Last month, shares of Universal Display Corporation (NASDAQ:OLED) plunged when production difficulties reportedly caused Samsung (NASDAQOTH:SSNLF) to abandon plans for building a new large screen OLED television manufacturing facility. But if recent technological advancements from Universal Display are any indication, those difficulties may not be an issue for long.
Why Samsung just couldn't keep up
Of course, Universal Display investors took solace knowing Samsung has since confirmed it will invest in a new facility to expand small- and mid-sized OLED production. And that was little surprise, considering Universal Display's flagship technology is already prevalent in millions of Samsung's Galaxy series devices.
But until Samsung works out the kinks for mass production of its large-screen RGB-OLED based technology, there's simply little hope for it to keep up with the ever-cheaper OLED TVs being manufactured by competitor LG Display (NYSE:LPL).
To be specific, the relative simplicity of LG Display's white-OLED tech allows it to enjoy fewer manufacturing hurdles when applied on a mass scale to large displays. As a result, improving yields for LG Display's 55-inch curved W-OLED televisions have allowed LG Electronics to drop the price by two-thirds in less than one year, to "just" $4,999 online as of this writing. Meanwhile, Samsung's comparable 55-inch RGB-OLED model still costs around $8,999.
This one's for you, Samsung
But don't for a second think Universal Display wants Samsung -- which is currently its single-largest customer -- to be left behind.
Hot on the heels of its new $50 million share repurchase program Thursday, Universal Display announced several OLED technology advances which were presented earlier in the day at the 2014 Society for Information Display Conference. Those included topics ranging from a new color tunable W-OLED lighting panel, methods to improve its single-layer encapsulation technology, and -- most relevant to our current discussion -- a paper presented by Dr. Mike Hack titled "Novel Two-Mask AMOLED Display Architecture."
From Universal Display's press release:
In the paper, Dr. Hack discussed the pathway for a significant improvement in the lifetime of an OLED display (by as much as 8 times) using a new display architecture that could enhance blue lifetime, thus significantly reducing image sticking. This new AMOLED display architecture may also improve the manufacturability of AMOLED displays, particularly large-area TVs, as well as increase AMOLED display resolution and lifetime, and further reduce device power consumption. [emphasis mine]
In addition, a quick glance at the SID session description for Dr. Hack's presentation reveals it appears to be directed at RGB-OLED manufacturers like Samsung. Specifically, it states the new architecture allows the production of AMOLED displays using only two low-resolution masking steps, while at the same time consuming "comparable power and [...] improved lifetime compared to an equivalent RGB side-by-side AMOLED display using three high-resolution patterning steps."
Finally, according to a SID article on the nuances of RGB color patterning for manufacturing OLED TVs, this is one of the biggest problems Samsung has faced in its attempts to improve yields.
In the end, it seemed logical to assume Samsung would eventually overcome its production difficulties with large-screen OLED TVs. But thanks to Universal Display -- and to the benefit of its shareholders -- that should now happen much sooner than would have otherwise been possible.