Universal Display Corporation (OLED) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to our virtual fireside chat with Universal Display at Oppenheimer's 28th Annual Technology, Internet and Communications Conference. Today, we have the pleasure to host the Chief Financial Officer of Universal Display, Brian Millard. Thank you, Brian, for being here.

Yes. Great to be here. Thanks for having us, Martin. Just before we get started, I do want to give a quick safe harbor statement. So I may make some forward-looking remarks as part of my comments today. And our results may differ from those forward-looking statements. So we would encourage everyone to look at our SEC filings before making any investments in the company.

Thanks, Brian. I would like to start with your view on the IT market. Beyond quantitative market forecast for OLED penetration in IT, what qualitative shifts in user behavior or product designs are you seeing in the IT market that excite you the most about the long-term material sales opportunity for Universal Display?

Yes. I think the IT market is certainly one that we see a lot of growth opportunity for in the next few years. We're coming off of very low penetration rates. So right now, approximately 5% or approaching 5% of the IT units globally have OLED displays in them. So very low penetration and one that we know there's a lot of OEM interest in the coming years in adopting OLED displays into a variety of IT products. So the form factor, I think there's -- whether it's tablets, laptops, monitors. There's a lot of use cases for OLEDs in the IT market. Gaming monitors are actually one that's getting a lot of momentum recently. The fast refresh rate of OLEDs is a key driver of interest in the OLEDs for the gaming monitor market. Even recently in the last few weeks, there's been some comments about some of our customers introducing new gaming monitors with even faster refresh rates. So we see that as being a key opportunity for growth in the IT segment. As well as there are some comments in the next few years, some OEMs may consider foldable IT products, which should bring an even more interesting form factor to the display. So there's a lot of interest in IT across our customer base. We see that because 3 of our major customers have already announced new CapEx plans for the IT market, Samsung, BOE and Visionox all have plans underway for capacity to meet that growing demand. And we would expect that other customers in the coming quarters may announce new capacity investments as well. So it's a key growth driver for our industry and one that we're actively working with our customers to support. We've also probably talked with you previously about the tandem structures that are used in many of the IT products, which is also a key driver of our business because there's more material needed for those displays. And for those not familiar, the tandem structure is where there's 2 emissive layers used in the display. So there's probably somewhere between 1.5 to 2x the material consumption of UDC's materials compared to a single layer structure, which is certainly a benefit to us because that's more of our red, green and future blue material that will be needed for those displays. And so it's one that we're working very closely with our customers to support them and are very excited about the path forward for IT and think that as these new fabs come online and as OEMs look at their product road maps for IT -- their IT products in the coming years, there's going to be more and more interest in the various form factors and options that OLEDs provide.

Got it. So maybe on the topic of large IT-oriented Gen 8 fabs coming online. What does those fab CapEx mean for you before they enter a mass production? Do you generate any meaningful sales as they ramp-up production and into commercial production?

Yes. So we certainly do. So as the equipment is installed and they're going through the process of qualifying those lines and readying them for commercial mass production, there is material needed from UDC to go through those test runs and those qualification processes. So we typically do see some revenues before those come online. And as it relates to the pieces, the materials that are going to be needed this year for the qualification at Samsung and BOE, those are already incorporated in our forecast and guidance for this year. But there is some material that's needed in advance of actual commercial mass production.

Got it. And then for -- regarding the tandem structure, we all know LG showcased a hybrid tandem panel with your phosphorescent blue and fluorescent blue. How do you think about the market potential for the hybrid solution versus a pure phosphorescent blue. Are most customers okay with this hybrid tandem structure? Or are they waiting until the pure blue is ready?

Yes. So LG's announcement back in May was really a key exciting development for us and for the industry. So as you noted, their display that they produced using our phosphorescent material for the blue color had 1 layer of fluorescent and one layer of phosphorescence. And they showcased that -- those displays a few weeks later at SID Display Week in California in mid-May. And they were IT size displays, so kind of the size of a tablet that they showed. And they showed a side-by-side comparison of a conventional tablet and a tablet that was produced using the higher efficiency blue material from us using that hybrid structure. They have power meters on both that you could see there was a 15% reduction in energy consumption using the high-efficiency blue from UDC. We know that, that 15% is really compelling. I mean energy efficiency is what our customers and the OEMs, their customers are all after as they're designing new and next-gen displays. And so, we don't think that there's -- we know there's a lot of interest in high efficiency and getting that to market. So we believe that even if it is a hybrid tandem structure, there should be a place for that in the market. And from our perspective, getting our phosphorescent blue material into market, whether it's in a hybrid tandem structure or another structure that LG or any of our other customers may bring to market, that's a really interesting opportunity for us and one that we're very excited. We also think it's a foot in the door because ultimately, getting to an all phosphorescent approach is our goal. But having our product in market initially will give us opportunities as we continue to invent new materials that continue to improve their performance, that then unlocks more opportunities for our customers in the years ahead.

