Samsung Buys QD Vision’s IP for $70M and the Future of Quantum Dots
In a strategic move to support the long-term vision of its display, TV and possibly other businesses, Samsung has reached an agreement to acquire QD Vision’s intellectual property for approximately $70M. This story has been reported by Korea’s ETNews, the web site SamMobile.com and elsewhere as an acquisition of QD Vision, but that is not accurate. It is only the IP, which consists of approximately 250 patents and patents pending as well as trademarks, which Samsung will be acquiring. When asked about the QD Vision IP, SamMobile quoted Samsung Advanced Institute of Technology CEO Jung Chil-hee who told reporters that QD Vision’s IP will become part of Samsung’s R&D efforts to produce increasingly advanced implementations of quantum dot (QD) TVs to compete with OLED TVs. We believe QD TVs have a bright future and I will talk about that shortly. However, first, let’s discuss what this means for QD Vision as well as the history of quantum dots.
Quantum dots, nanoscale particles of semiconducting material that can efficiently create highly saturated colors, were discovered by Dr. Louis Brus while working at Bell Labs in 1982. Both QD Vision and Nanosys were founded or co-founded by Dr. Brus’ MIT graduate students, Dr. Paul Alivisatos in the case of Nanosys and Dr. Moungi Bawendi at QD Vision, both of whom contributed significantly to Dr. Brus’ work.
Dr. Alivisatos is now Vice Chancellor for Research at UC Berkeley, Founding Director of the Kavli Energy Nanoscience Institute and Director Emeritus of Lawrence Berkeley National Laboratory. He recently won the National Medal of Science for his work on quantum dots. He studied under Brus in the early 1980s. He was the scientific co-founder of Nanosys in 2001 and also founded Quantum Dot Corp., which is now part of Life Tech.
Dr. Bawendi studied under Brus after Alivisatos and was an early scientific advisor to Nanosys from 2003. He licensed a number of his QD patents to Nanosys. Bawendi later co-founded QD Vision in 2004 along with Dr. Vladmir Bulcovic. Bawendi is currently a chemistry professor at MIT and runs a lab focused on the science and application of quantum dots. He is also the scientific founder of Quantum Dot Corp., now part of Life Tech, serves as Scientific Advisor to Lumicell and remained on the Scientific Advisory Board at QD Vision.
QD Vision was founded in 2004 and raised over $133M in 10 separate rounds from 11 different venture capital firms to commercialize QDs. The most recent round was November of 2015 at $22M. The VC firms backing QD Vision, according to Crunchbase, included BASF Venture Capital, Capricorn Investment Group, DTE Energy Ventures, Highland Capital Partners, In-Q-Tel, North Bridge Venture Partners, Novus Energy Partners, Novus Ventures, Open Innovation Ventures, Passport Capital and Tsing Capital. Unfortunately, it appears these firms will not make money on their investment.
QD Vision tried to commercialize QDs through their edge-lit quantum dot optic, Color IQ, which works with edge lit TVs and monitors. The QDs are packaged in resin in an edge lit tube placed between blue LEDs and a light guide in an edge lit backlight. QD Vision was the only company to commercialize this QD edge optic solution. According to QD Vision Co-Founder Seth Coe Sullivan, in Color IQ, concentrations of red and green converting QDs are engineered to pass tri-chromatic white light that's optimized for spectrally narrow color filters to maximize the throughput of the filters and deliver a wider color gamut as opposed to yellow phosphor LEDs found in most LED TVs which deliver a spectrally wider bichromatic light that is getting chopped into tri-chromatic light by the color filters which produce a narrower color gamut as shown in the Figure below. This results in brighter displays and a wider color gamut. The Color IQ approach uses less QD material than other approaches resulting in a lower cost solution. Sealing the QDs in a high precision glass tube acts as the barrier against moisture and oxygen. However, a significant portion of the light doesn’t make it into the light guide, although some of it can be recaptured by adopting reflectors. Companies that adopted QD Vision’s Color IQ included Hisense, Philips/TPVision, Seiki, Sony and TCL for TVs and Philips and AOC for monitors. In the case of TVs, while Color IQ and edge lit solutions resulted in extremely thin LCDs and a lower cost solution, the high end of the market has moved to direct lit LEDs and local dimming which aren’t compatible with Color IQ. In the case of monitors, there has been some negative reviews such as by Meko which found in a Philips Color IQ monitor that the white point was well of the desired 6500 setting at 7200 – 7400 and there was a large area of the screen that was 20% less bright than the center and slightly blue. So, QD Vision has been struggling. In fact, the Color IQ factory in Taiwan was shut down and the Philips monitor was re-designed without QDs. So, QD Vision has been struggling with its products not gaining acceptance.
