Conference. My name is Atif Malik. I cover US semiconductors, semiconductor equipment, and networking equipment stocks here at Citi. It's my pleasure to welcome Brian Miller, CFO, Universal Display. We also have Doris Lau in the audience as well, friendly neighborhood IR. I'm going to kick it off with my questions first, and then I'll give an opportunity to the audience to ask their questions. If you have a question, please raise your hand and the mic will come to you. Welcome, Brian.
Thanks. Thanks, Atif. Thanks for having us.
Brian, to kind of kick off the things, if you can give us the state of the union on the adoption of OLED. You know, where do we stand, and in TVs, IT, smartphones? And also if you can touch on your full year outlook and how is the year so far panning out?
Sure, yeah, thanks. And before I get started, I'll just like to say that I may make some forward-looking statements today as part of my remarks, and our actual results may differ materially from those. So we'd encourage everyone to look at our SEC filings before making any investments in the company's securities. As it relates to the key segments that you mentioned, smartphone, TV, and IT, we're seeing a lot of opportunity for growth, across all three markets. I'll kind of step through each individually, if that's helpful. So starting with smartphones, right now, more than 50% of the smartphones that are sold globally have OLED displays in them. That was something that we announced on our call last month.
For the first time, OLED display shipments exceeded LCDs earlier this year, so that's a key milestone, and one that we see continuing to grow in the years ahead. All the premium models or substantially all the premium models of smartphones today have OLED displays. We've seen additional penetration in the mid-tier market, and even now, some of the lower-end smartphones that have a lower price point are also adopting OLED displays. As OEMs sit down and introduce, you know, their new develop their next-gen roadmaps and products, adopting an OLED display is a great way of differentiating their products and continuing to increase the penetration rate for us. So we see a lot of opportunity for that.
And also, the AI functionality that's expected to come to many of the new smartphone models coming to market, we believe that also drives a replacement cycle, which should benefit us, and the smartphone market in the near term. The TV market is one that has, you know, had a little bit of a rocky road the last few years, but we've seen this year, roughly 20% growth in units, is the estimate, for TV units. LG Display is our largest customer in the TV space, with their white OLED TV. Their recent estimates are they're expecting to sell roughly six million units of that TV this year, and that's up roughly 20% from where they were in 2023. So a lot of opportunity for that to continue to grow.
The rate of growth in the coming years, we certainly think there's room for that to grow, off of where we are today, but we see almost the most significant rate of growth in the IT market. And IT, we define as laptops, tablets, monitors, and the like, and right now we're roughly 3-4% penetrated or thereabouts. There's been a number of leading OEMs in the last few quarters who have announced the adoption of OLED displays into their IT products, namely tablets and laptops, and so we see a lot of opportunity for that to continue to grow, and that's one that a lot of the industry analysts estimate that by 2030, roughly 20% of the IT market should be penetrated with OLED displays.
And there's a number of leading OEMs that have multiyear roadmaps in the next few years, based on our understanding, to adopt those OLED displays into their IT portfolio. So those are kind of the summary of the top three markets, all of which we see a significant growth in the near term, as well as the long term.
Can you remind us the outlook for this year and how is this full year sales tracked so far?
Yeah, so our guidance that we updated last month is $645 million-$675 million, so the midpoint being $660 million for 2024. We also have projected and guided for strong profitability, 76%-77% total gross margins, and 35%-40% operating margins. And through the difference this year compared to the historical pattern for our company is we expect that the H1 and the H2 are gonna be pretty balanced this year, pretty even with one another, whereas historically, we had much more of a H2 orientation to the business. And so that's... Those are the key things as it relates to 2024.
All right. Just starting with the smartphones, I know it's the most penetrated segment out of the three markets. You know, we saw the news that Apple is going to introduce all OLED phones next year, even on the iPhone SE, and everyone is excited about Apple Intelligence and AI generally on smartphones, and AI, it does consume a lot of power. Do you see a strong case that the adoption of AI will kind of accelerate the adoption of OLED in smartphones, or not so much?
