LG Display Buys 8G OLED Production Equipment For Large Screens

LG Display purchased 8th-generation OLED manufacturing equipment and will start making 30- and 55-inch TV panels in 2012, Universal Display CEO Steven Abramson told analysts. The 8G production facility, which will be in the same building in Paju, South Korea, that houses a 4.5G line, will have monthly capacity for 24,000 substrates, he said.

LG Display officials weren’t available for comment. But the installation of 8G equipment would appear to signal the much-delayed arrival of OLED TVs, industry officials said. Sony and LG Electronics fielded 11- and 15-inch OLED TVs in recent years, but at more than $2,000, only sold small quantities, industry officials aid. Sales of 30-40-inch OLED TVs are expected to hit 1-2 million units, increasing to 10-15 million by 2015, said Barry Young, managing director of the OLED Association. LG Electronics has no immediate plans for selling an OLED TVs in the U.S., a spokesman said. Universal supplies phosphorescent OLED materials used to produce panels to LG Display under an agreement that expires in June.

LG Display, which acquired Kodak’s OLED patents and assets in late 2009, also is expected to start production along the 4.5G line in the next few months, industry analysts have said. Production will start at 4,000 substrates per month, increasing to 12,000 by year-end, Abramson said. The latter would provide monthly capacity for 1.5 million 30-inch panels, he said. Many companies from Epson to Samsung have announced plans to produce large-size OLED TV panels over the years, but manufacturing is finally catching up to marketing, analysts have said.

The arrival of large-size panel production -- Samsung Mobile Display (SMD) is expected start production on a 5.5G line this summer -- comes as Universal develops PHOLED materials for solution-based manufacturing including ink-jet printing. Universal also has demonstrated ink-jet PHOLED material-based devices with performance similar to that produced through spin coating, Universal said in its 10-K. “These and other developments expand the opportunities for OLEDs to achieve substantial penetration in large-screen markets,” Universal said.

SMD has produced a range of OLEDs for smartphones, including the 4.3-inch display at the heart of the Samsung Galaxy S that sold 10 million units in 2010. A similar display is expected to be central to the Galaxy S2, which is expected to ship in May, replacing the Galaxy S. Samsung also has demonstrated a 7-inch AMOLED for tablet PCs. Universal’s commercial agreement with Samsung expires March 31. AU Optronics, which halted OLED development in 2006, is expected to return to the market this year when it starts mass production along a 3.5G line in the second half, Abramson said. AU Optronics officials weren’t immediately available for comment.

In a sign of growing OLED production, Universal’s Q4 revenue rose to $10.8 million from $4.9 million a year ago as commercial sales -- largely to SMD -- rose to $4.5 million from $1.9 million. Universal’s development revenue, largely derived from sales to LG and AU Optronics, increased to $6.3 million from $3 million, the company said. Aside from LG, Universal has at least 10 customers buying development chemicals, Chief Financial Officer Sidney Rosenblatt said. Universal’s Q4 net loss widened to $5.3 million from $3.8 million a year earlier as operating expense jumped to $11 million from $9 million. Patent costs also increased to $1.5 million from $700,000. Universal sales largely consist of red phosphorescent OLED materials, but it’s “widely sampling” green, which “from a technical standpoint seems to have no problems,” Abramson said.

Universal’s patent costs rose to $4.27 million from $3.23 million in 2010 amid a series of patent cases. The Japanese Patent Office in late February found invalid the broadest claims contained in several Universal Japanese patents, including one describing an OLED device with a layer with a host material containing an emissive molecule. The patent was issued in 2004. The patent office upheld the validity “of most of the claims,” Universal said in its 10-K. A notice of invalidation trial was filed by Semiconductor Energy Laboratory with the patent office in April 2010.

In a separate case, the U.S. Patent and Trademark Office issued a finding of patent interference in a dispute involving the University of Southern California and Princeton University and Fujifilm Holding. The patent office issues interference findings when two or more parties claim the same invention, which in this case is a transparent OLED. Under a licensing agreement with the universities, Universal is required to pay legal costs for the case. There was a hearing Jan. 28 and the universities were authorized to file seven motions by April 29. A request for invalidation trial also was filed March 10 with the Korean Intellectual Property Office. The company filing the request wasn’t identified, Universal said. The notice pertained to a Korean patent issued Nov. 26 describing a means of organic vapor jet printing of OLEDs. The patent was issued in the U.S. in 2008.

Under its research agreement with USC, Universal is required to pay the university $5.1 million for work performed through April 30, 2013. Universal also paid Princeton $555,546 in royalties in 2010. It’s required to pay Princeton a minimum $100,000 annual royalty under a 1997 licensing agreement. The Princeton pact expired in December, but discussions are underway to extend it through year-end, Universal said. Universal also bought 74 OLED-related patents from Motorola earlier this month. Universal originally licensed the patent from Motorola in 2000 and decided to buy them to end royalty payments to the company. Universal also issued last year 72,873 shares to PPG Industries, which manufacturers its PHOLED materials, down from 110,839 a year earlier. The PPG supply agreement runs through Dec. 31, 2012.

Universal also has a series of pacts for developing OLEDs for lighting. Among these is a two-year, $4 million U.S. Department of Energy contract it shares with Moser Baer for developing an OLED lighting panel manufacturing facility. Universal and Moser are creating PHOLED technology and materials for white lighting panels. Moser opened an $11.4 million pilot plant last fall near Rochester, N.Y. Universal secured in November a separate $2 million department of energy contrast with Acuity to demonstrate a PHOLED-based lighting system for commercial applications.