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Of Tablets, iPhones, and OLED Sales

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Our picture of the OLED display market is growing clearer. And it's not good news for the world's most fanatical customers.

The good folks at Ars Technica scored an interview with Barry Young, the managing director of the OLED Association, to clear up rumors of an Apple (Nasdaq: AAPL  ) tablet computer shipping with OLED screens (short answer: Dream on, 'cause it ain't happening). In the process, Ars uncovered some previously little-known facts about the OLED market, and when you match the new data up with reports from DisplaySearch, you get some investable information.

Samsung, which has a longstanding OLED technology partnership with Rule Breakers pick Universal Display (Nasdaq: PANL  ) , totally owns today's OLED market because of an early commitment to building factories to make OLED displays. LG Display (NYSE: LPL  ) , the runner-up, is armed with all of Eastman Kodak's (NYSE: EK  ) OLED expertise, but only runs 10% to 15% of Samsung's manufacturing capacity. Sony (NYSE: SNE  ) has slowed down OLED manufacturing for now and is back to the R&D lab, and long-rumored OLED processes at General Electric (NYSE: GE  ) have yet to result in any consumer-based retail products.

The industry is buckling under growing demand and constrained only by the lack of massive manufacturing facilities. Samsung and LG are selling as many screens as they can make, which (along with some manufacturing quirks) is why they can't commit to supplying millions of rather large OLED screens to Apple's iSlate.

Perhaps the most prominent OLED gadget on the market today is the Nexus One smartphone from Google (Nasdaq: GOOG  ) . When Google and manufacturing partner HTC decided to use a screen technology in short supply, they clearly didn't plan on selling millions of the darn thing.

In that light, widespread rumors of the next iPhone sporting an OLED display are probably nothing more than wishful thinking from the Apple faithful. The iPhone is too popular and would require far too many OLED screens. An already supply-constrained OLED industry simply can't make it happen just yet. Give Samsung, LG, and others another year or two to build out their factories, and maybe the fifth-generation iPhone could come with a glorious OLED screen. But the 2010 iteration almost certainly won't.

See anything I’m missing? Discuss in the comments area below.

Fool contributor Anders Bylund owns shares in Universal Display and Google, but he holds no other position in any of the companies discussed here. Google and Universal Display are Motley Fool Rule Breakers picks. Apple is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (8) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 20, 2010, at 1:43 PM, Fool wrote:

    I don't believe Apple has to have an OLED display for their slate to be successful.

  • Report this Comment On January 20, 2010, at 1:47 PM, lemoneater wrote:

    Helpful article. Thanks. I'm being patient about PANL.

  • Report this Comment On January 20, 2010, at 1:52 PM, gslusher wrote:

    OLED displays are not great. They use MORE power than backlit LCDs, on the average, unless you use a black background--they need more power to show white. The blue pixels grow dim faster than the red & green, so there's a yellow cast later. They're even harder to see in daylight than a backlit LCD. (Why do you think that Microsoft's demos of the Zune HD are always in the dark?) They show deeper blacks but muddier whites than LCDs.

  • Report this Comment On January 20, 2010, at 2:07 PM, PhulishMortal wrote:

    Thanks for the article, Anders; I was looking into this matter just this morning. Investing based on OLED potential is tempting, but I have nowhere near enough actual knowledge on the subject -- any "investing" would be no more than speculating.

  • Report this Comment On January 20, 2010, at 2:25 PM, jonluxy wrote:

    Don't forget LG is also a licensee of Universal Display and is building out a 3.5 gen fab this year & 5.5 gen fab in 2011. And GE is working with Konica Minolta which is a licensee of PANL as well (on OLED lighting) and Universal Display is working with Armstrong Industries on Lighting and infrastructure and was just earmarked for $8 million by the US Gov for developing an OLED lighting Pilot line. Also Samsung is expanding its AMOLED manufacturing capacity to 10,000,000 displays a month this year and does not expect that will meet demand. The demand is there, and the technology seems to have just come of age. I predict huge growth in the next 5 years. I consider PANL (Universal Display) to be the pure play in this field. It is risky because information is always held close to the vest, and the details of license agreements are never publically disclosed. But I expect by the end of this year PANL will have renegotiated their sweet deal license with Samsung and s/b profitable and/ or cash flow positive and will grow rapidly for several years once past that milestone, so I have invested overweighted in PANL shares.

  • Report this Comment On January 20, 2010, at 2:40 PM, puravidatoall wrote:

    There is a huge growth story evolving from OLED technology , companies are positioning itself for the future . Kodak/LG/Samsung .“As we said earlier this year, OLED is one of the businesses we wanted to reposition to maximize Kodak’s competitive advantage at the intersection of materials and imaging science,” said Laura G. Quatela, Kodak’s Chief Intellectual Property Officer and manager of the company’s OLED business. “This action is consistent with that strategy. Our OLED intellectual property portfolio is fundamental; however, realizing the full value of this business would have required significant investment.”

  • Report this Comment On January 29, 2010, at 11:04 AM, gt1135 wrote:

    I love reading about this stuff. Obviously its far from a consumer ready item, but it gives yo uan idea of some of the places these type of companies are heading.

  • Report this Comment On February 19, 2010, at 9:51 AM, Hank9898 wrote:

    Foolish me... Been with PANL for years. Wondering , is it better to leave the investment in PANL or invest in the companies (Samsung...etc) that will be producing products with the PHOLD and similar technology?!

    I have been awaiting this market to explode and want to be positioned correctly when it does.

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