Universal Display Corporation (UDC) - Page 13

In August 2011 Samsung signed a long-term license agreement with Universal Display. This agreement (which runs till 2017, and will probably be extended) included a license fee and allowed Samsung to acquire and use UDC's patented phosphorescent OLED materials.

In total, Samsung is set to pay (and already paid) UDC hundreds of million of dollars in royalties and materials. This got me wondering - why didn't Samsung acquire UDC back then, which would have given them a lock on the OLED market? Let's look at the numbers, but the answer is probably not related to the financials, really.

Universal Display reported their financial results for Q1 2015 - and there were no surprises this time - revenues were $31.2 million and net income was $1.3 million. Material sales were $26.8 million - and the company did not receive royalties from SDC this quarter - and also not from LG Display (following the new long-term contract with LG, there's a quarter lag in royalties).

UDC expects a stronger second half, as wearables, flexible displays and OLED TVs enter the market. The reiterated their guidance for revenues of $200 million (with possible 5% downside and 15% upside).

Universal Display reported their financial results for Q4 2014 - $56.2 million in revenues (up 13% from Q4 2013) and a net income of $16.5 million (and an income tax benefit of $41.4 million).

For the full year 2014, UDC generated $191 million in revenues (up 30% from 2013) and a net income of $32.7 million (excluding the tax benefit in Q4). In 2014, UDC generated $47.3 million in operating cash flow (compared to $45 million in 2013).

OLEDWorks and Universal Display signed an OLED technology license agreement. OLEDWorks was granted license rights to manufacture and sell phosphorescent OLED lighting products. OLEDWorks will pay UDC an upfront license fee and running royalties.

OLEDWorks, established in July 2010 by former Kodak OLED business experts, is a US-based OLED lighting maker (the only OLED lighting producer in the US). The company developed a proprietary low-cost production process. In 2013 the company successfully completed its Series A fund raising, and the company received three DoE grants (see here, here and here) to further develop is OLED technology.

During an investor conference call, Universal Display revealed some new details on LG Display's flexible OLED program. According to UDC, LGD's current production capacity in its 4.5-Gen fab is 14,000 monthly substrates, more than double its capacity (6,000 substrates/month) that was reported in the middle of 2014.

LGD indeed said they expect to double their capacity towards the end of 2014, and that's great news. Some of that capacity will go to LG's own flexible products (such as the G Flex 2 and the G Watch R) - and reportedly also to support Apple's Watch which will launch in April.

Universal Display and LG Display signed a new long-term OLED technology license agreement and supplemental material purchase agreement. The agreement runs till December 31, 2022.

Similarly to UDC's agreement with Samsung (signed in 2011), LGD gets non-exclusive license rights to manufacture and sell OLED displays, and will pay license fees and running royalties on its OLED product sales. UDC will also continue and supply phosphorescent materials for LG Display.

Universal Display and Sumitomo Chemical signed an OLED Technology License Agreement. UDC granted Sumitomo license rights to manufacture and sell solution-processed OLED lighting products. The agreement runs for the life of Universal Display’s relevant intellectual property rights.

Sumitomo aims to use UDC's technologies to increase the efficacy of their PLED lighting panels. The company will "explore business opportunities in lighting applications that take their printed polymer OLED technology to the next generation lighting.

Universal display posted disappointing financial results for Q3 2014. Revenues were $32.9 million (unchanged from Q3 2013) and net income was $4.3 million. UDC lowered their guidance for 2014 ($183-185 million, down from $190-205 million).

The lower sales were attributed to Samsung's soft mobile phone sales and lower green host sales. UDC reports that Samsung adopted a different green host supplier in some of their panels. The company is working on new high-performance low-cost host materials, but they always said that this is a competitive market.

Germany-based AIXTRON is a leading deposition equipment provider for the semiconductor industries - used for a wide range of applications, from LED to graphene deposition. For the OLED market, Aixtron is offering Organic Vapor Phase Deposition (OVPD) equipment (which was exclusively licensed to AIXTRON by Universal Display).

Juergen Kreis, AIXTRON's Director Business Development, was kind enough to update us on Aixtron's OLED business and answer a few questions we had on the company's technology. Juergen joined AIXTRON in 2010 as Director Business Development with special focus on the portfolio for organic material deposition solutions.

Q: Hello Juergen. Can you give us a short introduction to AIXTRON's OLED related products and services?

AIXTRON’s core expertise clearly is in the offering of proprietary process solutions for the deposition of organic thin-films, with OVPD (Organic Vapor Phase Deposition) and PVPD (Polymer Vapor Phase Deposition) being the core process technologies. As the fabrication of organic electronics requires many manufacturing steps, flawless integration of the respective processes into an automated material flow is essential.

According to a news report from Japan, Kaneka developed a new OLED panel that achieves a lifetime of 50,000 hours, almost double from the company's current OLEDs. The panel is 8x8 cm in size and 1 mm thick.

Kaneka has a small production line with an annual capacity of about 20,000 panels. The company plans to expand the production capacity with an aim to halve the manufacturing costs. Kaneka plans to achieve OLED sales of ¥50 billion (around $450 million) by 2020.