Universal Display Corporation (OLED) Earnings Call Transcript & Summary

Good morning, and good afternoon. I'm Timothy Arcuri. I'm the semiconductor and semi-equipment analyst here at UBS. Thank you for joining our session. We're very pleased to have Universal Display in this session, and very pleased to have Sidney Rosenblatt, who's the EVP and CFO of UDC. So we're just going to dive right in. Thank you, Sidney.

Thank you very much for inviting us. We appreciate it.

Great. So maybe let's start with the display end markets. And if you look at OLED penetration, it's expected to grow to about 45% of the smartphone market this year by year-end sort of if -- but if you look at TVs, penetration's very, very low; low, low single digits. Gaming and autos also seem to be emerging markets for OLEDs as well. So the question is, can you talk about the dynamics of OLED activity going forward in these end markets, the end markets where penetration is not as high? And can you talk about maybe what is the main new driver for material revenue for UDC?

Yes. Thank you very much. I mean from a broad perspective, the display market is $150 billion annual market, and it's broken down into multiple segments, which include smartphones, IT, TVs, you've got IR, VR, you've got a number of other ones got gaming. And OLED display started in the smartphone market in actually 2010, the Samsung Galaxy, first Galaxy phone, was the first one to have an OLED screen. So the smartphone market TAM is about 1.4 billion units annually. And as you said, OLEDs, at the end of this year, are expected to be about 40% to 45% of that market. So that -- it really is looking at the premium end of the smartphone market that has adopted OLED. And the main reason for that is OLEDs themselves are self-emissive displays and that because of their self-emissive displays and only the pixels that you put current to lights up, and an one of true -- but in OLEDs -- the materials themselves, the red, green and blue pixels and all visual displays use red, green and blue actually light up and you have a true black background, different than a liquid crystal display, which actually has a bright white light in the back and then in order to get black, you block it out. So that the benefits of OLED is you have a very high contrast ratio. In addition to that, using the technology, Universal Display's technology, which is a phosphorescent emitter, which is a very power-efficient emissive material. You would tend to get a display that gives you great picture quality and also increases the battery life of the devices, which is why it was originally included on smartphones. So the first opportunity for OLEDs for full-scale display production was on the smartphones. And so today, it's up to 600 million units that have -- smartphones that have OLED displays. The other areas that are really emerging for OLED technology are TVs and the IT markets. The TV market, which is really dominated by LG Display. LG Display is the only manufacturer of OLED TVs. They have 19 different OEMs who will brand their OLED display, but all of the panels are made by LG. And so that market is one that's about 250 million units annually, dominated by liquid crystal displays. In 2021, OLEDs are expected to sell somewhere between 7 million and 8 million units estimated to go to 10 million units for LG next year. Samsung is going to introduce small quantities of OLED displays using quantum dot materials as a down conversion, and I'll sort of walk through that. But -- so right now, in the TV market, you're talking about 3% to 4% penetration. So this is one of the areas that you will see significant growth in OLED technology. And then the IT market is one that's just emerging. So you see gaming applications that have it, and you'll see some of the smaller TVs like 48 inches and 42-inch TVs are used for gaming applications. And that's because of the benefits of OLED and the high contrast ratio. So that -- you will see that market start to emerge, and you've heard -- you're hearing chatter from the industry about tablets and moving to Gen 8.5 substrate sizes for the IT market. And that, again, is -- the penetration in that market, which is about 450 million units, that's laptops, tablets, notebooks, monitors, anything like that, that's a market that is really just emerging. So -- and then AR and VR, they are good opportunities because of the benefits of OLEDs and the picture quality. However, these are micro displays. And so they're small. So for us, it is -- the way that our business works is we coat the entire substrate. We sell these self-emissive materials. And we also get license fees from our customers. So for us, the key for growth is new opportunities, new capacity that comes online so that we can then coat it with our material. So that -- these areas that have -- that are just in the nascent stage are areas that you can see significant growth for our materials. So [indiscernible] I apologize. Yes.

