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To: handyman who wrote (12622)10/5/2017 11:21:12 AM
From: I'manoledguy
   of 12834
 
handyman, anybody and everybody in the display screen business has been aware of UDC for a long time and therefore not under the radar.

In case you are unaware, Samsung has been the 900lb gorilla in displays for years.

Yes, UDC has stated they want an ample cash stash to use should it be needed. Cash available for litigation discourages lawsuits. If you were to study UDC history you might discover that many years ago UDC did a secondary offering with this in mind.

You see, when you are an Intellectual Property company Mgmt knows that being able to defend it's patents is critical the reason they hired Mario.

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To: I'manoledguy who wrote (12620)10/5/2017 12:33:02 PM
From: slacker711
4 Recommendations   of 12834
 
Samsung would never have committed so much capital into current manufacturing capacity with more coming online shortly thinking they might discard it all in a few years after the end of the this 5 year contract.



Litigation, and the threat of litigation, is about leverage in negotiations. It is very very rarely ever as black and white as sign the contract or we are going to have to close the fab.

UDC's greatest strength versus other patent holders is the quality of their emitter materials.

If I was Samsung's management, I would need the answers to a series of questions before I signed a contract that was going to cost me billions.

First and foremost, are there commercially viable substitutes to UDC's emitter materials that dont use the identical molecule? If yes, then how many of the layers of UDC's patent pyramid do they violate? Is it only the ligands patent which begins to expire in sometime early in 2020?

If I have a commercially viable substitute, what is the probability that I would be able to win a court case in the US. What is the downside to litigation? How long would litigation take and would we be close to the expiration of the patents that we would be violating? Would the ITC actually ban all smartphones using OLED's. Would the President sign off an such an injunction?

If we go to litigation, will I be able to sign a better contract just prior to a judgement? How much money would Samsung save over the life of the contract by going this route? Would TADF materials be commercially viable before the end of the litigation?

UDC has to answer many similar questions before they decide on the lowest rate that they are willing to accept. If it really was a case of sign this contract or you are going to have to shut down your fabs, then UDC's royalty rate should be at least an order of magnitude higher. I would start negotiations at something like 15%.


Slacker

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To: handyman who wrote (12622)10/5/2017 12:50:11 PM
From: Mekopelet
3 Recommendations   of 12834
 
Lawsuits: Actually, UDC has been involved in several lawsuits about 5 years ago both in Europe and in Japan. The companies that challenged their patents included some major players (i.e. Merck). UDC won almost all of the lawsuits including the bendable OLED substrate challenge. Now, UDC have NEVER been challenged in the US since that would be a silly attempt given the source of the patents (UM, SIU etc..). With that said, Samsung LG or any company that challenges UDC patents would have to sue in the US.


Future (5 years) contract: I agree with the previous post that Apple or Samsung have probably taken the plunge (together) with the blessing that UDC patents remaining in place for at least 5 to 6 years.


How about the patent cliff? I believe that UDC is in the forefront of material development and if Samsung or others wish to jump ship in 5 years they might find that their competitors are not... their material mix might suck compared to more recent developments (i.e., Blue).


Samsung Current and Future standing in the phone market: As it stands, Samsung or LG phones don';t compare with the Pixel or Apple. They suck as they are loaded with bloatware (who really wants a Samsung voice search engine?) . I feel that Pixel will rule the android world in the not so distant future. The Pixel 2 shows that Google is developing hardware specific software and upgrades and is leaving Samsung behind (Samsung f the first generation of pixels by holding screens, a good reason the screw them back).


What will drive the future? Form factor plays only one role in the purchase of phones. The OS even more
important (that is why my kids refuse to shift to Android with an OLED screen). I don't see Samsung holding a sizable market for more then a few years. As the Chinese start making OLED screens and Google moving toward hardware at reasonable prices (Pixel II = $650 with OLED) Samsung will be out. Maybe they can come out with a Tizen phone???? ;-) Just kidding.

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To: Mekopelet who wrote (12625)10/5/2017 2:04:24 PM
From: I'manoledguy
   of 12834
 
Mekopelet. Well aware of those early litigation's mostly in Europe. Just wanted to add that one player involved was BASF---we know their fate.

It is also worth mentioning that part of the Samsung agreement and LG's is that if either buy chemicals from another source that violates UDC patents UDC can completely stop selling to them. This would also mean that any patents UDC owns involving architecture or manufacturing methods would also be revoked. A nice insurance policy.

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To: I'manoledguy who wrote (12626)10/5/2017 2:19:08 PM
From: handyman
   of 12834
 
The miners are lining up as UDC sells them the picks and shovels.?

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To: slacker711 who wrote (12624)10/5/2017 3:40:34 PM
From: litespeed2011
2 Recommendations   of 12834
 
In my mind UDC has greater leverage in getting the sweetheart deal this time.

