The new facility at Hsin-Chu, Taiwan can print 370 x 470mm glass substrates at approximately two to five minute intervals. CDT (Cambridge, U.K.) will transfer process technology to Delta (Taiwan), which will produce the displays.

The initial phase of the technology transfer program, announced last October, has been completed successfully with the production of 5.6-inch full color active matrix display prototypes, ink jet printed at CDT's Technology Development Centre in the U.K.

Cambridge Display Technology has been expanding its OLED patent portfolio to include encompass technology for ink jet printing. Ink jet printing is seen as the key to producing low cost, larger displays utilizing the benefits of OLED technologies.

Through the collaboration with CDT, Delta Opto plans to move from monochrome passive matrix displays into full color active matrix displays.

In addition to active matrix displays, the companies will also develop full color passive matrix displays, giving Delta the scope to address a wide range of potential end user markets.

The firm expects that number to grow to $615 million this year, up 50.7 percent from last year.
Thirty-one million OLED panels were sold in 2004, nearly double from 16.8 million in 2003, and El Segundo, Calif.-based iSuppli expects unit sales to nearly double again to reach 60 million this year.

Long term, the OLED market is forecast to rise to 341 million units valued at $2.9 billion in 2011, representing a compound annual growth rate of 34 percent in units and 29 percent in value from 2005 to 2011.

Among OLED vendors, rapid sales growth in 2004 for these displays allowed Samsung SDI to leverage strong presence in the mobile-phone business to take the top rank for the global OLED panel market, garnering 44 percent of unit sales. The company replaced Pioneer of Japan as the leading OLED supplier. Samsung’s OLED shipments were boosted by internal sales to its mobile-phone business.

In 2004, 89 percent of OLED panel market revenue was derived from sales to the mobile-phone market. Mobile phones are expected to remain the largest application for OLEDs during this decade, iSuppli reported.

OLEDs are currently being utilized as the main display of mobile phones, as opposed to being a secondary display, as has been the case until recently. Mobile phones also are increasingly using color OLED panels.

For the number two OLED vendor spot, Taiwan’s RiTdisplay edged out Pioneer with 22 percent of sales. RiTdisplay has made a rapid entry into the nascent market for OLED displays in MP3 players than its competitors. Pioneer slid to third place with 20 percent of OLED sales.

iSuppli also said makers of passive matrix OLEDs have cut prices of their products facing increasingly stiff competition from TFT-LCDs in the mobile-phone display market, but rising sales to the MP3 market have helped offset the impact of the price reductions.

MP3 player panels accounted for 3 percent of OLED market revenue in 2004, but iSuppli suspects this could rise to as much as 15 percent this year. More than 50 MP3 player models now use OLED panels, iSuppli noted, with RiTdisplay being the largest supplier. Other MP3 player panel suppliers include Univision, Samsung SDI, Teco and Pioneer.

The MP3 player has replaced the mobile-phone subdisplay as the entry application for simple OLEDs that support area-color or four-color display. In particular, flash-memory-based MP3 players that have 2- to 4-line displays are taking advantage of OLEDs’ high contrast and superior color compared to STN-LCDs. Hard-disk-drive-based MP3 players tend to have 1- to 2-inch graphic displays; some high-end players of this type also are switching to OLEDs.

iSuppli has found that efforts to commercialize large-scale active-matrix OLEDs (AMOLEDs) are being slowed by the need to compete with rapid price declines in TFT-LCDs. Further, deposition equipment for both small-molecule and polymer types of OLEDs has required significant modification and development in order to support processes for mass production. Many companies cannot yet supply large quantities of AMOLEDs for mobile-phone main displays, and will thus begin by serving the markets for low-volume products such as portable media players.

Finally, iSuppli pointed out that OLEDs are well suited for use as television displays due to their fast speed, good color, excellent viewing angle and high contrast ratio.

