Japan's Nikkei reports Samsung (OTC:SSNLF, OTC:SSNNF) plans to spend KRW8T ($6.82B) in 2016 to increase its smartphone OLED panel capacity by over 50%, or more than 200M/year. Samsung is believed to already have the capacity to produce 300M+ smartphone OLED panels per year.
The report follows ones indicating Apple (NASDAQ:AAPL) plans to launch iPhones featuring OLEDs in 2017, with some of the reports stating Samsung and LG Display (LPL -0.3%) will be among the suppliers. A Korean news service reported in April Samsung will supply 100M 5.5" OLEDs annually to Apple starting next year. The Nikkei suggests Apple will partly rely on OLEDs for its 2017 iPhone lineup.
OLED materials/IP provider Universal Display (OLED +0.3%) has moved slightly higher following the report. Industrial laser maker Coherent (COHR -0.4%) also stands to benefit from major OLED investments, as does chip equipment giant Applied Materials (AMAT -1%).
Lam Research (LRCX +4.1%), KLA-Tencor (KLAC +2.3%), ASML (ASML +2.2%), Axcelis (ACLS +3.9%), Kulicke & Soffa (KLIC +3%), Ultratech (UTEK +3.5%), Teradyne (TER +2.3%), Rudolph Technologies (RTEC +2.6%), and Xcerra (XCRA +2.7%) are outperforming after Applied Materials (AMAT +13.2%) beat FQ2 estimates, provided FQ3 guidance that was well above consensus, and reported FQ2 orders rose 52% Q/Q and 37% Y/Y to $3.45B. The Nasdaq is up 1.2%.
Applied's order growth was fueled in large part by display equipment orders totaling $700M, up sharply from $183M in the prior quarter and $120M a year ago. On its earnings call, AMAT said display order strength is likely to continue "over the rest of 2016," and is being driven by mobile-related OLED investments - many reports have indicated Apple plans to bring iPhones sporting OLEDs to market next year.
OLED materials/IP provider Universal Display (OLED +5.2%) is rallying. As are display panel makers LG Display (LPL +6.5%) and AU Optronics (AUO +3.2%), each of which have been stepping up their OLED investments, and industrial laser maker Coherent (COHR +2.5%), which has recently seen an OLED-related order surge.
Also: Applied's NAND flash-related orders more than doubled Y/Y to nearly $1B thanks to its customers' 3D NAND investments. That more than offset softer DRAM and foundry-related chip equipment demand. On the call, Applied suggested NAND orders will slow a bit in the second half of FY16, but remain strong overall. Foundry demand is expected to grow somewhat this year, with Applied gaining share. Industry wafer fab equipment demand is expected to be flat to slightly up.
B. Riley has upgraded Applied to Buy, and several firms have hiked their targets. Cowen's Tim Arcuri thinks $3 in annual EPS is now possible. Credit Suisse's Farhan Ahmad: "AMAT is clearly outgrowing peers this year, driven by favourable mix shift within WFE (NAND/Foundry increasing, DRAM declining) and strong growth in Display (China/OLED investments)."
UBS states Samsung (OTC:SSNLF) is re-entering the OLED TV market, after having pulled out in 2014 (source: Notable Calls). Meanwhile, Korea's Pulsereports Samsung "may invest" around KRW4T ($3.3B) in OLED TV panel production over the next two years.
The site adds Samsung is expected to order equipment for producing 8th-gen OLED panels (can be cut into six 55" OLED TV panels) "in September this year and next year," with annual panel production capacity topping 2M sq. meters in 2018. New Samsung OLED TV sets are expected in 2017 or 2018.
LG Display (LPL +0.2%) has already unveiled plans for big OLED TV panel investments. OLED sets have won praise for their thinness, low power consumption, and superior contrast/deeper blacks, High prices have limited sales to date, but prices have gradually declined as production ramps. Sub-$2,000 LG sets are now available.
OLED materials and IP provider Universal Display (OLED +3.9%) is having a good day ahead of its Feb. 25 Q4 report. Pulse's report comes three weeks after industrial laser maker Coherent reported receiving major OLED-related orders, while adding shipments will start in calendar Q2 and continue through 2017.
