Uni-Pixel (UNXL) is a pre-revenue micro-cap company ($170 million market cap) that has built a better touch screen and is currently in the process of ramping up capacity as they sign deals. For more background information look here. In this article I want to focus on the Carclo (CCEGF.PK) lawsuit and some differences between Carclo's technology and Uni-Pixel's touch screen: UniBoss.
Some of what I wrote in my above article is a little inaccurate, so I want to give a full update. Fellow author Ivan Jimenez wrote a great background article here. Essentially, CIT (a division of Carclo) worked with Uni-Pixel in 1996. In 2010, Uni-Pixel sold the related tech to Rambus. Since then, the confidentiality agreement has completely expired. This is the most important point and it is why Uni-Pixel is so confident in its case - The confidentiality agreement has expired and therefore Uni-Pixel has zero risk in producing and selling any and all technology related to its work with Carclo.
So why is Carclo even suing Uni-Pixel if they know they have no chance? Well, Carclo is asking Uni-Pixel to reveal how they develop their product and what sort of partner/customer interaction they have had. Does this sound like useful information to know about your #1 competitor? Yes. I fully expect that there will be no damage done to Uni-Pixel as they shut down the lawsuit before it begins and receive full compensation for lawyers fees.
So why is Carclo worried? Is their product inferior? Lets discuss:
Carclo/Atmel's (ATML) xSense vs. Uni-Pixel's UniBoss:
This took me quite a while to research as I don't have an engineering degree. Therefore, if any expert has more comments to add, please do in the comments section below.
The advantages of Copper nanowire metal-mesh vs. ITO based touch layers have been discussed frequently and everybody should, at this point, fully believe in the cost and technological advantages of copper nanowire. The only two companies really production ready in this field are Uni-Pixel and Carclo, who develops for Atmel. Carclo's product was ready "first" and they have already begun producing it for a few companies, including a very recent win with ASUS.
Similarities: Both processes are fully additive, which saves time and money. They can both print on both sides of the film which saves space as you only need one layer instead of two. They both have fantastic advantages in cost and effectiveness compared to ITO, although a side-by-side comparison has not been implemented. I have not yet been able to discover the pricing for xSense, but I have heard that UniBoss is cheaper.
Differences: The big difference is in the manufacturing process of the two products. I am going to greatly borrow from Ivan Jimenez's article for this section, so please read his article too. Carclo uses a photoimageable catalytic film which relies on UV photolithography to transfer the catalytic ink. Uni-Pixel uses an embossing process which requires a brand new 'Master' template to be created for every new product.
So which method is better? It may seem as though creating a brand new 'Master' template would be time consuming and expensive for Uni-Pixel, and it was initially as the process could take weeks or even months. However, through their patented techniques, (3 awarded, 80+ filed), they have actually gotten this process down to less than one day. That is it. If a customer gives them specs for a new tablet they are designing, one day later Uni-Pixel can begin producing. I don't think any customer will be complaining about this short timeframe.
Ok, so now both products are equally good? No. While both products are additive, the photolithography used by Carclo is not a perfect science and has a significantly lower yield than Uni-Pixel's embossing process. It is also more susceptible to minor errors which can affect performance. Some people would say that photolithography isn't truly additive due to this issue.
This explains why Carclo is so interested in Uni-Pixel's processes. They realize that UniBoss is in fact superior (or, at the very least, cheaper for the same quality). It also explains what is happening right now at CES.
CES 2013 - Where all the cool companies are:
Many people have been wondering if Uni-Pixel will be presenting at CES. All the cool companies go and it is a great opportunity for young companies with new technology. To not go would be equivalent to admit that your technology is lame. So, you go to the CES website, search through the exhibitors, go to 'U', scroll down, and.... no Uni-Pixel. What is going on - why aren't they presenting?
The reason is as follows: CES is geared towards presenting technology to everyday consumers like you or me. But we don't really care about a better touch screen because it isn't flashy. And, even if we love it, it doesn't help the company market itself. CES is also very expensive with booths costing in the millions of dollars, which is a lot for a small company like Uni-Pixel. So instead Uni-Pixel issued this email.
Why pay millions of dollars to CES when you can book a suite at the neighboring hotel and schedule meetings with current/potential partners and customers? I have spoken with several analysts who will be attending CES who have all stated that it has been very difficult to book time with Uni-Pixel this week as the CEO is constantly in meetings with a multitude of partners and customers. They all want to meet with Uni-Pixel, they all want to use UniBoss. They all see its potential, and they want it.
But it gets even better. Atmel is mostly a touch controller company, not a touch layer company (hence their partnership with Carclo). Therefore, they are a competitor to all of the other touch controller companies out there. Given the vast benefits of copper nanowires, all of these companies realize that either UniBoss or Carclo will be HUGE (probably both, but one could be bigger than the other). So, if you're TI (TXN), or N-Trig, or one of the other touch controller companies, do you want to see UniBoss become huge using your products and others, or do you want to see Carclo become huge using only Atmel? Obviously they would prefer to get a piece of the pie and are therefore all pushing for UniBoss and helping them in their marketing efforts.
This is hugely important and can't be emphasized enough. One of the major difficulties that micro-cap companies have is being heard by the 'big boys' - the companies that drive the market. But now you have a bunch of the medium-to-large companies behind them, supporting them, and making them successful. This is why Uni-Pixel will have huge revenue ramp up in 2013 and beyond. It won't take long before this $170 million company is a multi-billion dollar company.
Disclosure: I am long UNXL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.