As investors continue to push the stock price of Unipixel (NASDAQ:UNXL) higher and higher, Unipixel's management has finally pulled the trigger on a secondary offering, after months of repeatedly reassuring investors that there will be no dilution. Much has been said about the despicable track record of management credibility. The most recent share offering appears to be simply another data point to be added to a long list of broken words promised by the management to investors. To avoid overloading investors with the same information, this article will focus on the other broken side of the Company -- the broken lines.
Below is a picture shown in the Company's most recent investor presentation.
The above picture from Unipixel's own presentation show the lines that make up the metal grid are broken, making this grid not usable as a touch sensor. The fact that Unipixel cannot even find a good image of their grid to present says a great deal about the state of their production capabilities. Visitors to Unipixel's facility have looked at their product under a microscope only to find that these line breaks are everywhere. Unipixel emphatically denies these line breaks are a problem, but followup calls to sensor manufacturers in Asia verify that such breaks make this film useless for a touch sensor. Line breaks will either cause some areas to be electrically disconnected, or cause the conductivity of the grid to vary to such a extent that accurate touch detection is impossible. Both cases lead to a touch module that can't sense touch.
Why can't they make lines without breaks? Even for good pictures? Yield losses (as high as 20%) during wet patterning processes is a major driver for adoption of laser patterning for ITO, and that is for extremely refined, decades old processes for patterning ITO on PET at a line width of 100 - 200 um, more than 10 times larger than the sub-10 um line widths that Unipixel is targeting. NO ONE has EVER reported sub-10 um patterning using flexographic printing that Unipixel is using. For an overview of different printing methods, see this presentation from Xerox Parc. Flexographic printing is basically using a rubber roll to print ink on a substrate.
The following table from the presentation presents a minimum feature size of flexographic printing of 80 um, again more than 10 times larger than the line-width that Unipixel aims to achieve on an extremely reliable basis.
Independent university researchers have published very similar results. In the graph below they relate the "nominal grid track width", which is the line on the stamp, or "Plate Cylinder" in the figure below, to the actual printed line width.
Why does a 20 um stamp line turn into an 80 um printed line? Because the liquid ink spreads out across the substrate, just like the ink from a ballpoint pen. The resolution from this printing process is fundamentally limited by how much ink is transferred to the substrate, and how much is spreads out ("wets"). This line width limitation has simply not been solved for flexographic printing, especially in the sub-10 um range. If it had, why would anyone use photolithography at much larger line sizes? Unipixel may have a stamp with a nominal line width of 5 um, but it is not possible to print sub-10 um lines roll-to-roll (or 3M would already be doing it).
So what about the Unipixels pictures of sub-10 um lines? Three things:
1) We don't know how those were printed.
2) We don't know if the scale is correct.
3) We don't care because either way, they are broken.
What if they can't print such small lines? They can't compete and achieve the same performance as ITO, and their film is worthless.
In conclusion, Unipixel is a complete make-believe story that is literally made up to be believed. When gullible investors throw common economic sense out of the window and lack competency to comprehend the technological complexity, complete loss is the only outcome.
Disclosure: I am short UNXL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.