This is the transcript from a NanoMarkets teleconference on OLED materials market opportunities.

1. Transcript from NanoMarkets Q&A on
OLED Materials Markets
September 2012

2. NanoMarkets Q&A Session on OLED Materials Markets
NanoMarkets Associate Editor Valerie Coffey interviewed NanoMarkets Senior Analyst, Dr.
Jill Simspon and the firm’s Principal Analyst and co-founder, Lawrence Gasman to discuss
findings from the firm's recent report, “OLED Materials Markets.” Participants heard the
Page | 2 firm's latest perspectives on the evolution of the OLED materials market and how and where
NanoMarkets sees the industry unfolding over the coming years. The following is an edited
transcript from the call.
Valerie Coffey: Jill, regarding your new report on the OLED materials market, I’d like to
ask you: What were your key findings from your research efforts, and how have things
changed since the last report on the subject?
Dr. Jill Simpson: Thanks, Valerie. Key findings: probably the biggest key finding – and
this should come as no surprise to anyone – is that active-matrix OLED displays are really
on the market now in a big way in mobile display products, specifically from Samsung.
Samsung’s Galaxy phones actually outsold iPhones a couple of quarters. This will probably
change this month when the new iPhone 5 comes out, but it’s still significant because it
means that significant sales are flowing into the materials sector now, and that’s definitively
new for this report.
Also, you can note that UDC, which is a key materials supplier, had its first profitable
quarter last year – the fourth quarter. They also made money again in the second quarter of
2012. This is just one example, but it indicates a clear direction, I think, in the market.
The second key finding is the appearance – or the near appearance, I guess – of OLED
TVs. These haven’t become commercially available as quickly as expected, and no doubt
they’re still expensive, but the prospects are promising. This is important from this
perspective of materials because of the much bigger display size than in mobile devices.
They have, simply, a bigger OLED area to coat with materials.
Of course we’ve seen OLED TVs before. Sony had one a few years back, but the current
efforts from LG and Samsung are just a little bit more serious and stepped up with respect
to marketing activity, size, etc. Sony is even back into the TV market now, having recently
partnered with Panasonic. Those two firms are targeting 2013 for their OLED TV launch.
Taiwan’s AUO is also targeting 2013 for an OLED TV, so we’ll see. If all of these goals are
met, there will be a big change in the size of the OLED materials market.
Finally, I think we have to recognize that OLED lighting is still struggling to get off the
ground. We’ll talk more about that later, I think, but it’s important to note that it has made
some progress. You can buy products on a wider scale; kits are more widely available now.
It’s not just luxury luminaires anymore, even if we have pushed the market takeoff out a
couple of years to 2015 or 2016. Here again, OLED lighting will be important from a
materials perspective because of the bigger panel areas; bigger OLEDs will quickly
increase the size of the OLED materials market.

3. The final thing that’s really changed, at least since the last time that NanoMarkets did a
report on OLED materials, is that the materials sector has moved beyond an IP-building,
R&D-only phase. Obviously those things continue – building up of IP is still important and
still goes on, but there’s an equal amount of effort now, being put into things that happen
when you start actually having sales – things like scale-up, quality control, logistics,
Page | 3 business development and marketing.
VC: Can you give us some estimates on how you’re valuing the OLED materials market
this year and how you see it growing in the next few years? Have your estimates changed
since your last report?
The forecast for
2012 for OLED JS: Yes. Let me give you the number directly from the report. The forecast for 2012 for
materials is about OLED materials is about $524 million. That number includes not only the core functional
$524 million… We materials in the OLED stack (the emitters, the hole-transport blocking layers, etc.) but also
see that value substrates, encapsulation and electrodes. We see that value growing to about $940 million
growing to about in 2015. And then it really takes off – again assuming that lighting and TVs become a bigger
$940 million in factor – between 2015 and 2019, growing to about $7.4 billion by the end of the forecast
2015 period.
GRAND TOTAL SUMMARY: Market Value of Materials in
OLEDs by Layer 2012-2019 ($ Millions)
8000 Substrates
7000 Encapsulation
6000
Anode
5000
HIL
4000
HTL/EBL/HBL
3000
2000 ETL
1000 EML
0 Cathode
2012 2013 2014 2015 2016 2017 2018 2019
TOTAL
Year
© NanoMarkets 2012