It's a good question. I think maybe not, and the only reason is, I think a lot of the smartphones that will first adopt AI probably already have OLED displays in them. But I think certainly the key thing that we're focused on from an AI perspective is: how do we continue to increase the energy efficiency of the displays, and enable our customers to continue to increase that energy efficiency, which then allows that power that's freed up from the display to be used for AI and otherwise, as well as, as I mentioned earlier, the replacement cycle that we expect to occur as consumers want to, you know, purchase those new phones with the AI features.
All right. Just kind of zoning on IT, with the Apple launching its OLED-based iPad this year, we saw a big uptick in sales for them. Can you touch on the upcoming opportunities beyond the tablets, and how should we think about the level of penetration in IT in five years? And also if you can touch on auto end market.
Yeah, so in IT, there's a number of embedded factors that are at play here. The most significant being a number of our customers have announced new capacity investments that they're making for the IT market to meet the demand of where the industry is going in the next few years. So Samsung Display announced a capacity investment around April of last year, of 2023, and that is a Gen 8.6 fab. They're spending roughly $3 billion to retrofit that fab. It's expected to come online in 2026. BOE also announced last year a similar size Gen 8.6 fab. It's actually gonna have double the capacity of Samsung's, and they're spending roughly $8 million on that fab. So a lot of investment being put into the IT market.
Our customers certainly aren't making that level of investment without having a good understanding of where the OEM's product roadmaps are going over the next decade and beyond, to make sure that that's the right play for them to make. So there's a number of proof points that, you know, this IT adoption cycle is real, and as you mentioned, the iPads, you know, iPad Pro models going OLED in Q2 was a key milestone. Our expectation is that not just Apple, but other OEMs have plans in the future to continue to further adopt OLED displays across their IT portfolios. Dell just recently announced a new notebook that has an OLED display. Microsoft Surface Pro models also recently went OLED. So there's an...
On a quarterly basis, there continue to be a good drumbeat of news, related to OLED display adoption across the IT landscape.
And Brian, just curious, the adoption of OLED larger panels for tablets and autos. How is the kind of the cost scaling down when you move to larger panels? Is that a driver in terms of the adoption, or is it more of the consumer appetite for a better looking screen and power management and those things? Like, what's the driving force? Is it the cost curve coming down for higher adoption?
It's really around product differentiation, I think, is the key value that OLED displays are bringing at this point. I mean, the rich colors, the true blacks, the viewing angle benefits of OLED displays relative to LCDs is the reason why you're seeing a lot of these premium IT products start to adopt OLED. These new fabs coming online should also enable more scale, therefore, you know, better pricing for OEMs as more volume can be put through, and our customers can, you know, do things to leverage price differently. But today, an OLED display is certainly more costly than an LCD display for the OEM. So it's really around how do they differentiate their product? How do they create more energy-efficient products? OLED displays are great for that.
And that's really why we've seen the adoption that we have and why we expect to see it in the future. To your point on automotive earlier, I forgot to respond to that. I mean, I think automotive is a key adopter of OLED as well, specifically in the EV market. You've seen a number of leading EV makers across the globe, US, Europe, and Asia, adopt OLED displays into their EV products because of the energy efficiency. And so if you can have a more energy-efficient display, that unlocks a lot of opportunity for, you know, battery life and range and what have you. So that's a key driver. There are some, you know, non-EV autos that have OLED displays, but it's primarily in the EV segment.
We've also seen lighting, specifically tail lights, go OLED. So Audi, there's a recent announcement that Audi, both their EVs, as well as some of their non-EV models, are gonna have OLED tail lights in them. So that's another key way of, you know, having the visual benefits of, of OLED come to play.
Great. Let's talk on the topic of energy efficiency. Let's talk about blue. I feel like when we entered this year, there was definitely excitement around adoption of OLED in IT, like, you know, iPad and there was excitement that, you know, we'll hear maybe blue phosphorescent getting adopted this year. And on the last earnings call, you kind of pushed it out a little bit into next year. And now, there was an article in, I believe, Times yesterday, talking about one of your Korean customers making very good progress with it and talked about maybe within a year to get into production.
