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Universal Display Corporation (OLED), Corning Incorporated (GLW): Profiting From the Booming Smart Devices Industry

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According to recent reports, the smartphone industry grew by 45.1% in 2012 and is expected to grow by 44% in 2013. And thanks to the growing need for mobile devices, the tablet industry grew by 78.4% in 2012 and is expected to grow by 58.7% in 2013. Furthermore, tablet sales are estimated to surpass notebook sales by 2016. These bold projections point towards a booming industry of smart devices, and I believe that the following companies could be the prime beneficiaries of the boom.

Universal Display Corporation (NASDAQ:OLED)

Universal Display Corporation (NASDAQ:OLED)

Universal Display Corporation (NASDAQ:OLED)

is the world’s leading manufacturer and marketer of Organic LED displays, which offer staggering clarity and with best-in-class color vibrance. These displays are energy efficient, and can be deployed in small and thin form factors.

This has made OLED displays a raging success in the growing market for smartphones, and made the existence of ultrathin displays a reality. However, the company generates most of its revenue by deploying OLED displays in Samsung Electronics Co., Ltd. (KRX:005930)’s


high-end smartphones. Since Samsung dominates the global smart devices industry, with around 22% market share,
Universal Display Corporation (NASDAQ:OLED)’s huge reliance on Samsung Electronics Co., Ltd. (KRX:005930) used to be considered as a positive.

But earlier this year, Piper Jaffray analyst Jagadish Iyer, downgraded Universal Display, suggesting that its revenues could continue to shrink. This was because, Samsung had reportedly tied up with Nippon Steel to outsource the production of its OLED displays. With another competitor in the picture, Universal Display Corporation (NASDAQ:OLED) quickly lost its luster. But I believe that its downside has been overblown.

This is because Samsung Electronics Co., Ltd. (KRX:005930) recently announced that it will work with Universal Display Corporation (NASDAQ:OLED) to develop Phosphorescent Organic LED, or PHOLED, technology. These new displays will offer more color vibrance, more Pixels Per Inch, or PPI, and consume even less power. In short, PHOLED will fiercely compete with Apple’s retina display. That should lure more consumers toward Samsung Electronics Co., Ltd. (KRX:005930), and contribute to higher revenues for both the companies.

Since the propreitary technology will be kept between Samsung Electronics Co., Ltd. (KRX:005930) and Universal Display Corporation (NASDAQ:OLED), I don’t think Samsung will introduce a third party manufacturer to outsource its production. Samsung’s dependence on Universal Display will gradually increase, due to which it might even look to extend its 6.5 year contract with the display manufacturer. This is great news for Universal, as PHOLED displays will ensure a steady stream of income for the display manufacturer.

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