And then in the LG implementation, how does the material consumption for UDC compared to a more regular tandem panel?

Yes. It's very hard to say at this point because we don't know the exact recipe that LG used to produce that display. So typically, in a tandem structure, there's 1.5 to 2x the material consumption in total compared to a single layer. But exactly the thickness of each of those layers for blue is a little unclear to us at this point. But certainly represents an entirely new revenue stream for us because we don't have any blue in market today. And so, if they're successful in commercializing that and having an OEM design that into a product, that's an entirely new revenue stream for us and one that we're really excited about.

And then for overall tandem adoption in the market, we've seen some smartphone using tandem in China, and then we are seeing a wider adoption of tandem in tablet products. Going forward, where do you think -- aside from IT, do you still see smartphone as a high potential market for tandem?

We think that smartphones, as you noted, to date, it's been a little bit niche using tandem in the smartphone market. There's been some -- even in the last few weeks, there's been some rumors of tandem's being considered for various smartphone models. We think that, especially if it can enable phosphorescent blue getting into market, we think that, that's a great opportunity. And even regardless of phosphorescent blue, we think that certainly on the red and green side, our tandem structure would be incremental revenue for us, if they do use tandem on the red and green side. It's -- the tandem displays are brighter. So brightness tends to be one of the key factors that are marketed when introducing tandem displays. And actually, when the iPad Pro, Apple's iPad Pro launched in 2024, Apple specifically marketed it as a tandem OLED and also noted the brightness is one being one of the key features of it. So in the smartphone market, we think it does have an opportunity to take hold, but we'll have to see exactly how those OEMs in the next few years decide to consider tandem in the smartphone market.

And then for Apple's iPad Pro, for example, that display is one of the brightest and the highest performance display in the market alongside other IT products. So do you think this -- how would you characterize the commercial success of this tandem panel? And do you think going forward, this will make tandem a mainstay along the IT product for Apple's product lines?

Yes. So I think that tandem, whether it's really any OEM who's evaluating tandem has to consider what exactly does it add to their product that they're bringing to market and could they introduce a single layer and get the same features. As you said, the brightness, and we talked about the brightness is a key factor and also the lifetime because if you have white pixels on all day long on the display, after a number of years, there can be some concern of lifetime, if you don't have a tandem display and tandem does help with the lifetime concern there. We believe that in the IT market, there's going to continue to be a blend of single layer and tandem structures, whether any OEM is going to have probably their premium models that would have the tandem structure. And then there may be other models that are single layer. There's models that have been in market for many, many years that are single-layer OLED IT products, and they do quite well. They don't have the same brightness that you would have with tandem. And after many, many, many years, possibly there's a lifetime concern, but we've not really seen that be a significant issue. So there's going to be sweet space, I think, for both. And really, it comes down to the cost because tandem is a more costly display for the OEM to procure from the display maker. There's more manufacturing complexity. As it relates to our material, we're still a relatively small part of the overall bill of materials for a display, even a tandem display. So it's not necessarily UDC's material pricing that's a hindrance to tandem being adopted, but more some of the other manufacturing complexity that goes in the process that causes them to be a little bit more expensive for the OEM to purchase.

Got it. And I want to touch on blue because this will be quite an integrated topic with tandem structure going forward. Maybe first taking a more retrospective view on blue. When you look at the blue development, what were the most unexpected breakthroughs or challenges you're running to that contributed to the delay in 2024?

