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Technology Stocks : OLED Universal Display Corp -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (25907)5/6/2021 3:39:45 PM
From: ZikZak3 Recommendations

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Iridium prices and Ir vs Pt in PHOLEDs

We have a very unforgiving market in which stocks are being punished if they do not report their greatest quarter of all time. For us the biggest threat is the price of iridium which is up by a factor of 4.0 over the last 12 months. Will those raw material prices bite us on earnings or earnings guidance?

To my knowledge, only once has the effect of the rising price of iridium (Ir) on margins been addressed in the earnings call. That was Q1 2013. By early 2011 iridium (Ir) had doubled from its 2007 pre-crisis level, from under $500/oz to just over $1000. That surge didn't start to abate until 2013. By the end of 2013 Ir had fallen to below its 2007 price. Yet for two years that doubling did not affect OLED's margins. It wasn't until Q1 2013 that it first became significant, and by then it was already starting to abate. Here's the discussion from the Q1 2013 transcript. After this Ir prices were never mentioned again.

Brian Lee - Goldman Sachs

Okay, and just want to drill down on few modeling things, you mentioned the cost and material had one raw material cost which seems to be up I think and you said 30% for a particular input on green emitters. Can you elaborate on what drove the higher cost and if you expect that to persist in future quarters?

Sidney D. Rosenblatt

It's iridium chloride that goes into all of our emitters. And in the quarter one it up we are actually seeing a decrease now. It does fluctuate we did an increase this year over last year. But we have actually seen a decline in the last month of production. So that's really a component that we are seeing the increase in.

Why did it take two years for the Ir rise to affect OLED? Did OLED have a long term iridium chloride contract with their supplier? And how do OLED and PPG divide material cost increases? None of this was explained so we don't know why there was a two year lag in OLED seeing the effect. Can we count on another long lag before OLED feels the effect of the current surge to $6300/oz? Hopefully so, but who knows? The analysts were not savvy enough to ask during the Q4 call. Ir was at $4400 then vs $6300 now.

81% of Ir comes from South African mines. Production has been disrupted due to covid, so hopefully we can look for relief on Ir prices going forward, although we haven't seen any decrease yet.

Platinum as an alternative to Iridium

While Ir is up 4X over the last 12 months, platinum (Pt) is only up by a factor of 1.59X. Also, Pt is a lot cheaper than Ir, $1242/oz vs $6300/oz. If these prices don't normalize, will this put pressure on the market to switch to Pt? In the past that couldn't be done because the lifetime of Pt materials was so much less than Ir, but that is changing now.

At last year's SID 2020 Samsung Display, session 6.4, reported that they were studying OLED's blue PHOLED to understand why the emission spectrum is affected by the n/p host ratio. That material was Pt, not Ir. So OLED is clearly working on Pt.

But more significantly, at SID 2020 session 20.2 "High Efficiency and Long Device Lifetime Green Organic Light Emitting Diodes Using a Pt Complex" given by Sunghun Lee of Samsung Advanced Institute of Technology (SAIT), the presenter gave us a lot of insight into what Samsung liked and didn't like about OLED's materials, and what their strategy was in developing their own suite of materials to replace them. While Samsung is satisfied with OLED's red, they want (as of 2020) 20% more efficiency and 100% more lifetime from green.

The issue is that both OLED's red and green are Ir. While OLED has succeeded in developing a red with a high horizontal dipole orientation, which allows for high EQE due to greater outcoupling efficiency, they have not with green. Samsung believes that Pt is the key to getting that higher EQE. After years of working on Pt, they claimed they had achieved both EQE and lifetime superiority over Ir in the yellow-green, coordinates (0.345, 0.619). But will they be able to get to a commercially viable deep green? From looking at SID 2021 papers, no sign of that yet. Hopefully it will be years, if ever. But the Ir-Pt price discrepancy, if it continues, will doubtlessly provide a lot of motivation.

Too bad the analysts aren't well versed enough in the tech to ask questions about Ir vs Pt.