Yes. So how do you think about -- since yours is a -- you have your licensing business, but from the materials side, it's a sort of a square inch business, surface area business, right? So how do you think about -- I mean, yes, the TV penetration is, obviously, much, much lower than it is in smartphone. But of course, the display sizes are much, much bigger. So how do you think about sort of how big of a driver -- like it seems like you don't need to have that much increase in penetration for it to really drive the materials side of your business, can you talk about that?

Yes, that's absolutely correct, because depending on what size substrate you're using, it is -- Gen 8.5 is what's being used, and we coat the entire substrate. So if what you're talking about in making mobile devices, you may be able to make 250, 300 mobile devices on 1 substrate. When you go to TVs, though, you're talking about 6 55-inch TVs or 3 65-inch TVs. When you look at just the square meters of glass, we do a calculation that says there's about 10 million OLED TVs. It's probably equivalent to about 500 million to 600 million smartphone-sized screens. So you are 100% correct because if the TV market goes from 10 million to 20 million, that's a significant increase for us in our material revenue.

Got it. And how do you think about the timing of that? And obviously, we have Samsung coming online with QD. But what's the inflection point going to be for us to go from, we're at 7% to 8%, like you said? But what's going to drive the market to go to 20% or 30% or 40%? Is it -- I mean, is it cost? Is it just as simple as that?

Well, it -- clearly cost is a big piece of that. And initially 5 years ago, a 55-inch OLED TV that was just HD, not a 4K TV, sold for $3,600. So -- and today, you can get a 55-inch OLED TV that is 4K for about $1,000. So the price has come down dramatically. LG when it first introduced it and still talks about the premium end of the market. The premium end of the TV market is probably about 10 million units. So if you're going to go in and you want the best TV that you can get, you don't care about price, you'll pay anything. But today, the price has come down enough where if you walk in Costco's today, usually the first thing you see now is a 77-inch OLED TV. And a 77-inch OLED TV, I think the last when I went in there, may have only been $3,500, 65 inches are down to like $1,800, $1,700. So I think price has always been one of the issues with OLEDs. And they're selling pretty much all they can make at this point. So you're going to have to have new capacity come online. Samsung is entering the market. LG thinks that they can sell 10 million units next year, and I would not be -- and you've got others Chinese manufacturers who are talking about entering the OLED TV business. So you're going to need new capacity. You can convert an existing LCD fab in about 12 months to start making OLED TVs because that's what LG has done from the beginning. They haven't done any greenfield fabs, all of their OLED production is converted LCD fabs.

Got it. Just kind of a related question. I mean if we look at the largest premium smartphone vendor in the world, they sort of introduced OLED. I think in 2017, they had one out of the 3 models, if I remember properly, was OLED, and that's now -- of course, all the models now have those screens. And there are some reports that, that's going to broaden into iPad and MacBook and other areas and also talking about launching an AR headset using micro OLED. So not to comment on that customer, in particular, but just broadly, can you talk about sort of where you're focused -- you're focusing your development activities? Is it more in these new parts of the market? And then also I had a question just about micro OLED. Is that the same opportunity for you if that customer were to put micro OLED into a headset? Is that the same sort of general opportunity for you based on surface area for materials and then based on a license for the licensing business?

