Universal Display Mines for Opportunities in Fujifilm OLED Patents

7/31/12Follow @jpruth

In a move to beef up its opportunities, Universal Display Corp. (NASDAQ: PANL) in Ewing, NJ plunked down $105 million last week to grab more than 1,200 patents and patent applications for organic LED technology from Fujifilm.

Organic LED—OLED for short—is a technology used to create new types of light sources as well as ultrathin electronic displays for mobile devices and televisions. The addition of this patent portfolio gives Universal Display, which develops and supplies OLED material and technology, a deeper well to draw from.

The company’s technology is licensed by Samsung and other manufacturers. The addition of the Fujifilm OLED patents nearly doubles Universal Display’s portfolio and should help expand its licensing and materials businesses, says Janice Mahon, vice president of technology commercialization. “We decided it was a great strategic play for us was to acquire [Fujifilm’s] portfolio,” Mahon says.

OLEDs can be used to design thinner electronic screens compared with LED and LCD technology. In spite of the prospects for this innovation, thus far the screen sizes of OLED devices have been relatively small. Smartphones such as Samsung’s Galaxy S line use the technology, with larger screens in development. Manufacturers Samsung and LG Electronics both plan to release 55-inch OLED televisions sometime this year. The LG OLED television boasts a screen that is 4 millimeters thin at its narrowest edge.

Future uses of OLED material could include thin, flexible electronic displays mounted as visors in soldiers’ helmets. Light panels made with OLEDs could lay flat against walls and ceilings and potentially drain less energy than some traditional light sources. Mahon says Universal Display has sought ways to help advance the manufacturing methods used to make OLEDs. The company raised $250 million in March 2011 through a public offering in order to make such investments as the Fujifilm portfolio acquisition.

The long-term effects of this and another recent deal by Universal Display may be on investors’ minds when the company holds its second quarter earnings call on Aug. 8. The company has taken some bruising on the stock market over the past year. Its shares closed at $32.44 on Monday, down from a 52-week high of $60.28 during trading last Sept. 20.

For the first quarter of 2012, the company did not meet analysts’ earnings forecasts. Universal Display lost three cents per share for the period ended March 31, rather than earning four cents per share as analysts expected. The company reported a net loss of $1.2 million on $12.6 million in revenue for the first quarter, compared with a net loss of $11.9 million on revenue of $9.6 million a year earlier. In short, the company made gains, but not to the extent that the market expected.

Universal Display seems to be responding by pouncing on more opportunities. Now, the company has a new vault of patents to work with in addition to another recent deal. On July 19, the company announced a $4 million investment in Pittsburgh-based Plextronics, a manufacturer of printed electronics technology. In addition to the money, Universal Display formed a three-year development agreement with Plextronics to help spur the commercialization of materials from both companies.

Mahon says the current manufacturing method typically uses solid OLED materials that are set onto a surface in thin layers through a process called vacuum deposition. If the process can be performed instead by printing liquids on to surfaces, she says it might lead to a cost-effective way to produce high-volume, large displays. “There’s been ongoing research to develop liquid OLED materials that could be inkjet printed, nozzle printed, or put down as large area coatings,” she says.

Though Mahon could not specify what patents exist in the Fujifilm OLED portfolio, the scope may be substantial. Fujifilm was researching the technology for more than 10 years and was a longtime archrival of Kodak in this field.

“It was apparent to many that Kodak was a key player in the development of OLED,” Mahon says. “It was less obvious to the general public that Fujifilm was essentially doing the same thing.” Buying up the patents, she says, will bolster Universal Display’s position as a provider of OLED technology to manufacturers.

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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