Universal Display at Oppenheimer Conference: OLED Growth and Strategy

On Tuesday, 12 August 2025, Universal Display (NASDAQ:OLED) presented at the Oppenheimer 28th Annual Technology, Internet & Communications Conference. The company outlined its strategic vision, highlighting growth opportunities in OLED technology and addressing challenges in the Chinese market. Positive advancements in energy efficiency and capital allocation were discussed, alongside concerns about geopolitical influences.

Key Takeaways

• Universal Display is optimistic about OLED adoption in IT, with a focus on gaming monitors and foldable devices.
• A $100 million share buyback authorization is in place to manage capital allocation.
• The company is advancing blue emitter technology, achieving a 15% reduction in energy consumption with LG.
• Manufacturing is balanced between US and Ireland facilities, with high capacity utilization.
• OLED penetration in global IT units remains low at approximately 5%.

Financial Results

• The IT market shows approximately 5% OLED penetration, indicating significant growth potential.
• Guidance was adjusted upward by $10 million, reflecting improved visibility in the market.
• A $100 million buyback authorization supports strategic capital allocation efforts.

Operational Updates

• Key players like Samsung, BOE, and Visionox are planning capital expenditures for IT market capacity.
• Tandem structures in IT products require 1.5 to 2 times more material than single-layer structures.
• Blue emitter development with LG led to a 15% reduction in energy consumption, though improving lifetime remains challenging.
• Manufacturing is evenly split between US and Ireland, with some excess capacity available for scaling.

Future Outlook

• The IT market is expected to experience the strongest growth rate compared to smartphones and TVs.
• OLED adoption is anticipated to increase in mid and low-end smartphone models.
• The automotive market is a key area of interest due to energy consumption and temperature performance factors.

Q&A Highlights

• Universal Display holds over 6,500 patents and remains committed to protecting its intellectual property.
• No specific timeline was provided for an all-phosphorescent blue approach, but LG’s hybrid structure is seen as a significant achievement.

In conclusion, Universal Display’s strategic initiatives and technological advancements position it well for future growth. Readers are encouraged to refer to the full transcript for detailed insights.

Full transcript - Oppenheimer 28th Annual Technology, Internet & Communications Conference:

Martin, Host, Oppenheimer: Good morning, everyone. Welcome to our virtual fireside chat with Universal Display at Oppenheimer’s twenty eighth annual technology Internet and communications conference. Today, we have the pleasure to host the chief financial officer of Universal Display, Brian Millard. Thank you, Brian, for being here.

Brian Millard, Chief Financial Officer, Universal Display: Yeah. Great to be here. Thanks for having us, Martin. Just before we get started, do wanna give a quick safe harbor statement so I may make some forward looking remarks as part of my comments today. And our for our results may differ from those forward looking statements, so we would encourage everyone to look at our SEC filings before making any investments in the company.

Martin, Host, Oppenheimer: Thanks, Brian. I would like to start with your view on the IT market. Know, be beyond quantitative market forecast for OLED penetration in IT, you know, what qualitative shifts in user behavior or product designs are you seeing in the IT market that excite you the most about the long term material sales opportunity for universal display?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. I think the IT market is certainly, one that we see a lot of growth opportunity for in the next few years. We’re coming off of very low penetration rates. So right now, you know, approximately 5% or approaching 5% of the IT units globally have OLED displays in them. So, very low penetration and one that we know there’s a lot of OEM interest in the coming years in adopting OLED displays into a variety of of IT products.

So the form factor, I think there’s, you know, whether it’s tablets, laptops, monitors, there’s a lot of use cases for OLEDs in the IT market. Gaming monitors are actually one that’s getting a lot of momentum recently. You know, the fast refresh rate of OLEDs is a key of, you know, driver of of interest in the OLEDs for the gaming monitor market. Even recently in the few weeks, there’s been some, you know, comments about some of our customers introducing new gaming monitors with even faster refresh rates. So we see that as being, you know, a key opportunity for for growth in the IT segment.

As well as there’s some, you know, comments in the next few years, some OEMs may consider foldable IT products, which bring, you know, an even more interesting form factor to, to the display. So there’s a lot of interest in IT, across our customer base. We see that because three of our major customers have already announced new CapEx plans for the IT market. Samsung, BOE, and Visionox all have plans underway for capacity to meet that growing demand. And we would expect that other customers in the coming quarters may announce new capacity investments as well.

