CEO Conversations XXXXI: Leading the Micro LED Revolution. Insights from Alex Lee, Founder of QIC, and Dr. Charles Li, Chairman & CEO of PlayNitride Inc. (6854 TT)
(Photo: TaiwanPlus)
This episode of CEO Conversations is edited and republished with permission from TaiwanPlus Point.
Taiwan and South Korea dominated the global panel industry for the last 20 years until Chinese companies entered the business with huge government subsidies and a decisive market presence until recent changes in the display industry. Micro LED is at the forefront of the display industry, bringing Taiwan back to the core of the business once again. With technology leadership, PlayNitride is a leading manufacturer driving a decade-long paradigm shift in the global display industry. On Aug. 18th, 2022, PlayNitride went public as the first-ever Taiwan Innovation Board (TIB)-listed company and as the world’s first listed Micro LED company.
In this episode of CEO Conversations, we will provide Alex Lee, the CEO of QIC, and Dr. Charles Li’s, Founder and Chairman of PlayNitride, views on the Micro LED, the ultimate display technology, through interviews and ask Dr. Charles Li to share PlayNitride's entrepreneurship story and vision. The following is our interview content:
Alex: Hi Charles! I know you’ve been busy traveling everywhere in recent months, especially since you just finished exhibiting at SID in LA, USA. SID is the largest display technology exhibition. You must have brought something new back from this exhibition.
Charles: Let me take you back to 2017. At that time, I was alone when I participated in SID Display Week, which is the largest display exhibition in the world. Nobody knew exactly what Micro LED was or, I should say, nobody had even heard about it at that time. After a few years of hard work, this year is really different. First of all, we actually won three awards. In 2018 we won a new technology award and this year everyone understands that Micro LED is happening right now, so we received very positive feedback from customers. To be honest, this has become the hottest topic today in the LED industry and all conventional major LCD players attended with Micro LED technology in their booths. I would say this year marks the beginning of this industry.
Alex: Great! We’ll come back to more detail about the key applications you discovered at this particular show. Congratulations again on another great year for winning awards at SID! Nevertheless, other than your technological developments, you also became the first technology company to list on TIB (Taiwan Innovation Board) last year. Can you tell us why you became the first company of TIB?
Charles: That’s a very good question. First, why Taiwan? We are a Cayman Islands company, but we are currently running 100 percent of our operations in Taiwan. Most of our employees are Taiwanese engineers and good employees in the company. For us, it was straightforward to think about doing our IPO in Taiwan. We believe it’s an honor and also a responsibility. As you mentioned, we are the first company on the Taiwan Innovation Board. This is a little different from what we initially thought; we hoped to be a normal company rather than a very special number-one company. But for Taiwan’s capital market, they need something new, especially when China and the US have already had markets for startups and new tech companies. We were approached by officials and we believe that this is a great opportunity for us and also for Taiwan’s new economy and new business companies. We hope to become one of the leaders in this field, so that’s how we made this decision.
Alex: For those who aren’t too familiar with the Taiwan Innovation Board, I can probably share some interesting data. In August 2022, there was an evaluation in this particular space, PlayNitirde was traded at roughly 40 times price-to-sales in 2022. I bet it depends on how analysts and portfolio managers forecast for this year. You’re now trading at 10 to 15 times the price-to-sales this year, probably the highest among all the disruptive technology companies in the world. I bet you also offer a lot of consultations for other new founders in Taiwan. What’s your recommendation or do you give positive feedback on listing on TIB?
Charles: I’ve talked to many CEOs of new economy companies in Taiwan and they’re all smart people doing something much more brilliant than us. What I actually tell them is that for a company like ours, we’re doing something very different so we need time for people to understand our business model. Sometimes just telling people that we’re doing innovative things is very important so they don’t expect steady growth of our revenues or earnings. People understand that this is a bumpy journey and in this case, I think TIB becomes very meaningful because investors have understood that there will be some bumps ahead of us. This actually reduces my pressure as a CEO of the company because I don’t need to explain too much about our volatile revenue. This becomes very important for us to manage the company.
Alex: Speaking of the journey of technology development, can you introduce a little bit about what made your transition from academia to the display industry?
Charles: I was a professor at the Department of Electrical Engineering at National Taiwan University, which I believe is the best department and the best university in Taiwan according to their entrance exam scores. We have a lot of smart and brilliant students in the department. As a professor, I had just received my Ph.D. from the United States and then came back to school. It was very hard for me to educate them because all I could do was show them what was in the book. To be honest, they could do that themselves, so I felt like I needed more experiences or more views. This was one of my motivations for returning to the industry instead of spending my whole life at universities. Of course, it turned out to be much different than what I had initially thought. After leaving NTU, I joined a company, quit, and then started up a company. I learned a lot, not only technically but also in fundraising and legal issues. There were a lot of things like the stock price or valuation of the company are what I was never thought about before. I believe that if I go back to school, I can show them what’s really happening in the world.