And I know you can't comment on your customer's plans, but can you just walk us through where... First of all, what happened with the delay, and then what are your latest expectations and on kind of ramping production on blue?
Yeah. So the first and most important point, I think, is our excitement for this project has not wavered whatsoever. We continue to be on the right path. The timeline has been pushed out. As you mentioned, we had previously said we thought in 2024 we would have performance, commercial performance of our material, and that would then enable, you know, our customers and the OEMs to introduce it thereafter. We did update on our call last month to say that we think we're gonna need more time beyond this year, and that that additional time is gonna be measured in months and not years. This continues to be a matter of, you know, this is when and not if phosphorescent blue gets commercialized.
But there's really complex, you know, aspects that come up as you approach the last stages of R& D in something as complicated as this. And that's really where we are at this point, where there's just more work and more time that we need. We continue to work with all of our major customers on phosphorescent blue development projects. As you mentioned, there was some recent reporting out of Korea. We can't confirm or deny any of those reports other than to say, you know, it did reference some customers of ours, you know, having positive experience with our material in their development efforts. So we're working closely with all the major customers, and they're all, you know, pursuing, you know, various paths as well in terms of how they plan to introduce it.
And Brian, I ask you this always, but can you help remind us the kind of content increase that you would see, dollar content increase or some qualitative measure, you know, once blue gets adopted? The reason I ask that is I read the article, and there was some mention that that customer is mixing fluorescent with phosphorescent. Fluorescent for the lifetime and phosphorescent for
Efficiency.
- efficiency. So I'm just kind of going through the scenarios in terms of, like, how meaningful of a content driver blue will be for you guys once it gets into production.
Yeah, so there's a number of variables to that question. The first being quantity, I think is where what we're getting to. Price is another element. But on a quantity basis, right now, in a red, green, and blue side-by-side display, like your smartphones, there's roughly double the quantity of... So two to one, green to red, so green is double the quantity of red. In the future, we would expect that a blue, when a blue material is incorporated, the quantity is fairly similar to what you have for green. So you'd have kinda two to one in terms of ratio of green, blue, and red. On price, we don't have pricing set for blue with any of our customers. We have, you know, exchanged points of view on pricing with certain customers at this point.
There's not a lot of urgency to, you know, sign those agreements at this point because we're still focused on getting the commercial performance where it needs to be, and once we're there, we're confident that we'll be able to reach the right agreements with our customers.
Yeah. And also, if you can remind us, is blue already designed into the licensing with these existing customers, or it's not included, or it will be layered on top of those?
So all of our agreements, except Samsung, already incorporate blue in their IP. They have portfolio license agreements that encompass all of our IP. Samsung's license agreement expressly excludes blue at this point, so we also would need to enter into an additional license agreement with Samsung for blue, and then with everyone for material supply.
All right. Just on blue, do you have any sense of what the design cycle of blue will look like? Once it starts to get into production, are there, you know, more derivatives of blue that can be added on, or is it just one go, and then you're all set?
Yeah, I mean, there's... In terms of the life cycle, there's gonna be, you know, continued evolution and invention of new blues. So, you know, what we bring to market initially is gonna be very different than, you know, what we bring thereafter. And also, a key point is, you know, what exactly the adoption curve looks like is very hard to weigh in on at this point either. So there's a number of things that need to, you know, play out over the next, you know, few periods of time here before, you know, we have, you know, exact insight into, you know, exactly what those life cycles look like.
On the cost side, you know, how would the cost structure look like for you guys? Do you have a manufacturing capability lined up and precursors and all that stuff?
So our manufacturing site in Shannon, Ireland, which we operationalized two years ago, in the middle of 2022, is when we brought that site online. That will be the primary manufacturing location for blue. We'll probably have a secondary source in the US, but we've already, you know, gone through a process of, you know, speccing out what that needs to look like, so we're not concerned about capacity constraints. We need to get to a final material, though, before we can, you know, fully go through setting up all of the supply chains. Certainly have supply chain set up for the development material that we've been producing to date and selling to our customers. But once we have commercial performance, we need to make sure that all the raw materials that are needed to produce that, we have.
