UDC, the Next ARM Holdings!
March 06, 2017

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One of the biggest winners of the Smartphone transformation has to be Arm Holdings (ARM). Founded in 1990, the company focused on designing processors that were small, powerful, and low in power consumption. After going public in 1998, the company operated in obscurity, but that changed significantly after 2007. As smartphones began to develop, the arms race to develop and add new features created a strong demand for processors that were small, powerful, and low in power consumption. ARM designed processors became the industry standard for cutting edge smartphones. ARM Holdings started to generate millions and millions in revenue in the decade leading up to 2010. The valuation of the company shot up to the multi billion territory and continued to grow, before SoftBank Group acquired it in 2016 in an all-cash deal for a $32 billion dollars. As our readers are well aware, there's another massive shift happening right now in electronic displays. With companies like Apple and Samsung pioneering the shift to OLED technology in their line of smartphones and LG pushing OLEDs for televisions, companies specializing in OLEDs are poised to benefit massively over the next few years. Universal Display is the clear frontrunner. Founded in 1994, and having gone public in 1996, Universal Display has pioneered OLED technology. With the discovery of phosphorescent OLEDS, which enabled high efficacy and long lifetime UDC has become the go to company for organic emitters. Initially, Tohoku Pioneer used Universal Display's materials and proprietary research back in 2003 for PLMOLEDs. A few years later, Samsung launched their first iteration of an AMOLED screen in 2007. After years of development, OLED technology finally became consumer ready. With OLEDs in the process of becoming the dominant standard for current displays, Universal Display's revenues are skyrocketing reaching $200 million in 2016. As we have discussed previously, Samsung has a 99% share of the small medium small/medium OLED panel market and LG has a 100% share of the OLED TV market.  But that dominance is expected to change over the next 5-years as Sharp, JDI (and JOED), BOE, CSOT, Tianma, Everdisplay, Truly, Visionox and Royale enter the market. With the growth of OLED displays expected to double in 3 years and double again in 6 years, UDC is poised to take advantage of this phenomenon.   In the year of its IPO, the company was valued at $31 million. The investors, who have held it until today, have made over 130 times their original investment! Universal Display is currently worth $4 billion, and should continue to grow reflecting the growth of the market.  Some believe the company is poised to replicate the financial success of ARM and could be the subject of a buyout in the near future. It was rumored that Samsung had a change to buy the company early on but opted to pass.  Clearly, Samsung is the external company most responsible for UDC’s growth but the original offering price (reportedly ~US$300m) is trifling. 

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