So it’s a key growth driver for our industry and one that we’re actively working with our customers to support. We’ve also, you know, probably talked with you previously about the tandem structures that are used in many of the IT products, which is also a key driver of our business because there’s more material needed for those displays. And for those not familiar, the tandem structure is where there’s two emissive layers used in in the display. So there’s probably somewhere between one and a half to two times the material consumption of UDC’s materials compared to a single layer structure, which is, you know, certainly a benefit to us because that’s more of our red, green, and and future blue material that we needed for those displays. And so it’s it’s one that, you know, we’re working very closely with our customers to support them and are very excited about the path forward for IT and think that, you know, as these new fabs come online and as OEMs look at their product road maps for IT, their IT products in the coming years, there’s gonna be more and more interest in, the various form factors and options that OLEDs provide.

Martin, Host, Oppenheimer: Got it. So maybe on the topic of large IT oriented gen eight fabs coming online, what does those fab CapEx mean for you before they enter a mass production? Do you generate any meaningful sales as they ramp up production and into, into commercial production?

Brian Millard, Chief Financial Officer, Universal Display: Yes. So we certainly do. So as the equipment is installed and they’re going through the process process of qualifying those lines and readying them for commercial mass production, there is material, needed from from UDC to go through those test runs and those qualification processes. So we typically do see, you know, some revenues before those come online. And as it relates to the pieces, you know, the the materials that are gonna be needed this year for the qualification at Samsung and BOE, those are already incorporated in our our forecasting guidance for this year.

But there is some material that’s needed, you know, in advance of actual commercial mass production.

Martin, Host, Oppenheimer: Mhmm. Got it. And then for, regarding the tandem structure, you know, we all know LG showcased a hybrid tandem panel, with your fluorescent blue and fluorescent blue. How do you think about the market potential for the hybrid solution versus a pure fluorescent blue? You know, most customers, okay with this hybrid tandem structure, or are they waiting until the pure blue is ready?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So LG’s announcement back in May was really a key, exciting development for us and for the industry. So as you noted, their their display that they produced using our phosphorescent material for the blue color had one layer of fluorescent and one layer of phosphorescence. And they showcased that those displays a few weeks later at SID display week in in California in mid May. And they’re I they were IT size displays, so, you know, kind of the size of a of a tablet that they showed.

And they showed a side by side comparison of a conventional tablet and a tablet that was produced using the higher efficiency blue material from us using that hybrid structure. They had power meters on both that you could see there was a 15% reduction in energy consumption using the high efficiency blue from from UDC. We know that that 15% is really compelling. I mean, energy efficiency is what, you know, our customers and the OEMs, their customers are all after as they’re designing new and next gen displays. And so, you know, we don’t think that there’s we know there’s a lot of interest in high efficiency in getting that to market.

So we believe that, you know, even if it is a hybrid tandem structure, there should be a place for that in the market. And from our perspective, you know, getting, you know, our phosphorescent blue material into market, whether it’s in a hybrid tandem structure or another structure that LG or any of our other customers may bring to market, you know, that’s a really interesting, you know, opportunity for us and one that we’re We also think it’s a foot in the door because, ultimately, getting to an all phosphorescent, you know, approach is our goal. But having our product in market, you know, initially will give us opportunities as we continue to invent new materials that continue to improve their performance that then unlocks more opportunities for our customers in the years ahead.

Martin, Host, Oppenheimer: Mhmm. And in the LG implementation, how does the material, consumption for UDC compare to a more regular tandem panel?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. It it’s it’s very hard to say at this point because we don’t know the exact recipe that LG used to produce that display. So, typically, in a tandem structure, there’s, one and a half to two times the material consumption in total compared to a single layer. But exactly, you know, the thickness of each of those layers for blue is a little unclear to us at this point, but, certainly represents an entirely new revenue stream for us because, you know, we we don’t have any blue in market today. And so, you know, if they’re successful in commercializing that and having an OEM design that into a product, that’s an entirely new revenue stream for us and one that we’re really excited about.

Martin, Host, Oppenheimer: Mhmm. And then for overall Tandem adoption in the market, we’ve seen some smartphone using Tandem in China, and then we are seeing a wider adoption of Tandem in tablet products. You know, going forward, where do you think, you know, aside from IT, do you still see smartphone as a high potential market for Tandem?