It's gonna be more costly, you know, certainly initially, to produce, compared to our red and green material because of the complexity of the molecule itself, the various materials that are needed to produce it, as well as the fact that anytime we do something new, it's certainly more costly initially until we can improve yield and improve from there. So we believe the price will be reflective of the fact that there's an additional cost involved in producing it.
Okay. And, so on the margins, you know, will blue be kind of additive to the gross margin structure or just support the existing structure?
That's certainly the approach we're taking, but it's very hard till we land on commercial pricing and have a better understanding of cost to exactly opine definitively on that. But, our position is certainly that we've made significant investment in research for this project over many, many years. We need to make sure there's an appropriate return on that investment, as well as making sure that it's reflective of the pricing also reflects the increased complexity in manufacturing.
And then from a value proposition, I know this is your customer's decision, are you expecting blue to be adopted in smartphones and TVs and in tablets all at the same time, or you think there's a bigger pull for smartphones first?
We believe it has applicability across all applications. So, you know, we have customers who have told us they're evaluating it across, you know, a number of different applications, not just smartphone or just, you know, IT, what have you. And so it's, you know, has broad applicability. In terms of what's first and is it everywhere all at once, I mean, I think it's probably logical to assume that, you know, a customer and an OEM will work to bring it to market in something first, and then it will, you know, go on from there. It's probably not everywhere all at once at the same time. But we certainly believe it has applicability across all form factors, and we believe there should be and will be significant adoption of it over a period of time.
But it's very hard to weigh in on exactly the slope of that curve at this point, since our focus is really on getting that commercial performance achieved. That then enables our customers and the OEMs to have a conversation on, you know, how it gets introduced. The key value proposition, or one of the key value propositions of phosphorescent blue, is the energy efficiency. So you could say, on that basis, it might make most sense that it's first in some battery-powered device, whether that be a smartphone or an IT application or otherwise, because of that, that energy efficiency, and that therefore enabling the OEM to do different things with the design if there's energy efficiency created in the display.
But hard, hard to say right now, just based on the fact that our customers are still in the R&D phase as we are.
All right. One question I get asked is, like, "How will we find out that blue has been adopted? Like, will you put out a press release, or there'll be some teardown of some phone that you will find out, others will find out that now it has blue phosphorescent in it? Or, or you expect your customers to advertise it, that there, there's this, you know, you know, superior OLED screen using blue?" Like, how will we find out?
Yeah, it's a great question, and it's one that you're probably not gonna hear first from us because of the fact that we have to be very sensitive to not get in front of our customers in terms of talking about their technology and their roadmap and when they're introducing what materials. But I certainly there's, you know, a lot of buzz in this industry and, you know, news that gets reported, and I would suspect that once one of our customers has designed that into something commercially, that that gets out, whether, you know, intentionally or otherwise from them. But we're focused on keeping our head down, doing the work we need to do, supporting our customers, enabling them to be successful in commercializing this material, which we firmly believe will happen.
And then the communications piece of it is something that is probably more likely to come from them because of the reasons I mentioned.
Okay. And just on this topic, I think it'll be helpful to the audience if you can kind of simplify for us the two different approaches, RGB and white OLED, and why would one customer adopt it and the other customer not do it? You know, what are the kind of pros and cons?
Yeah. So the various architectures that are in market today for with OLED technology are what we call RGB, red, green, and blue, side by side. So that's really all the smartphones have RGB technology. The IT products also have, in large part, RGB. Some of the larger sized monitors are white OLED or quantum dot OLED. But RGB is, you know, universal across smartphones and, you know, predominant in the IT market as well. And then, in TVs, you have two technologies that are in market today. One is the white OLED approach, which is LG Display's technology, and they are, you know, unit-wise, six out of the seven million units of OLED TVs that'll be sold this year are coming from LG Display using that white OLED architecture.
