23 Aug 2011
Licensing and sales agreement running through 2017 builds on eleven-year relationship between the companies.
The deal, which runs through December 2017, extends a relationship that already goes back eleven years, under which SMD and its parent company have pioneered the development of the technology. Thus far, AMOLED screens have only been produced in large volumes for mobile handsets – notably in Samsung’s ‘Galaxy S’ smart phones – although the Korean electronics giant is understood to be scaling up OLED displays for much larger applications such as televisions.
“SMD is committed in leading the world display industry by offering high quality OLED products to its customers,” said Soo In Cho, the president and CEO of SMD, in a statement announcing the new UDC deal. “I believe the long-term agreement with Universal Display and the continued close partnership between the companies will provide a platform for successfully establishing the OLED products as the mainstream display products.”
Just two weeks ago, when announcing UDC’s second-quarter financial results, CEO Steve Abramson had headed off questions about any impending agreement with SMD. At the time, he said that the two companies were still working under three-month extensions of their earlier agreement – a situation that had been ongoing for more than a year.
The new deal between UDC and SMD covers phosphorescent OLED display products, and under the terms of the license grant, SMD has agreed to pay Universal Display a license fee over the term of the license agreement.
Under a supplemental agreement, UDC has agreed to supply a minimum amount of phosphorescent OLED material for SMD’s use in the manufacture of licensed products, subject to UDC being able to supply sufficient quantities to meet SMD’s requirements.
Meanwhile, UDC is having to deal with a new patent dispute in Korea that relates to its organic vapor jet printing deposition technology. Abramson says that some of the $250 million cash raised via the firm’s IPO earlier this year would likely be used to acquire more intellectual property.
OLED displays offer a number of advantages over LCD screens, such as better color saturation, darker blacks and better energy efficiency – unlike an LCD, on OLED screen consumes no power when showing a black image – while they can also be made thinner and much lighter.
But while many now expect the success of Samsung and LG with AMOLED displays in the smart phone market to be replicated with larger formats such as tablets and televisions, OLED-based lighting is at a much earlier stage of development.
A recent report by the market research company Lux Research forecast that OLED lighting would remain only a niche technology through 2020, largely because it will remain too expensive for mainstream applications. In his outlook for the technology, Lux analyst Jonathan Melnick said: “It’s only the most cost-insensitive markets that would use [OLED] for aesthetic value for the foreseeable future.”
• UDC's stock made sharp gains immediately after the Samsung agreement was announced, on a strong day for the markets overall as stocks rallied, and was trading up nearly 20% on August 24.