Brian Millard, Chief Financial Officer, Universal Display: We we think that smartphones you know, as you noted, to date, it’s been a little bit niche using tandem in the smartphone market. There’s been some you know, even in the last few weeks, there’s been some, you know, rumors of tandems being considered for various smartphone models. You know, we think that especially if it can enable phosphorescent blue getting into market, we think that that’s, you know, a great opportunity. And even regardless of phosphorescent blue, you know, we think that, you know, certainly on the red and green side, a tandem structure would be incremental revenue for us if if they do use tandem on the red and green side. It’s you know, those the tandem displays are brighter, so brightness tends to be one of the key factors that are are, you know, marketed when introducing tandem displays.

And, you know, in the iPad Pro, Apple’s iPad Pro launch in 2024, Apple specifically, you know, marketed it as a tandem OLED and also noted the brightness as one of being one of the key features of it. So in the smartphone market, we think it does have, you know, an opportunity to take hold, But we’ll have to see exactly, you know, how those OEMs in the next few years decide to, you know, consider tandem in the in the smartphone market.

Martin, Host, Oppenheimer: Mhmm. And then for for Apple’s iPad Pro, for example, that display is one of the brightest and highest performance display in the market alongside other IT products. So do you think, you know, this how would you characterize the commercial success of this 10 panel? And, do you think, going forward, this will make Tandem a mainstay, along the IP product for Apple’s product lines?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So I I think that, you know, Tandem’s, whether it’s, you know, really any OEM who’s evaluating tandem, has to consider, you know, what exactly does it add to to their product that they’re bringing to market, and could they, you know, introduce a single layer and get the same features. As you said, the brightness, you know and and we talked about the brightness as a key factor, and also the lifetime. Because if you have white pixels on all day long on a display, you know, after a number of years, there can be some concern of lifetime if you if you don’t have a tandem display, and tandem does help with the lifetime concern there. We believe that in the IT market, there’s gonna continue to be a blend of single layer and tandem structures, whether, you know, any OEM is gonna have probably their premium models that would have the tandem structure.

And then there may be, you know, other models that are single layer. There’s models that have been in market for many, many years that are single layer OLED, IT products, and they do quite well. They don’t have the same brightness that you would have with tandem. And, you know, after many, many, many years, possibly, there’s a lifetime concern, but we’ve not really seen that be a significant issue. So there’s gonna be space, I think, for both.

And really, it comes down to, you know, the cost because tandem is a more costly display for the OEM to procure from the display maker. There’s more manufacturing complexity. As it relates to our material, we’re still a relatively small part of the overall bill of materials for a display, even a tandem display. So it’s not necessarily UDC’s material pricing that’s a hindrance to tandem being adopted, but more some of the other manufacturing complexity that goes in the process that causes them to be a little bit more expensive for the OEM to purchase.

Martin, Host, Oppenheimer: Mhmm. Got it. And I wanna touch on Blue because this will be quite an integrated topic with tandem structure going forward. Maybe first take in a more retrospective view on Blue. When you look at the Blue development, what were the most unexpected breakthroughs or challenges you’re running to that contributed to the delay in 2024?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So a little bit of background there is, as many of you may know, in 2022, we first set a timeline to Blue, and we said that in 2024, we expected to have, you know, commercial performance of our material. And, you know, just this May, so, you know, five months after 2024, one of our major customers, LG, came out and said that they had no commercial performance using our materials. So, over the last few years, our team’s been working very closely with our customers and internally to develop new materials that have continued to increase their performance and therefore given our customers more opportunities as they design and develop, material you know, products using using our high efficiency blue. I’d say the the challenges and breakthroughs, have been that, you know, our material is one component of our overall system.

And so, you know, that is, you know, a little bit challenging for us and our customers because it’s a matter of, you know, how does UDC’s material perform with various other materials that are used in producing a display. And getting to that right combination, you know, has been part of the puzzle that everyone’s been trying to solve. As well as, you know, specifically, there’s three things that we, assess when we’re developing new materials, whether it’s red, green, or blue materials, which is, you know, what’s the lifetime of the material? What’s the color point, so how deep is the blue or light is the blue, and, what’s the energy efficiency. And so of those three, the lifetime has been kind of the most challenging to move up the curve.

