Universal Display Corporation (UDC) - Page 24

I just had an interesting talk with two industry insiders (one of them is a Samsung supplier) - about Samsung's upcoming Super AMOLED HD display. It turns out that these displays are indeed real - and will be unveiled soon. We can expect 5" to 6" smartphones in fall 2011 (the first will probably be the GT-I9220 with a 5.3" display) and 7" tablets by the end of 2011.

A 7-inch Super AMOLED prototype

According to my sources, Samsung managed to achieve HD resolution on these small displays by using PenTile matrix again (like in the original Super AMOLED displays). They have also developed a new manufacturing process and are using new materials. It might be that they have finally started to use Universal Display's green PHOLED (we reported that Samsung is using a green phosphorescent in their new 5.5-Gen plant, but perhaps they will only start using it in the HD displays).

Universal Display announced record revenue of $11.3 million (a 33% increase compared to Q2 2010). Commercial revenue was $5.3 million - a 170% increase over last year - mostly due to Samsung AMOLED capacity expansion. Operating loss was $1.1 million (down from $1.9 million). When taking stock warrant liability into account, net income was $3.2 million. The company is operation-cash positive ($223,000 in the quarter), and has about $326 million in cash or short-term investments.

During the conference call, the company gave some interesting updates. They say that no-one is currently using their green PHOLED material in commercial product. But they say that about half of their development revenues were from the sales of green-emitter and host materials (and over 10 customers are evaluating green). Our (trusted) source said that Samsung are using green in their 5.5-Gen fab - perhaps UDC cannot say it's commercial until they sign a new license agreement with Samsung that includes green. Or perhaps our source was wrong.

Remember Toshiba's portable OLED lamp? Universal Display donated OLED materials and technology for those lamps. It seems that Toshiba made the actual panels (which was a surprise to us because we didn't know they had an OLED lighting program) as UDC provided only knowhow and materials. This is the first time we hear of a collaboration between UDC and Toshiba, but we don't know whether it extends beyond this specific project.

Toshiba will make 100 units of this lamp, and donate these to quake-hit areas (50 units were already donated to the evacuation center in Kesennuma City, Miyagi Prefecture). Toshiba has no plans to sell these to consumers.

Back in April, Philips unveiled a new OLED panel called Lumiblade Plus - which is the world's most efficient panel under production (45lm/w). Back then Philips said that the panel was 'developed by Konica Minolta', but wouldn't say more. Today Konica Minolta issued a press release with some more information: it appears that indeed the materials and structure were developed by KM and the production will be handled by Philips. Production will start in autumn 2011.

While I do not understand the cooperation entirely, after talking to KM it seems that both companies will offer the panel for sale. It's not clear whether Philips will pay royalties for KM on each panel, but it might be so. Philips are already accepting orders for the Lumiblade plus (€120, minimum quantity is 100 units) - but KM says that the panels are not shipping yet. We do not know how many the panels Philips is going to make - but perhaps the agreement with KM was part of the decision to expand Philips' OLED capacity.

Universal Display and LG Display have renewed their commercial supply agreement - till the end of 2011. The companies are still negotiating a long-term agreement. UDC also extended their license with Samsung a few days ago.

The original agreement between UDC and LG Display (LG.Philips back then) was signed on May 2007. LG is using UDC's PHOLED materials in AMOLED displays, and pay them license fees.

Universal Display and Samsung announced another extension (till September 30, 2011) to their license agreement (that was announced back in 2005). Samsung will continue to use UDC's PHOLED materials in their AMOLED products, all the terms of the agreement will remain the same.

This is the fifth three-months extension between SMD and UDC - the companies still can't seem to negotiate a new agreement...

The Flexible Display Center (FDC) at Arizona State University (ASU) installed Sunic Systems' GEN-II OLED SUNICEL Plus 400 vacuum evaporation and encapsulation process tool. The FDC now has the ability to manufacture full color flexible OLEDs in-house - and the FDC says that they are already scaling the recently announced 3.8" AMOLED prototype (developed together with Universal Display, shown below) to larger sizes. The FDC purchased that system back in May 2010.

The FDC says that this new Gen II production system will enable the development of not only large-size flexible OLEDs but also solid-state lighting and plastic electronics.

The US Department of Energy (DOE) announced the 7th round of SSL projects, totalling $15 million for OLED and LED lighting research, product development and production projects. One of the two production projects is headed by Moser Baer. The DOE will give $2.9 million (and Moser Baer will add $1 million) to reduce the cost of manufacturing OLED lighting panels. Moser Baer's pilot production line in Canandaigua, NY will be used to demonstrate these manufacturing improvements.

Prototype OLED lamps by UDC

Moser Baer's pilot production line is built together with Universal Display and uses UDC's PHOLED technology. The project was already awarded $8.3 million by the DOE back in January.

The Korea Times reported that another Univeral Display patent was invalidated in Japan (bringing the total patents to three) - and that these patents are also being challenged in Korea (by Duksan) and in Europe. This caused UDC's stock to plummet. We knew about 2 patents back in March.

Steven Abramson, UDC's CEO responded to this in a technology investor conference. The company says that indeed Japan's court invalidated three of their patents. The basic PHOLED patent is still valid until 2018 in Japan, and this does not harm their entire portfolio. They will appeal to the Japanese high court, and in any case this only relates to products being made, used and sold in Japan - so it doesn't really pose a problem to the company.

Universal Display (UDC) were speaking in the SID 2011 investor forum. They have recently raised $250 million, and when asked about their plans for this cash, the speaker said that they will be looking at IP acquisition - especially at doing more material layers.

This has been speculated before, but it's very interesting to hear it directly from UDC. Two possible targets for acquisition are Novaled (which indeed develops and sells non-emissive layer OLED materials) and Plextronics. It is also possible that UDC will purchase patents or technology and not an entire company (as they did in March 2011, buying 74 patents from Motorola).