And then the third being quantum dot OLED, and that's Samsung Display's technology, where they have a blue, fluorescent OLED background today, and then there's quantum dots for the colors. And so we think that if as it relates to blue, taking blue across all three of those different applications, certainly in red, in RGB, phosphorescent blue can be substituted for the fluorescent blue they're using today. In white OLED, they're using a fluorescent blue. There's a variety of different ways you can create white color, but, you could, you know, if you're using fluorescent blue, phosphorescent blue be substituted in that. And then on the QD-OLED, the blue fluorescent that they're using in that technology, certainly could be substituted with phosphorescent blue in the future, is our expectation. So it has applicability across each.
It's probably most likely gonna be first in an RGB, would be my, you know, guess as of right now, but ultimately, we think it has applicability and will be used across all.
Just going back to the cost side, are you also planning to provide the host for the blue phosphorescent or just the molecule itself?
So we've been selling development quantities of hosts. So the blue sales that we report on a quarterly basis, that includes both emitter and host. Emitter is the vast majority of it, but there have been host sales every quarter, and we are, you know, bringing that to market for our customers to evaluate our host and our emitter in connection with one another. We are very aware of the fact that the host business is a much more commoditized market. Certainly, on the red and green side, we would expect the same in the blue market in the future.
And so we're approaching it cautiously in the sense that we want to make sure we don't put a lot of, you know, excessive investment in CapEx and resource into setting up a host business if our customers choose ultimately to use our emitter and somebody else's host with it. And so we're evaluating that, bringing solutions to our customers. Ultimately, it's the customer's decision, which materials they select. We firmly believe our emitter is in there. It's, you know, the approach that's being used by all of our customers includes our emitter. On the host side, it's, you know, possible that they use ours, or possible it's somebody else's.
Is that what you did with red and green in the past as well? Like, it kind of helps accelerate adoption if you, you know, provide them some initial host, and then they can move on to whatever they want to use.
Yeah.
Is it similar, or is there something different about blue?
I think the difference from, you know, then to now, then being, you know, ten plus years ago when green was brought to market and when we had a green host business, is the industry's evolved significantly since then. There's much more players in the industry providing host solutions. We did have a green host business, you know, back when we first introduced green emitter. And what we saw over a number of years was that business kind of quickly, you know, went away to other players.
and so that's why we're taking the learnings of that experience and applying it to today, to make sure that as we approach blue, we do so cautiously, putting our best foot forward, making the pitch for why our blue host is the best solution to use with our blue emitter, but also, you know, acknowledging that there are other people out there.
Okay. Let me pause here and see if there are any questions in the audience.
Thank you for the question.
Just one minute. It's the mic mute.
Thank you for taking the question. Just on revenue, you know, you mentioned a lot of opportunities. It's been a bit lumpy. It's, you know, it's gone from low single digit to, like, 20%. So how should investors really think about growth moving forward, considering there's television, IT, and, you know, all of the drivers that you spoke about? So some color on that will be pretty helpful.
Just to clarify, when you say revenues being lumpy, were you referencing our materials revenues or what?
Just, like, just sales in general. Like, licensing has been pretty stable, so mostly materials, would be the case.
Okay.
Thank you.
Yeah, so we, if you look over the last few years, 2022, we had $617 million in revenues. 2023, we had $576 million, so there was a downturn in revenues last year, and that was really driven by market factors, macroeconomic factors, the TV market being challenged last year, the OLED TV market, as well as the TV market more broadly. And then, you know, the consumer, you know, demand and sentiment last year not being great either. Heading into this year, at the midpoint of our guidance, you know, it's roughly a 15% increase in revenues, from 2023 to 2024. So a lot of, you know, growth, opportunity, you know, heading into this year.