Yes. So we work with all of our customers. We have R&D teams that are specifically assigned to each customer. And each customer has a different group that works on whether it's mobile size, whether it's handset size, whether it's tablet size, whether it's R&D on TVs. So we work across the board with all of our customers, and they tell us essentially what they want the material to do. So whether it is material that is -- the color shifts 1 nanometer to deeper or brighter or they want less voltage but more candelas per Amp. There's lots of different things that we work on, but we do work with each of our customers, and we have teams that will develop materials to meet their needs. None of these are exclusive to that customer, but essentially, we will design them for a customer telling us what their needs are. They may tell us that they need something that does X, Y, Z, and we have it on shelf. Or if not, we will develop it. So that's an area that we've always worked on and you were seeing a lot more activity today on -- across the board, whether it's mobile, whether it's tablet size, whether it's TVs. I mean essentially, they are all the same. However, some need to be brighter. If you move to a TV, it needs to be brighter than your laptop or your cell phone size screen. So -- and OLEDs, the brighter they are, the faster that they degrade, so that you need to make sure that the materials that are used that you need to be brighter have much longer lifetimes. So we are working on and continue to work on developing new materials to meet all the needs for the future. And our customers will talk to us about the next generation and the next generation after that because it's probably a 2-year cycle from when they start designing something to when it gets into the marketplace. So we have been focusing with our customers across the board. And for micro displays, it's much higher resolution because it's very close to your eye. And so in order for your -- if you're putting -- if you put your laptop up really -- if you put your face real close, you will see the pixels. If you're -- so whether it's 4K or whether it's 600 dots per inch, once you get the micro displays, you need to be 1,000, 1,200 dots per inch because it's so close to your eye. For us, it's substrate size. It's how much material we put on it. So these are very small substrates. So even though the license fees and the royalties may be different, but they are -- they give you the best display. They give you the best color, they give you the best display. But in terms of quantity of material, it's not like a TV, obviously. So -- and we look at it like pennies per square inch of our material that goes into a device. So if it's much smaller, then it's going to be, obviously, a lot less as opposed to a TV, which may have 105-inch screens in it.

Got it. A lot of these consumer products display has become an important differentiator for all these different consumer electronics companies trying to compete against each other. So when you're engaging with these companies on sort of a company-by-company basis, I would think that there are examples where some of these large companies that maybe have their own proprietary IP would want to ring-fence that when they're working with you. But it sounds like you resist that from what you just said. Do you -- are there any cases where when you're kind of in a co-development on a display technology with a customer. Other examples where you say, well, actually, this is pretty unique to this customer, and so I can't use this and I can't leverage this to use with other customers.

No. We work nonexclusively, and our customers understand that we work nonexclusively. However, if a customer asks us to design something because they have a specific drive scheme, that they want X, Y, Z. They want the red material to be 648 nanometers and the green to be -- whatever the numbers are, we will design it for that because we don't charge customers for development. We own that material. We can sell it to anyone else. But realistically, if what you have is a proprietary drive scheme, and you need something that does, X, Y, Z. The other customer may not really want that material because it doesn't work with their drivers. So it's -- there's nothing that is -- we own all the IP. There is nothing that's exclusive. But there may be a material that maybe only one customer can actually use.

Got it. The dominant question for investors on the stock that I've heard is obviously blue. And I think for the last 3 years or so, you've noted kind of, I think you've said excellent progress on your quarterly earnings calls. But on the most recent call, it seemed like you expanded your commentary on blue. So the question is, can you provide an update on your progress in developing sort of a commercial phosphorescent blue? And maybe provide an estimate for the impact that a commercial blue could be into your business and revenue?

