Universal Display Signs Pact with Mitsubishi Chemical
Universal Display’s agreements with Mitsubishi Chemical and Nippon Steel Chemical represent the latest in a series of alliances by developers seeking to widen their supply base for OLED materials. Universal last year extended an OLED materials development and supply pact with PPG industries through 2008 (CED Aug 11 p7), and in April hired 5 of its engineers. Rival Cambridge Technology formed an OLED materials joint venture -- Sumation - with Sumitomo Chemical last year, but continues to work with Merck, which bought former partner Covion last year.
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Unclear at our deadline Wed. was the effect of Universal’s agreements with Mitsubishi and Nippon on its work with PPG. Universal officials weren’t immediately available for comment, but in a news release the company said the Mitsubishi alliance will focus on developing materials for phosphorescent OLED displays that can be processed through “wet” solutions like ink-jet printing. Printing active matrix OLEDs instead of using vapor deposition is a “promising approach” for developing large-size displays for TVs and PC monitors, the company said. While Epson and Samsung have shown prototype 40” AMOLEDs, mass production remains several years off and the technology has been confined to cellphone displays. The joint venture will draw on Mitsubishi’s expertise in OLED chemicals and ink formulation, Universal COO Stephen Abramson said. In the case of Nippon, the companies will work on development of red phosphorescent OLED materials.
Universal’s ties to PPG date to 2000 and the companies’ agreement requires that it pay the chemical firm’s development expenses in cash and stock. It took a $1 million charge in the first quarter ended March 31 in issuing 77,402 shares to PPG. Universal’s first-quarter R&D costs of $5 million -- up from $4.6 million a year earlier -- included $284,281 related to the PPG agreement, it said in an SEC filing. Universal’s first-quarter loss narrowed to $3.5 million from $4.9 million as revenue rose to $3.2 million from $1.4 million. The increase in revenue was driven by a rise in royalty and license fees to $930,846 from $73,255 a year earlier due partly to payments from Samsung SDI and Dupont. Chemical development revenue jumped to $675,906 from $413,362.
Universal also signed a new sponsored research agreement with USC and subcontractor U. of Mich. in Jan. that calls for it to pay $4.6 million May 1, 2006-April 30, 2009. The OLED developer switched alliances after Stephen Forrest, a former researcher at Princeton U., moved to Mich. It’s required to make at least a $100,000 royalty payment to Princeton under a 1997 agreement, $59,025 of which was paid first quarter, SEC filings state.
Cambridge invested $3.2 million in Sumation in April to maintain its 50% stake and was reimbursed $4 million for related R&D projects, it said in an SEC filing. It also recorded $1.4 million in the first quarter as its share of the joint venture’s loss. Cambridge also is required to provide 10 employees to Merck’s OLED operations through Dec. It receives royalties based on Merck’s OLED sales and is renegotiating its agreement with the company, it said. While the royalties received from the Merck agreement are currently less than the costs of funding the project, they continue after the service contract expires and Cambridge “anticipates” the pact will eventually be profitable, it said.
Cambridge’s first-quarter loss narrowed to $7.4 million from $8.4 million despite a decline in revenue $1.03 million from $1.56 million. R&D expenses declined to $3 million from $3.9 million. Toshiba Matsushita Displays, Toppan Printing and OTB each accounted for more than 10% of the company’s first-quarter revenue. While Cambridge had 7 technical services and development customers during the quarter, up from 6 a year earlier, the segment’s revenue declined to $698,000 from $1.4 million. Cambridge also cancelled a $15 million credit agreement with Lloyd TSB during the quarter, having not drawn on the facility since Dec. 2004, it said.