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The Super-Thin Star of a New TV Screen

After years of piling up losses, Universal Display eyes a bright future in applying its technology to flat-panel television sets.EWING

Universal Display Corp. hopes to profit handsomely from Sony Corp.’s decision last month to stop making rear-projection television sets. The consumer electronics giant is switching to liquid crystal displays (LCD) and organic light-emitting diodes (OLED) for all its flat-panel TVs.

This could be a boon for Universal Display, a Ewing company that licenses its OLED technology to companies that include Sony, Samsung-SDI and Konica Minolta. OLED screens don’t need the backlighting that LCD screens require, which enables manufacturers to trim OLED screens down to three-millimeter-thick slivers. OLED technology also produces sharper and brighter images than the high-definition TVs currently on the market.

“Sony’s announcement got the major manufacturers to sit up and accelerate their own organic LED activities,” says Janice Mahon, Universal Display’s vice president of technology commercialization. For Universal Display, she says, “it will mean revenue growth and shareholder value from a licensing perspective and material sales perspective.”

At the huge International Consumer Electronics Show in Las Vegas last week, Sony showed off an 11-inch OLED television dubbed the XEL-1 that the company has just released into the U.S. market. Sony priced the small yet slender television at a whopping $2,500 and is promising to develop larger units. Sony also displayed a 26-inch OLED TV prototype at the show.

Samsung upped the ante by showing off prototypes of 14-inch and 31-inch OLED TVs ranging in thickness from four millimeters to 10 millimeters—compared with LCD screens that are just now approaching 10 millimeters. But Samsung’s offerings are at least a year away from commercial production.

Publicly traded Universal Display racked up losses totaling more than $45 million over the three-year period from 2004 to 2006, on revenue totaling about $29 million. Shares of the company traded around $18 last week, down from a 52-week high of $23.35 Dec. 24 shortly after Sony announced its shift away from rear-projection TVs.

Universal Display’s OLED technology is currently used in cell phones and laptop computer screens. The company is also developing transparent OLEDs for electronic visors that can be built into military helmets to provide soldiers with visual displays on the battlefield. Rival companies developing OLED technology include Germany’s Novaled AG, Britain’s Cambridge Display Technology and Dynamic Organic Light in Longmont, Colo.

Meanwhile, researchers are exploring OLEDs that produce white light as energy efficient replacements for incandescent light bulbs. Mahon estimates that OLEDs will generate $4.5 billion worldwide by 2011 for developers and component makers.

But organic LED products still have some maturing to do, says Paul McWilliams, editor of Next Inning Technology Research in Princeton, a financial newsletter that focuses on technology stocks.

McWilliams says that while OLED screens may eventually replace LCD and plasma TVs, the current generation of flat screens will remain on the market for years. He expects the first OLED units to sell for around $3,000 for a 14-inch TV.

This compares with current prices for LCD models ranging from about $400 for a 19-inch TV to about $3,000 for a 46-inch screen. Not all manufacturers are sold on the technology either. Sharp Corp. says it won’t produce OLED TVs until screens are developed than can last 10 years. Current estimates put the lifespan of OLED units at about three years.

But McWilliams expects Sony, Samsung and their peers to push ahead with their screens. A wait-and-see reception of OLED TVs “isn’t going to slow their advancement, it is going to slow the profits,” he says.

Television sets will never be the same again, that much is clear. McWilliams says flat screens are the industry’s future as manufacturers part ways with the tube TV. “We will see 40-inch [OLED screens] by 2010,” he says.

E-mail to jpruth@njbiz.com

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