4. Of that total, the value of the core materials – those emitters, hosts, transport, blocking,
injection materials, etc., is valued at about $370 million this year and grows to almost $3
billion by the end of the forecast period.
If you look at market share, the core materials values correspond to 70 percent today and
Page | 4 40 percent of the total OLED materials market by the end of the forecast. The percentage
goes down because prices of core OLED materials have got further down to go than the
electrodes or substrates, but also because utilization is improved.
VC: How did NanoMarkets determine the average layer costs that would correspond to the
market values for each material type?
JS: First, all of the market value forecasts that we put together for this report are based on
OLED panel shipment forecasts, which are done for each OLED type, whether it’s phones,
tablets, TVs, lighting panels, etc. Each of those OLED panel types is given an average
display size or average panel size so that we can convert the shipment numbers to total
area. We then apply an estimate for yield, which could be different – it is different in OLED
lighting versus displays, for example – to get a total OLED area produced. Then, that total
OLED area produced forms the basis of the materials forecast.
On the materials side, we build the forecast from the bottom up. For each material we start
with assumptions about utilization rates, film thickness, film density, etc., to calculate a total
amount of material required to coat the produced OLED area. We then use price estimates,
which are estimates of average commercial prices for each material type obtained by
talking to both suppliers of materials as well as end users. You can look at catalogue prices
in some cases, although of course those don’t usually correspond very closely with what
real commercial prices are.
For this year’s report we spent a lot of time refining all of these estimates from the utilization
rates to film thickness and to prices, etc., so we think they’re quite reliable. Then to get the
market value, we multiply the price by the total quantity used.
In the report, we also present the data in terms of average layer cost so that the reader can
compare the costliness of each layer in the OLED. Those values are determined from sales,
too. (As such, they’re not derived from different numbers; they’re just presented as a
different way of looking at the same data.)
VC: Where are the major OLED materials technology gaps for both lighting and displays
that present opportunities for suppliers to come up with better solutions and grab more
market share?
JS: Overall – and this is kind of painting a broad brush – but clearly needed by the OLED
industry are materials for the functional stack (the emitters, hosts, transport blocking
materials, etc.) that enable both higher efficiency and longer lifetime. These are always the
goals, and gaps remain in those areas. For example, you need emitters that provide better
efficiency and longer lifetimes at the right color points to achieve proper color gamut in
displays or the right CRI and color temperature in lighting panels.

5. If you look at the needs more specifically, in displays what’s missing are dark blue with high
efficiency and a longer lifetime. The need for longer lifetime probably means a transition to
all-phosphorescent technology. Current blue materials that are on the market work okay for
small, mobile displays. They are being used today in the Galaxy phones on the market. But
it’s not clear that today’s emitter set is going to work well for larger displays, and more
Page | 5 specifically for larger displays that are expected to have longer lifetimes, like televisions.
Clearly, a TV should have a longer lifetime than a cell phone. Just how long that lifetime is
expected to be is not exactly clear, but it’s certainly longer than in phones. If you’re going to
pay thousands and thousands of dollars for that OLED TV, you’re going to expect it to last
quite a while.
On the OLED lighting side, the gap is in light blue emitters with high efficiency and longer
lifetimes. Here the efficiency piece is even more important because for OLED lighting to
take off – I think Lawrence could talk about this as well – it needs to get into some sort of
general illumination market like office lighting. To do that, it’s going to have to meet
efficiency and lifetime targets.
I think that the DOE’s targets for lifetime and efficiency are 100 lumens per watt and
50,000-plus hours. Today’s materials aren’t quite there. They’re getting there, but they’re
not quite there and they have to be, again, because the whole point of alternative lighting,
whether OLED or LED or something else, is that it provides higher efficiency than
conventional lighting. So, efficiency is critical and materials suppliers have an opportunity to
provide products to close that gap.
VC: Many people in the industry, including NanoMarkets, are expecting OLED lighting to
be a major contributor to overall revenue. Lawrence, as an expert on OLED markets, can
you speak to whether OLED lighting really can compete with LED-based lighting?
LG: I guess the quick answer is “yes.” In some sense, it doesn’t have to. The thing about
the display industry is that it seems to be structured in a way that one technology becomes
dominant. CRTs have almost gone away now and they’ve been killed off by LCDs. Perhaps,
– just perhaps – OLEDs will eventually kill off LCDs, although that could take a human
generation. The pattern seems to be that one technology is dominant with a few others
buzzing around trying to compete but not doing all that well. Plasma would be a case
history you could bring to bear.
Lighting is different. If you want proof that two completely different technologies can coexist,
look at fluorescent and incandescent bulbs, which have existed for a couple of human
generations now. They certainly compete with each other. They’re economic substitutes at
some level, but they seem to coexist.
With OLED lighting, there’s no historical reason that it has to compete with LEDs in a broad
sense to do well in the marketplace. I think even the most optimistic forecasters of OLED
lighting – I can tell you what we think: that in eight to ten years OLED will be maybe 3
percent of the general illumination market in terms of units shipped, which is not exactly a

