What happened with OLED today?
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Uses news and trading volume to explain the day’s move and how it relates to the market.
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Universal Display Corp supplies phosphorescent materials that produce light inside OLED displays and lighting products; it does not make the finished displays or lights. Its manufacturing partner PPG produces the materials, which Universal Display checks against its specifications and resells to manufacturers as needed for production. Material sales are its largest revenue source. Manufacturers also pay to use its patents and technical know-how, through fixed license fees, royalties tied to their licensed-product sales, or both; these payments provide another substantial revenue source.
Most revenue comes from BOE, LG Display and Samsung Display, making those relationships central to the business. Universal Display relies solely on PPG to manufacture the OLED materials it sells. Its income depends on customers continuing to use its materials and technology in commercial products: material purchases support sales revenue, while sales of licensed products support royalties.
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Universal Display's results hinge on OLED material purchases and patent licensing by Samsung Display, BOE and LG Display, while PPG is its critical manufacturing supplier.
LG Display's OLED panel production and sales feed directly into Universal Display's revenue: it buys OLED materials and pays to use Universal Display's patents to make panels for brands and their designated system integrators. Watch its OLED panel sales for televisions and smartphones, since licensed-product sales volume determines additional license fees above the annual minimum.
Universal Display Corp earningsThis company
Universal Display's report will show whether panel makers' material purchases and payments to use its OLED patents are both supporting the business.
Read material sales alongside license and royalty fees. Rising material sales with growing license revenue would show panel makers buying more materials as sales of products using Universal Display's technology support fees. Weak material sales without enough license growth to offset them would show customer mix or purchase volume still weighing on the business.
LG Display Co. Ltd. earningsLPL
LG Display's report will show how sales of its OLED TV and phone panels relate to Universal Display's material sales and additional license fees tied to licensed-product volume.
Watch LG Display's OLED panel sales, particularly for TVs and smartphones, alongside sales volume of licensed products. Strength in both would mean more LG products using Universal Display's technology, supporting additional volume-based license fees and material purchases; weakness would point to less product activity underpinning those revenue streams.