OLEDs may appear in televisions smaller than 5-inches in diagonal size by 2006 with TVs larger than 9-inches probably not employing OLEDs until at least 2008. Shipments of OLEDs for large-screen televisions probably will not exceed 1 million units until after 2011, iSuppli concluded.

Samsung SDI (Seoul, South Korea) captured 44 percent of OLED unit sales last year, replacing Japan's Pioneer as the leading OLED supplier. Samsung's OLED shipments have been boosted by internal sales to its thriving mobile-phone business, said iSuppli.

Though mobile phones continue to the largest OLED application, MP3 players are also catching on, with Taiwan-based RiTdisplay edging out Pioneer as the second leading supplier with 22 percent of OLED unit sales, said iSuppli. RiTdisplay rapidly entered the market for OLED displays in MP3 players, driving up sales.

On a whole, revenue in the global OLED market jumped from $251 million in 2003 to $408 million last year, up 63 percent. Unit sales were 31 million, nearly double from 16.8 million in 2003.

For 2005, OLED unit sales are expected to nearly double to 60 million units, with revenue projected to grow 50.7 percent to $615 million.

iSuppli projects the OLED market growing at a rate of 29 percent revenue-wise through 2011, reaching $2.9 billion. Unit sales will grow 34 percent over the same period to 341 million.

The firm also projects OLEDs to begin appearing in TVs under 5 in. diagonal in size by 2006, though it does not expect penetration into larger TVs until later in the decade.

The new facility has been established at Hsin-Chu with the delivery of three Litrex 142P ink jet printers. The Litrex printers are robust, production-capable units, with the ability to print 370 x 470mm glass substrates at approximately two to five minute intervals, and these have been commissioned with the support of CDT's field support engineers based in the region. When combined with the process technology now being developed at CDT and transferred to Delta engineers as part of the commercial transaction, the facility will pave the way for Delta-Opto's full-scale production of color displays.

Ink jet printing of full color displays is now widely seen as the key to production of low cost, larger displays utilizing the benefits of OLED technologies.

The initial phase of the technology transfer program, announced last October, has been completed successfully with the production of 5.6-inch full color active matrix display prototypes, ink jet printed at CDT's Technology Development Center in the UK. Both parties are pleased with the quality of these prototypes and are confident that the manufacturing process can be enhanced to optimize display quality and yield in the next phase of the program.

Delta Opto has experience in the manufacture of monochrome passive matrix displays, and through its collaboration with CDT, now has a road map to move into full color active matrix product segments.

In addition to the program on active matrix displays, the companies will also be working on full color passive matrix displays, giving Delta the scope to address a wide range of potential end user markets.

The new products include a 128x48 pixel solution and a white and blue display format for Osram’s existing 96x36 pixel displays.

Designed for the fast-growing MP3 player market, the new 128x48 display is a standard product available in seven different colors. Depending on the color, this 1.2-inch product offers a lifetime between 10,000 and 40,000 hours.

The new 96x36 product is offered in both white and blue is designed for handset sub-displays, as well as alternative communications and consumer applications with similar size and specification requirements.

Osram claims that demand for the displays is particularly high among cellular telephone manufacturers, but these displays can be used for a wide range of applications, including medical diagnostic devices, personal communication appliances and light industrial portable devices.

Pictiva products are driven by standard IC-driver technology that supports both parallel and serial interfaces

Q: First, let us talk about the company’s transformation. What happened to NEC-Mitsubishi Electric Visual Systems? How did it change the company’s business?

A: According to the agreement, we cannot use Mitsubishi brand names anymore. This is probably the biggest issue for us, since the sales contribution of products sold under Mitsubishi brand names was about 20% last year. As for other issues, one of them is, of course, they will probably become our competitors again. Keeping this in mind, we are aiming to make Mitsubishi our biggest OEM customer by 2006.

Q: What will be going on with facilities, people, intellectual property and so on? Do you still have a right to use Mitsubishi’s technologies?