6. huge success story. It just turns out that the revenues are enough to make the suppliers
successful.
The other thing about OLED lighting not having to compete with LEDs is they are
fundamentally different kind of lights. OLEDs are lighted panels, by definition, that can be
Page | 6 integrated into walls and windows (and who knows what else) and create effects that are
completely different in terms of functionality and aesthetics than an LED. So, I’m fairly
confident that if the numbers are right, LEDs and OLEDs can coexist.
I think the numbers will get right fairly soon. Jill threw out a few numbers. I think, on the
efficiency level, industry says that you need to be at 100 to 110 lumens per watt. We’re
“Matching the
getting up there. There’s been a lot of success in that field.
performance
available or When we started covering OLED lighting, not that many years ago, commercial OLEDs
achievable in were doing about 15 to 20 lumens per watt. At the Light+Building conference and trade
vapor-based with show in Germany that’s become a center of OLED lighting displays, what they were
solution versions showing this year were 40 to 60 lumens-per-watt panels. One hundred to 110 has been
still requires achieved in the lab, so I’m pretty sure that within a few years we’ll be there. The question is
work, and that’s cost and manufacturing, which speaks to the materials, and I think we’ll be talking more
an opportunity for about that as we go on.
materials
suppliers to VC: Significant efforts are being made to replace vapor deposited functional OLED
create a materials with solution-based ones: LEPs, HILs, ETLs, etc. Jill, what are the market
competitive prospects for solution processable materials in OLEDs?
advantage around
their particular JS: Actually, I think they’re quite good. This is because clearly, at least to me, the most
materials.” likely path toward actually achieving those larger areas at lower cost involves a transition to
solution processing, for the fabrication of as many of the OLED layers as possible.
If you look, however, at solution processing as a group, you can separate it into both
polymers and small molecules, and that’s where it gets a little more interesting and
different. Sumitomo is just about the only firm left that still is touting polymers in a big way.
The rest of the industry, led by DuPont Displays with its solution materials and its partners,
as well as UDC, Merck, BASF, etc., seem to have made a bet on small molecules for
solution processing. This isn’t to say that there aren’t problems to be solved still in solution
processing in order for it to meet expectations, not the least of which is the fact that the
performance in a solution material still needs to be generally improved. In other words,
matching the performance available or achievable in vapor-based with solution versions still
requires work, and that’s an opportunity for materials suppliers to create a competitive
advantage around their particular materials.
Also needed are better methods for large-area patterning. Certainly, aerosol jet is one
method that has shown some promise, as is nozzle-jet printing, which was developed jointly
by Dai Nippon Screen and DuPont Displays. One might say it’s perhaps the most promising
of the methods out there since these firms recently licensed their technology to Samsung.

