What we think about Universal Display (OLED)
Universal Display in Three Words: Enviable OLED Margins
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Background
There are two primary technologies currently dominating the world of electronics displays: Those based on liquid crystal displays (or LCDs), and those using organic light emitting diodes (or OLEDs).
But make no mistake: Many of the world’s largest display makers have already announced plans to wind down their LCD businesses in favor of shifting operations toward OLED display production. And Universal Display will stand tall as a central enabling beneficiary of that trend.
More specifically in Universal Display’s case, we’re talking about phosphorescent OLEDs (or PHOLEDs), a version of OLED that boasts up to four times higher efficiency than those based on conventional fluorescent technology. For simplicity in this report, however, I’ll refer to UDC’s PHOLED technology as OLED.
So what makes OLEDs so special?
Applying an electric current excites OLED materials, enabling individual pixels to emit their own light without requiring backlights and other bulky, rigid layers utilized by today’s LCD technology. In addition to enabling significantly thinner devices, OLED displays are generally brighter, crisper, and deliver incredibly high contrast ratios relative to their LCD counterparts – the latter a byproduct of their ability to literally shut off power to individual OLED pixels rather than the entire display, delivering true blacks in the process.
OLED displays can also be made semi-transparent, flexible, foldable, rollable, and even stretchable. And though commercializing next-generation devices built with these unique form factors is obviously a challenge – as Samsung demonstrated with the first version of its Galaxy Fold hybrid smartphone/tablet device last year – the possibilities enabled by OLED technology are simply too exciting and compelling to ignore for consumers and OEMs alike.
Perhaps it should come as no surprise, then, that Universal Display has long-term IP licensing and material supply agreements in place with the largest display makers in the world. Samsung Display, LG Display, and BOE (China’s largest display maker) are its three largest clients by a long shot – and each have struck deals to supply OLED displays to Apple for its iPhones and Apple Watches, by the way, in addition to their own namesake products – representing 44%, 27%, and 15% of Universal Display’s total sales in 2019, respectively. Other notable display clients include Japan Display, Sharp, AU Optronics, Pioneer, and (with a new long-term deal signed a few weeks ago) China’s #2 display maker Wuhan China Star, a subsidiary of TCL.
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