Yes. That has been probably the number one, number two and number three question that we get on all of these calls is about blue. All visual displays use red, green and blue pixels to give you 266,000 colors of the rainbow. And we sell red material, green material to our customers, and the blue is still the old original technology that was invented by Kodak Corporation in 1982, which is what's called the fluorescent emitter. Our phosphorescent emitters are 4x as efficient, or in English, we use 75% less power to get the same amount of light out of it. So all of our customers are pushing us to get a phosphorescent blue because for mobile devices, it impacts your battery life. When Samsung adopted our green material in 2013, they stated they got a 25% increase in battery life. And our customers are pushing us for that. So we expect to get the same pretty much when you adopt our blue emissive material. We have -- we've had more color around where we are. Last summer at Display Week, Samsung presented an R&D paper. And in that paper, it talked about them working with a phosphorescent blue emitter, which was provided by us. And then again, this summer in San Francisco, they did the same thing and talked about additional work. So we will never talk about something we are shipping to a customer or doing with the customer until the customer talks about it. But since then, we have stated that we are shipping blue developmental quantities of material to multiple customers. And developmental materials or materials when you're looking at blue do not meet commercial specs, but it has reached the stage where customers, we tell them what the material will do and what it won't do and they want to work with it because it's getting close. So that is really what we have talked about is the fact that it's not an if we can get it, it is when. And customers -- historically, we've done the same thing with other materials. So customers always want to know what this material does, how it reacts in their vacuum chambers, how quickly the deposition rates are, what temperatures they need to do it. And to be honest, they know that eventually we're going to get it because we have been -- we are the phosphorescent emitter company. We've been doing it for 20 years and we've got 5,000 patents issued and pending worldwide on our technology, and this is clearly one of the areas that we have been focusing on.

And can you -- I hear a lot of things about blue. Can you -- are there other solutions for blue that maybe some of your customers are pursuing separately?

Well, it's -- we don't believe so. I mean I think that there's been some misunderstanding of some of the things that were presented by the Samsung paper. Some folks thought that Samsung was working on its own blue. Samsung is working in the paper that was presented on their host materials using our phosphorescent blue. All when you -- all the pixels used what's called the dopant and a host. So it's a multiple systems. So they're working on host materials. The existing fluorescent material is a technology that's out there today. We need to be better than it. But like I said, our customers are all pushing us. So for us, we think it may look a lot like green in terms of doping concentration. We sell twice as much green emitter as we do red emissive material today because of the way your eye sees color. So we fully expect from a material standpoint, the blue look a lot more like green than red, which right now it's 1/3, 2/3, you would then add an additional 2/3 -- another material that looks just like green. So it will be 1/5 and 2/5. So it's about a -- probably a 40% to 50% increase in our material sales. But it won't happen overnight. Even when it meets commercial specs, it will be put into new products because you do have to redesign your back plane, your transistors to drive a phosphorescent emitter as opposed to a fluorescent emitter. So it will be a migration from fluorescent to phosphorescence.

So I guess two questions there. So do you think you'll be the first two in the commercial market with a nonfluorescent blue? And then the second would be, can you give us just a time line in terms of how long it will take you, I mean, as you said, it's not a matter of if, it's when. So can you give us just an idea of sort of how long it will take for you to get blue into the market until it becomes a significant piece of revenue? So two [ lot of ] questions there.

Well, to answer your first question, we believe that we will be the first. So the answer is yes. We will be the first one to invent and commercialize a phosphorescent blue. I mean I think we have been working on it for a long time. There is nothing else out there that will replace phosphorescent blue. It is -- it will replace fluorescent blue. There's a number of other technologies that are hybrid technologies trying to make fluorescence better. But the ultimate that you will get is when you get a phosphorescent blue, you get the most efficient blue. And we will be the first one. We fully believe we will be the first one to get it. And the timing, we've talked about this in the past that once a customer gets material that meets their commercial specs, it does have to be designed into the next-generation product. So the question is, is that 9 months to 12 months, that's probably the right time frame? But the nice part about it is there is no difference in their manufacturing process or in the capital that they have to have to do it. It is essentially you take out the fluorescent emitter in your blue vacuum chamber and you put in the phosphorescent emitter. So there's no additional CapEx. Clearly, the display itself, though, has to be redesigned so that it drives the blue pixel correctly.

Got it. So is, I mean, I guess it's safe to say it will be several years until it becomes a more significant piece of revenue?

Yes, it clearly is. I mean, in terms of -- on the license side, the only customer, we've talked about the Samsung license agreement does not include blue. All of our other customers are portfolio licenses. So you wouldn't see any incremental amount. But for us, it is a significant revenue stream increase. As I said, the quantity of material is very similar to green material when you do apples-to-apples.