7. Yields are also still an issue in larger area patterning. Still, even given the problems,
solution processing seems like it could be the key to getting costs down, especially for
something like OLED lighting, which is probably going to rely on the ability to make larger
area panels at lower costs – again, as long as performance isn’t sacrificed.
Page | 7 Also, at least one of the OLED TV makers, LG, has already publicly stated the intention to
transition at some point to solution processing. Samsung is also looking at solution
processing, having licensed technology from Dai Nippon Screens and DuPont Displays. So,
Samsung is looking at solution as an enabler for its future.
If you look at this from a numbers perspective, clearly the market value of OLED materials
in 2012 is mostly based on vapor deposition, and for the next several years will continue to
be mostly based on vapor. But, by the middle of the decade, by 2015, we are looking at a
mix of more like 75 percent vapor to 25 percent solution. That could be a little bit optimistic
given the delay in getting the first-generation big OLED TVs out. But, by the end of the
forecast we have that ratio at more like 60-40.
If you look at polymers, even though we have a total OLED materials market for the core
functional materials of about $3 billion by 2019, we’re pretty pessimistic about the prospects
for polymers, which we put at somewhere under $150 million through the whole forecast
period. Polymer OLEDs have been in the development phase forever, it seems now – at
least a decade – and we’ve become pretty skeptical that they will ever emerge from that
phase. It’s a possibility that that approach could be abandoned altogether.
VC: That is so interesting. Now, can solution-based or printed other materials, like
electrodes, encapsulation layers, etc., achieve the performance necessary to enable truly
low-cost manufacturing?
JS: That’s an interesting question and one I think that doesn’t really have a great answer.
Today not many good solution-based options exist for “other” materials, for electrodes,
certainly not for cathodes.
Also not many solution-based technologies exist for encapsulation. However, if you think
about encapsulation being accomplished using a finished barrier film of some kind, which is
somehow glued or laminated to a device, then that’s certainly compatible with solution
fabrication of OLEDs and potentially inexpensive, assuming those films themselves are not
prohibitively expensive.
Also, we see some indication that there is a way to get at least partly there with solution
processing for anodes in OLEDs, specifically for transparent electrodes. I’ll let Lawrence
talk about that because he’s the expert, having just recently done a report for NanoMarkets
on transparent conductors.
LG: First of all, this whole thing about solution processing and printing – just seven years
back or so there was a huge amount of enthusiasm about printed electronics. That
enthusiasm does not seem to have been justified. I think part of it is matters of fundamental

8. chemistry. If you’re trying to process something at very low temperatures, it’s harder to get
high performance than if you have the ability to heat things up a bit.
The other problem – and I say this as someone who began his business career in the
printing industry – is that printing inks are quite hard to make, even if you’re just talking
Page | 8 about graphics inks. Electronic inks are even harder because we don’t understand them as
well.
With regard to the transparent conductors: at this point, outside of R&D facilities, I’d say just
about 100 percent of the transparent conductors used in OLEDs are ITO and deposited
using vapor deposition. ITO ink have existed for a long time, but nobody seems to have
actually been able – it’s a good example of what both Jill and I were talking about – to
“OLED create an ITO ink that somebody would want to use outside of R&D.
encapsulation is
What’s interesting is that two of the transparent-conductor materials that seem to have
clearly the most
some very good prospects – I talked about this at a teleconference that NanoMarkets held
difficult kind of
last week – are silver-based inks and carbon-nanotube-based inks. Those are mostly being
encapsulation
delivered as a printable technology, so if they can find their way into OLEDs – and they
because the
might because there’s a long list of reasons why OLEDs would like to do without ITO – that
requirements are
would be an example of a success. These materials are available now in small quantities.
at least one – and
Their penetration in OLEDs is still small, but there’s a real-world example for commercial
probably two –
applications. But, we’ve got a long way to go. At the moment the penetration of solution
orders of
processing for transparent electrodes in OLEDs is exactly zero, I think. So, this is a
magnitude
possibility and it has some potential and may be an opportunity.
stricter in an
OLED than in Regarding encapsulation, I think Jill said most of this, but that’s got even further to go
most other because it’s not only is the manufacturing process in question, but exactly what kinds of
applications.” encapsulation OLEDs are going to need and can afford in the future is very much open to
speculation. We have a couple of reports coming out on encapsulation late this month,
which may be of interest in that regard.
VC: Can you go into the various encapsulation strategies and what are their strengths and
weaknesses?
JS: I can do that. First, there was a question earlier about technology gaps that Lawrence
just alluded to. Encapsulation still is one of the technology gaps in OLEDs in general. This
is probably especially true if we’re looking at moving toward longer lifetime products, TVs,
lighting, etc. As he mentioned, we will be releasing two new reports on encapsulation in the
next month for both photovoltaics and for OLEDs, so check back for more information.
That said, OLED encapsulation is clearly the most difficult kind of encapsulation because
the requirements are at least one – and probably two – orders of magnitude stricter in an
OLED than in most other applications. So, this has been a really important area for
development and investment and there are several technologies.
The first and most obvious technology for encapsulation is glass. It’s the standard used
now. Glass is great because it has excellent barrier properties. It’s transparent. It works