And that’s part of the reason why you saw LG in their announcement back in May. They noted that they got the energy efficiency benefits of the phosphorescence from UDC, and they were able to get more of the stability or lifetime benefits of the fluorescent using that hybrid approach that they did. Continuing to improve the lifetime characteristics of our material is certainly a priority and what our team is working on. But it’s, you know, it’s not a linear path. Right?

There’s, you know, kind of, you know, twists and turns as we go through the the development process that, just cause it to take a little bit longer than that 2024 timeline that we had originally set out for a few years ago. One of the key things that we’ve been using across our development of red, green, and blue materials is our proprietary AIML platform. So we set up a computational chemistry team at UDC about ten years ago, And that team is working, you know, continuously with our, you know, team in the lab to come up with, you know, new material sets that, you know, can improve performance characteristics. So that’s been a key capability of ours that’s helped us, you know, certainly on the positive side move forward, you know, faster than, than we would have otherwise been able to. And, but there’s, you know, always in science, there’s things, you know, around the corner that you can’t anticipate, and we’ve, you know, successfully navigated those and are really happy with the place that we’re in today.

Martin, Host, Oppenheimer: Mhmm. And talk about, you know, one of the challenges is developing a material in a very complex system. Does that make you think about maybe getting involved in more of the material development in the entire stack or forming a closer relationship with our customers or any other way to maybe remove some of the challenges in this complex system design?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. It’s a great question. So the material that’s most has the closest relationship to the emitter that we produce are the host materials. And we do manufacture on the blue side, we have manufactured blue hosts and been selling blue hosts in development quantity to our customers. So that’s been a way that we’ve, you know, been partnering internally to with ourselves to, you know, continue to make sure that we’re introducing a system to our customers that has the best possible likelihood of success.

We also, have host collaboration agreements on on red and green specifically, you know, with other companies where, you know, we do collaborate, you know, periodically with other partners in the in the OLED ecosystem on, you know, material development for for both for on that you know, they’re developing hosts. We have development emitter, and we do have collaboration agreements to kinda make sure that we’re able to introduce collectively the best possible systems to our customers. So it’s something that we certainly do focus on, specifically on the host materials.

Martin, Host, Oppenheimer: Mhmm. And do those host collaboration agreements resulting in any financial upside to you? And is that something you also have revenue recognized from those development agreement?

Brian Millard, Chief Financial Officer, Universal Display: It’s not any material revenue, but we do occasionally have some, you know, small amounts of revenue that come out of those collaboration agreements.

Martin, Host, Oppenheimer: I see. And for Blue specifically, do you still see the host material for Blue as a potential revenue stream once the materials are ready and passed all the commercial commercial thresholds?

Brian Millard, Chief Financial Officer, Universal Display: We do see an opportunity for Blue revenues Bluehost revenue specifically. And I think it’s you know, we are mindful, though, that the the host market is a little bit more commoditized than the emitter market. And so, you know, as we approach, you know, our customers and approach that that commercial opportunity, we fully think we have hosts that perform very, very well. We, you know, know there’s interest in them because our customers have been purchasing them for development use. But we’re also being mindful not to go build a bunch of capacity and infrastructure around a host business until we have, you know, a really clear sense of the commercial opportunity there.

But we are, you know, fully, you know, going, you know, all at that opportunity, and making sure that we’re really competing in that space.

Martin, Host, Oppenheimer: Mhmm. Got it. You know, I wanna talk about foldable smartphones because that’s, you know, we see a very steady increase of foldable smartphone both in shipment and market share over the years. And for you, are you developing foldable specific material stack given that, you know, the display has more durability or power efficiency concerns? Anything special in the recipe?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So it’s the foldable opportunity, as you said, is is really seems to be taking off, in the smartphone market. You know, as many Chinese brands as well as, you know, Samsung and others who have had, you know, quite good commercial success with introducing foldables. So we would expect, you know, in the next few years, there’s gonna be other leading OEMs that will introduce foldables, in the smartphone side as well. We specifically don’t material sets are fairly common, whether it’s foldable or single layer.