At the get-go when Samsung was the only play in town, there's not much leverage.

But today it's different. As handyman pointed out (and actually I do like the pick and shovel description because it's easy to understand), folks are lined up at the door to get a piece of the action.

And the UDC strategy of maintaining a large cash stockpile will help in achieving a happy ending for the negotiation story.

Why? If things truly come to a stall, which I don't think it will and UDC is 'forced' to play hardball which again is a low probability event, which company has more to lose by digging its heel in the ground?

UDC can go without Samsung for a year with its cash and revenue from LG. How long can Samsung hold out not being able to sell phones and screens given all it's capital expenditure? And if Samsung can't deliver to Apple, Apple will sue.

There are other girls on the dance floor now. UDC can pick and choose. Of course being the respectful business folks that work at UDC, UDC team will seek to achieve amicable terms without Samsung feeling that it's been cornered into the terms and conditions because after all, who doesn't want a long-lasting mutually beneficial business relationship?

Samsung management on the other hand, should learn from its LG brethren (they missed the first lesson on how to build OLED TV and here's an opportunity to not fumble on a major decision) and be wise about signing on to reasonable terms so that it doesn't end up on the dance floor, alone.

The only thing I'd ask UDC mgmt team to remember is follow Teddy Roosevelt's style of diplomacy where one "speaks softly, but carry a big stick".

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To: litespeed2011 who wrote (12628)10/5/2017 3:47:39 PM
From: handyman
   of 12834
 
I echo all your sentiments. Samsung would have to be nuts to pass on 4 nil for what?

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To: litespeed2011 who wrote (12628)10/5/2017 4:01:06 PM
From: slacker711
1 Recommendation   of 12834
 
I would note that everything that you said was true in 2011. Samsung had spent billions on their Gen 5.5 fabs and was preparing for the launch of the Galaxy S3 which I believe was the best selling Galaxy handset of all time. Samsung is making far more on OLED's now but they are making less on handsets.


Also, UDC's patent with the widest coverage still had over five years of life left. Despite that, UDC settled for a "no-downside" agreement.

How long can Samsung hold out not being able to sell phones and screens given all it's capital expenditure?


So we know for a fact that nobody in the industry, regardless of patents, can supply commercially viable emitters?

If yes, then UDC should raise the royalty rate substantially and go for a 6+ year license.

If no, then it becomes a balancing act with Samsung and UDC trying to figure out how much risk they are willing to take to get better terms.

I think it highly probable that Samsung will sign. However, IMO the idea that there is zero risk that this goes into litigation or even a one year agreement shows too much confidence into negotiations where we have little insight.

Slacker

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To: slacker711 who wrote (12630)10/5/2017 4:39:38 PM
From: Cooters
3 Recommendations   of 12834
 
IMO you've made the critical points but I'm going to frame the argument differently, and it hopefully will highlight why I believe we are likely to see this drag into 2018 and get rather......contentious...

The leverage in this negotiation is not based on one fulcrum because it is not based on one moment in time, it is a moving and fluid target. I'll narrow it for sake of argument to a day in each of the 5/6 years we hope the agreement spans.

- 7/1/18 - I would consider Samsung's leverage virtually zero, almost laughable, they cannot produce a commercial OLED without a license and UDC emitters.

- 7/1/19 - Ligands patents still valid, very unlikely but not impossible that commercial TADF emitters could be available. Still major advantage UDC.

- 7/1/20 - Now we are getting to a situation. Ligands patents begin to expire. TADF emitters are much more in the realm of reality, remembering we are speculating about their availability today. Advantage UDC.

- 7/1/21 - New world. Ligands patents expired or expiring worldwide. Are we relying on the 4000 patents now? Still betting TADF is not a viable option? IMO we have arrived at Advantage Samsung.

- 7/2/22 - Advantage Samsung

Note when I say Advantage Samsung I am talking in a negotiation. What actually transpires will come to pass in the fullness of time. What Samsung has to accept for a one year extension is not what they have to accept for a 6 year deal.

Cooters


PS - And also note the patent leverage was much stronger in 2011 and we know what we got.

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To: slacker711 who wrote (12630)10/5/2017 4:47:24 PM
From: Prophet3200
   of 12834
 
Thank you Slacker. I agree completely...

I would go a step further to say that UDC's management team is the company's largest liability in its negotiations with Samsung. They have a history of giving away the company's tech for way to little!

To illustrate my point I suggest a comparison between the UDC's "value add" vs. UDC's "value received". UDC's technology adds 3x to power efficiency, much longer lifetime, cool operation (no heat sinks), flexible form factors etc. The company receives less than 1% of panel sales in combined material sales and royalty/license fees.

I know that we have discussed this in the past.... this is among my largest frustrations with UDC!

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