4 Critical Areas for Universal Display Investors to Watch

Evan Niu, CFA, The Motley Fool
Updated

The next generation of display technology will be centered upon organic light-emitting diodes, or OLEDs. The technology's viability in mainstream applications continues to ramp up in conjunction with advancements, but its advantages over traditional LEDs and other display technologies are too promising for investors to ignore.

As the dominant supplier of OLED materials and intellectual property, Universal Display has a bright future ahead of it. To break down exactly how investors should understand this company, the Fool recently crafted a premium research on Universal Display, a brief excerpt from which we've included in the text below. Enjoy!

The four areas you must watch

  • Apple: All of the advantages that OLEDs offer are characteristics that Apple places high value on: thinner, lighter, and they're environmentally friendly, among others. The biggest impediment to Apple adopting OLED to date has been the relatively low manufacturing yields, as Apple demands high volumes. In addition, manufacturing remain costs are high, and Apple also likes to maintain its gross margins. As OLEDs progress down the cost curve and yields improve, Apple may eventually adopt the technology. This may not happen for many years, if at all, but it's something to keep an eye on.

  • LG agreement: Samsung has already signed a long-term supply agreement with Universal Display, so revenue from this partnership should be fairly consistent and reliable. If LG similarly inks a long-term contract, that will remove a lot of uncertainty from Universal Display's future and would be a very positive development. Investors need to be on the lookout for a LG agreement.

  • OLED TV prices and adoption: Currently, OLED TV prices remain far too high for mainstream adoption. The TV market in general has remained sluggish, as there have not been any innovations meaningful enough to drive an upgrade cycle. However, as OLED technology increases penetration in the flat-panel TV market, Universal Display will benefit.

  • Smartphones with OLED displays: Many popular smartphones now ship with OLED displays, particularly from Samsung, Universal Display's largest customer. Its current flagship Galaxy S3 that ships in high volumes features an OLED display. As OLED continues to gain traction, investors should monitor for high-profile flagship devices that carry OLED displays.


Universal Display has a powerful patent portfolio behind OLEDs, a technology poised to dominate the displays of the future. Its placement at the center of OLEDs makes the company an underappreciated way to play the enormous sales growth in tablets and smartphones. However, like any new technology, there are plenty of risks to Universal Display. I've authored a new premium report that dives into reasons to buy the company as well as the challenges facing it. For access to this comprehensive report, simply click here now.

The article 4 Critical Areas for Universal Display Investors to Watch originally appeared on Fool.com.

Fool contributor Evan Niu, CFA owns shares of Apple and Universal Display. The Motley Fool recommends Apple and Universal Display. The Motley Fool owns shares of Apple and Universal Display . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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