OLED display's). Are we calling out the demise of OLED? Certainly not. We see a number of markets that will embrace OLED technology for their ability to make super thin, flexible substrate panel displays that can be contoured and folded for wearables plus their ability to produce high quality smaller form solutions such as the handheld market (let's face it, the early adopter "hipster crowd" always needs some cutting edge product to stand out from the rest of us like the Apple Watch). That being said, it certainly looks as if the LCD technology incumbents are planning to give large form OLED technology players a real run for their money - and so far it looks like the momentum is squarely in the quantum dot/UHD camp as the ultimate arbiter in these "arguments" is always the consumer, and right now it looks like they are leaning heavily towards "OLED like" quality at "LCD like" prices.
Oh yeah, one more thing. Did we happen to mention that Nitto Denko is a supplier of optoelectronic components to Apple? Well, they are and of course the jury is still out on whether or not Apple will stay the course of their present retina display technology, or at some point go down the OLED path or possibly look to up their color gamut game with a quantum dot film solution (their recent product announcements made really no material changes to their current display design). Yes, we are aware of the rumors floating around the internet right now that Apple is now considering OLED based technology for the iPhone 8 series, expected to hit stores in 2017, but if they ever did look at the qd solution (and with a low cost, high quality quantum dot film now looming on the horizon from a big Apple supplier maybe they will) . . .there's always a chance to get QDX™ in an iPhone, and it's certainly something to think about now isn't it!
We will continue to keep you updated on QMC's developments in this rapidly evolving market for quantum dots. If you haven't already joined the qd revolution, we suggest you jump on board, get a good seat and hang on, as it looks like it's going to be one heck of an adrenaline ride going forward from here!
Regards,
Clay Chase
SD Torrey Hills Capital
858 456-7300
cc@sdthc.com
Disclaimer: This information is provided by San Diego Torrey Hills Capital to provide readers with information on selected publicly traded companies. The reader should verify all claims and complete his or her own due diligence before investing in any securities of profiled companies. San Diego Torrey Hills Capital has been retained to provide investor relations services for some of the companies mentioned in this email and receives compensation for those services. Further, San Diego Torrey Hills Capital and its employees and affiliates may own, or may purchase and sell, securities of the companies profiled. San Diego Torrey Hills Capital undertakes no obligation to inform readers about the ownership or trading activities of it or its employees or affiliates in the securities of the profiled companies. Neither San Diego Torrey Hills Capital nor anyone involved in the publication of this email is a registered investment adviser or broker/dealer. San Diego Torrey Hills Capital makes no recommendation that the purchase of securities of companies mentioned in this email is suitable or advisable for any person or that an investment in such securities will be profitable. In general, given the nature of the companies profiled and the lack of an active trading market for their securities, investing in such securities is highly speculative and carries a high degree of risk. An investor in such securities should be prepared and able to bear a loss of his or her entire investment. Nothing in this email should be construed as an offer or solicitation to buy or sell any securities of any profiled company.
