These are exciting times in the OLED industry. OLED technology researcher Universal Display (Nasdaq: PANL) is the single best performer in my all-star CAPS portfolio. The shares I bought with real money in early January have already gained more than 43%. This stock is lighting up all my portfolios, if you'll pardon the pun.
Blink and you'll miss the next catalyst for dramatic market growth. Whether you're looking at the exploding smartphone scene or the unsexy-but-huge lightbulb replacement opportunity, OLED knows how to grow. This is just the beginning of a remarkable investing story.
In just the last few days, we've seen two major moves in this space.
Gorilla glass in the mist
First, Glassware giant Corning (NYSE: GLW) announced a joint venture with Korean electronics expert Samsung. The new operation will make glass panels for OLED displays, using highly specialized Corning Lotus glass that can stand up to the high temperatures in today's OLED manufacturing processes.
The Gorilla Glass you see on many high-end smartphones today sure is tough, but it could buckle or melt under the unique stresses of an OLED screen. Moreover, the Lotus substrate should allow Samsung to deliver higher resolution on its already impressive OLED panels, because the material just doesn't react to high temperatures.
Samsung will use these top-shelf OLED panels in its own lines of smartphones, tablets, and even large TV sets. The venture will also ship glass to "the broader Korean market," which basically means local peer LG Display (NYSE: LPL). Samsung is already the world's largest maker of OLED products, and the company signed an important long-term supply agreement with Universal Display last summer.
The announcement quotes research from NPD DisplaySearch, predicting that the OLED display market will quintuple from $4 billion in 2011 to $20 billion by 2018. This specialized glass panel operation will help that vision become a reality.
The more we get together, the happier we'll be
Also, last week, Taiwanese screen builder AU Optronics (NYSE: AUO) boosted its interest in OLED technologies. The company unveiled a strategic alliance with Japanese chemicals giant Idemitsu Kosan for the development of next-generation OLED displays.
Idemitsu will ship OLED materials to AU, and the two will collaborate on developing the technologies further. Like Samsung, AU plans to use the resulting products in everything from little smartphones to huge TV screens.
This deal doesn't directly hook into Universal Display, but that company has longstanding relationships with both AU and Idemitsu. A healthy dose of co-opetition is necessary in this industry, because no OLED researcher has cornered the market for every type of material that goes into a modern OLED screen. Instead, panel builders mix and match technologies from various camps. "We believe that collaborative relationships such as these are important for ensuring success of the OLED industry and broader adoption of our PHOLED and other OLED technologies," Universal Display said in last year's 10-K filing.
Growing the addressable market is a common goal for all these companies. And with the Samsung contract to hold up as a template for others to follow, Universal should be able to sign similar long-term technology licenses and material supply deals with AU, LG, and others. For example, so far the company has a contract with Idemitsu and Panasonic (NYSE: PC) for OLED lighting panels. Look for the stock to pop as each new partnership is announced.
Putting money into Universal Display is the easiest and most obvious way to invest directly in the OLED explosion. But there are other roads into this market as well. High-quality mobile displays are powering a trillion-dollar revolution – find out more in our free report, where you'll find plenty of quality stocks.