And what have you said about why the Samsung license doesn't include blue. Is that because they -- I mean I asked you before, whether they are working on their own version of blue, which you don't think they are. But why doesn't your license include blue?

When we negotiated it that license actually, which I did in 2011, they said if we're going to pay you for blue, then you need to tell us when you're going to have it. And so it's a legacy license that was taken over. They understand that when they start buying commercial quantities of blue they need to negotiate the rights to that.

Got it. Let me ask you about foldable, which is something that I think about for all of my coverage, virtually all my coverage, what that could do to the smartphone market, just in general. And there's obviously increasing momentum in the market towards foldable. I think maybe some folks would have thought that we would have sort of a second brand in the market by now. But obviously, that's coming. So can you talk about foldable and sort of how OLED technology plays into the development of that market segment. If you compare it to a standard smartphone single screen, how would your revenue opportunity change with foldable? Is it a different license? Is it just simply scaling by surface area?

Well, we think foldables and, personally, I think foldables are a really area for growth. I think it is something on the smartphone market that I don't think people really understand the impact that it will have. This is a Galaxy Fold product that I have. And so you can see how much more surface area there is on it. So when you open it, you didn't see this. For us, this is something that this is -- my product is actually the first generation. There are now multiple generations behind it. I can tell you when I take this product out, people look at it and say, "What is that?" So it really does not have broad knowledge of and your broad base today. And it was expensive. I mean it's was $2,000 initially, and it's $1,800 now. But to be honest, an iPhone cost you $1,200, $1,300. So it is -- the gap is getting closer. For us, it's clearly square inches. So it's square meters of glass that we coat. So for us, if what you have is a full screen on the front and then 2 more inside, side-by-side, it's 3x the material content for us on a device. But OLEDs are the only ones who could really do this because OLEDs are bendable, foldable, rollable inherently. These are layers of film so that you can bend it and fold and roll it. And there's no other technology that can really have a foldable or eventually a rollable screen that you can use. So I do believe that this is a market that will continue to grow, and you read more and more about different OEMs introducing foldable products.

Some of the limitations on foldable just have been around the bend radius as, obviously, you want it to be like a piece of paper where there's a very, very small bend radius. Is that a UDC problem that you need to solve? Or is that a problem that's related to other suppliers? Is it a films issue? Is it a display issue? Can you just talk about that and sort of where do you play into the bend radius? or you meant...

Yes. I mean that's really not our issue. I mean we -- these are made on plastic substrates. So we have made these on essentially sheets of paper. So it isn't an UDC issue. These materials inherently are rollable and foldable. And OLED is essentially layers of film and the entire stack is 1,000 the thickness of a hair. So what you need to do is encapsulate it on either side as an oxygen and moisture barrier. But having something that pulls out or rolls up, I mean that's -- it's a mechanical issue and it's a customer issue. It's not something that we do. Our technology will work no matter what it is they do to it.

Got it. Can we move on just to the competitive landscape? And there's been a lot to talk about, as we talked about before, many LEDs and micro LEDs and those being competitive with OLED. Are they a competitive threat to OLED? And if so, how? I mean -- and if they were to gain share, how does that affect your revenue?