The real winner of the QD market so far has been Nanosys, founded 3 years before QD Vision, whose QD films can be found in nearly 20 different Samsung SKUs in TVs ranging from 43” to 88” and have also been adopted by other leading brands including Hisense, TCL, Vizio and others. Nanosys’ Quantum Dot Enhancement Film (QDEF), which can be used in either edge-lit or direct-lit backlight solutions, replaces a diffuser film and places red and green QDs inside a film and blue LEDs illuminate the film. As with the edge-lit optic, the film generates tri-chromatic light at a desired white color point that allows the optimized color filter to produce a wider color gamut than it would if it was receiving broad spectrum bichromatic light from yellow phosphor based LEDs. While this approach uses more QD material and should be more expensive than the edge-lit approach, the higher volumes have enabled Nanosys to rapidly reduce cost. We believe over 4M QD TV panels will ship in 2016, up from around 1M in 2015 and the market should double in each of the next 3 years led by Samsung. As Samsung increasingly pushes wide color gamut and high dynamic range, Nanosys will be a major beneficiary. In addition, in its 2nd generation of QD films, Nanosys is using a lower cost barrier film, which is further reducing costs and prices to TV brands. Nanosys also has 7 different suppliers led by 3M and Hitachi Chemical, which compete against each other to deliver the Nanosys film solution. In addition, Samsung and Nanosys have also created a second QD source, Hansol, under a license and royalty agreement with Nanosys to ensure there are no disruptions of supply for the #1 TV brand.
So, if Samsung and Nanosys are doing so well together, why purchase QD Vision’s IP? Well, QD films are not the only implementation of QD displays. QDs have an interesting roadmap, which include implementations that can improve brightness and power performance, lower cost, etc. These implementations could even expand QDs usage into mobile displays as well. QDs can become emissive displays on their own and follow the path created by OLEDs in terms of form factor, share some of the same equipment, etc.. The different QD implementations include:
- QD LEDs – QDs are used instead of phosphor and placed on or near blue LEDs. This type of solution would be attractive to both display and lighting implementations as several types of quantum dots could be placed over the LEDs to achieve a very high color rendering index (CRI) which better emulates natural lighting sources resulting in more consistent perceptions of color. This would eliminate the need for a QD film or tube and could even eliminate a color filter resulting in brighter and lower power displays. However, there are a number of challenges including how to deposit the tiny QD materials in the right proportion onto the LEDs and developing QD materials that are stable in air and not sensitive to moisture and be able to withstand subsequent solder, bake and packaging steps.
- QD CFs – In this approach as shown in Phase 2 of Nanosys' QD roadmap below, quantum dots are integrated into resist and patterned, replacing today’s color filters in a similar process. Blue LEDs would generate the blue light that would be passed through in the right proportion while red and green light would be down-converted from the blue LEDs and the red and green QDs. The red and green QD color filter would pass significantly more light than a traditional color filter and also result in brighter and lower power displays. The QDs must become air processable and stable enough to withstand a few other process steps before they are sealed in the display. Our sources indicate that QD CFs could be twice as bright as conventional CFs using the same # of LEDs or achieve equivalent brightness with ½ as many LEDs. It will also enable QD CF-based LCD TVs to more easily meet the brightness requirements for high dynamic range (HDR) TVs. We expect to see prototypes of this approach in the near future and have heard that Nanosys’ quantum dots have already achieved the desired stability during the manufacturing process to enable the commercialization of this approach. Interestingly, the ability to achieve better stability in air has already enabled Nanosys to adopt a lower cost barrier film for the QD enhancement film approach.
