Universal Display Corporation (UDC) - Page 22

Universal Display's CFO (Sidney Rosenblatt) attended Goldman Sachs Technology and Internet Conference 2012 yesterday, and he gave some very interesting updates. First of all, he commented on the recent AUO and Idemitsu Kosan (IK) agreement. According to Sid, IK are not selling emitter materials - they are offering organic materials that go into other layers of the OLED stack. They do not believe the AUO-IK agreement will have any effect of PHOLED sales to AUO, and in fact he tells us that UDC and Idemitsu Kosan are developing OLED materials together for Sony.

Host materials

In their latest earning report of 3Q 2011, UDC announced that they started to offer OLED host materials - and had almost $8 million in revenue from those materials. Today Sidney explained this business a bit further. Host materials are the materials that you put the emitting materials into (Sidney used a metaphor - if the OLED is chocolate milk, then the milk is the host material and the chocolate is the emitter). These materials are considered a commodity, and UDC didn't think to sell those as it's not an interesting market for them.

Universal Display and Acuity Brands presented advances in their stripes white OLED architecture project. A stripes OLED is made from thin stripes of red, green and blue OLEDs. When you put a diffuser panel on top, it appears white. The stripes architectural results in efficient panels, that are also color tunable (2500-4000K).

UDC reports that the project is proceeding well - and in fact the pixel performance exceeds the project's goal. They fabricated the first 15x15 cm panel samples already and both companies are on target to deliver the actual luminaries in 2012 (which are based on the same design as the Kindred and the Revel - the lamps that use LG Chem's OLED panels). UDC is also working to further optimize the panel's performance.

We just got word from LG Chem that the company finished development of their first OLED lighting panel, and have started mass production. The "type 1" panel, or the LG-OLED-041 is a 100x100 mm square panel that features 4,000K, CRI>80, 45 lm/W and 10,000 hours lifetime (LT70) at 3,000 nits. The active emitting panel is 90x90 mm, and the whole panel is 2.44 mm thick (including the optical film and PCB. The OLED itself is 1.84 mm).

LG Chem is already developing the 2nd generation (or "type 2") panel which will up the efficiency to 60 lm/W and the lifetime to 15,000 hours. The size will be the same, but the color will be 3,500K. LG Chem will start mass production of type 2 panels in 2Q 2012. LG Chem further says that it decided to offer these new panels at "lower prices" - although we do not know the actual price yet.

Lux Research posted an interesting grid that shows how different display developers rate on technical value and business execution. It includes mature technologies (such as OLED and e-paper) and emerging technologies such as electrochromic and electrofluidic displays.

Lux says that OLED materials and equipment developers have a clear head start over other technologies, with notable players such as UDC, CDT, Novaled and Kateeva. The company that stands out in both technical value and business execution is E Ink - with high score in technology and IP and strong partnerships and management team. E Ink is the only company that scores a "strong positive" - with their nearly 100% market share of the electrophoretic market - which is used in products such as Amazon's Kindle and B&N Nook e-readers.

Update: UDC's CFO gave some comments on this deal - which involves only non-emitter materials and will not effect their red and green PHOLED sales to AUO...

AU Optronics (AUO) and Idemitsu Kosan announced that they will form an OLED strategic alliance - and will collaborate to develop high-performance OLED displays and OLED-related patents. Idemitsu will supply OLED materials to AUO including device structure proposal. AUO committed to reinforce the development of OLED products - both small sized OLED displays for phones and tablets and large sized OLED panels for TVs. The two companies will also study the possibility of collaboration in other fields beside OLEDs.

AUO 32-inch OLED TV prototype

AUO is gearing up towards mass production of 4" - 5" OLED panels in Q2 2012, targeting smartphones. AUO is using LTPS substrates and vapor deposition for the direct-emission RGB OLED sub pixels. AUO will produce these panels in their 3.5-Gen line in Hsinchu, Taiwan. In the second half of 2013, AUO's 4.5-Gen AMOLED Line in Singapore (at AFPD) will start producing panels as well. Towards the end of 2011 AUO unveiled prototypes of Oxide-TFT based 32" OLED TVs, 4" flexible OLEDs and 6" transparent ones.

There are reports that LG Display decided to built a pilot 3.5-Gen (730 × 460 mm) flexible OLED production line. They have ordered the equipment, which will arrive by 3Q 2012, and the line will become active by the end of 2012. An official from LGD is quoted saying that it will take 1-2 years to develop and verify the process and produce prototypes. The company hasn't decided on a production schedule yet.

LG Display's flexible OLEDs will use the same technology as Samsung's flexible prototypes - a polyimide coated substrate and direct-emission RGB sub-pixels (as opposed to LG's OLED TV which use WOLED with color filters).

Lumiotec signed a new OLED technology license agreement with Universal Display - and will integrate UDC's technology and materials into their OLED lighting products. Lumiotec will pay license fees and running royalties to UDC, and the term of the agreement runs through December 31, 2015.

Lumiotec OLED lamps

Lumiotec says that they will start delivering sample panels next month (February 2012) - mainly 145x145 mm square panels - with warm white color and 40 lm/W efficiency. The company will start mass production these panels by April. Lumiotec also says that they are developing high-efficient natural white panels - and these will be released sometime during 2012.

NanoMarkets released a new report on OLED lighting materials. In this report they forecast that OLED lighting will take off in 2014, and will start to generate significant revenues for material suppliers. How significant? $1 billion in sales in 2015.

The company says that emissive layer material sales will top $375 million in 2015, with 90% of this coming from vapor-deposited small molecule materials. The report discusses the continuing dominance of UDC in important sectors of the OLED lighting market and the increasingly important role of Chinese OLED materials suppliers.

Universal Display reported their 3Q 2011 financial results: net income (and cash flow) of $6 million (this is the first profitable quarter for the company) on revenues of $21.8 million (an increase of 208% compared to 3Q 2010). Commercial revenue was $9.9 million and development revenue was $11.9 million.

Host Materials

UDC has started to offer OLED host materials to complement their emitter materials. They enjoyed high host material sales in this quarter ($7.8 million) - but this is a competitive market as several companies are offering the same kind of materials. The company said that they are looking to "expand the R&D and material business outside of emitters and to other aspects of the stack". Back in March when UDC raised $250 million it was rumored that the company is looking to acquire a company (Novaled was the leading candidate according to the rumors) to expand their business in that way.

There are reports that Universal Display's key PHOLED patent's key claims has been invalidated and revoked in an Oral Proceeding of the European patent office. According to the report UDC will have to submit a much narrower patent - deleting any references to any phosphorescent materials other than iridium. The opposition to the patent was filed by Merck, BASF, and Sumation.

UDC responded to this story: "The European Patent Office conducted an oral hearing on November 3rd. The EPO panel announced its decision to maintain the patent with claims directed to OLEDs containing phosphorescent organo-metalic iridium compounds. A transcript of this hearing will be available in two weeks. UDC's earning reports will be released tomorrow and hopefully we'll learn more about this issue.