Organic light emitting diode (OLED) display technology got a boost today as leading display manufacturer Samsung Mobile Display Co. Ltd. licensed OLED technology from Universal Display Corp. Universal is an early researcher and developer of OLED technology and materials.
The companies have already worked together for more than a decade, and today's agreement will accelerate the development and production of OLED displays. OLED has a number of advantages over LCDs for display technology: OLEDs create their own light; use less energy; are extremely thin; and can be built on flexible substrates such as plastic. They also don't fade in direct sunlight, as LCDs do, and retain their clarity when viewed from any angle. According to a joint press release from the companies:
- The agreements announced today are an OLED Patent License Agreement and a Supplemental OLED Material Purchase Agreement. Under the license agreement, Universal Display has granted SMD license rights under various patents owned or controlled by Universal Display to manufacture and sell certain phosphorescent OLED display products. In consideration of the license grant, SMD has agreed to pay Universal Display a license fee over the term of the license agreement.
Under the supplemental agreement, SMD has agreed to purchase and Universal Display has agreed to supply a minimum amount of phosphorescent OLED material for SMD’s use in the manufacture of licensed products, subject to Universal Display being able to supply sufficient quantities to meet SMD’s requirements.
Materials development has been one of the challenges holding OLED back from widespread adoption. Some colors have been difficult to achieve, and some materials degrade more quickly than others. Although OLED is a good fit for the needs of cellphones and products requiring small, energy-efficient displays, expanding development into larger displays has been held back partly due to the lack of volume production. Until OLEDs are manufactured on a wider scale, they will continue to be more expensive than LCDs.
The Samsung-UDC deal doesn't target larger displays, but both companies say they are committed to expanding the development of OLED as the next generation of display technology.
The display market in general appears to be ready for disruption: A number of leading manufacturers of LCDs have sold some of their production facilities and moved toward outsourcing display production. The LCD market is currently suffering from over-capacity, and prices have declined. Market researcher IHS iSuppli forecasts that LCD outsourcing will increase as OEMs seek more flexibility of sourcing and the cost of investing in newer LCD facilities increases.(See: Display Market Outsourcing Accelerates.)
Samsung has already established its volume and price leadership in display manufacturing. If OLED technology migrates up within the Samsung organization, it could accelerate the development of large-screen OLED displays. As more regions pass legislation requiring energy efficiency in electronics products, OLED may become more common in consumer products such as TVs. But it is going to take a significant increase in manufacturing capacity to resolve the price differential with LCDs.
Samsung already is a leader in OLED investment. According to IHS iSuppli:
- Samsung has led the charge in AMOLED manufacturing and will continue its commitment to the technology with an investment of $4.8 billion into its next-generation 5.5G, or 1,300 millimeter by 1,500 millimeter, AMOLED fab. This first stage of production will turn out 24,000 substrates per month from Samsung’s Tangjeong facility.
Samsung has discussed up to three increments of 5.5G capacity and about 70,000 in monthly capacity, which would boost its AMOLED output capacity from its 2010 levels of about 3 million per month to more than 8 million panels per month total of 4-inch equivalent displays per month by the end of 2011. A second fab line with the same capacity is scheduled to commence mass production in early 2012—likely in the first quarter—which will significantly increase overall AMOLED supply.
Moreover, 5.5G lines have the potential to transition to the production of larger displays for applications like televisions.
With the shortage of AMOLEDs for smart phones, it is anticipated that Samsung will concentrate on small-and-medium sized AMOLED displays with these two Gen 5.5 lines. Samsung has announced its intent to manufacture 7-inch Galaxy tablet panels using AMOLED. Given the current strong demand for smart phones, it is unlikely that volume production of tablet panels will start before 2013.
Other suppliers are looking at AMOLED capacity installation and expansion as well. However, none of these other suppliers are as aggressive in their investment as Samsung.
Another big investor in OLED, says IHS iSuppli, is the government of China. Samsung, a Korean company, and UDC, a US company, should take this opportunity to capitalize on their leadership position in OLED.