- QLEDs – In this approach, the QDs act like OLED material and generate light using an electroluminescent mechanism. The QD material would be sandwiched between an anode and cathode like an OLED and each sub-pixel would have either red, green or blue QD material emit at the desired wavelength in response to a voltage. Because QDs emit light in a narrow spectrum, the QDs could potentially achieve high contrast over a wide color gamut at a lower power than OLEDs. There would be no backlight, no LC, no color filter, etc. In addition, unlike OLEDs, where expensive and slow evaporation equipment is required, it is possible that the QD material could be patterned or ink jet printed resulting in lower costs than OLEDs. However, there are a number of challenges to be overcome before this is possible. To eliminate the expensive evaporation equipment, the QD material would have to be stable and processable in air, not sensitive to moisture, withstand a higher flux and robust enough to withstand other process steps at higher temperatures. In addition, it is not clear how the backplane would need to change and what levels of brightness and resolution could be achieved. We have heard that it could take 5 years before this process may be implemented, but it has great potential to deliver excellent performance at lower costs than OLEDs. Furthermore, QLEDs could potentially share OLEDs form factors in terms of being flexible, foldable and rollable.
So, what does this have to do with acquiring QD Vision’s IP? We have heard that QD Vision may have some important IP in QD LEDs and QLEDs. In fact, they even own the trademark for QLEDs. So, Samsung is purchasing QD IP to gain freedom to operate in these areas and advance its own R&D efforts. If the future of displays and TVs is QD, it will be helpful for Samsung to acquire 250 QD-related patents and trademarks. It will gain the upper hand vs. its competitors who may have to take a license from Samsung and pay a royalty to produce or use displays that compete with Samsung’s QD implementations that were owned by QD Vision and now Samsung.
In addition, it is likely that Nanosys’ QD material will still be used in these implementations as Samsung has been working with Nanosys on its QD film products, is an investor in Nanosys through Samsung Ventures and is believed to be working with Nanosys on other implementations. Furthermore, Nanosys also has a very strong IP position in quantum dots and holds nearly 300 patents worldwide in QDs including certain patents exclusively licensed by MIT and UC Berkeley. In fact, Nanosys is suing QD Vision for infringing on its patent protected photoluminescent QD materials. Nanosys claimed that when QD Vision’s own technology failed, the company chose to infringe on Nanosys’ patents over taking the time to innovate on their own. Nanosys is seeking an injunction to stop QD Vision’s infringement and the destruction of existing inventory, enhanced monetary damages and a full recovery of attorney’s fees. However, there may not be much for Nanosys to recover other than the proceeds paid by Samsung for the IP. The biggest losers may be the venture capitalists who appeared to have backed the wrong QD supplier. Investing in next generation technologies is a risky business.
Samsung appears to be thinking long term about how QDs will be used in the future and they were smart to pick up more QD IP. In addition, QLEDs may not be limited to TVs and high-end monitors. QLEDs could potentially extend to a wide range of applications including mobile, depending on what we learn about their performance, ability to be printed or patterned at very high resolutions, impact of higher temperatures and flux, manufacturability, yields, required voltages and current, etc. With Samsung already enjoying a large lead in OLEDs, it now appears well positioned to build a similar lead in QD displays.
Meanwhile, now that QD Vision has sold off its IP, one has to wonder if this is the end of QD Vision with other assets such as manufacturing equipment, etc. potentially sold off as its investors look to limit their losses. Or, will they pivot into other applications where they may have a stronger IP position. We will have to wait and see.
Nanosys' QD Roadmap