What Display Daily thinks: If South Korea wasn’t so adamant about OLED as next generation technology and willing to invest so much in maintaining a lead over Chinese competitors, would OLED really hold the premiums that it does? I mean, from what I can see, when it comes to OLED everyone is orbiting Samsung and LG, basking in the light.
Put aside the technical arguments for OLED, and think of it in purely experiential terms. It is not the optimal solution and when it is, it comes at a very, very high price. One that is not commensurate with the actual real world results.
And UDC is, in essence, a one trick pony – all-in on OLED. That’s great because it has the IP and supplies to be the only game in town for some time to come, but one company doesn’t an industry make. So, what if it has a great year in two years time, or one that is better than this year?
As a barometer of the OLED market, UDC is exceptional.But none of this financial data is exceptional. There’s no price curve that is going to increase OLED adoption. There seems to be a pullback on investment in OLED right now because of macroeconomic headwinds (that term pretty much covers all the worlds business ills). There’s room to grow, but is that through innovation through obsolescence in older technologies?
The glory of OLED is going to be in continued smartphone adoption and growth. Certainly not TVs. More flexible and foldable displays in handhelds and portable devices is a growth engine, enough to get those penetration levels up to what is anticipated in 2023, but not TVs.
When it comes to bigger displays, the outlook is a lot murkier. Like we said in an earlier article, All Technical Paths to Wider Color Gamut Possible. Essentially, OLED isn’t the competitive advantage it has been cracked up to be. It is profitable, very profitable, for those that own the tech, but at some point, that concentration of control is a gating factor that reduces market opportunity. Clever companies find a way around those limitations and can get market share with tech that is good enough.
OLED is just too good for its own sake. It amazes on some technical level, and it disappoints on another level, the one that matters, as accessible to a broad range of consumers. Do you make a capex commitment to OLED production that requires a 7, 10 or more years payback or do you think shorter term?
Universal Display Stock Falls on Q3 Revenue Decline But Analysts Remain Bullish Long-Term
Universal Display Corporation (UDC), the Ewing, New Jersey-basedOLED materials company, saw its stock fall over 4% in after-hours trading last week following the company’s release of third quarter results that showed declines in revenue and profit amid a challenging macroeconomic environment.
UDC reported revenue of $141.1 million for the quarter ending September 30, a 12% drop versus the same period last year. Net income fell 16% to $51.5 million. The decline was attributed primarily to lower royalty and license fees as customers faced weakened demand for consumer electronics using OLED displays.
However, the company achieved record OLED material sales of $85.2 million in the quarter, up 15% YoY, highlighting strong underlying demand for its phosphorescent OLED technologies. UDC remains a major supplier to Samsung and LG for their OLED panels used in smartphones and TVs.
Roth Capital Partners analyst Scott Searle has maintained a Buy rating on UDC stock while trimming his price target to $176 from $196, still seeing substantial upside. “OLED penetration rates are still in early innings at high-single digit levels today, and poised to approach 30% by 2030,” wrote Searle in a note to clients.
Searle forecasts UDC returning to growth next year as supply chain and inventory issues abate. He projects 2024 revenue rising to $651 million, increasing further in 2025. With OLED adoption expanding in consumer electronics and making inroads into automotive displays and lighting, most analysts covering UDC remain bullish on its long-term growth trajectory despite the recent slowdown. UDC continues to be seen as a central player in the expanding OLED ecosystem.