9. very well for today’s small OLEDs, and clearly an existing glass industry can supply glass
with the right properties. There’s a giant display glass industry.
That said, the disadvantages of glass are that it’s expensive, in theory. It’s heavier than
others, and when thinner, cheaper materials are desired, people start to think about
Page | 9 alternatives. Of course in the long run, if the idea of flexible, or even if just roll-to-roll
manufacturing is ever achieved, rigid glass will not work.
The glass industry’s answer is flexible glass. All of the major glass companies are
commercializing some version of flexible glass. At the SID show in Boston earlier this year,
at least three or four rolls of flexible glass were on the exhibit hall floor. So, it’s out there,
too.
The problem with flexible glass is that it’s still pretty expensive, although the argument from
the glass industry in favor of flexible glass is that the cost of glass is tied to its weight, so the
very lightweight, flexible glass may not be as expensive as you might think. Getting a
handle on the real price of the stuff is not that easy. That said, it has a lot going for it. It has
the excellent barrier performance that glass does. It has transparency. Drawbacks are
availability and price.
Most of the other barrier technologies out there are based on some kind of dyad of
alternating layers of polymer and inorganic layer. The goal, no matter who has been
working on this, has been to reduce the number of layers required to get a particular barrier
performance. Today a few firms are touting availability of two-layer and even single-layer
barrier technologies. UDC says it has a single-layer barrier technology. There’s also the
Singapore-based firm, Tera-Barrier Films, that has a dyad-type product which is two layers,
I think. 3M also has a product on the market. In fact, 3M has something that looks closest to
a real product that you can buy, in roll form.
The advantages of a barrier film based on a dyad are that it should be, in theory, lighter and
thinner than a cover glass. The disadvantage – outside of performance today, which still
lags compared to glass – is cost. Of course the argument for dyad encapsulation is that
cost should be lower in the long run for these kinds of encapsulation strategies than it will
be for glass. That’s a possibility.
You can also separate the thin film or dyad-type encapsulation into two categories: one
where you have the barrier films that you purchase and glue or laminate to a device, as in
the 3M product. But you could also directly apply the encapsulation film to an OLED device.
LG: You were talking about the price of flexible glass. We did a report on flexible glass and
we think that it has an excellent chance of being a major force to be reckoned with in the
OLED space, but it’s ridiculously expensive now and it’s produced in relatively small
quantities, so it’s really one of those Catch 22s that somehow the display industry seems to
get around, which is: it’s too expensive to use right now even though we want to use it, and
it won’t reduce in price until people start to use it.

