Universal Display Corp Citi Global TMT Conference

Welcome, Brian. Thanks. Great to be here.

Yeah, so before I go too far, just a quick safe harbor. I may make some forward-looking statements today as part of my remarks, and our actual results may differ from those. We'd encourage everyone to look at our SEC filings before making any investments in the company. The comment I made on the next phase of growth that's kicking off, we very much believe that. I think there's a number of proof points to that. As you noted this year, and the current environment with the memory situation is creating some near-term headwinds, specifically in the smartphone market, where it seems to be most impacting our business. But if you look to the next few years, there's a lot of capacity plans that our customers have.

Specifically, about 2, 3 years ago, multiple customers of ours announced new capacity investments they were making in what we call Gen 8.6 capacity, which is high-capacity output specifically geared toward the IT market for tablets, laptops, and monitors. We have already seen this year, two of those four capacity investments come online with Samsung and BOE both turning on their fabs this summer for mass production for the first time. Visionox and TCL China Star Optoelectronics Technology both being underway with their construction plans for their Gen 8.6 facilities, which will be coming online in the next year or two. There is a lot of investment, not just in the IT market, but even recently, Samsung and LG Display have also highlighted investments that they are making in Gen 6 capacity for the smartphone market. LG Display has also talked recently about some new manufacturing process technology they are investing in for OLED IT.

Specifically in the IT market, tablets, laptops, monitors, where we have only 5% penetration today of OLED, there is a lot of upside opportunity that the industry is preparing for with all these new capacity investments coming online.

Yeah, certainly, on the smartphone side, we do expect foldables as a growing form factor to be a really exciting trend, not just in 2027, but in the coming years. There is very much a belief that we have seen the foldable penetration increase nicely over the last few years. As more and more OEMs, you alluded to one possibly launching soon, and we think that very much in the coming years, that will become an increasingly popular form factor for consumers. The reason why that is beneficial for us is even on a unit-for-unit basis, if one is a foldable, that is an incremental opportunity for our business because of the size of those displays in a foldable product compared to a conventional non-foldable.

Typically being two to 2.5 times the quantity of surface area in those foldable products, and therefore more material of ours that's needed to produce those displays. In the IT segment, I think that's really where we see the most promise in the coming years, specifically off of the low 5% penetration rate that we have today and the capacity investments that I mentioned earlier. And those capacity investments, just those four Gen 8.6 fabs I mentioned, that's $20 billion of capital investment that our customers are putting into those four facilities. They're making those investments because they know their OEM customers need that capacity to realize their product roadmaps in the coming years. There's very strong conviction on the IT side. Additionally, automotive is a growing segment as well. Right now, only about 1% penetrated with OLED.

So, a nice low penetration currently in both IT and automotive, and a lot of focus from our customers and the OEM community on continuing to adopt OLED products into more and more IT and automotive offerings.

Approaching 70, yeah. So we're at 65% thereabouts today. And that's been nicely growing over the last few years. Certainly, all the premium models today have OLED displays in them, and more and more of the mid and low-end models are introducing OLED products as well. So, the price gap between OLED and LCD in the smartphone market has really narrowed, such that that's enabled the penetration rate of OLED to grow as well as it has in the last few years.

Yeah. The price gap, I will speak first to TV. The price gap in TV has been one of the reasons why the penetration rate in TV has been pretty flat at 3% the last few years. Certainly, LG Display is our largest customer that is focused on the TV market, and increasing that, the number of units that they are selling is certainly a top priority for them, and we would benefit as well from that. They have recently, this year, launched an OLED SE model, which is a lower-cost OLED TV display that they are marketing to their OEM customers. The challenge in the TV market has been that the premium LCDs are good, the OLEDs are much better, but the price gap has been pretty wide between those two, such that price-conscious consumers have more tended toward the premium LCD versus the OLED.