Universal Display Corporation Will Benefit As OLED TV Prices Fall

When LG first released its first curved, 55-inch OLED television in stores last August, its picture wasn't the only stunning thing about it. That beautiful screen also came with a shocking $15,000 price tag, or more than enough to buy a reasonably nice car.

According to the Fool's Steve Symington in the video below, however, that high price was primarily due to painfully low manufacturing yields early on. Lucky for investors, that's changing quickly as OLED panel makers like LG Display  (NYSE: LPL  ) and Samsung (NASDAQOTH: SSNLF  )  Display iron out the kinks in their respective manufacturing processes.

In fact, here we are just eight months later, and the same 55-inch model from LG -- the 55EA9800, to be specific -- is currently selling for "just" $5,999 on Amazon.com. If you head over eBay, several sellers are currently offering sets new in the box for under $4,400. What's more, thanks to more recent developments, Steve says OLED TV prices are set to plunge even further by the end of this year.

From an investor's standpoint, he also thinks there's no better long-term play on the space than OLED specialist Universal Display Corporation (NASDAQ: OLED  ) , which currently has license and material supply agreements in place with both Samsung Display and LG Display.

But these falling prices won't have an immediate positive affect on Universal Display's coffers. To hear Steve's full take on what investors can expect, check out the video below.

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Comments from our Foolish Readers

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  • Report this Comment On April 04, 2014, at 10:57 AM, carnegiel8ker wrote:

    I'm a BIG fan of Universal Display (OLED) but I need to correct 2 things: First it would have been GREAT had the stock been up over 200% over the past year but it hasn't...by my calculation it has been essentially flat (but not without some severe peaks and troughs!!) Second, they do NOT have a commercial PRODUCTION agreement with LG yet (they have one with Samsung). The company does indeed make money from LG, and if LG were to continue to pay the higher prices for Universal's products under their DEVELOPMENT contract, the company would be very happy, but the market is skeptical of a steep ramp in TV production from LG because we have not yet seen a long term agreement with UDC.

  • Report this Comment On April 04, 2014, at 3:44 PM, TMFSymington wrote:

    @carnegiel8ker, You're correct about the chart, which actually reflects OLED's 5yr return.

    And on the "production" vs. "development" agreements, note we're both saying essentially the same thing. In LG's case, however, rather than splitting out the license fee and paying lower prices for higher material volumes as Samsung does, UDC simply builds the license fee into LG's material prices. So yes, UDC is perfectly happy doing so until LG's volume reaches the point at which it makes sense to sign a long-term agreement. Either way, UDC does have (as I stated in the video) "license and material" supply agreements in place with both companies.

    And the market shouldn't be skeptical about LG's pending "steep ramp in TV production." Remember during last quarter's conference call in late February, UDC's CEO reminded investors LG had just "reaffirmed its 8G OLED TV comitment with its first line slated to start ramping in the second half of this year."

    Only after that happens should we expect to see a long-term agreement with LG Display. Simply doesn't make financial sense for LG otherwise.

    Thanks for watching and and Fool on!

    Steve (TMFSymington)

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