The two leading emerging touch sensor technologies are UniPixel's (NASDAQ:UNXL) UniBoss and Atmel's (NASDAQ:ATML) XSense. Both UniBoss and XSense are metal mesh based touch sensors, and they are very similar. In this article you will find the latest developments on these two new technologies and a quick comparison.
On March 19, 2013, UniPixel's CEO Reed Killion gave presentation at ROTH Capital Partners 25th Annual Growth Stock Conference, where he illustrated the evolution of the UniBoss touch sensor:
In 2011 we where printing 20 microns lines. In 2012 got down to 12 microns lines and in 2013… we will be going to be shipping 6 microns plus or minus one line to our current PC manufacturing partner.
So it was not until recently that UniPixel achieved printed circuit lines small enough that can be used for a display touch sensor. Printing circuits on film is nothing new; there are many manufacturers out there that can print circuits above 10 microns in size. What is new is the ability to print printed circuit lines so small that they become virtually invisible.
UniBoss Production Road Map
UniPixel claims that they will print 62 thousand units a month by the end of April, 200 thousand units by end June, 700 thousand units by the end September and 1.3 million units by the end of December.
On a more recent presentation at Williams Financial Group, UniPixel stated that they are working on a second production facility designed to hold 3 printing lines and 15 plating lines. Each printing line will have the capacity to print 1 million units a month and each 90 feet long plating line can process 100 thousand units a month. They also stated that 2 of those 3 printing lines are already on order.
This production ramp-up seems to be incredible, so incredible that it raises questions. Every single claim UniPixel has done has come from UniPixel and there has not been any confirmation by any secondary party. UniPixel claims to have achieved a multi-million dollar preferred capacity licensing agreement with a PC manufacturer and that it will post a $5 million profit this quarter from that deal. UniPixel has also claimed to have a new ecosystem partner is on the wraps. So the question is: "Can we believe UniPixel?"
Green River Assets certainly does but Adam Gefvert doesn't. The only thing I can say is that UniPixel's CEO Reed Killion demonstrated technical know how during the last presentation by talking about quality control issues and the need to install automated in-line visual inspection equipment and automated chemical controls. His technical insight gave him credibility in my book. Let's move to XSense.
On March 25th, Carclo PLC (OTCPK:CCEGF) the manufacturer of Atmel's XSense issued a press release announcing that it would at last receive a 10 million dollar payment from Atmel for achieving full-scale production of the XSense touch sensor. The 10 million dollar payment was triggered when the first production shipment of XSense was achieved on December but Atmel was holding the 10 million dollar payment because of a delay in the Asus tablet program. On the press release Carclo stated:
Production in the downstream manufacturing chain restarted after the Chinese New Year and the immediate customer requirements have been fulfilled. Whilst shipments did not reach the intended levels, this tablet program represents an important milestone in the adoption of FLT (Fine Line Technology) and the experience gained will be invaluable in the rollout of FLT into future programs.
The press release also gave an update on the XSense production ramp-up and it announced that a third XSense manufacturing facility was going to be ready next May. The first XSense manufacturing facility was the pilot line at Carclo's Conductive Inkjet Technologies facilities in Cambridge. The second manufacturing facility was set up at the Atmel facilities in Colorado Springs. And now the third manufacturing facility will be operational in May in Cambridge. Carclo's roadmap is to have the capacity to print one billion 3.1 inch sensors this year.
During the last earnings call Atmel said that XSense was selected by a second large OEM for multiple tablets and ultrabooks.
XSense vs. UniBoss
The biggest issue that metal mesh touch sensors have is transparency. The metal mesh circuit lines are not transparent; they are visible and they can glare. Metal mesh touch sensor are actually an old technology. Maybe you have seen an old touch monochrome display were you could see small glare lines running across the display. This is why this technology is no longer used. But now UniPixel and Carclo have achieved printed circuit lines small enough so they won't glare. In this case, XSense with printed circuit lines at sub 5 microns compared to UniBoss at 6 microns (plus or minus one) is the clear transparency winner. Atmel, the last earnings call, mentioned that XSense has achieved transparency equal to ITO because of a new grid design. And that makes me think that UniBoss with wider circuit lines has less transparency than ITO.
Another point of differentiation between XSense and UniBoss is the manufacturing process. XSense uses photolithography to apply the catalytic ink, while UniBoss uses an embossing process where the printed circuit is pressed against the film and the catalytic ink is then applied to the embossed film. UniBoss uses a 100 microns thick film for embossing, while XSense uses a 50 microns thick film making UniBoss 50 microns thicker than XSense.
Not only is UniBoss thicker than XSense, but it requires special handling because the embossed circuit on the film is delicate. Remember these are embossed micro structures only 6 microns in size, and any bump could deform them. This is why UniPixel does not sell the sensor by itself. UniPixel sells the entire sensor module laminated with the protective film, whereas XSense is sold un-laminated. This is an advantage XSense has over UniBoss, because it gives the OEM the option to do the lamination in house, whereas UniBoss forces the OEM to buy a laminated sensor only to have it re-laminated over the display.
The only advantage that UniBoss claims over XSense is price and price alone. UniPixel's embossing process is not only cheaper than Carclo's photolithography, but UniPixel claims that their catalytic ink formula is cheaper too. Carclo's CEO has claimed that XSense is about half the price of ITO, but Atmel is charging premium price for XSense, because they know that XSense is a superior product compared to ITO, so they see no need to undercut in a market where demand exceeds supply.
Atmel vs. UniPixel
One thing I like about UniPixel is its management-aggressive posture. UniPixel's aggressive expansion plans are something marvelous to behold. Atmel has some clear advantages over UniPixel, including a head start on the touch sensor market, but UniPixel aims to be a "world class high volume producer," whereas Atmel seems to be happy by just being a player. There is no reason why Atmel could not be the number one producer of touch sensors in the world, but they are just not aiming for that. Atmel's management team could learn a thing or two from UniPixel.
Microsoft (NASDAQ:MSFT) has dictated that all PCs will be touch enabled. The PC market is in a slump because they are selling PCs that are not touch enabled for an OS that is. Large touch sensors for PCs are a rare commodity that all PC makers are trying to secure. PC makers are desperate trying to secure an economical yield of touch sensors and the supply is just not there. There has been speculation about how big the touch sensor market is, and I will tell you it is bigger than what anyone suspects, because supply has not been able to catch up with the growing demand. Even if the price of touch sensors falls, lower prices will help drive the adaptation of touch on larger displays and even smart TVs. The demand for larger touch screens is there and is waiting for an economical technology like XSense or UniBoss to get it fulfilled. Imagine your child playing and interacting with TV programming by just touch or a large TV that doubles as a gaming table. This can only be accomplished by the adaptation of metal mesh touch sensors.
Because of this, I do believe that UniPixel does have a preferred license agreement from a PC manufacturer. The PC manufacturer must have been looking for a way to secure a yield at a good price, and UniBoss fits the bill.
Metal mesh touch sensors are the replacement for ITO; they are not only cheaper, but also provide better performance. This is the revolutionary product that will put the nails on the coffin of ITO. The only danger I see for Atmel and UniPixel could be a new technology entering the market, but currently they are it. I'm bullish on Atmel, because they have a better sensor, but I'm also bullish on UniPixel, because they have an aggressive management team that can get things done. Take your pick.
Disclosure: I am long ATML. 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.
Disclaimer: I’m not an expert on touch sensors; my background is in aviation maintenance and my opinions are my own.