10. I think you’ll see some pioneers out there that recognize that glass has got a lot going for it
over plastics, and people are looking at OLED displays as the fabric for the flexible displays.
We do have a report on flexible glass out now, in addition to the reports on OLED materials
that we’re talking about today. This is a scenario we’ve covered quite a lot so I thought I’d
add some gloss to the question.
Page | 10
VC: Jump in any time.
JS: OLEDs are probably a really good fit for a flexible glass because they probably can
support the cost, at least a little more easily than maybe some other applications, for a
while, anyway – at least in some instances.
Getting back to film-type encapsulation, you have the separate films like the 3M products.
The advantage of something like that is that it should be cheaper and easier to use from the
“ALD is a very
perspective of a display maker. Also, if there’s a bad area in the film, or an area with
interesting area to
imperfections, you can in theory – if you know where that is – be able to remove that from
explore as an
the film and thereby not destroy underlying OLED devices, which are expensive.
opportunity with
revenue potential Also, if you approach film encapsulation from a separate film perspective you have a little
for the equipment bit more freedom in processing of those films with respect to temperature, for example. The
manufacturers but weakness, however, is performance of the films on the market today. You could go to direct
also as an enabling encapsulation where you directly deposit your thin film dyad on the devices. That’s a little bit
technology for riskier; you have to have very pristine, pinhole-free films. Those are difficult to achieve, but
OLED companies that’s definitely an approach that many display makers are looking at.
that are ambitious
enough to start One thing that’s interesting is ALD as a possibility for encapsulation. Several ALD
pursuing flexible, equipment makers are looking at OLEDs as a target market. The idea with ALD, compared
curvy or even to CVD or PVD methods, is that it’s better at getting to those really pristine layers, and it
stretchable – also can be done at lower processing temperatures than PVD or CVD can.
someday – OLED
technologies.” The problem with ALD historically has been device-area capability, but this is being
improved, so that’s why manufacturers are thinking about using an ALD process for
encapsulation.
LG: As a speaker at the Society of Vacuum Coaters Technology Conference earlier this
year, I had the opportunity to walk around their exhibition. I was actually surprised, I
confess, about how far ALD had come. I tended to think of it as an R&D technology or a
very specialized technology in semiconductors, but a bunch of companies were first of all
offering the potential for R2R, ALD, sub-high throughput (ALD). A lot of them were focused
on the OLED opportunity.
Again, I think that the percentage of OLEDs that use ALD at the moment is close to zero,
but at least the ALD manufacturers see OLED as having some potential. When you’re
talking about flexible displays and when you’re talking about how OLEDs have so much
vulnerability, it seems like ALD is a very interesting area to explore as an opportunity with
revenue potential for the equipment manufacturers but also as an enabling technology for

11. OLED companies that are ambitious enough to start pursuing flexible, curvy or even
stretchable – someday – OLED technologies.
In our encapsulation reports coming out in a few weeks, we’ll look at what ALD really
means. It’s obviously a rising star in encapsulation. We talked a little bit about
Page | 11 encapsulation in the materials report – a lot more granularity in terms of forecasts and
actually newer information will be in the encapsulation reports. I just wanted to jump in with
my experience of wandering around that particular show.
JS: One final encapsulation technology is metal. It has been used for many years quite
well in some OLEDs. It’s been largely displaced in displays because of a move to top-
emitting structures, which then necessitated cover glass. But certainly something like OLED
lighting could transition back to a bottom-emitting structure – or maybe it already is using
that – and metal could become a factor again.
The advantage of metal is that it also has really good barrier performance. Disadvantages
are lack of transparency, perhaps, and with respect to weight it’s probably in between glass
and plastic.
VC: Thank you. Jill, can you tease us with a few companies in the report that you see as
important players in the market, and if any of them have declined in overall importance
since the last report?
JS: Clearly the most important players, the ones to watch in OLEDs, are the manufacturers
of OLEDs themselves. On the display side, obviously that means Samsung because it’s
making 90-plus percent of the active matrix OLEDs on the market today. Also, LG, Sony,
etc., are all important. On the lighting side, the big lighting manufacturers, like Philips,
Osram, Lumiotec, Konica, Minolta are the key firms. These manufacturers are actually
making OLED lighting panels.
Samsung, though, is still the most influential because it manufactures so many of the
devices out there. It has announced plans to sell more than a billion OLED displays within
the next five years. It has a big plant coming online – I think it was supposed to be this
quarter.
That said, Apple is also a key firm to watch that could have a major influence on the OLED
materials market. There have been rumors that Apple will shift to OLEDs at some point for
some products and when that happens, it will really change the market. It hasn’t done so
yet, presumably because of a lack of a supply of OLEDs, and perhaps because Samsung
has been either unwilling or unable to manufacture enough. That could change at any time.
There’s additional capacity being added; there are other manufacturers that Apple can look
to.
Samsung might also decide that revenue from sales of display panels to Apple would
outweigh any negatives associated with supplying its main competitor with components.
Perhaps the recent judgment against Samsung will make it a little bit more unwilling to work
with them for a little bit longer, though.