Alex: Now, for sure, you are the master of everything in the capital market. Let's talk about your technology. Can you try to use simple terms to explain what Micro LED is and what mass transfer is, as it is a major technology associated with its development?
Charles: Actually, when I got married to my wife, many of her colleagues asked what LED was like 20 years ago. People didn't understand what LED was at that time. But today, if you talk about LED, everyone understands it. Regarding Micro LED, it is just a very small size of LEDs. Normally, you can see LEDs if you take apart your lamp, but Micro LEDs are super small, so you probably can’t see them with naked eyes. Their size is as big as a pixel in a display, so they are normally in micron sizes (for example, 20 microns x 10 microns). We use these super small LEDs to make a display by arranging them carefully in a glass called a backplane. Then we can light them up as much as we want, and this becomes a Micro LED display. It's a super easy thing compared to other display technologies.
Alex: Can you explain the main differences between two common display technologies we use every day, LCD panels, and OLED, in simple terms?
Charles: Currently, there are two major conventional techniques: LCD and OLED. LCD is very different from Micro LED in the way it is controlled. LCD uses liquid crystals as shutters to control the passage of light. When you open the shutter, light comes out; when you close the shutter, light doesn't go through. Basically, this technology is very power-consuming. Normally, only five percent or even one percent of the power is used for the light you see on LCDs. It's very inefficient. Micro LED, on the other hand, is very different from this. OLED, on the other hand, is a self-emissive technology, similar to what we are working on with Micro LED. OLED materials emit light by themselves, so there is no need for shutters. However, the "O" in OLED stands for organic, which means the materials are not very strong or robust and can be damaged by air, humidity and oxygen. Generally speaking, OLED displays are not long-lasting technology. They typically need to be changed every few months or years, so we don't think it is a very sustainable technology. Micro LED, on the other hand, as you can see today, lighting systems based on LEDs last for 100,000 hours or even more. Efficiency, reliability and robustness are the competitive advantages of Micro LED.
Alex: I guess our audience also wants to know where the Micro LED technology can be applied in real life, in terms of products or applications. Can you give us an idea about that?
Charles: Okay. If I were to make a strong comment, I would say that Micro LED can do everything for displays, but of course, it's not going to happen tomorrow. We do see a trend in the market for large-size displays that conventional technologies like LCD or OLED find challenging, such as 100+ inches TVs. It's also very hard for LCD or OLED to make a very bright display for wearable devices like watches or even AR glasses, but Micro LED can do that. Moreover, we see the importance of Micro LED technology in the automotive industry. Conventional vehicles didn't have many displays, but today a lot of displays are installed in cars. They require super bright displays because cars sometimes drive under sunlight, and at the same time, they need very efficient displays for electric cars, which Micro LED can provide easily. Another application for Micro LED in automotives is transparent displays, offering high transparency. This provides a lot of design capabilities for the next generation of vehicles.
Alex: Is it fair to say that Micro LED can do anything, right? Considering the current addressable market size for LCD and particularly OLED, which is roughly a couple of hundred billion US dollars, would you agree that the potential size of Micro LED should be even bigger?
Charles: Sure. We believe that the display industry is actually growing and growing fast. As I mentioned, Micro LED can eventually replace LCDs and OLEDs, and it can also generate a lot of new possibilities. I do believe that Micro LED has a much bigger market size compared to what we have today for LCD and OLED.
Alex: Can you share further details about some new applications? You mentioned that many companies recognize Micro LED as a very important technology for displays, and more companies are adopting this new technology. Can you give us a couple of examples and let us know if they will happen within the next one or two years?
Charles: In the short term, we believe that we will see large-size displays, especially for TV applications. However, these won't be conventional TVs but rather premium TVs with sizes larger than 100 inches. These are for really high-end applications. We believe they will be available within a year. We also see a trend in wearable devices like watches, and we have had discussions with various consumer electronics companies working on that. At the same time, we have been in talks with many automotive makers and tier one companies, which supply electronics to car makers. They are working on integrating Micro LED technology into the next generation of vehicles. Generally speaking, this will take three to five years since designing and incorporating the technology into vehicles usually takes that long. However, they are currently in the design process, so we have strong confidence that it will be coming very soon.