And that's tracking, you know, more or less in line with the market in terms of what, you know, the growth in units are across, and revenues are across the industry. Our revenues are also impacted by, you know, when new customer agreements are put into place. We typically have five-year deals with our customers, and we have to look at what the, you know, average selling price of our UDC materials and our license is going to be over that five-year period. And so when we have new agreements come into place, and the industry is growing, and the volumes in a forward-looking five-year period are going to be much greater than they were over the prior period, you do have some ASP pressure that comes into play because of that volume pricing that we have in all of our customer agreements.
But, on a unit basis, we've seen, you know, significant growth this year, and also, you know, projecting significant growth in revenues.
Questions?
It sounds like the IT opportunity has kind of become the new growth driver. Previously, it had been TVs. Can you size it? You used to give, like, a phone equivalent penetration rate. Like, what's the 3% to 4% IT penetration rate in kind of cell phone screenage equivalent?
Yeah, it's a good question. It's a little difficult in the sense of, you know, different IT products have different sizes, so it's, you know, It's really square inches, right? So if you scale, what's an average, you know, number of square inches on a smartphone? What's the average number on a, you know, is it 4-5X or something like that? The markets are much differently sized, right? You've got smartphones being 1.2-1.3 billion, depending on the year, in terms of units, with more than 50% penetration, and then you've got an IT market that's in the 400-450 range, depending on the year, and roughly 3%-4% penetration. So, And as I said, the screen size being really the challenge.
If you think about that 3-4%, are you talking about 13-inch, 11-inch, you know, models and, and how you get there? But I think the key point in IT is as I said earlier, there are embedded factors that are, you know, in motion, with our customers bringing on that new capacity for where they see OEMs going. You know, also the fact that many of these IT products use what's called a tandem structure, which has two emissive layers in the display. So the iPad Pro models that were introduced in May of this year by Apple, they have a tandem structure, and Apple actually branded it as tandem OLED in many of their marketing materials.
And that has, you know, not probably, not two X our material, but, you know, somewhere between probably one and a half to two times the quantity of our material in one of those displays, compared to a single layer. And so that's also an additional incremental opportunity for us in the IT market, above and beyond, you know, a single. Going forward, we expect there's probably going to continue to be a mix of single-layer and tandem OLED in the IT market. But tandem is certainly one that all, you know, OEMs, Apple being the most recent example, are using to differentiate the product. The brightness is much greater with a tandem structure compared to a single layer, and has many other benefits in terms of the lifetime of the display as well.
Right. Brian, China is a big part of the OLED market, both manufacturing as well as consumption. And, you know, we continue to hear about smaller private companies, you know, working on phosphorescent emitters. And can you give us an update or in terms of, like, your intelligence, like, what's happening in China? Is there some sort of a risk from these kind of indigenous manufacturers?
Yeah, so we certainly keep our eye on the landscape across the board, you know, China, as well as globally, in terms of other companies that could be competitive with us. I think the key thing is our materials, the breadth of our patent portfolio, with more than 6,000 patents, the customer relationships that we have with our customers, the quality of our materials being exceptionally high, the performance also being exceptionally high. Our customers and the OEMs always want the best things, and if you want the best, you're gonna come to UDC, and that's the position that we have as it relates to potentially competitive, you know, solutions.
While there is certainly a, you know, a bit of a drumbeat locally in China for, you know, more localization of materials and local supply of things, we've not seen, you know, to date, any significant impact on our business. And we believe that the quality of our business, the quality of our materials, the strength of those relationships will carry forward as well.
Right. And one thing I kind of struggle with is, like, when I look at your materials growth, like, what benchmark do I use to look at the industry growth on OLED? Is it like what do you guys use, like, or some fab tracker? Like, what, how do you like, in on the consumable side, we have wafer starts, so if, you know, if a company's top line is exceeding the wafer starts, then they're outgrowing the market. So how should we gauge you versus some benchmark?
Yeah, I mean, there's a number of leading companies that publish research routinely on the industry. We subscribe ourselves to many of those companies' research, and that we leverage that intelligence as well as our own team on the ground. You know, we have significant teams in both Korea and China who meet regularly with our customers, understand the trends that they have in their own products, and what they're hearing from the OEMs. And we do, as I said, you know, certainly lean on the third-party information as well to help come up with really our longer term planning. Our near-term planning in the six to 12-month timeframe is really entirely internal, working with our customers and our field teams to estimate what, you know, the next 12 months are gonna look like.
