Universal Display & LG Display Renew LT Agreements
Universal Display (OLED), as the IP holder for a wide variety of OLED material and device patents, has renewed their license and material supply agreement with LG Display (LPL). The new agreement will run for 5 years,, and while terms were not disclosed, previous agreements were based on a license/royalty fee on units shipped, which has been the standard agreement terms for all of UDC’s license and material agreements, other than with Samsung Display (pvt), who pays a quarterly fee rather than one based on unit volumes. In years before ASC 606 Samsung’s license fees were easy to spot given they were paid twice yearly, while now they are prorated against material sales on a quarterly basis regardless of when received.
The previous long-term agreement with LG Display was to extend until 12/31/22 which makes the early extension a bit unusual, however given LG Display’s increased large panel OLED capacity, a result of the Guangzhou fab, and the company’s potential for further large panel OLED expansion, we expect the previous agreement, particularly on the material side, was looking a bit outdated. The only caveat in the LG Display equation would be the potential closing of LG Electronics’ (066570.KS) mobile business, which would have an impact on LGD’s small panel OLED display sales, but we believe that LG Display’s improving supply relationship with Apple will compensate should that occur.
The resigning with LG Display is part of Universal Display’s long history of agreements with both collaborators and customers. While key players are Samsung Display, LG Display, and BOE (200725.CH), there are few OLED display developers or producers that have not signed contracts with UDC. Not all have proven as lucrative as those with the above, but they certainly cover a wide swath of display producers. Those UDC agreements with OLED panel and lighting producers that have been made public since 2004 are listed below. Those shaded red are key customers and those in italics are based on OLED lighting.:
The previous long-term agreement with LG Display was to extend until 12/31/22 which makes the early extension a bit unusual, however given LG Display’s increased large panel OLED capacity, a result of the Guangzhou fab, and the company’s potential for further large panel OLED expansion, we expect the previous agreement, particularly on the material side, was looking a bit outdated. The only caveat in the LG Display equation would be the potential closing of LG Electronics’ (066570.KS) mobile business, which would have an impact on LGD’s small panel OLED display sales, but we believe that LG Display’s improving supply relationship with Apple will compensate should that occur.
The resigning with LG Display is part of Universal Display’s long history of agreements with both collaborators and customers. While key players are Samsung Display, LG Display, and BOE (200725.CH), there are few OLED display developers or producers that have not signed contracts with UDC. Not all have proven as lucrative as those with the above, but they certainly cover a wide swath of display producers. Those UDC agreements with OLED panel and lighting producers that have been made public since 2004 are listed below. Those shaded red are key customers and those in italics are based on OLED lighting.:
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