A: We still have a right to use the technologies developed by NEC-Mitsubishi, while Mitsubishi has some restrictions on using them. As for people, yes, some employees from our headquarters in Japan will join Mitsubishi, mostly sales managers covering the domestic market and also some engineers. The total number does not exceed 60 people. Our manufacturing facilities belong to another company, NPG Display. There will be no change in its work since this company is owned by NEC and managed by our company.

[Editor’s note: Matsuda is also chairman of NPG Display.]

Q: Currently we see many display technologies available or coming to market, including TFT-LCD, PDP, rear-projection, LCOS and OLED. Even old CRT technology is still alive. What picture do you forecast in a few years from now? Will we see any winners or losers in the technology battle?

A: You have just mentioned CRT is alive, but actually, the gap between CRT and LCD monitors is becoming wider. This year, worldwide shipments of CRT displays are expected to be no higher than 40 million units, while those of LCD monitors should reach 90-100 million. Obviously, what we see now is the sunset for CRT technology.

In 5-6 years from now, I am expecting that OLED technology will become mature enough to play a significant role in the market. Looking at the industry now, we are seeing many companies involved in OLED development. I think that, after a few years, this technology will be suitable for real products to come out, not just for mobile phones, but also for standard PC monitors.

Q: Do you have any expectations when NEC Display Solutions will stop shipments of CRT monitors?

A: It will depend on our customers. Currently we are still seeing a demand for CRT products, but this year we will have reduced production to about 400,000 units.

Q: When will you start manufacturing OLED monitors?

A: Again, difficult to say, maybe in five to ten years from now. As I said before, it could be at the beginning of the technology maturity.

Q: Last year NEC-Mitsubishi demonstrated a prototype of an LCD monitor with an LED backlight at CeBIT. This year we saw this monitor again at NEC-Mitsubishi’s booth at the trade fair. How far are you from commercializing this technology?

A: Two years ago, it was a technology demonstration behind closed doors. Last year it was actually a prototype. This year we are launching the product. The shipments will start this summer.

Q: Do you plan to implement OLED as a backlight source?

A: Currently not, we do not have such plans. As you know, OLED has many advantages, but it is sensitive to moisture. This problem should be solved before we develop monitors using OLED as a backlight source.

Q: Does NEC Display Solutions plan to expand its product portfolio?

A: No, we will still focus on LCD monitors in the near future. PDP, rear-projection, microdisplays are out of our focus now, but sure, we keep and will keep watching prospective technologies like OLED.

Q: How big is your company’s R&D budget? What kind of R&D projects are you currently developing?

A: Our annual R&D budget is about US$30 million. We have R&D centers in Japan and in Taipei, concentrating their activities on LCD-related projects.

Q: What is your opinion about the driving forces for the display industry? Where are most of the innovations coming from?

A: I would say that innovations are not coming from any specific country like Korea or Japan, but from the whole West-Pacific region.

Q: Do you cooperate with Taiwan TFT-LCD panel makers or do you buy LCD modules exclusively from NEC LCD Technologies?

A: Of course, we cooperate with NEC LCD Technologies as well as NEC SVA, a joint venture established in 2002 by NEC and SVA Group, but we have also been buying LCD modules from many other companies, including Taiwanese and Korean suppliers.

Q: How do you rate cooperation with Taiwanese companies in comparison to Japan, Korea and China? What is better and what is worse in working with Taiwan compared to the neighboring regions?

A: This is a critical question touching key elements of our business. Of course, there are some better things and some worse things in our work with Taiwanese companies, but, needing the problems fixed, we prefer to talk to our partners directly to say clearly what exactly they should improve and how to do this in a proper way, from our viewpoint.

Q: Last year was expected to be a breaking point in TFT-LCD industry. Some experts forecasted Taiwan would take the lead from Korea in terms of market share. Do you feel it has happened?

A: I do not think it has happened. Korean companies have too much money to lose leadership so fast. The battle still goes on.

Q: Do you see any changes in the displays industry since Philips announced the sale of its display business to TPV Technology?