So there can be, you know, slight tweaks, but it’s not like it’s an entirely new thing that we’re not familiar with. Many of the materials that we develop that are used for single layer devices can also be used for foldable. And so it’s it’s a market that’s really growing, and our customers are all very interested in it. And the opportunity for our business is also very great because there’s, you know, probably two to three times the quantity of our red and green materials and and future blue materials that will be needed to, produce those foldable displays just based on the square area of those foldables compared to a to a conventional smartphone. So it’s a great opportunity for us.

But on the materials side, it’s, you know, fairly common, to what we’re used to in, in the traditional smartphone devices.

Martin, Host, Oppenheimer: Mhmm. I see. And considering the so I wanna move on to your exposure to Chinese market. Considering the the China order patterns are skin more bulky, these geographic political factors, how do you proactively manage your inventory levels across The US and Ireland?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So we as as you said, we manufacture our products in in two locations, The US and Ireland. Right now, we manufacture about 50% of our, you know, needs in each location. So, it’s a challenging situation to balance, you know, what we manufacture. If we’re introducing a new product tomorrow, you know, do we manufacture that only in The US, only in Ireland?

Do we manufacture it in both locations so we have the ability to supply customers from both? The with The US China, you know, trade situation, having the Irish plant in our in our network has been a key capability for us. We’ve been able to supply our our customers in China directly from Ireland in many cases. There are some materials that we make that are only made in The US. And so, you know, those have been subject to some tariffs, and that’s why we saw a lot of our customers in China purchase significant quantity of material in the first April, before some of those Chinese tariffs went into effect.

So it’s a constant balancing act to how we balance our supply between the two, plants. And, and one that, you know, we’ve having Ireland, though, as as part of our manufacturing network has been really critical in this time because, it’s, you know, key that we have alternative sources and be able to, you know, continue to be a US manufacturer, but, but have the options of manufacturing elsewhere if we if we can as well. So we’re, continuing to, you know, on a case by case basis, work with our customers to figure out, you know, exactly where the optimal location is for those manufacturing activities.

Martin, Host, Oppenheimer: Mhmm. And would you say the capabilities in The US and Ireland, they are similar? Is there any materials that can only be produced in The US or Ireland?

Brian Millard, Chief Financial Officer, Universal Display: No. We have the ability to make them in both. So the the equipment sets are really identical between the two. So we have, you know, the the ability to do all the wet process chemistry as well as all the finishing processes in our manufacturing in both locations. So and we have packaging labs in both locations as well.

So, really soup to nuts, we can do the whole the the full, process in either location, the same.

Martin, Host, Oppenheimer: Mhmm. So is is it right that the only difference between The US and Ireland will be, total capacity where you have a bit more capacity in Ireland?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So so, ultimately, Ireland is a larger facility. If it at full capa if we build out all the phases of CapEx, it’s a multiyear, you know, CapEx plan that we have for that location. It’s a 16 acre campus, so it’s quite large, and we’re only using about about half roughly of the of the physical plant that’s there. There is some incremental CapEx needed in the coming years to fully get to a 100% capacity there.

But as of today, based on the capacity we have in Ireland and the capacity we have in The US, we’re balancing about 50% of our production needs between between both sites.

Martin, Host, Oppenheimer: Mhmm. Got it. And when it comes to capacity, there’s also this question on utilization. What’s the current effective utilization rate across your manufacturing capacity manufacturing facilities? Is there something some optimization you currently needs to do that impact margins?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So we have, a a high degree of of capacity utilization, so we don’t have a lot of underutilization at this point. That said, we certainly have, you know, some excess, you know, in our in our, you know, in our process if we need to scale up for additional volume to meet customer needs. It’s also important to note, you know, back to kind of the earlier part of your question, with the lumpiness of customer ordering patterns, you know, we stock, you know, many months of and sometimes quarters of material in finished goods for our customers so that if they do place a significant order tomorrow, you know, we have the ability to meet that demand because we’ve already produced it and have it on the shelf waiting for them. Mhmm.

So that allowed us you know, in April when we got all those significant orders from our customers in China, we were able to rapidly respond and meet their needs within a few days because of the fact that we had already produced everything. So it’s, you know, a constant, you know, act of, you know, figuring out exactly, you know, how much to produce. But we have a high degree of utilization, but not a 100%. Right? There’s always, know, some capacity.

