UDC at DBank - 9/12/2017
Q&A format with Sid. He gave an overview and history which answered many basic questions, then DBank guy started with additional questions.
- They ship emitters probably one or two weeks before they go into a device.
- PPG doubling of capacity will be fully online in a month or two. By end of 2018 or early 2019 they will be looking to double capacity again.
- 2H17 guidance was sequentially down vs. 1H2017 due to 1) pricing discounts kicking in and 2) there is some efficiency gain just going from the initial turn-up to volume production and they probably saw some of that in H1. They do expect additional capacity to come online in 2H and that may offset these items. He said so far they are right where they expected to be....granted only been a month.
- Samsung extension - gave a history and highlighted it was 11 months on an interim agreement last time, but also said it was easy to continue in this mode since the old agreement was royalty based. I would say on the margin Sid was less positive about completing the agreement by the end of the year.
- Fundamental, early patents expire in 2017-2020, but they expect to have full IP coverage beyond their expiration. Cited recent agreements and the LG agreement running through EOY 2022.
- Gave some new estimates on how long a new PHOLED blue might take once shipped for R&D sampling. From R&D spec to commercial spec, 6-9 months. They then would need to design it into a new backplane, did not give a specific timeframe for that.
- Expect more blue will be used than red or green. Did not sound very positive about blue host.
- TADF discussion was just in general, nothing new.
Q&A from crowd-
- Oversupply - Said even even if it appears capacity is being built to supply the entire smartphone market, he believes new and larger panel applications will develop. He also pointed out Gen6 fabs can produce 42" TV's.
- Said royalties would be in the semiconductor range, "1%, 2%, not much higher". This is a more positive reference to semi rates than prior, when he said .5%-2%
- Said upfront payments in new agreements are all part of the negotiating process and usually come with somewhat lower ongoing rates.
- On cash use, sounds like they are committed to an ongoing and increasing dividend. Also sounds like we can expect additional acquisitions like Adesis as their business expands and they find it economical to just acquire the talent versus pay contractor rates.