Then, beyond twelve months, you know, it gets a little bit blurry in terms of the information that we get directly from our customers, and so we have to, you know, turn to leverage a little bit more of that third-party data.
All right. And then, OVJP, can you give us an update, state of the union, you know, where you stand, your partnerships? You know, how much R&D are you investing in this project?
OVJP, for those that aren't familiar, is a dry printing process that we have developed. That RGB architecture we were talking about earlier, where you have red, green, and blue sub-pixels right next to each other on a substrate, the way that that is produced today for a smartphone is using a vacuum thermal evaporation process. There's shadow masks, and they deposit the material onto a substrate. What OVJP is trying to do is enable that red, green, and blue architecture on a very large area display, like the size of, imagine a seventy-inch TV or the likes of that. Currently, the vacuum thermal evaporation process has not yet been able to be scaled to that size of substrate for gravity and sagging, mask sagging reasons and otherwise.
OVJP has very efficient material utilization because you're actually dry printing directly onto the substrate. We've recently. Our most recent technical progress that we announced in May was being able to print 8K resolution, 160 ppi, using our OVJP system. Four years ago, we set up a subsidiary in California, in Santa Clara, and the team out there has been focused on scaling up the technology. We now have a Gen 4 system on the floor there, and a lot of R&D progress that we've made over the last few years. As you said, we've, you know, consistently said, we are not an equipment company, nor do we think that we should become one, but we developed this technology.
We wanted to get it to a place where it was, you know, at the right point of talking with customers and with other strategic partners. We've had many of those conversations. We continue to have those conversations, and I think there's a lot of interest in the technology. A challenge that we're having is that there's a lot of focus right now from a CapEx investment perspective on the IT market, with the TV market really having, you know, sufficient capacity for the next few years of growth, but we're continuing to advance the technology, advance our R&D efforts, and have our team, you know, work closely to move that forward.
This equipment will be inserted in the existing manufacturing of TVs, or is this a kind of brand-new manufacturing scheme?
It's a new manufacturing scheme. There are elements of the existing fabs that, you know, would be leveraged or could be leveraged, but you're basically replacing certain elements of the line with an OVJP equipment system. And as I said earlier, you know, it's more efficient from a material usage perspective. We also believe it's more efficient in terms of the upfront CapEx investment to install one of these systems. And you might ask, why does a materials company want more efficient material usage? That seems counterintuitive. We believe that it will enable greater adoption and penetration of OLEDs in the TV market, so it'll be an enabler and net, net, a significant positive element for our business.
Do you have any evaluation units at your customers?
We do not today. We have, you know, had customers come and tour and see our facilities, so they have an understanding of the technology, but we've not yet deployed a system to a customer.
All right. Just lastly, on the balance sheet and capital allocation, can you just talk about the use of cash? You have no debt and capital allocation.
Yeah, so as you said, we have a very strong balance sheet, you know, approaching $900 million of cash on our balance sheet, at the end of June. And, you know, we are really focused on how do we grow the business, and whether that's internal investment in R&D, making sure that we're going after the right targets in that perspective, looking at areas, you know, adjacent to display or in display, or organic electronics that our team's, you know, expertise and know-how can be leveraged. Those are things that we're looking at from an internal R&D perspective. We also do look at, you know, acquisitions. We've acquired a number of patent portfolios over the years, not necessarily significant business acquisitions, but, we're open to those as well if we see an opportunity that looks right for us.
We do prioritize returning capital to shareholders. We've done that through our dividend program. To date, we've had a dividend program in place for a number of years now and have routinely increased that, and we aspire to continue to increase that, you know, going forward. We do routinely evaluate buybacks, but it's not something that to date has been a priority of the board or the management team.
Great. We're almost out of time, and wrap it up here. Thank you, Brian, for coming to the Citi Conference.
Thank you. Thanks, Atif.