A: Not yet, but I am expecting some changes. Philips was very strong in the consumer market, so it is interesting to see how people will react on the situation when there are no more Philips monitors available to buy. It will not have a big impact on us globally, because we get most of our revenues from the corporate market, but we probably have some chances to boost our sales in Benelux countries, where Philips had a position as the officially recognized supplier for government bodies.

Q: Do you cooperate with Taiwanese vendors of LCD module components such as color filters, polarizers, and driver ICs?

A: All the components you mentioned are very important. So, yes, we buy some components, but prefer to see them made in Japan, especially for high-end products. It would not be true to say it is because of the quality issue. I call it the feature issue.

Q: Which Taiwanese companies do you see as your competitors? Do you see any challenges from your competitors in Taiwan?

A: Displays is a huge industry. We have many competitors; it is difficult to name names. For each region we have some close competitors, but frankly speaking, Taiwanese companies are mostly not on our radar, since they focus on OEM business and commodity products for the consumer market. We also have some OEM business, but it generates less than 10% of our revenue. So, of course, we compete with Taiwan and TPV (as potentially the biggest display maker worldwide), but these are not our main targets.

Q: What is your future outlook for 2005 in the displays industry as a whole? What are your company’s main goals this year?

A: There are no doubts that the industry will grow in 2005 and beyond. I think people will need more and more visualization systems as human society grows and develops. As for our company, NEC Display Solutions, it is necessary to keep up with the trends and have the right products at the right times. This year we will continue the work started in January of 2000 as a joint venture with Mitsubishi, and I see many prospects on the way.

With such advantages, OLED displays are beginning to appear in premium products; two Sony Corp. Network Walkmans use OLEDs and both Samsung Electronics Co. Ltd. and LG Electronics Inc. have released mobile phones with OLED main displays.

"The thinness, the depth of colors, the brightness, these are features that any company would want," said David Yang, a spokesman for Sony.

About 31 million OLED panels were shipped last year, double that of 2003, according to market research firm DisplaySearch. And U.S. market research company iSuppi Corp. has counted over 50 OLED-equipped MP3 player models in the market as of March this year.

"OLEDs are visually appealing, which is important in a product that is mostly a fashion statement for young people. I was shocked at how many models are out there," said Kimberly Allen, an iSuppli analyst.

The growing adoption of OLED displays has proven that the technology is viable, despite pricing concerns.

"Some people were concerned about whether or not OLED could become a significant industry -- but I think we've proven it can," said D.C. Wang, chief executive officer of Taiwan's RiTdisplay Corp.

RiTdisplay was the world's number two OLED panel maker in terms of shipments in 2004, with a 25 percent share, according to iSuppli. Samsung SDI Co. Ltd. led the market last year with a 44 percent share, and Pioneer Corp. of Japan was third with 20 percent, according to the research company's estimates.

Several years ago, some makers predicted OLED panels might replace LCDs as the display of choice for portable gadgets. Sanyo Electric Co. Ltd., for example, was expected to release its first OLED-based handsets in 2003. It showed prototypes last year.

But products failed to appear. That's because OLED screens still cost about 1.5 times the price of the same-size LCD screens, and this proved too expensive for the company to use in mobile phones, it said.

OLED's price premium also rules out the technology's use in larger applications such as notebook PCs, according to Taiwan's BenQ Corp., a major PC vendor.

"For panels, affordability trumps power savings, and LCD technology is the lowest cost right now," said Richard Hsu, a director at BenQ Corp.

While display lifetimes are lengthening as makers improve the technology, many OLED displays only last about 5,000 hours, about half of that demanded for TVs by makers.

For small gadgets and mobile phones however, OLEDs last long enough and many OLED makers and industry analysts are optimistic about the technology's future in such applications.

OLED display shipments will double to about 60 million units in 2005 and then nearly triple to over 170 million units in 2008 as OLEDs take even more market share for MP3 players and, for example, become more common as main displays in mobile phones, according to iSuppli.