Alex: Great! To ensure a smooth adoption of this technology by most of your customers, I believe cost reduction and yield rate improvement are two very important factors. Can you explain the methodology and how you expect the cost to be reduced rapidly as well as the improvement in the yield rate?
Charles: This is a critical question. As I mentioned, in 2017, nobody really heard about Micro LED technology. Year after year, people started asking, "Is this really possible? Can you make a demo?" After a few years, the final hurdle for people to fully embrace it is the cost of Micro LED displays. But I want to make a strong point that every new technology starts with high costs. LCDs, for example, were 100 or even 500 times more expensive compared to what we have today. There is a process to reduce the cost every year, and we believe that Micro LED can do much faster. We also believe that Micro LED can be even cheaper than what we have today for LCD and OLED. One easy way to explain this is that Micro LED follows Moore's law, you see today in Taiwan or in the world people understand Moore's law that every 12 months or 18 months, for the same size of Silicon they can double the density of transistors, which means we reduce 50 percent of the cost every 12 months to 18 months, the same thing happened in Micro LEDs. Today we have, for example, a size 20x20um chip, we can reduce the size of the chip by 50 percent every year. To do this reduction of the size is not hard, but we have to keep the performance at the same time. Just like what we have done for the silicon foundry industry for the last 20 years. We do believe there's a chance we can reduce the size and keep the same performance every year, and if you do the math carefully, 50 percent every year means reducing 95 percent of the cost after five years. It's not the end of the story, we will reduce another 95 percent of the cost every five years. There's a huge chance that we will have a super cheap, high-performance display, and we believe we’ll see many more applications on that as well.
Alex: It's very interesting you brought up that kind of comparison between Moore's law versus the cost reduction in the Micro LED industry, if I can challenge that a little bit, it was prevailing for 60 years in Moore's Law getting close to the end according to some of the experts, but at the same time, the company like TSMC; at least in the first maybe 20, 25 years, they spend a lot of capital and resources trying to keep the leadership ahead of the rest of the competitors. Again, that requires a lot of investment. Would that be the same logic for the industry where you require a lot of capital investments?
Charles: Well, I do believe this is a manufacturing technology, so we're talking about display. We believe that there will be a lot of CAPEX investment for future Micro LED displays, but if your question is regarding PlayNitride, we hope that we don't need to do that by ourselves. We are in Taiwan, and we have a lot of experienced manufacturing companies that have done great jobs for the last few years, they know how to control and do real manufacturing. We believe they are very good partners for PlayNitride and we should be able to collaborate with these experienced manufacturing company together to do the whole thing, and make it happen.
Alex: Can we put it that your company, PlayNitride, trying to adopt a very different kind of approach, can I call it an asset light business model?
Charles: Yes.
Alex: Can you just further elaborate what is the business model since you're going to go with a quite different manufacturing strategy, what is your end game?
Charles: I like your term “asset light”. So, if you look at the semiconductor industry, design houses have demonstrated how this business model works. They keep exploring different markets, using different kinds of chip designs and have common huge manufacturing partners like TSMC and UMC. We are working on these possibilities right now. We believe that more and more designs are needed for Micro LED displays, and we can explore different kinds of applications and customers. In this case, we don't need to focus on just doing manufacturing, we need to have some companies that can do a lot of investment and control manufacturing processes. These companies know how to protect customers’ secrets and run fabs in more cost-effective ways. So, we believe we can find partners in Taiwan and be more design-oriented and customer-oriented. This is the goal of PlayNitride in this industry.
Alex: That may also reflect in the board structure and your many other particular strategic investors, because any investor couldn't help but look at the very interesting combination of your board members. You have AUO, you have Samsung, which are two very strong display technology companies in the world, proofing you are a very smart and sophisticated fundraiser, you can gather two very distinct kinds of company. What's your strategy and how can you make it?
Charles: This is also a very nice question, but this came back to the company’s origin when we started. In the beginning, I just thought we should do something new, and that's it. But then I figured it's very hard for a new technology; or I should say, a new industry. The ecosystem is very important; we cannot just build up the whole ecosystem by ourselves. In this case, I think we should find upper-stream partners, downstream partners, or even collaborators. Samsung is no doubt one of the biggest consumer electronics players, AUO is one of the best LCD panel manufacturers in Taiwan and we also have Ennostar and EPISTAR as well. We try to talk to them and say this is something we have to work together and build up the whole industry. Especially in Taiwan, there is a huge demand for OLED, but we don't have OLED industries in Taiwan. So, we understand that there will be huge competition for LCDs and OLEDs. If the LCD companies cannot have next-generation display technology, they would be in trouble. So, we talked to all of them, and they believe that this is a combination and I do believe so as well. In this case, they understand that they don't want anyone to control the whole thing. It's just like ASML they have to talk to Samsung, TSMC, and Intel at the same time. So, this is how we build up this very balanced board of directors in our board.