Sure. Well, our competition has been liquid crystal displays. I mean it is a $150 billion annual market dominated by LCDs. There's 80-or-so LCD fabs in the world today producing product. So liquid crystal displays have always been the competition for OLEDs. Mini LED is just a better version of a liquid crystal display. It's a backlight technology. It is not its own technology. It's not a self-emissive technology, started out with CCFLs as backlights, then you have LEDs and mini LEDs. So it is an improvement to existing LCD technology. Micro LEDs are different. Micro LEDs are self-emissive LEDs. They will emit red, green and blue light just like if you go to outdoor signage, if you go to a football stadium and you look up and you see the scoreboard, if you're very close to it, you can't even see because what you do is see big red bulbs of red bulbs, green bulbs and blue bulbs because when you're that close to it, your eye can't distinguish what it is. But when you're on the other side of the stadium, you see this great display. They are LEDs, they are very large LEDs. They're talking about micro LEDs that are essentially grains of sand. That's how small you're talking about because if you're talking about putting 200, 300, 400, 500 dots per inch, you can imagine how small these must -- these little LEDs that they have to grow, they have to take them off the wafer and deposit them onto a lattice. So it is technology that is very young. And it is a number of years away, even the industry folks will tell you, it's a number of years away if it can be commercialized and when. And pretty much the opportunity for it are very small area displays and very large areas displays. Samsung has, I think, 120-inch micro LED TV that they sell for $150,000. So it is not something that we see as a competitive threat. However, it's a $150 billion business. They still sell -- you can still buy a Kindle with e-Ink on it. And people said that these electrophoretic displays will go away years ago. It's just like CRTs. When we started the business in 1994, it was going to be the end of cathode ray tubes, Well, it took 20-some years before CRTs went away. So it is not something that happens overnight.

Got it. Can we talk just about your -- about the P&L and then maybe about the balance sheet as well. So from a P&L perspective, from an OpEx perspective, you guided 2021 OpEx of SG&A development and patent costs kind of in aggregate to grow in the range of 20% to 25% year-over-year with R&D up 25%, SG&A up 15%. That's above your historical average of 10% to 15% year-over-year OpEx growth as you had talked about that. And you cited significant investments in OVJP as well as your new manufacturing site in Shannon. So if I just talk about the Shannon site. Does this site have more to do with diversifying your manufacturing base outside the U.S. or more focused on industry trends and supporting increased emitter demand? And to that point, when do you expect the Shannon site to be up and running such that at -- such that the site can support blue?

Yes. So it is both. It is -- we have increased our capacity. We work with our partner, PPG, for 20 years. They are exclusive manufacturer of our phosphorescent emitters for us. And we have two facilities, one in Pennsylvania, one in Ohio, where our materials are made. And as the demand grows and when we see what the market is for us, we will add capacity well in advance because we are a sole source. And we ship within 24 hours of receiving a PO. So that we always have to make sure we have excess capacity and excess inventory. So when we were looking at expanding, and we finished the other expansion a couple of years ago, we then said, where do we want to go and to some extent, some of the trade issues impacted our decision. So we looked around the world where it would make some sense for us to put our next phosphorescent emitter facility with our partners, PPG. And the facility came up in Shannon, Ireland, right near the airport that was essentially a pharma manufacturing facility. So it was designed for very highly purified materials and ended up being a great opportunity for us. In addition to the fact that it is outside the U.S. And if there are any trade issues that come up, which there were with China in the past, you would be able to make and sell materials that are not manufactured in U.S., not subject to some of the sanctions. Our materials were not subject to the sanction. And so we were not subject to that anyway, but we just want to -- we are a belt and suspenders company. We want to make sure that we are protected. This facility at Shannon will make all of our emitters. It will make red emitters, green emitters and blue emitters when they are being made commercially. So it is a site that it has lots of room for expansion. So we're actually very excited about it. I was there last week. So we're in the process of getting it ready for manufacturing probably will be up and running by the middle of next year, well in advance of when we actually need to have the materials.

Got it. Can you spend a little time talking about organic vapor jet printing. I think on a recent conference call, I was just looking through the transcripts. And you noted that your OVJP team is constructing the building blocks of an alpha system. Can you just sort of walk us through just a quick teaching, if you will, on sort of what OVJP is and sort of what your partnership opportunities are? And maybe when we could expect to see a commercial tool in the marketplace?

