Universal Display (OLED 3.04%) has had an incredible year. Shares up approximately 130% year to date, thanks in part to the OLED technology specialist raising its 2019 guidance in every single quarterly earnings report of the year. At the midpoint, Universal Display's latest outlook is 20% higher than its initial 2019 revenue guidance provided in February.
|
Date Issued |
2019 Revenue Guidance |
|---|---|
|
Feb. 21, 2019 |
$325 million to $350 million |
|
May 2, 2019 |
$345 million to $365 million |
|
Aug. 1, 2019 |
$370 million to $390 million |
|
Oct. 30, 2019 |
$400 million to $410 million |
Data source: SEC filings.
When asked about upgrade cycle for smartphones next year, CEO Steve Abramson noted that "the premium smartphone market I think is something that will continue to grow," pointing to high expectations that 5G will spur upgrades. "We are very positive on 2020," the chief executive added.
Samsung is the dominant supplier of OLED display panels. Image source: Samsung.
Here's some more data to support Abramson's bullishness.
AMOLED phones to top 600 million units in 2020
Counterpoint Research recently estimated that global sales of smartphones that use AMOLED panels will jump 46% in 2020 to top 600 million units. For the most part, the high costs associated with OLED displays has kept the technology in premium ends of the market. Thus far, Apple (AAPL 0.04%) only offers OLED displays in its most expensive iPhones that start at $999, while more affordable models use traditional LCD displays.
OLED displays are facilitating many of the latest smartphone trends, such as foldable displays, improved power efficiency, and smaller bezels. "Hence, we believe that AMOLED-based smartphones will remain in demand with Chinese smartphone brands aggressively adopting them for their mid-tier portfolio," Counterpoint's Tarun Pathak said in a statement. "AMOLED panels are already a default choice in premium-tier smartphones."
Samsung represented around 45% of AMOLED smartphone sales in 2019, followed by Apple with 16% share. The No. 3 player in AMOLED smartphones for the year was China's OPPO with 11% of sales.
In 2020, many Chinese manufacturers may add AMOLED displays to sub-$200 phones as costs continue to come down. "Apple is also likely to go for an all OLED portfolio in its next launch cycle," Counterpoint's Jene Park added. "These factors will further lead to the growth of AMOLED based smartphones in 2020."
As the underlying supplier for OLED intellectual property as well as the materials that go into the panels, that all bodes well for Universal Display.
Ramping up production will take time
However, adoption could be limited by production capacity constraints, according to Counterpoint. Samsung supplies nearly 90% of all OLED panels (including to Apple), and it's going to take time for other panel makers to ramp up manufacturing. Beyond phones, OLEDs are becoming increasingly incorporated into other product categories like smartwatches and TVs.
"We believe that the proliferation of OLEDs across the consumer electronics spectrum is fueling a tremendous multi-year capex cycle," Universal Display CFO Sid Rosenblatt said in October. "As panel makers continue to shift more of their focus to OLEDs as the future of displays, we are seeing a corresponding increase in OLED investment momentum."
