Cutting OLED Screen Costs ‘Only Way You Get’ to 50% of Smartphones, Says Universal CFO
Universal Display stands by the estimates it shared last month that it “pulled in” $15 million to $20 million in Q2 "prepurchase" OLED materials orders it would have recorded in Q3 if not for Chinese panel-maker customers seeking to beat the List 4 Section 301 tariffs on TVs and smartphones (see 1908020004), Chief Financial Officer Sid Rosenblatt told the Deutsche Bank technology conference Tuesday. Universal had a “pretty good feel” that the tariffs were at play, he said.
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The OLED technology and materials supplier has “multiple customers in China that pretty much told us that in anticipation of increased duties, they were going to prepurchase material for the third quarter,” said Rosenblatt. “Our relationship with these customers in China is different than it was” before the U.S-China trade war, he said.
In contrast to Universal’s largest Korean panel customer, Samsung Display, which “does not share a lot of information,” customers in China “really need a lot of help from us in what they're doing,” said Rosenblatt. “So they are much more open in what they are buying, what they have, what they are going to need.” Samsung didn’t comment Wednesday. List 4A tariffs took effect Sept. 1 at 15 percent on finished TVs from China, but the 15 percent List 4B tariffs on smartphones were deferred to Dec. 15 (see 1908250001).
Rosenblatt estimates OLED screens are in 25 percent of the 1.6 billion smartphones sold globally each year. Reducing the cost of the OLED screens is “the only way you get” to 50 percent share, he said. “It's estimated that an OLED screen made on plastic substrates is anywhere from $55 to $75 per screen,” compared with only $10 to $30 for an LCD display, he said. “If you talk to the OEMs, they all want OLED screens” in their smartphones because “it has the best picture quality and it has the best power efficiency,” he said. OLED isn’t a solution “looking for a market,” but “you need to get the price down,” he said.
The 5G transition bodes well for the future of OLED smartphones, said Rosenblatt. He thinks 5G will “spur new demand” for an upgrade “cycle” in premium smartphones, which is the market segment where OLED resides, he said.
Universal still believes in the viability of its proprietary organic vapor jet printing (OVJP) technology for the future of mainstream-priced large-screen OLED TVs (see 1611040018), though it remains in development after many years in the lab, said Rosenblatt. “We proved the principle,” and at Display Week, demonstrated the ability to use OVJP on a 55-inch 4K display, with a migration path to 8K, he said.
The challenge now is how to “scale this up” so it’s viable for Gen 10.5 panel production that’s optimized for 65- and 75-inch TV screens, said Rosenblatt. If market forecasts are accurate that global OLED TV demand will grow fivefold by 2022, “you're going to need a new manufacturing process to go from 10 million to 50 million OLEDs and get the price point down where it becomes essentially commodity product,” he said. “We believe OVJP is one of the methods that get you there.”