Will This Company Ever Become an Apple Supplier?

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Just earlier this month, I wrote:

One day down the road, I expect Apple  (Nasdaq: AAPL  ) to adopt OLED technology in iDevices. The Mac maker recently filed numerous patents for OLEDs, including one involving improved power efficiency and another on how they may be implemented in future iPads. Another three (all related to touchscreens) were uncovered more than a year ago, so you know it's on Cupertino's radar.

That was a small component of why I bought Universal Display (Nasdaq: PANL  ) . I conceded that any type of OLED adoption on the Mac maker's part would be a long way away, if at all. Well, evidence continues to build that Apple is interested in one day including OLED displays in its products.

AppleInsider recently uncovered a freshly published patent application titled "OLED Driving Technique." The application outlines a way to improve brightness control on such displays. Apple originally filed for it in October 2010, but it was just publicly published last week.

The patent application uses a MacBook Pro as an example of a device that could benefit from an OLED screen, although it says it could be applied to any device, including smartphones and TVs.

In November, Apple also filed another patent application on how to implement an OLED backlight for a traditional LCD display, with the main advantage being that an OLED backlight could be thinner and have better light uniformity. As Apple continues to build its IP related to OLEDs, the case for seeing Apple one day adopting the technology similarly builds steam.

The connection is also apparent as UDC's two largest customers, Samsung and LG Display (NYSE: LPL  ) , supply displays for Apple. There are still plenty of hurdles holding back this scenario, like manufacturing costs, supply constraints, and blue OLED pixel lifespans.

Available supply is particularly challenging, since when Apple enters a component market, it mercilessly corners it, leaving little left for competitors as it locks down supply with billions of dollars of forward contracts. After all, it needs to make sure it can build all the devices it's selling.

I still don't think this will happen anytime soon, but I do think it will happen eventually.

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Fool contributor Evan Niu owns shares of Universal Display and Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Universal Display and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Universal Display and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On April 28, 2012, at 7:59 AM, aporeh wrote:

    According to reports from Digitimes AU Optronics (AUO) is expected to enter the AM-OLED market during the second quarter of 2012 with a 4.3-inch display. The 4.3-inch AM-OLED (960 x 540) will be priced at between US$45-55. LG has no plans to make small screens. While traditionally Apple was able to "corner" the market OLED is not yet a commodity and is only commercially manufactured by Smasung. Apple needs OLED quickly so that it can innovate their form factor, and Samsung make so much money from their phones they don't give a.... Now, as Samsung moves to flexible and even foldable screens they might give Apple 4.3 each displays (S-OLED) so as to keep the edge. Meanwhile the Nokia Lumina is OLED and so is the Sony Vita, and they are selling well. All in all you are right. OLED and UDC is the future. UDC should be a 80 to 100 stock if it wasn't for the manipulation of various hedge funds.

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