Yes. So a little bit of background there. As many of you may know, in 2022, we first set a time line to blue, and we said that in 2024, we expected to have commercial performance of our material. And just this May, so 5 months after 2024, one of our major customers, LG came out and said that they had commercial performance using our material. So over the last few years, our team has been working very closely with our customers and internally to develop new materials that have continued to increase their performance and therefore, given our customers more opportunities as they design and develop material products using our high-efficiency blue. I'd say the challenges and breakthroughs have been that our material is one component of an overall system. And so that is a little bit challenging for us and our customers because it's a matter of how does UDC's material perform with various other materials that are used in producing a display. I think getting to that right combination has been part of the puzzle that everyone has been trying to solve as well as specifically, there's 3 things that we assess when we're developing new materials, whether it's red, green or blue materials, which is what's the lifetime of the material, what's the color point, so how deep is the blue or light is the blue and what's the energy efficiency. And so of those 3, lifetime has been kind of the most challenging to move up the curve. And that's part of the reason why you saw LG in their announcement back in May, they noted that they got the energy efficiency benefits of the phosphorescence from UDC, and they were able to get more of the stability or lifetime benefits of the fluorescent using that hybrid approach that they did. Continuing to improve the lifetime characteristics of our material is certainly a priority and what our team is working on. But it's not a linear path, right? There's kind of twists and turns as we go through the development process that just caused it to take a little bit longer than that 2024 time line that we had originally set out for a few years ago. One of the key things that we've been using across our development of red, green and blue materials is our proprietary AI/ML platform. So we set up a computational chemistry team at UDC about 10 years ago and that team is working continuously with our new team in the lab to come up with new material sets that can improve performance characteristics. So that's been a key capability of ours that's helped us certainly on the positive side move forward faster than we would have otherwise been able to. And -- but there's always in science, there's things around the corner that you can anticipate, and we've successfully navigated those and are really happy with the place that we're in today.

Talk about 1 of the challenges is developing a material in a very complex system. Does that make you think about maybe getting involved in more of the material development in the entire stack or forming a closer relationship with our customers or any other way to maybe remove some of the challenges in this complex system design?

Yes, it's a great question. So the material that's most -- has the closest relationship to the emitter that we produce are the host materials. And we do -- on the blue side, we have manufactured blue host and been selling blue host in development quantity to our customers. So that's been a way that we've been partnering internally with ourselves to continue to make sure that we're introducing a system to our customers that has the best possible likelihood of success. We also have host collaboration agreements on red and green specifically with other companies, where we do collaborate periodically with other partners in the OLED ecosystem on material development for both -- for their developing host. We have development emitter and we do have collaboration agreements to kind of make sure that we're able to introduce collectively the best possible systems to our customers. So it's something that we certainly do focus on, specifically on the host materials.

And do those host collaboration agreements resulting in any financial upside to you? And is that something you also have revenue recognized from those development agreements?

It's not any material revenue, but we do occasionally have some small amounts of revenue that come out of those collaboration agreements.

I see. And for blue specifically, do you still see the host material for blue as a potential revenue stream once the materials ready and passed all the commercial thresholds?

We do see an opportunity for blue revenues or blue host revenue specifically. And I think it's -- we are mindful, though, that the host market is a little bit more commoditized than the emitter market. And so as we approach our customers and approach that commercial opportunity, we fully think we have host that performed very, very well. We know there's interest in them because our customers have been purchasing them for development use. But we're also being mindful not to go build a bunch of capacity and infrastructure around the host business until we have a really clear sense of the commercial opportunity there. But we are fully going all at that opportunity and making sure that we're really competing in that space.

Got it. I want to talk about foldable smartphones because that's -- we see a very steady increase of foldable smartphones both in shipment and market share over the years. And for you, are you developing foldable-specific material stack given that the display has more durability or power efficiency concerns, anything special in the recipe?

Yes. So it's the foldable opportunity, as you said, is really seems to be taking off in the smartphone market. There's many Chinese brands as well as Samsung and others, who have had quite good commercial success with introducing foldables. So and we would expect in the next few years, there's going to be other leading OEMs that will introduce foldables in the smartphone side as well. We specifically don't -- our material sets are fairly common, whether it's foldable or single layer. So there can be slight tweaks, but it's not like it's an entirely new thing that we're not familiar with. Many of the materials that we develop that are used for single-layer devices can also be used for foldable. And so it's a market that's really growing and our customers are all very interested in it. And the opportunity for our business is also very great because there's probably 2 to 3x the quantity of our red and green materials and future blue materials that will be needed to produce those foldable displays just based on the square area of those foldables compared to a conventional smartphone. So it's a great opportunity for us. But on the material side, it's fairly common to what we're used to in the traditional smartphone devices.

I see. And considering the -- so I want to move on to your exposure to Chinese market. Considering the China order patterns are just getting more bulky due to geographic political factors, how do you proactively manage our inventory levels across the U.S. and Ireland?