Korea's Electronic Timesreports Samsung (OTC:SSNLF) and LG Display (LPL -0.6%) are close to final deals with Apple (NASDAQ:AAPL) to supply OLED displays for iPhones.
It adds the companies plan to spend a combined KRW15T ($12.8B) in capex over the next 2-3 years to expand their OLED capacity, and that (in-line with past deals with suppliers) Apple will likely provide some funding to help the companies with their investments. Samsung will likely get bigger order volumes than LG.
The report follows one from Japan's Nikkei a month ago stating Apple will launch iPhones featuring OLEDs in 2018, and that the company will work with suppliers "over the next year or so" to see if it can obtain enough displays and eliminate technical issues such as performance degradation.
OLED IP/materials supplier Universal Display (OLED +5.1%) is rallying once more, after having previously done so on the Nikkei report. Shares are within $3 of a 52-week high of $57.93, and up 99% YTD.
A piece in the Nikkei Asian Review says Apple "plans to introduce organic light-emitting diode displays for iPhones starting in 2018," though no sources are cited.
Cowen's Robert Stone - who has Outperform ratings on both Universal Display (OLED +6.1%) and LG Display (LPL +1.1%) - expects Apple to eventually adopt an AMOLED display, subject to establishing sufficient capacity. "Capacity commitments are apparently being sought for 2018, by which time we expect the technology of choice is likely to be on flexible substrate."
In the meantime, he says, look for AMOLED's (both rigid and flexible) to continue taking market share from LCD displays with other smartphone OEMs in China and elsewhere.
Japan's Nikkeireports Apple (AAPL -0.5%) will launch iPhones sporting OLED displays starting in 2018. To date, the company has exclusively used LCDs for its retina displays.
The paper adds securing enough OLEDs to meet Apple's needs (the company sells over 200M iPhones/year) could be difficult, and that Apple will "work over the next year or so" with suppliers to see if it can obtain enough displays and eliminate technical drawbacks such as performance degradation.
iPhone LCD supplier LG Display (LPL +6.9%), which has already unveiled plans to invest ~$8.5B in OLED manufacturing through 2018, is said to be "planning capacity upgrades." OLED materials/IP provider Universal Display (OLED +5.2%) have caught a bid on the Nikkei's report; LPL was already higher on the day.
OLEDs have long been a staple on Samsung's Galaxy S and Note lines. Supporters of the technology praise its high contrast/deep blacks and potential thickness and power consumption advantages. Apple, however, has argued its LCDs provide superior color accuracy.
There have long been rumors Apple is thinking of adopting OLEDs. The company recently filed a patent application for an integrated OLED display and touch panel, with a fingerprint reader located underneath.
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Universal Display (OLED +9.6%) is up 17% over the last two days. Possibly helping: The USPTO has published a patent application from Apple (has long been the subject of rumors it's testing/thinking of using OLEDs) for an integrated OLED display and touch panel, with a fingerprint reader underneath.
In the application, Apple (NASDAQ:AAPL) states integrating an OLED stack and touch sensors on a silicon substrate "can allow for an extremely high number of pixels per inch," and that arranging OLED sub-pixels side-by-side with touch sensors "can also lead to a wider viewing angle display with a higher contrast ratio, higher brightness, and more vibrant colors without compromising touch sensitivity."
Also: Reuters has published an article highlighting LG's recent OLED TV price cuts, made possible by recent production improvements and plant investments. Two sets now sell for less than $2K. LG Display (LPL +3.2%) recently promised to invest at least KRW10T ($8.5B) in OLED manufacturing through 2018.
Universal jumped two weeks ago after beating Q3 estimates and narrowing its full-year guidance. Shares are at their highest levels since August.
Update: Also of note: Korea's Digital Times reports LG Display plans to invest (perhaps using the funds previously allocated for OLED expansion) up to $4.2B to build a new OLED plant in Paju, South Koirea. The plant is expected to go into production in the 2017-2018 timeframe.