Yes. So today, all of the mobile size screens are made in vacuum chambers. And the way that we put these red, green and blue materials down is there's a separate chamber for each. And you put these organic materials in a source, you heat them and they vaporize, and then they rise in a vacuum chamber. And then you have your substrate, which is facing down that has a shadow mask and you deposit your green materials where you want your green materials, but you block the areas out where you don't want it. Then you go to the next chamber, your deposit red and then your deposit blue. You waste 2/3 of the material on the mask itself because you don't want to because then you have cross talk and you have pixels that don't work. It's somewhat of an inefficient process. It's a process that works. These materials are cheap. They are pennies per square inch, but it is still an inefficient process. Folks for years talked about inkjet printing as a way of depositing these materials. And inkjet printing has been talked about for 12 or 13 years. It is not simple. These layers are 1/1,000 the thickness of a hair. You're putting 600 dots per inch when you try to put a droplet of water down, that's [ one 1/600 ] of an inch and not have it touch the next material, folks have not been able to do it. So what our scientists invented was they said, we know how these things work. These materials perform in vacuum chambers. So we use a vacuum process. We heat the materials, but we then push them through a printhead and deposit our red, green and blue materials directly on the substrate. You get the same performance that you have in the vacuum chamber, but you don't have a shadow mask. And it should be very high-yielding, high throughput. We've proven it in our facility on 6-inch squares, which is all we ever work on. We hired a team in California, that Jeff Hawthorne runs who was the CEO of Photon Dynamics, who has commercialized technology in the display industry in the past. His job is to commercialize this. His job is to scale it up from 6 inches to make OLED TVs because this technology is really for TVs, it's for large area displays. And so what we expect to do is have an alpha tool, we call it -- we have test beds. So essentially, we're proving out using discrete components that we know are the ones that you have to get make work for the deposition process. One, like a Gen 4 sized substrate. So we're working on these discrete pieces. Also, we fully expect to be partnering with probably customers and/or equipment companies so that we can commercialize this and scale it up because going from a 6-inch piece of glass to a garage-sized door, piece of glass is not an insignificant challenge. So we do think it's 3 to 5 years away before you see commercial production. But in 3 to 5 years, let's just say, maybe you're selling 40 million to 50 million OLED TVs out of a TAM of $250 million. This is a way to get to market and really just literally take the market away.

And what is your business model there? Is it -- are you selling the tool itself? I mean, is it an equipment business?

The business will be an equipment business, whether or not we do it with a partner and how it is done or whether we license it to a customer or we make these. It -- for us, we're looking at this as we talked about TVs really are as that increases, that's so much more material for us to sell. So even though it's more efficient, we use less material per TV. This really makes the market grow exponentially. So for us, we've really looked at this as a way of expanding our materials business.

Got it. Got it. So you would sell the equipment plus you would still -- I mean, obviously, you sell all of the materials as well?

Yes.

Got it.

I think you're muted, Tim.

Sorry. Yes, I was. We'll touch for maybe one more question. I was going to ask you just about ESG. This is a topic that on every stock I cover, I get an increasing number of inbounds. We have our own ESG team here at UBS. Your top customer, Samsung Display, issued its first sustainability report this year and noted the importance of OLED materials in reducing power consumption. And so can you discuss the sustainability initiatives sort of as a player in the OLED ecosystem?

Well, our whole business is based upon power efficiency. The fact that our phosphorescent emitters, OLEDs were invented by Kodak in the early '80s. And that material is what's called a fluorescent emitter. Self-emissive material, you put current into it, it lights up, and then 25% of the energy that went into it came out as light, 75% was wasted as heat. Our process is one that's called phosphorescence. When we put current into a device, we get 100% of the energy converted into usable light, it's called a 100% internal quantum efficiency. So our entire business is based upon power savings. So it extends the battery life of your device so that energy efficiency literally is what our entire business has been based upon sustainability and power efficiency from day 1.

Got it. Got it. Well, that's all the time we have, Sidney. So this has been a great conversation. Thank you for your time.

Thank you very much for inviting us.