Yes. So we -- as you said, we manufacture our products in 2 locations in the U.S. and Ireland. Right now, we manufacture about 50% of our needs in each location. So it's a challenging situation to balance what we manufacture, if we're introducing a new product tomorrow do we manufacture that only in the U.S., only in Ireland? Do we manufacture it in both locations. So we have the ability to supply customers from both with the U.S.-China trade situation, having the Irish plant in our network has been a key capability for us. We've been able to supply our customers in China directly from Ireland in many cases. There are some materials that we make that are only made in the U.S. And so those have been subject to some tariffs, and that's why we saw a lot of our customers in China purchased significant quantity of material in the first few weeks of April. Before some of those Chinese tariffs went into effect. So it's a constant balancing act of how we balance our supply between the 2 plants. And 1 that we having Ireland always as part of our manufacture network has been really critical in this time because it's key that we have alternative sources and be able to continue to be a U.S. manufacturer, but have the options of manufacturing elsewhere if we can as well. So we're continuing to, on a case-by-case basis, work with our customers to figure out exactly, where the optimal location is for those manufacturing activities.

And would you say the capabilities in the U.S. and Ireland, they are similar? Is there any materials that can only be produced in the U.S. or Ireland?

No, we have the ability to make them in both. So the equipment sets are really identical between the 2. So we have the ability to do all the wet process chemistry as well as all the finishing processes in our manufacturing in both locations. So -- and we have packaging labs in both locations as well. So really soup to nuts we can do the full process into your location, the same.

So is it right that the only difference between the U.S. and Ireland would be total capacity where you have a bit more capacity in Ireland?

Yes. So ultimately, Ireland is a larger facility. If it at full -- if we build out all the phases of CapEx, it's a multiyear CapEx plan that we have for that location. It's a 16-acre campus, so it's quite large, and we're only using about half roughly of the physical plant that's there. There is some incremental CapEx needed in the coming years to fully get to 100% capacity there. But as of today, based on the capacity we have in Ireland, and the capacity we have in the U.S., we're balancing about 50% of our production needs between both sites.

Got it. And when it comes to capacity, there's also this question on utilization. What's the current effective utilization rate across your manufacturing facilities. Is there something -- some optimization you currently needs to do that impact margins?

Yes. So we have a high degree of capacity utilization, so we don't have a lot of underutilization at this point. That said, we certainly have some excess in our -- in our process if we need to scale up for additional volume to meet customer needs. It's also important to note, back to kind of the earlier part of your question, with the lumpiness of customer ordering patterns, we stock many months and sometimes quarters of material in finished goods for our customers, so that if they do place a significant order tomorrow, we have the ability to meet that demand because we've already produced it and have it on the shelf waiting for them. So that allowed us in April when we got all these significant orders from our customers in China, we were able to rapidly respond and meet their needs within a few days because of the fact that we had already produced everything. So it's a concept, act of figuring out exactly how much to produce. But we have a high degree of utilization, but not 100%, right? There's always some capacity. And we do a forward-looking plan, multiyear plan looking forward of where we think industry volumes are going to go. Over the coming years, and that informs our CapEx plans and how we need to bring new reactors and other capacity online.

Got it. And do you need to bring reactors online in relation to the Gen 8 fabs?

We have sufficient capacity today, we believe, to meet that demand because we've been planning for that and know that, that was going to happen, that the IT market was going to have an inflection point in the coming years and that we were going to need to scale up manufacturing to meet that demand. So we feel comfortable with the capacity we have either in place or under construction in the current state that we'll be able to meet those volumes.

Got it. So how would you describe your overall visibility in terms of customer demand? You talked about having ample stock in finished goods for inventory, would you say your visibility with clients are pretty reasonable for you to prepare ahead?

We get visibility. Some customers give us kind of rolling 12-month forecasts. Our larger customers tend to give us longer-range forecast. And -- then as the -- the smaller customers, we tend to get 3 months or sometimes 6 months of visibility. So it really just depends on the customer how much visibility we get, and then we have our own team internally that meets typically every 2 weeks to kind of look at what the forward-looking volumes are expected to be over the next 12 months. And then we do an internal kind of rolling 12 months even for the customers that we don't get. 12 months before we do our own extrapolation and estimates for that 12-month period. And then we do a longer-range 3-year model on an ongoing basis based on mostly internal data leveraging some third-party analyst and market research firms, but as it relates to kind of the near-term visibility. We do get 3 to 6 typically and sometimes even more than that from our customers. And what's given us the confidence this year to raise our guidance that we raised just 2 weeks ago on our earnings call, we brought up the bottom end of the guidance range by $10 million. And that's really because we have good visibility now to kind of certainly what through July and into August look like. And we're continuing to get consistent feedback from our customers about what the rest of the year also is expected to be. And so that's why we felt confident in bringing up the bottom end of the guidance range by $10 million.

