Universal Display Posts Previously Deferred Revenue From OLED Stoppage

Universal Display Q2 sales were bolstered by its recording $2.1 million in previously deferred revenue from a former customer that halted OLED manufacturing plans, executives said on a conference call. Analysts believe that the unspecified customer was Sony, which in April 2001 signed a technology development agreement with Universal that expired four years later. Sony manufactured OLED panels, including one used in an 11-inch TV, but didn’t sign a commercial license agreement with Universal for its phosphorescent OLED materials. A commercial license typically signals the start of volume production, industry officials said.

"We determined that the likelihood of us entering a commercial licensing agreement was remote,” Universal said in an SEC filing. Chief Financial Officer Sidney Rosenblatt said “the customer has informed us they do not intend to move forward in the OLED manufacturing field and the likelihood was remote that they would continue."

Sony officials weren’t available to comment. But Sony executives last fall suggested the company was moving less aggressively in commercializing OLEDs for large-size flat-panel TVs. While Sony opened an OLED panel plant in Nagoya, Japan, in 2007 (CED Feb 20/07 p3), the facility didn’t produce displays in volume.

Meanwhile, with Samsung Mobile Display (SMD) struggling to keep pace with demand for OLEDs for smartphones, the company is focusing on supplying affiliate Samsung Electronics, Universal officials said. Samsung Electronics is using a four-inch OLED in the Galaxy S and Vibrant smartphones and SMD may not free up capacity for OEM customers for 18 months, Universal CEO Steve Abramson said. The Galaxy S sold 200,000 units the first 10 days of availability in late June (CED July 9 p2). HTC recently switched its Desire and Droid smartphones to a 3.7-inch Sony-designed LCD from an SMD OLED, citing a tight panel supply. SMD is spending $2.2 billion on a new 5.5-generation OLED panel plant that will start production in 2012. SMD “will sell to anyone who wants panels, provided there is anything left over,” said Avian Securities analyst Andrew Abrams.

AU Optronics and LG Display also are ramping up OLED panel production. LG Mobile is expected to ship Optimus smartphones this fall with OLED displays (CED Aug 3 p3). LG Display appeared to be a major contributor to Universal, increasing Q2 commercial development revenue to $6.4 million from $1.71 million a year earlier. Universal’s total Q2 sales soared to $8.44 million from $2.95 million a year earlier, partly from the recording of $2.1 million of previously deferred revenue, the company said. Universal’s commercial revenue, derived largely from sales to SMD, jumped to $2 million from $1.2 million. Samsung’s license agreement with Universal was recently extended to Sept. 30, while LG’s expires in December. Universal partner Idemitsu Kosan recently bought a 32 percent stake in LG’s OLD business and appears to be continuing to invest in fluorescent materials. Idemitsu also is selling OLD materials to LG. Universal still has a “very good relationship” with LG, which use phosphorescent materials “in all of their devices,” Abramson said.

Universal’s Q2 net loss narrowed to $4.43 million from $6.41 million, despite a rise in operating expenses to $10.4 million from $9.3 million. Universal also took a $2.6 million noncash loss in Q2 on outstanding warrants to buy 744,000 shares, Rosenblatt said.

Universal’s earnings include some funding from a $4 million U.S. Department of Energy program for creating a phosphorescent OLED lighting-panel manufacturing facility. Universal teamed up with Moser Baer Technologies, which is setting up a facility in the Rochester, N.Y., area with some staff from the Rochester Institute of Technology, company officials have said. Konica Minolta also is working with GE on white OLEDs for lighting under a Universal license.

As it develops materials for lighting, Universal also is sampling a light blue phosphorescent OLED material designed to cut power consumption up to 33 percent. The material is made up of deep and light blue colors, with deep blue used only when needed to reduce power consumption, company officials have said. Universal is sampling a green phosphorescent material with “a number of customers” including Samsung, but a manufacturing schedule hasn’t been set, company officials said. Some customers have been testing the green material for a year, Abramson said. “To try and guess when customers will use it at this point is very difficult,” he said.

Semiconductor Energy Laboratory also filed notices in April and May with the Japanese Patent Office seeking to invalidate Universal patents granted in the country in 2007 and 2009, the company said. Universal filed a response to the April claim in July and sent a second this month, the company said. The Japan IP is similar to U.S. patents issued to Universal. Among the U.S. patents is one granted in 2004 to researchers at Universal partners Princeton University and the University of Southern California that describes OLD devices with an emissive layer containing a host material with an emissive molecule.