And we do a forward looking plan, multiyear plan looking forward of where we think industry volumes are gonna go over the coming years, and that informs, you know, our CapEx plans and and how we need to bring new reactors and other capacity online.

Martin, Host, Oppenheimer: Mhmm. Got it. And do you need to bring reactors online in relation to the gen eight fabs?

Brian Millard, Chief Financial Officer, Universal Display: We have sufficient capacity today, we believe, to to meet that demand because we’ve, you know, been been planning for that and known that that was gonna happen, that the IT market was gonna have an inflection point in the coming years and that we were gonna need to scale up manufacturing to meet that demand. So, we feel comfortable with the capacity we have either in place or, you know, under construction in the current state that, you know, we’ll be able to to meet those volumes.

Martin, Host, Oppenheimer: Got it. So how would you describe your overall visibility in terms of customer demand? You talk about having ample stock in finished goods for inventory. You know, would you say your visibility with clients are pretty reasonable for you to prepare ahead?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. We we get visibility. Some customers give us kind of rolling twelve month forecasts. Our larger customers tend to give us longer range forecasts. And then, you know, as the custom you know, the smaller customers, we tend to get, you know, three months or, you know, sometimes six months of of visibility.

So really just depends on the customer, how much visibility we get. And then we have our own team internally that meets, you know, typically every two weeks to kind of look at what the forward looking volumes are expected to be over the next twelve months. And then we do an internal kind of rolling twelve month even for the customers that we don’t get twelve months for. We do our own extrapolation and estimates for that twelve month period. And then we do a longer range three year model on an ongoing basis based on mostly internal data, leveraging some third party analysts and and market research firms.

But, as it relates to, you know, kind of the near term visibility, you know, we do get, you know, three to six typically and sometimes even more than that from our customers. And what’s given us the confidence this year to, you know, raise our guidance, that we’ve we raised just a few you know, two weeks ago on our earnings call, we brought up the bottom end of the guidance range by 10,000,000. And that’s really because we have, good visibility now to kind of, you know, certainly what, you know, through July and and into August look like. And we’re continuing to get, you consistent feedback from our customers about what the rest of the year also is expected to be. And so that’s why, you know, we felt confident in in in bringing up the bottom end of the guidance range by 10,000,000.

Martin, Host, Oppenheimer: Mhmm. Got it. I wanted to maybe touch on emerging sectors for OLED display. Beyond the expected growth for IT and your potential blue adoption, what are the underexplored or emerging applications for OLED that you see as having significant longer term consumption potential?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. I think automotive is a really interesting market. It’s one that, you know, over the last few years, I think we’ve been increasingly bullish about the automotive opportunity as our customers continue to focus on it even more and more. You know, we have automotive development projects underway with many of our major customers at this stage. And especially in the EV market, automotive, the OLED have OLEDs in automotive have a lot of compelling, factors for, energy consumption, you know, the the, the ability to, you know, have good temperature, you know, specs that that OLEDs, can perform at, as well as, you know, some some tandem structures are also being assessed for for the automotive market, which is certainly an incremental opportunity for us based on that material volume per square inch being greater.

And the automotive market’s one where not only for, you know, the cockpit and the dashboard and and those, you know, driver facing and and and front passenger facing features, but even, you know, the rear, you know, entertainment displays for passengers in the rear of the car. And we have some customers who are, you know, active in the taillight market as well for automotive. Audi has been the OEM who’s been most active in the OLED taillight market, and they’ve, you know, adopted them in many of their models, and have, you know, plans to do even more in the coming years. So I think automotive of the key markets is one that, you know, we’re most interested in. Certainly, wearables continue to be an area of focus, whether that’s, you know, smartwatches and and other types of wearables.

It’s a smaller revenue opportunity for us just because the size of those displays is smaller than, you know, a smartphone or a tablet or or those types of devices. But, you know, those are really the key markets that we’re we’re evaluating going forward. And then there’s certainly things that fall beyond those two, like, you know, medical devices and other things that might use use OLEDs. But, you know, the predominant things that we’re focused on, you know, beyond the top ones are are really automotive and wearables.

Martin, Host, Oppenheimer: Mhmm. And given there’s a higher performance requirement for auto in terms of various conditions, maybe a resistance to temperature and brightness. Would you say overall, there’s a potential of higher adoption of tandem structure in auto?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. To date, many of the many of the auto most of the automotive use has been tandem. Mhmm. There’s been a few, brands, especially some of the Chinese EV brands that our understanding is they have used a single layer OLED in some of those models. But, you know, especially many of the flagship, you know, brands, in the West seem to be using a tandem structure for for their displays.