Got it. I wanted to maybe touch on emerging sectors for OLED display. Beyond the expected growth from IT and your potential blue adoption, what are the underexplored or emerging applications for OLED that you see as having significant longer-term consumption potential?

Yes. I think automotive is a really interesting market. It's one that over the last few years, I think we've been increasingly bullish about the automotive opportunity as our customers continue to focus on it even more and more. We have automotive development projects underway with many of our major customers at this stage. And especially in the EV market, automotive, the OLED -- OLEDs and automotive have a lot of compelling factors for energy consumption, the ability to have good temperature specs that OLEDs can perform at as well as some tandem structures are also being assessed for the automotive market, which is certainly an incremental opportunity for us based on that material volume per square inch being greater. And the automotive market is one where not only for the cockpit and the dashboard and those driver-facing and front passenger-facing features, but even the rear entertainment displays for passengers in the rear of the car. And we have some customers, who are active in the tail light market as well for automotive. Audi has been the OEM who's been most active in the OLED tail light market and they've adopted them in many of their models and have plans to do even more in the coming years. So I think automotive of the key markets is one that we're most interested in. Certainly, wearables continue to be an area of focus, whether that's smart watches and other types of wearables. It's a smaller revenue opportunity for us just because the size of those displays is smaller than a smartphone or a tablet or those types of devices. But -- those are really the key markets that we're evaluating going forward. And then there's certainly things that fall beyond those 2, like medical devices and other things that might use OLEDs, but the predominant things that we're focused on beyond the top ones are really automotive and wearables.

And given there was a higher performance requirements for auto in terms of various conditions, maybe reason is the temperature and brightness, would you say overall, there's a potential of higher adoption of tandem structuring auto?

Yes. To date, many of the -- most of the automotive use has been tandem. There have been a few brands, especially some of the Chinese EV brands that our understanding is they have used a single layer OLED in some of those models. But especially many of the flagship brands in the West seem to be using a tandem structure for their displays.

Got it. And do you foresee in the future where auto start to become more material? Is there an inflection point or milestone you expecting for auto to become more material to your business?

Yes. So I think it's important to have the context of the broader -- the TAM of the auto market. So there's around 85 million new vehicles sold annually in the world. Right now, about 1% of those -- so a couple of less than 1 million units of those have OLED products in them. So there's clearly a lot of opportunity for growth off of where we are now, since we're just at such low adoption in the current state. And I think if you look at some of the new -- the next-gen prototype models that are coming out, they have more and more displays in them. I think that's really the key opportunity for us is proliferation of displays even more in automotive. And as that happens, we think OLEDs will continue to have strong foothold. So I think that there's no 1 particular thing to point on other than we think that the penetration rate is very low today, has a lot of opportunity to grow as well as the size and quantity of displays in vehicles is continuing to grow on an annual basis. And so that provides an even greater opportunity for our business as that continues to occur in the years ahead.

Got it. So both the penetration rate and then the content per vehicle will rise over, right?

Yes.

Got it. I want to touch on IT. And how do you plan to evolve your IT strategy to keep protecting your leadership position against other challenges, especially as the majority of the OLED industry is based in East Asia?

Yes. We are a continuous innovation company. So we're continually on a daily, weekly basis, inventing new technologies, materials, device architectures, various types of IT that we are patenting. And so we are filing that on an ongoing basis and continuing to get new patents granted. So we have more than 6,500 patents today, that cover not just our materials, but a broad array of technologies in the OLED and display space. And we believe that the global coverage of that portfolio as well as the quantity and breadth and depth of the portfolio provides us with a lot of protection against competitive concerns. And so we believe it would be very hard for someone to compete with us in a meaningful way, especially on a global scale based on the types of IP and the nature of our IP. But -- it's -- we're not sitting here living on patents of the past. We're continuing to move forward and invent new and improved materials and technologies that provide us with a lot of protection for our business going forward.

Got it. So I want to touch on the topic of capital allocation. So you have announced a buyback this year and in UDC's history, it's a very rare occurrence. Can you maybe speak to the context of buyback right now? And overall, what's your capital allocation strategy and where buybacks sits.

