Why isn’t the UK the centre of the organic electronics industry?

In February 1989, Jeremy Burroughes, at that time a postdoc in the research group of Richard Friend and Donal Bradley at Cambridge, noticed that a diode structure he’d made from the semiconducting polymer PPV glowed when a current was passed through it. This wasn’t the first time that interesting optoelectronic properties had been observed in an organic semiconductor, but it’s fair to say that it was the resulting Nature paper, which has now been cited more than 8000 times, that really launched the field of organic electronics. The company that they founded to exploit this discovery, Cambridge Display Technology, was floated on the NASDAQ in 2004 at a valuation of $230 million. Now organic electronics is becoming mainstream; a popular mobile phone, the Samsung Galaxy S, has an organic light emitting diode screen, and further mass market products are expected in the next few years. But these products will be made in factories in Japan, Korea and Taiwan; Cambridge Display Technology is now a wholly owned subsidiary of the Japanese chemical company Sumitomo. How is it that despite an apparently insurmountable academic lead in the field, and a successful history of University spin-outs, that the UK is likely to end up at best a peripheral player in this new industry?

As recently as 2009, a UK government strategy document (Plastic Electronics: a UK strategy for Success (PDF)) felt able to make the claim that “currently the UK is among the world’s leading players in plastic electronics”. This was arguably true in the academic world, with large, world-leading groups in Cambridge and Imperial and significant activity elsewhere. But by 2009 there were already signs of trouble on the commercial side of plastic electronics in the UK. The original Cambridge spin-out, Cambridge Display Technology, had been taken over by Japan’s Sumitomo in 2007, and while research activity continues in the UK, device development is increasingly going to happen in Japan. The second spin-out from Richard Friend’s group, Plastic Logic, established its first production facility, not in the UK, but near Dresden, in 2006. The focus of Plastic Logic has been on low-cost, printed plastic electronic logic circuits for use as the backplanes of e-ink readers, but its progress since then has been chequered. Having established a substantial Californian presence, it aimed to launch its own e-reader, but this never reached market. It subsequently received a large injection of cash from the Russian state organisation Rusnano, with the intention of establishing production facilities near Moscow. An article in the FT (£) earlier this year reported that it would close its USA operation, abandon plans to manufacture its own e-readers and focus on selling its technology to other companies. Another spin-out, this time from Edinburgh University, Microemissive Displays, went into receivership in 2008. The Manchester based speciality chemicals company Avecia had an R&D activity in plastic electronics, associated with its JV with Hoechst, Covion Organic Semiconductors, but both the materials business and the R&D activity were sold to the German chemical company Merck in 2005. Difficulties in the sector haven’t been confined to the UK – the leading company attempting to commercialise solar cells made from semiconducting polymers was the US company Konarka, which filed for bankruptcy this June, having burned through $170 million (see this Boston Globe article: Why did solar cell company Konarka fail?).

So has anyone made a success of organic electronics? Samsung is one of a number of companies in the far east to bring organic light emitting diode displays to a mass market, as illustrated by the Samsung Galaxy S. But this is a slightly different technology to the plastic electronics that the UK companies were concentrating on. Both depend on organic molecules as the semiconductors, but Samsung and its ilk uses small molecules – quite possibly supplied by Merck – rather than polymers. Similarly one of the leaders in the field of organic solar cells – Heliatek – is at pilot plant stage for roll-to-roll production of small molecule organic photovoltaics at its base in Dresden, in a growing organic electronics cluster in Saxony. The small molecule and polymer variants of organic electronics are based on very similar physics. The advantage of polymers over small molecules is that the latter need to be applied by more expensive, vacuum based techniques than the polymers, which can be applied by printing or coating from solution. But the necessary very high degree of purity in the materials is easier to achieve with small molecules than with polymers. What we are now beginning to see is the prospect of small molecule organic electronics being produced by wet coating techniques, combining the advantages of both methods. In Japan, for example, a JV between Mitsubishi Chemicals and Pioneer is building a factory to produce organic light emitting diode modules for lighting. They will be using small molecule organic light emitting layers, but manufacturing them using a wet coating process (press release here (PDF)), and they aim to have mass production starting in 2014.

