A Samsung rendering of a potential foldable OLED device. Image source: Samsung.
Rejoice, technology enthusiasts, because we're about to see arguably the most significant shift ever in smartphone form factors. For investors looking to capitalize on the trend, that shift will come from Samsung (NASDAQOTH: SSNLF), made possible by its use of flagship OLED technology from Universal Display Corporation (OLED 2.25%).
More specifically, earlier this month analysts at HSBC predicted the Korean electronics giant will launch a new smartphone with a slick, foldable OLED display in the second half of 2016.
But I think we'll get our first glimpse of this new foldable smartphone much sooner.
Deja vu?
Before we get too excited, haven't we heard this song before?
Recall that at an investor event more than a year ago -- in November 2014 -- Samsung Display VP Lee Chang-hoon revealed plans "to provide consumers with a product that has a flexible display by the end of [2015]."
To be fair, those plans also came with the caveat that no final decisions had been made regarding a finished product. But investors and tech enthusiasts alike had reason to be pleased. A full 10 months earlier, Samsung reportedly showcased early prototypes of a foldable OLED smartphone to VIP attendees at CES 2014. And before that at CES 2013, Samsung made waves by introducing its YOUM line of flexible displays, then revealed several compelling concepts in a promotional video for the technology:
And consumers aren't just compelled by the slick aesthetics enabled by foldable OLED technology. Because OLED pixels emit their own light and don't require a backlight, OLED displays can be made impossibly thin, virtually unbreakable, and feature superior brightness, more vivid colors, and near-infinite contrast ratios.
So why should we believe the foldable OLED device rumors this time?
For one, the timing is right. Though Samsung executives promised an end-of-2015 timeline just over a year ago, I won't be the least bit surprised if they opted for a slight delay to introduce a foldable device alongside the Galaxy S7 and S7 Edge at next month's Samsung Unpacked 2016 event. Considering the Galaxy S6 Edge -- which features a curved OLED display -- was only just revealed at Samsung Unpacked 2015 this past August, this could add some much-needed novelty to what some consumers might otherwise view as a mundane exercise in incremental upgrades.
What's more, Samsung undoubtedly wants to maintain its technological edge over Apple (AAPL 0.56%), especially as the Cupertino-based tech giant's own transition to OLED technology looks more inevitable with each passing day. If it wasn't enough to hear Universal Display CFO Sid Rosenblatt state an OLED iPhone was "only a matter of time" during Universal Display's call in November, over the past few weeks alone we've seen several reports of impending Apple-centric OLED investments from Apple suppliers AU Optronics, Japan Display, and even curved OLED manufacturing capacity for Apple being added at LG Display.
And last April, Samsung itself reportedly formed a 200-person team to focus exclusively on making displays for Apple -- the same day it formally split its display unit into separate LCD and OLED divisions. With a front-row seat to Apple's plans, it would only make sense that Samsung would want to stay at the forefront of the very OLED technology it has championed for years already.
But if the early stages of manufacturers' investments are any indication, Apple won't have the necessary capacity to fully convert its iPhone line to OLED until at least 2017. This, in turn, gives Samsung the flexibility to prime consumers' interest in foldable OLED devices early in 2016, then formally launch its foldable OLED device as it is able to meaningfully ramp production later this year.
To be sure, according to Universal Display CEO Steve Abramson during last quarter's conference call in November, Samsung primarily views flexible OLEDs as a "mid- to long-term growth engine" at this stage. When asked during the Q&A portion of the call to name the biggest potential influences on upside or downside relative to Universal Display's financial guidance next year, Abramson singled out the uncertain timing of both Samsung's "flexible investments" and the ramp of its A3 gen-6 flexible OLED production line.
Over the long term, however, what remains clear is that OLED technology continues to permeate the electronics landscape. For investors able to buy now and patiently watch as the story of this new generation of devices unfolds, the financial rewards could be staggering.