Yes. So as you noted, we historically have returned capital to shareholders through our dividend program. We've not been active on the buyback side. Our Board did put $100 million authorization in place back in late April. And that authorization was put in place really to give another tool to management as we move forward that, if there is price dislocation or a reason why we think our stock is trading at a particular value relative to what we believe is a market we can get in there and buy some shares. We're not going to be -- so we're going to be opportunistic in the way that we deploy that. As opposed to having an ongoing program each quarter where we're buying a certain quantity of shares. And our capital allocation program is really focused firstly on investment, and that's investment either in R&D and continuing to expand our position in the industry. M&A, whether that's acquiring patent portfolios or businesses. And then returning capital to shareholders, as I said, is important to us and has been through our dividend program historically and now through the authorization that we have in place for the buyback. And we'll see when and if we deploy the buyback going forward. But -- it at least gives us the opportunity that, as I said, if we see that dislocation, we can get in there and take action as we need to.

Got it. And in terms of other priorities in capital allocation, how would you rank them, respectively?

Yes. I think organic investment in organic R&D, right, and continuing to find new research areas, whether that's in OLED displays or other types of electronic materials or things that are kind of within our wheelhouse and what we know how to do is important. We're also continuing to look at our AI/ML and computational chemistry area, which I mentioned earlier, and how can we continue to leverage that as a vehicle for our growth in the years ahead to maintain and grow our position in OLEDs as well as other research areas that, that might be applicable to. And then we've acquired patent portfolios historically over the last few years. We most recently acquired the Merck patent portfolio 2 years ago. And we'll continue to look at opportunities in the years ahead of -- if there's IP, we find interesting that we think is additive to our position, we'll have the capital in the business to be able to pursue those very quickly. We've not had a significant history and track record of doing M&A at the business acquisitions. But it's something that we preserve the flexibility to do through the capital we retain in the business and our financial position that we have.

I would like to address a few questions coming from the audience. The first regarding Summer Sprout and then your IP protection. The question is -- the company has been shipping red and green materials and their reports that those materials are being used in global smartphone models. How should investors take your lack of legal response to this development?

Yes. I think the key thing is we have a position with our customers. We have a strong partnership with our customers. We expect to continue to be the leader in the industry. There has been an increased competitive environment over the last few years, particularly in China. A lot of that is driven by a desire for localization. And we believe that our IP position which we just talked about over the last few minutes as well as the partnerships we have with our customers, the quality of our materials. We'll continue to preserve our position on a long-term basis. But continuing to protect our IP and our know-how and trade secrets is about most importance and what we'll continue to take going forward.

Another question from the audience regarding Blue development. So do you have a new time line to share when do you expect to hit the commercial specification for a stand-alone blue, I mean in blue are in all phosphorescent RGB architecture?

Yes. So we don't -- I think the key thing is LG's announcement of using our material in a hybrid structure with phosphorescence and fluorescence we view as a major win for us and being able to get a foothold in the market, which will enable us to move forward and continue to iterate off of that strong position. Like I said, getting to an all phosphorescent approach is certainly a priority. I don't have a specific time line to provide in that regard other than to say, our team continues to work. Our work isn't done in continuing to invent new materials that continue to improve their performance characteristics and that then giving our customers more options as they invent new products going forward.

And I want to maybe take the last few minutes to talk about your outlook for next year. Aside from quantitative guidance. What are the things you're excited about going into next year?

Yes. I think certainly, if you look at the key markets of our business being smartphones, TV and IT, of those 3, IT, we expect has the strongest rate of growth over the next few years and in 2026 as well. Based on the new capacity coming online, the OEM product road maps that we understand today to adopt OLEDs into more and more products on the IT side over the coming years. And there's a lot of momentum at our customers on the IT side. Smartphones, we also have the opportunity to grow that market. We're more than 50% penetrated today in the smartphone space, and there's room for that to continue to grow as more and more mid-end mid models and low-end phones continue to adopt OLEDs. And TVs. We also expect there's going to be continued growth in the TV market over the coming years. So we're excited about a lot of things going into next year. And on blue, we're continuing to work with our customers very closely on their development prospects. And we believe that we'll be very successful in having blue in market. It's just a matter of continuing to support our customers as they develop displays using our blue and as they continue to move that forward into the commercial marketplace. Got it.

Now I see no further questions from the audience, is there any closing remarks we would like to make?

No, I really thank you, Martin for -- and Oppenheimer for hosting us today. It's been a great conversation and conference. And look forward to talking with many of you in the coming quarters as well.

Thank you, Brian. Thanks, everyone, for attending. That's a wrap.

Thanks. Take care.