12. In terms of declining importance, you have to look, on the lighting side, at GE, which at one
time was really active in developing roll-to-roll OLED lighting processes and applications,
but it has really been quite silent. I’m pretty sure that GE’s development project still exists,
but at a much lower activity level than in the past.
Page | 12 Also, Sumitomo, as I pointed out before is really the only firm out there still touting polymers
in a big way. Like I said, that approach could be altogether abandoned at some point.
VC: Interesting.
LG: The other thing I’d mention is the Japanese companies. One of the things we didn’t
talk about and nobody talks about much is that OLED displays have been around for a very
long time, but in the form of very low-performance passive-matrix displays, and somebody
had to supply the materials for that. A select group of Japanese companies has been
largely supplying what are now almost obsolete materials. I’m probably exaggerating a little
bit.
If we’re looking for companies in potential decline, they would be it. Jill can give more gloss
on who they are, but certainly there’s been a shift. UDC has been around a long time, and
it’s a company one always thinks of when one thinks about OLED materials. Shift back five
or six years and you’d list a bunch of other companies almost automatically – less
automatically now, I think.
VC: There are a few key firms like UDC that dominate the OLED materials business now.
How does NanoMarkets see revenues derived from licensing and materials supply
changing as the market matures? Will other players break through and erode current
revenue streams or will they be subsumed by the dominant players?
JS: At least with respect to emitter technology, I think UDC will continue to dominate. But,
keep in mind that although we talk about them a lot, it’s because they’re a public company,
their income statements are more easily available, and you can link the information directly
to what’s going on in the market. But, they still only hold about 50 percent, or maybe even
less, of the value of the emitter market since only red and some green materials of theirs
are being used. So, it’s really not the only player; it’s just definitely the most visible player.
Also, it’s important to keep in mind that most of UDC’s sales today rely on a single major
customer – Samsung – and that’s never a particularly comfortable position for a materials
supplier to be in. That said, UDC still has some things going for it. Use of green
phosphorescent UDC material is growing, and it’s likely that UDC has as good a chance as
anyone – and perhaps better than most – to start selling phosphorescent blue materials if
and when they’re developed.
Keep in mind that the whole industry is moving toward all-phosphorescent technology for
efficiency, which is especially important in lighting. And when you talk about
phosphorescent technology, it automatically brings UDC and its IP position into play. They
already have a really extensive network of licensees around for their phosphorescent

13. technology, and are particularly dominant in Asia where so must of the activity is going on.
Samsung is obviously a key licensee, but UDC has a presence elsewhere, as well.
It also has partnerships on the materials side that keep it involved in everything. The IP
situation is a little bit uncertain, I suppose. A couple of patents were partially invalidated in
Page | 13 Japan earlier in this year, but really only some very broad claims were invalidated. If you dig
more deeply you discover that most of the fundamental iridium core IP for phosphorescent
OLEDs is upheld. It’s a similar story in the EU and also in Korea, I believe.
Nevertheless, that does open the door a bit for competition. As the market grows, and it’s
clearly growing, UDC can definitely expect more attacks on its IP, naturally. Everybody
wants to get into this if possible – not to mention the fact that some countries in some
regions may simply just devise workarounds or ignore IP altogether. That’s always a
possibility.
VC: We’re running a little long. I have another couple of questions I wanted to ask but we
might skip them. You can add anything to this if you want. I was going to direct this one to
Lawrence and ask him: Heading into the future, how fast will mainstream display makers
transition to OLEDs?
LG: I think it will be very slowly. All the evidence from display transitions in the television
business is that it happens very slowly. I remember reading, I think in The Economist, that
some particular year was the first year that flat-panel televisions actually outsold non-flat-
panel televisions. You’d think from all the fuss that that was a very long time ago. I don’t
remember exactly when, but it was probably five or six years ago. It just takes a long time in
the television industry.
As Jill said, television is particularly important in the context of materials because
televisions use a lot of materials, essentially. And I think that will be a very slow transition.
In the mobile display area, the transition will happen much faster. Part of it’s just the
mathematics of it because the longevity of a mobile display is just a few years and while we
don’t know, really, what the expectations are for TVs anymore, they’re clearly longer than
that. Especially, as Jill said, if you’re buying a $10,000 TV you want it to last more than
three years – at least I certainly would.
I think mobile displays will transition much faster, but maybe not super fast for two reasons.
One of them really has to do with capacity. If you want to buy large numbers of small mobile
OLED displays right now you pretty much have to go to Samsung. It’s the only firm
producing them in large numbers. So, if you’re Apple you have to do some kind of deal with
Samsung. We already talked about this. It’s not that easy after the recent patent
infringement dispute.
That will change, though. New plants will open up. New plants are going to open up for sure
in China in the next few years, but there’s a constraint on that, too. The other thing that will
constrain the change from LCDs to OLEDs is the fact that LCDs are very good at keeping
up.