Martin, Host, Oppenheimer: Mhmm. Got it. And do you foresee in the future where auto start to become a more material? Is there an inflection point or milestone you’re expecting for auto to become more material to your business?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So I think it’s important to have the context of the broader, you know, the TAM of the of the auto market. So, you know, there’s around 85,000,000 new vehicles sold annually in the world. Right now, about 1% of those, you know, so little less than a million, units of those have OLED products in them. So there’s clearly a lot of opportunity for growth off of where we are now since we’re just at such low adoption in in the current state.

And I think if you look at, you know, some of the new, the next gen, you know, prototype models that are coming out that have more and more displays in them. I think that’s really the key opportunity for us is proliferation of displays even more in in automotive. And as that happens, we think OLEDs will continue to have, you know, strong foothold. So I think that there’s no one particular thing to point on other than we think that the penetration rate is very low today, has a lot of opportunity for grow as to grow as well as the size and quantity of displays in vehicles is continuing to grow on an annual basis. And so that provides an even greater opportunity for our business as that continues to occur in the years ahead.

Martin, Host, Oppenheimer: Got it. So so both the penetration rate and then the content per vehicle will rise over Yes. Yep. Got it. Thanks.

I wanna touch on I IP. And how do you plan to evolve your IP strategy to keep protecting your leadership position against, other challenges, especially as the majority of the OLED industry is based in East Asia?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. We are, you know, a continuous innovation company. So we’re continually, you know, on a daily, weekly basis, you know, inventing new technologies, materials, you know, device architectures, various types of of IP that we are patenting. And so we are filing that on an ongoing basis and continuing to get new patents granted. So we have more than 6,500 patents today that cover not just our materials, but, you know, a broad array of technologies in the OLED and display space.

And we believe that the global coverage of that portfolio as well as the quantity and breadth and depth of the portfolio provides us, you know, with a lot of protection against, you know, competitive concerns. And so we believe it’s it’d be very hard for someone to compete with us in a meaningful way on a especially on a global scale based on, you know, the types of IP and the and the nature of our IP. But it’s we’re not, you know, we’re not sitting here living on patents of the past. We’re continuing to move forward and invent new and new and improved materials and technologies that provide us with a lot of protection for our business going forward.

Martin, Host, Oppenheimer: Mhmm. Got it. So I want to touch on, you know, the topic of capital allocation. So you have announced a buyback this year, and in UDC’s history, it’s a very rare occurrence. Can you maybe speak to the context of buyback, why now, and, you know, overall, what’s your capital allocation strategy and where buyback sits?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So as you noted, we we historically have returned capital to shareholders through our dividend program. We’ve not, you know, been active on the buyback side. We our board did put a 100,000,000 authorization in place back in in late April, and that authorization was put in place, really to give another tool to management, you know, as we move forward that if there is price dislocation or, you know, a reason why we think, you know, our stock’s trading at a particular value relative to, you know, what we believe is market, we can get in there and buy some shares. The we’re not gonna be, we’re so we’re gonna be opportunistic in the way that we deploy that as opposed to having an ongoing, you know, program each quarter where we’re buying a certain, you know, quantity of of shares.

And our capital allocation program is really focused firstly on investment, and that’s investment either in r and d and continuing to expand our position in the industry, you know, m and a, whether that’s acquiring patent portfolios or businesses.

Martin, Host, Oppenheimer: And

Brian Millard, Chief Financial Officer, Universal Display: then returning capital to shareholders, as I said, is important to us and has been through our dividend program historically and now through the authorization that we have in place for the buyback. And, you know, we’ll see, you know, when and if we deploy the buyback going forward, but it at least gives us the opportunity that, you know, as I said, if we see that dislocation, we can get in there and and and take action as as we need to.

