Early in 2009, panel manufacturer AUO acquired a significant stake in the electrophoretic-display (EPD) maker SiPix Imaging. AUO saw the potential in eReaders and, more broadly, was also interested in expanding its display technology portfolio.

Ken Werner
Senior Analyst and Editor

Other panel makers, such as LGD and Samsung, decided to use E Ink’s Vizplex front plane for their EPD development, but AUO decided to buy and apply the only other (apparently) well-developed EPD technology. And AUO’s plans were certainly optimistic. Last August, Dan Nystedt of IDG News reported, "By October [2009], AUO and SiPix engineers hope to increase production on that factory to 30,000 sheets of mother glass per month, for output of up to 300,000 6-inch e-reader screens. …In the second half of next year, SiPix’s total output should reach 300,000 sheets of mother glass per month, equivalent to 3-million 6-inch e-reader screens, the AUO representative said."

But the ramp-up did not go as planned, with (somewhat vague) reports of instabilities relating to the tiny, colored charged particles that are key to an EPD’s successful operation. Qisda, an AUO sister company that was developing EBRs using the SiPix EPDs, indicated it was having problems with the EPD’s materials and manufacturing processes. In April 2010, SiPix Imaging chairman Liu Chun-ting "resigned," later to be replaced by the energetic AUO stalwart C.T. Liu, who is also CEO.

Now, SiPix has overcome its production problems and expects yield rates to reach 80 to 85% in the August-September period, according to a Qisda spokesperson. Monthly capacity is expected to reach 200,000 units in the fourth quarter of 2010, and 400,000 in Q1′11. In a dramatic reduction from AUO’s original estimates, SiPix plans to ship 900,000 EPDs in 2010, according to Qisda.

According to Susie Pan and Yen-Shyang Hwang of Digitimes, Qisda said the reflectivity of the SiPix EPD is only about 30% with a procap touch panel installed. That compares with about 40% for E Ink, and that’s a substantial difference. Wistron began shipping Si-Pix (and Android) equipped EBRs early this month, industry sources told Pan and Hwang, and did so because of low cost, as well as the touch screen. The low cost of the SiPix EPD is also tempting Acer, the sources said.

Having the low-cost EBR spread is probably not what AUO had in mind when it took control of SiPix, but Qisda does expect to ship 400,000 EBR units in 2010, including shipments to the China-based Shanghai Century Publishing Group, Asustek, and BenQ. Qisda and Wistron are hoping for a 20 to 30% share of the mainland’s EBR market in 2010, with market-leading Hanvon expecting 70%. Hanvon — and many other EBR makers — uses E Ink displays, and Digitimes Research estimates E Ink will have more than 70% of the Chinese market in 2010.

That Chinese market will be smaller than originally projected — 900,000 units instead of 1.5 million — largely because subsidized sales through China Mobile Communications’ have been hugely disappointing. The wireless provider planned to buy one million EBRs for subsidized sale, but actually bought only 30,000 to 40,000 units in 1H’10, Digitimes Research said.

In the display business, nothing is easy.