14. At the SID show, I saw two mobile phones next to each other – both very high-quality
displays. One of them was OLED and one of them was some kind of fancy LCD. I asked the
representative there, “You know, does this mean that OLEDs are not going to succeed?” He
pointed out what was obvious, really – and the impact sort of grew on me – that to get to
that quality in an LCD you had to add all sorts of films and filters and who knows what else.
Page | 14 That added cost, so the point about OLEDs wasn’t just quality, it was a price per quality
unit. I think LCD will try to keep up for quite a while, and it will be successful to some degree
before it basically gets out-maneuvered in terms of price.
I think all these things are going to take a while. Of course, we don’t yet know for certain
that OLEDs are going to take over. Like the issue of encapsulation; it’s still a big question
mark. If you can’t get the encapsulation for OLEDs right and cost effective and you end up
“ If you can’t get with large displays that don’t last very long, then I think the scenarios that we and most
the encapsulation other analysts are exploring for OLEDs begin to look a little ropey and unrealistic.
for OLEDs right
and cost effective The assumption we’re making is it will continue to grow. It’s got a long way to grow,
and you end up because the penetration in the display marketplace and certainly the in the lighting
with large displays marketplace are small. I know you can go out and buy Galaxy phones anytime you want
that don’t last very now, but if you look at them as a proportion of the numbers of cell phones sold, with about
long, then I think 1.4 billion cell phones sold every year, the percentage of those that are OLEDs is – Jill
the scenarios that would know – pretty darn small.
we and most other
analysts are VC: Thank you. Jill, do you have anything to add to that?
exploring for
JS: We talked a bit before about key firms to watch, or influential firms. In the interest of
OLEDs begin to
time, I glossed over a couple of them. In the report we talk pretty extensively about some of
look a little ropey
the others that I didn’t mention like Novaled and Mitsubishi and Idemitsu Kosan and some
and unrealistic.”
others that are also really influential in this market.
LG: I think some of those companies that you mentioned, especially in OLED actually have
been around for years and they’re now beginning to see the light of day. Good news for
them – but, also showing the new direction that OLEDs are taking – it’s a bad pun here
somewhere – and the visibility that OLEDs are getting. UDC and Pioneer put out the first
commercial OLED display that went into a car radio. I don’t remember how long ago that
was, but it was a very long time ago. It was too small to get an impression of the new
technology at that point.
JS: Around a decade ago, I would think.
LG: Yes, that’s what I thought.
VC: Thank you both. That’s all we have time for, so I’m going to conclude and pass it back
to Robert for closing comments. Thank you for this opportunity.

15. Related NanoMarkets Reports:
 Transparent Conductor Markets 2012
 OLED Lighting: Companies, Products and Strategies – 2012
Page | 15  NanoMarkets OLED Lighting Market Forecast – Q2 2012
 OLED Lighting Materials Markets 2012
 Markets for OLED Encapsulation Materials -2011
 Markets for OLED Materials - 2011
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