As volumes increase, prices will fall, helping OLED's competitiveness against LCD in a wider range of small displays, according to RiTdisplay's Wang. And that's good news for his company, he said.

"We will continue to expand. Big is beautiful in this industry, and we have to remain competitive," he said.

Shares in Universal Display (Nasdaq: PANL) rose more than 30% yesterday after the company announced Samsung SDI signed a license agreement for its next-generation OLED (organic light-emitting diode) display technology.

Very brief lesson: OLEDs offer technical and viewing benefits over LCDs by emitting light when exposed to an electrical current. Unlike LCDs, they don't need a backlight, so they can be thinner. They can be viewed from a wider angle and consume less power than LCDs.

Universal is a pioneer in the development of small-molecule OLED display technology, a technique that has produced a stable of display technologies, including transparent OLEDs (TOLED), flexible OLEDs (FOLED), and phosphorescent OLEDs (PHOLED), that last of which promise cost savings in reduced power consumption, longer lifetimes, and less heat buildup.

Universal is not alone in such small-molecule OLED development. Eastman Kodak (NYSE: EK) invented the original concept and has licensed its patents to various display manufacturers. But Universal is ahead of the pack with its proprietary technologies.

OLEDs are being used predominantly in mobile phones, though MP3 players increasingly are using them to replace LCDs as the preferred display technology. They threaten eventually to replace LCDs in both large and small displays. It is for these reasons major LCD makers such as LG Electronics and SDI's bigger brother, Samsung Electronics (Nasdaq: SSNJF), both recently reported huge losses on their LCD divisions, reporting 86% and 52% declines in net profit, respectively.

Room to run
As you might expect with an emerging development company, Universal lost money in 2004 -- $17 million, but that includes $16 million spent in R&D. That will be money well spent if royalties start to accrue. Even with yesterday's jump, Universal shares are still 50% off their 52-week high, which bodes well for potential investors.

The OLED market is in its infancy, but it's growing fast. According to iSuppli, a leader in electronic industry research, the market rose 63% in 2004 to notch sales of $400 million from 30 million panels sold, and it's widely forecast to continue at least doubling in size for the next three years. That is Rule Breaker-type growth, and it's why we featured OLED display technology in our "Nanotech Universe" column in a recent issue of the Rule Breakers newsletter. At that time, we were leaning toward Cambridge Display Technology (Nasdaq: OLED) as being ahead of the commercial curve. Cambridge produces a competing polymer (large-molecule) P-OLED technology.

With this news, Universal's patented phosphorescent OLEDs become the preferred choice for Samsung SDI, the current market leader in OLED display supply, with 44% of the market in 2004. Interestingly, Samsung is working with Cambridge to develop the P-OLED technology, so this battle is far from over, and it's likely that both technologies will find commercial markets.

The Rule Breakers newsletter service is specifically looking for disruptive technologies such as OLEDs. Why not take a free trial and see where else we are looking in nanotechnology, biotechnology, and early adopters for the next big thing?

Carl Wherrett owns shares in both Universal Display and Cambridge Display Technology, but not in any other companies mentioned above. John Yelovich owns none of the above. The Motley Fool has a disclosure policy.

Lightning fast response times (up to 1000 times faster than LCDs) mean that OLEDs can display video data with ease.

Offering significant advantages over conventional LCDs, OLED displays provide a wide viewing angle and high contrast which makes the display highly legible in all light conditions.

Because OLED technology is 'emissive' the modules do not require a backlight, which reduces power consumption making them ideal for use in portable and handheld equipment.

With headquarters in Hong Kong and a manufacturing facility of 186,000m2 in Guangdong, China, the plant includes 280m2 of class-10 and class-1000 clean rooms for the photolithography and organic deposition processes.

Rodney Tietjen, MD of Digital Displays said: 'This is a really exciting opportunity for us'.

'Not only are we putting the latest display technology in front of our customers, we can do it in as little as 2-6 weeks and we can supply 256K colour modules with 96 x 96 resolution for only $12.00'.