Alex: Again, I believe PlayNitride for sure is a front-runner in the Micro LED industry, but you are not the only one, in the competition. Can you talk about the landscape on a global basis, what kind of competition and the potential outcomes in this particular space.
Charles: When we started the company there are actually a few startup companies working on Micro LED at the same time. But luckily, we have the fastest growth compared to others. The reason why we are much more matured right now is that we have real customers, so we build up our fab based on customers’ requests. Our customers have their own quality control systems, so we have to pass all of them. Right now, PlayNitirde is a real production company. I mean, of course, we mentioned that we don't want to build up huge production capacity, but we have to build up the foundation and we have successfully built up the production capacity. We still see a few other Micro LED players today, and we treat them as partners. They are working on their own technologies and markets. So, to be honest, we try to work with them all together, the competition for me or for PlayNitride is actually LCDs and OLEDs. So, we are facing the fast growth of OLED as well. For the last few years, OLED is growing really fast, and we understand the resources for the display industry are limited. If OLED grows much faster than Micro LED, the growth of Micro LED will be slower. That’s the reason why we are working with all these Micro LED players together to promote this technology so people can invest more in Micro LED. This is what we see as of the landscape.
Alex: If we would purely look into Micro LED technology itself, just regardless of the dynamic between OLED and Micro LED, what would you consider your closest competitor in the world. We also know a Chinese company that has done a lot of investment in this particular space. You always hear one kind of argument: “Chinese already done that”. What’s the chance for a new company like PlayNitride to make a niche in that particular space?
Charles: For Micro LED, I think this is an ecosystem competition, not the company-to-company competition. As I mentioned, we were lucky that we work with very good companies in the world like Samsung, AUO and EPISTAR. We do believe that this group is very much ready for competition from China. And if you really have to ask me for a few company names, we do see Apple working on this and we do see Chinese companies working on this. But today, we still believe that we are, including Samsung, AUO, PlayNitride, and EPISTAR, we are still the most advanced company groups in the world today that can do production. We can fulfill customers’ requests and the demand for that kind of cost, production size and capacity today. We still see us as world number one in this moment.
Alex: Just like the semiconductor industry in the world, the US launched the Chip Act and it organized all different kinds of groups working against or confronting Chinese companies. On top of that, there's a geopolitical concern in Micro LED or in the display industry. Do you sense this similar kind of alliance being formed? And, particularly for Micro LED, how strategical will Micro LED be considered in developed countries like the US and Japan?
Charles: Generally speaking, I believe that 90 percent or even more of the display industry is in Asia, but recently we understand that there's a confrontation between the US and China. And we do see that for the last few years, the COVID-19 supply chain has caused people to demand or request more localized manufacturing. In this case, we see a lot of chances for PlayNitride. However, these chances are not in the conventional display industries like huge display systems (Gen 8.5, Gen 10, or Gen 10.5), which require a lot of CAPEX investment. In fact, Micro LED can be separated or segmented into small production sites with a reasonable cost and CAPEX investment. This is very suitable for European companies or U.S companies. They can set up their small foundry close to their end market. We see a lot of customers request us to build our facilities in the US, Europe or even China as well. In this case I see that the future of the display industry may be a little different. Maybe it's not 90 or 95 percent in Asia. Maybe they will move back a little bit closer to what they really need to be.
Alex: That's also quite new to me. I have to ask you a tipping point kind of question because we know it's great technology and your revenue and the production almost like doubles every year. But again, along with the cost reduction and the improvement in the yield rate, what would you say is a particular year that’s going to be a tipping year, when we're going to see everything happens?
Charles: I'm not sure if I can answer this correctly, but the cost is really a competition. So, when we say it's really happening, that means the cost, or the price of the Micro LED really close to OLED or close to LCDs. This strongly depends on the applications, so as I mentioned, if you say that large-size TV with Micro LED display is cheaper than LCD and OLED already because LCD and OLED are expensive in such big sizes. But if we are talking about cell phones, like what is normal today for IT applications, I would like to say it would take probably five to ten years to make it happen. Optimistically, I would say 2030 there might be a chance. But before that, we will see a lot of new applications happening. So Micro LED will keep going up really fast. Not just only double but maybe triple or even more for the applications.
Alex: Well, if I can go back to one of the statements you made because you are not only a manufacturer of Micro LED, but also a creator of a brand-new business model and the ecosystem associated with that. Would it be fair to say that this is the foundation that you can compete against the Chinese companies which raised lots of capital and invested huge CAPEX in the Micro LED development? Would you argue or defend yourself so you can find your niche and work around the competition?