What lessons can we learn from this story? Firstly, introducing new technologies is never easy, because the incumbent technologies they aim to replace themselves don’t stand still. When Cambridge Display Technology was founded in 1992, the vision was to produce cheap, thin, large area TV screens. At that time, liquid crystal displays were small and expensive; the first generation LCD factories of the time made displays on glass panels with dimensions 30 x 40 cm. What’s driven the LCD industry since then has been a drive to build new factories every year or two to use bigger and bigger glass panels; we’re now on generation 10, making LCDs on picture window scales – 2.9 x 3.1 m. It’s this that has driven both the availability of very large screens and the very low prices of more standard sizes, undercutting two out of three potential advantages of screens based on organic LEDs. Plastic Logic’s plan to bring an e-reader to market based on a screen with a polymer electronic backplane was sunk by more specific factors – it couldn’t match the functionality of Apple’s iPad, nor did it have the connection to a large library of content that made Amazon’s Kindle a success. A technical advance in one aspect of the device didn’t make it competitive with the integrated user experience offered by its rivals. The story of organic photovoltaics so far is one of the difficulties of a currently less efficient technology attempting to compete on cost when the cost of the more efficient technology – silicon solar cells – has plummeted in conditions of considerable market instability.

Secondly, small, undercapitalised companies without any sustaining income streams from established business, like University spinouts, always have a strategic dilemma – should they get some early income streams from licensing their technologies to bigger, more established companies, or try and find the much larger sums of patient capital needed to establish production facilities, to allow them to capture more of the value of their innovations if they are successful in the market? An oscillation between the poles of this dilemma has characterised the changing strategies both of Cambridge Display Technology and Plastic Logic at various times in their history, as they wrestled with the need to generate returns while their technologies matured more slowly than they had first envisaged. They’ve not always been immune to the fashionable view that manufacturing is simply a function that can outsourced to the lowest cost location. But manufacturing does matter, because (as argued forcefully, for example, in this article by Pisano and Shih (PDF)) process and product innovation are closely intertwined.

This leads us to the third lesson, which concerns the importance of clustering. It’s well known that high technology manufacturing tends to take place in geographical clusters, where manufacturers, materials suppliers, manufacturers of plant and machinery and support one another as they mutually drive manufacturing innovation. The question for a new technology is how to nucleate such a cluster, and I think one important lesson from organic electronics is that sometimes an existing technology cluster can adapt to a new technology if new and existing technologies have enough in common. The things you need to make LCDs – large area clean rooms, clean handling facilities for big sheets of glass, the precise polymer coating technologies that are needed to make colour filters, the technologies to make transparent electrodes, are transferrable to organic electronics, at least in their earliest implementations. It’s possible that in the long run manufacturing technologies for organic electronics may look rather different, with widespread use of roll-to-roll printing methods, but before that happens it is likely that the clusters that have developed around existing display technologies will have achieved too much of an advantage in organic electronics to be easily displaced.

There have been many positive outcomes from the UK’s commercial activity in organic electronics – as research organisations, they’ve moved the technology closer to implementation, as businesses they’ve generated employment and economic benefit, and in financial terms they’ve brought useful returns to the universities and academics involved, and (sometimes) their investors. What they have not done is contributed to a wider transformation of the economy, either by leading to major new investments in manufacturing in the UK, or by growing to the scale of a new Vodafone or a new Google.

Now the UK government is looking to new areas of science-based innovation, like graphene and synthetic biology, to help extract the UK economy from its current problems. The story of plastic electronics should remind us that science is not the same as innovation, that innovation in the material world (as opposed to the digital domain) needs patient, long term, capital, and that it matters where manufacturing takes place. Above all, internationally leading science doesn’t automatically translate into economy transforming innovation.

3 Responses to “Why isn’t the UK the centre of the organic electronics industry?”

  1. Wow, that’s a great article. I’ve been thinking along these lines about the graphene industry, and I think you couldn’t be more right. With graphene, it seems that US-based companies have caught on to the fact that production, innovation, and sales go best together. The same goes for South Korea. In the UK, we’re still not seeing serious graphene companies, and it will be interesting to see if the organic electronics story repeats itself.

  2. Andy Extance says:

    Great analysis! Glad you made the point about clustering – Samsung’s LCD lines were definitely important in their ability to take the lead in OLED. I’d suggest that there’s perhaps a slight difference between OLEDs and “plastic electronics” for non-display applications though. OLEDs can deliver technological improvements over LCD, while plastic electronics are at a performance disadvantage relative to their main rival, silicon. And now, people like UIUC’s John Rogers and his spinouts are producing flexible electronics from slivers of inorganic semiconductors. So there, part of the story looks to me like a technology whose promise greater than its ultimate benefits. But I may be wrong.

  3. Richard Jones says:

    Marko, I worry that the UK situation with regard to graphene is actually less favourable than with plastic electronics, as at least with the latter UK academia and companies established a reasonably strong IP position, which is not the case for graphene, as this report from the Patent Office shows.

    Andy’s point is a fair one, which emphasises that ultimately it isn’t the technology that matters but the functionality it delivers. I was interested to see, during a visit I made to the Mitsubishi Chemical Lab in Yokohama a couple of weeks ago, that their organic photovoltaics business, which is aiming to go into production also around 2014, has also developed a product range of amorphous silicon on flexible substrates to help build the market for flexible PVs.