Martin, Host, Oppenheimer: Mhmm. Got it. And in terms of other priorities in capital allocation, how would you rank them respectively?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. I think organic investment in in in organic r and d, right, continuing in to find new research areas, whether that’s in OLED displays or, you know, other types of, you know, electronic materials or things that are kind of, you know, within our wheelhouse and what we know how to do is important. We’re also continuing to look at our AIML and computational chemistry area, which I I mentioned earlier, and, you know, how can we continue to leverage that as a vehicle for our growth in the years ahead, to maintain our and grow our position in OLEDs as well as, you know, if there’s other research areas that that might be applicable to. And then, you know, we’ve acquired patent portfolios historically over the last few years. We most recently acquired the Merck patent portfolio, two years ago, and, you know, we’ll continue to look at opportunities, you know, in in the years ahead of if there’s, you know, IP we find interesting that we think is additive to our I our position, you know, we’ll have the capital in the business to be able to pursue those, you know, very quickly.

We’ve not had a significant history and track record of doing, you know, m and a at the know, business acquisitions, but, you know, it’s something that we preserve the flexibility to do through the capital we retain in the business and our financial position that we have.

Martin, Host, Oppenheimer: Mhmm. I would like to address a few questions coming from the audience. The first regarding Summersprout and then your IP protection. The question is, the company has been shipping red and green materials, and there are reports that those materials are being used in global smartphone models. How should investors take your lack of legal response to this development?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. I think the key thing is, you know, we have a position with our customers. We have a strong partnership with our customers. We expect to continue to be the leader in the industry. There has been an increased competitive environment over the last few years, particularly in in China.

A lot of that is driven by, you know, desire for localization. And, you know, we believe that our IP position, which we just talked about over the last few minutes, as well as the partnerships we have with our customers, the quality of our materials, we’ll continue to preserve our position on a long term basis. But continuing to protect our IP and our, you know, our know how and trade secrets is of utmost importance and and one we’ll continue to take going forward.

Martin, Host, Oppenheimer: Mhmm. Another question from the audience regarding Blue development. So do you have a new timeline to share when do you expect to hit the commercial specification for a standalone blue, meaning blue, or or in a all phosphorescent RGB architecture?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. So we don’t I think the key thing is LG’s announcement of using our material in a hybrid structure with phosphorescence and fluorescence, we view as a major win for us and being able to get a foothold in the market, which will enable us to move forward, you know, and continue to iterate off of off of that strong position. Get like I said, getting you an all phosphorescent approach is certainly a priority. I don’t have a specific timeline to provide in that regard other than to say our team continues to work. Our work isn’t done in continuing to invent new materials that continue to improve their performance characteristics and that then giving our customers more options as they invent new, new products going forward.

Martin, Host, Oppenheimer: Mhmm. And I want to maybe, take the last few minutes to, talk about your outlook for next year. Aside from, you know, qualitative guidance, you know, what are the things you’re excited about going into next year?

Brian Millard, Chief Financial Officer, Universal Display: Yeah. I think, certainly, if you look at the key markets of our business being smartphones, TV, and IT, of those three, IT, we expect, has the strongest rate of growth, you know, over the next few years and and in 2026 as well based on the new capacity coming online, the OEM product road maps that we understand today to adopt OLEDs into more and more products on the IT side over the coming years. And there’s a lot of momentum at our customers on the IT side. Smartphones, we also have the opportunity to grow that market. We’re more than 50% penetrated today in the smartphone space, and there’s room for that to continue to grow as more and more mid t mid end, mid models and and low end phones continue to adopt OLEDs.

And TVs, we also expect, you know, there’s gonna be continued growth in the TV market over the coming years. So we’re excited about a lot of things going into next year. And on Blue, we’re continuing to work with our customers very closely on their development prod you know, prospects. And, you know, we believe, that, you know, we’ll be very successful in in having Blue in market. It’s just a matter of, you know, continuing to support our customers as they develop, displays using our Blue and, as they continue to, you know, move that forward into, into the commercial marketplace.

Martin, Host, Oppenheimer: Mhmm. Got it. Now I see no further questions from the audience. Is there any closing remarks you would like to make?

Brian Millard, Chief Financial Officer, Universal Display: No. I I really thank you, Martin, for and Oppenheimer for hosting us today. It’s been a great conversation and conference, and look forward to, you know, talking with many of you in the in the coming quarters as well.

Martin, Host, Oppenheimer: Thank you, Brian. Thanks, everyone, for attending. That’s a wrap.

Brian Millard, Chief Financial Officer, Universal Display: Thanks. Take care.

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