Charles: I'm not sure if we can defend this, but I do believe that any technology, if it gets matured, then of course it's a very cost driven thing. And eventually it goes to the place where is probably the most cost-effective. Today, maybe China. Tomorrow, maybe Vietnam or even India. So, it's very hard to defend that from the view of cost. For us, of course, we do believe that to build up a league, to build up an ecosystem is very important, and this will keep us lasting for some time. But eventually I still believe that either PlayNitride or Taiwanese companies will have to keep being innovative. We cannot just say “Okay, that's it”. That's just trying to cut everything out. We still must work with Chinese companies. We must work with Indian companies or Vietnamese companies to not only reduce the cost, but also to do something with innovation. We have to keep raising up our values so that we can survive. This is my philosophy.
Alex: Let's move to your personal front. Well first of all, PlayNitride, the name is a very interesting name. Why did you name your company PlayNitride in the first place? Does it hold any significance or philosophy?
Charles: When we started the company, and I just have to clarify that I don't really know how to build up a company at the moment, we treated this as a fun thing. People in my age started with Nintendo or PlayStation. To us, PlayStation sounds to be a nice name. So, we try to build them together and then make some fun, which is how we came up with “PlayNitride” in the beginning.
Alex: Are you a gamer yourself?
Charles: Kind of when I was young, not today.
Alex: That is an interesting combination. Again, is it easy to talk about you becoming a first-ever tradable list public company for the Micro LED. But again, in the last 10 years, you got to experience a lot of up and downs. What was your most terrible downturn in the past 10 years?
Charles: Well, I got a few. One of really the worst is that when we kind of successfully did our first fundraising, I do believe that money can probably last for four to five years. But right after one year, we realized that it's probably will be gone within six months. So, I was expecting five years and it turns out to be only one and a half years. I was kind of shocked at that time and I realized that we would have to do another fundraising. I talked to the original investors, and they were really unhappy with that as you can imagine. But they do believe me that I didn't spend their money in the wrong way. We kind of successfully raised another round of money at that time, I still can remember that I was so anxious, nervous and worried about if we just cannot make it. So that's probably one of the worst cases. Another one similar to that is when we finally satisfied Samsung with our R&D effort, then they asked us to go for production. You know I'm a RD person. I don't know much about manufacturing at that time, but I understand that this is very critical for my customer that they need us to go for manufacturing. It only took me about 10 seconds to promise them, but after that time I really don't know what to do. I was there thinking about if I gave the right answer. What's going to happen and how to raise the money for a manufacturing site is still unknown at that moment. It's another challenge that I remember the most.
Alex: It doesn't sound too tough. It may happen again and again.
Charles: I have to say I was kind of lucky for this Journey.
Alex: Well, just compared to how the significance of the display industry you build up. It doesn't seem to me you raised a lot of funds. So, can you share with us how much money you raise before the company went for the IPO?
Charles: I think we raised about US$200 million.
Alex: Two hundred million? That number was a large number right in Taiwan but…
Charles: As a startup company.
Alex: As a startup company right which we're very well done. But if you compare it to such a disruptive technology on a global basis particularly if compared to the money get raised in Silicon Valley and even in China. I would say that's a very humble amount. I bet you should be really proud of that, and how you made it?
Charles: Well, we take a lot of advantage of what we have in Taiwan. So if we really have to build up everything ourselves, then we definitely need to raise much more than that. For example, for the backplane itself, we have to do all the manufacturing by ourselves, then we probably need to raise 10x of the amount. But we have a very strong supply chain in Taiwan or even a little in China, so we take advantage of this. We work with partners together, using conventional IC, driver IC and TFT technology. This makes everything a little bit easier and saved lots of money for us.
Alex: I think this is a Taiwan style business model.
Charles: Exactly.
Alex: My very last question is that you were a professor before. You got a lot of experience in sharing your life experience with students. As now you've been successfully going public, you share a lot of experiences in the capital market with other founders, right? No matter to students in a school, a college, or the upcoming founders, if there is one lesson you want to share, what would that be?
Charles: PlayNitride’s financial journey is a kind of successful story. I would say I would tell students and my employees that people should try to challenge the real challenging things and avoid easy things that is my first advise. And also, we have to keep innovating.
Alex: This is very important for me. That is a really valuable lesson to share and the reason which made you the first company to list on the Taiwan Innovation Board. Thank you Charles!
If you would like to arrange a meeting with PlayNitride’s Founder and Chairman – Dr. Charles Li, please contact yvonnehuang@qtumic.com.
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