Q2 2020 Universal Display Corp Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to Universal displays second quarter Twentytwenty earnings Conference call.
My name is Brock and I'll be your confidence moderator for today's call.
At this time, all participants are in I'll listen only mode.
A question answer session will follow formal presentation.
If anyone to require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like turn the conference over to Bury clue director of Investor Relations. Please proceed.
Good afternoon, everyone welcome to Universal display second quarter earnings conference call good quality there Steve.
<unk> Chief Executive Officer.
You bet, Vice President and Chief Financial Officer, before Steve again Ranger chased called property and Universal display any redistribution retransmission orphan black hat and question. This call in any form we don't expect or any kind of needless to say strictly prohibited.
There is being webcast slide and moving together purely timing universities last night.
Contains time sensitive information that is.
Oh.
Well I left out there how are these six 2020.
During this call we made me wonder.
[laughter] execution <unk> subject to a number significant uncertainty and actual results may differ materially <unk>.
What I'm looking at PC and should be referenced by anyone.
Mm backed.
Securities.
We disclaim any obligation to update and DC.
Now I'll, let you know over to Steve.
Hi stars and welcome everyone on today's call.
So do you all continuing to stay safe and healthy.
During his pandemic, our focus continues to be on safety and well being of our employees customers partners and community sees gardener business operations and advancing our strategic growth programs.
Second quarter results were $58 million in revenues operating loss of $1.2 million and net income was $800000.02 per diluted share.
Joe This is a pandemic continued impact us second quarter as customer orders and shipments declined.
Well go to 19, uncertainties, well likely whale consumer demand in the near term, we continued to invest and further strengthen our leadership position and the old ecosystem.
That's to emerge a stronger partner to our customers added to the old industry long term, we believe the growth path of all lives is unchanged and remains robust.
And the second half of the customers have expressed cautious optimism.
We've seen a pickup in demand is custom orders increasing the most in July.
At the same time, we'd lose significant uncertainty still too early consumer a macroeconomic environments and the near term demand visibility remains unclear.
As you loans is ongoing uncertainties relating to become a good night.
We believe it is prudent to continue to refrain.
2020 guidance.
Visibility improves we expect to resume providing annual guidance.
Let me give you always industry. Despite the near term macroeconomic uncertainties. We are pleased to see activity broadening with new Oleg five new OLED products.
Yesterday.
Hosting its first ever virtual Galaxy I'm happy that unveiled the Galvus you know 20, and the Galaxy note 20, Ultra five G booth with OLED screens and for the first time. The most series. The Galaxy note 20 Ultra offers a visit and blade dynamics I am always too.
X display and 120 hurts refresh race, which we have some calls the best screen yet.
The Galaxy tab, a seven plus which has an extra large 12 point would super am OLED display with 120 hurt refresh rate. So you can see who the cloud based gaming and high definition streaming that five Julie.
The Galaxy watch three premium Olin Smartwatch, there's health features and the Galaxy Z hold true and next generation over the old smartphone with enhanced refinements to cover screen is 6.2 inches and the main screening 7.6 inches and isn't that bodes well.
Our use of the first galaxy fault.
You know some also announced <unk> earnings conference call last week I was glad to expand all would present beyond mobile phones in areas, such as overhauls and I two devices to prepare for the anticipating a resurgence in market than that.
Oh Gee display him ceremony, two weeks ago to announce that mass production second Gen <unk>, Oh live TV Wanzhou China's.
Oh. This is the first solar PV Black hogs, you Korea can produce 70000 seats per month.
And now as long as though LG displays production capabilities almost doubled to 130000 subs to starts per month.
Well, the OLED TV Oems blood Vizio announced in June, but its first OLED Tvs.
These and 65 inch workday models will be available in the fall.
Let's have a week later Shami debuted its first I would you be in China 65 inch Master series model for approximately $1850.
Moving to small medium sized panels, we've been reported that Mercedes Benz New has caused luxury sedan was expected to be unveiled in September well hub for the first time and old infotainment systems due to supply by LG.
And following up to 2021 escalate using reported the upcoming Cola Mirror Olestra crossover.
But the equipped with the curb 33 inch wide screen OLED display.
In China, you technologies completed construction of its third Gen six watsonville old Bob in Chongqing.
Early last month.
No that's been a $6.6 billion this production facilities, but do bad and install capacity of 20000, so choose towards per month and smooth over the next year.
You read continues to broaden its portfolio of old obligations and recently showcased where you know IDH ultra wide curved OLED display.
Our foldable Olin smartphones why.
Teenage although a notebook display with the narrow bezel at the 2020 displays in the region, China warm an exhibition.
No. They see Edmar held me groundbreaking ceremony for its new Gen six flexible OLED filed in Charlotte.
The 6.8 billion dollar Olivia is also expected to produce Moody's thousands of stores per month and smoothed over the next year.
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End of June Alethia young males that needs as Q five as you'd be models will feature optional Oleg tailwinds. According to LD. In addition to perfect contrast, because it's a video over there are a high level homogenizing minimal gap between so.
Well, if you do the future only the perfect technology for executing person was light design with a high degree of precision and extensive variability.
The dog offered all sorts of opportunities for further development.
Well, you, usually see research and development, but we continue to strengthen our core competencies to further expand our market opportunities.
Products back some color gamut efficiency and lifestyle continued abroad.
What are your R&D teams are continually innovating and then you knew him as the materials technologies and who you raised you yellows in host to meet customer you obligation and new product room that needs on the blue fraud, We continue made excellent progress and our ongoing development work.
For commercial phosphorus abuse the system.
Last month, we used to an exciting emails me about the commission or would you be corporation to Betsy commercialization. We gave me a novel manufacturing process for mass was solve it knows you know I direct printing a wall area OLED panels.
As wholly owned subsidiary will be based Silicon Valley, and led by Jeff Hawthorne only CEO.
Uh huh.
Definitely feel focus on the commercialization of the movie JBT with the initial focus on the quitting the skill.
We would you be R&D will continue in New Jersey, where we are currently working on for the full color Phosphorescence Workday Oleg Pat.
During the quarter, we sold there when do you partnership with PBG exclusive manufacture of our proprietary universal toilet ostracism bidders.
These two decades old involved in that idea to a now mainstream players in consumer electronics market you see a DDG adobe successful relationship of close collaboration as well as a wealth of manufacturing expertise or no.
We believe the extraordinary partnership will continue to drive growth incredible value for customers and innovative solutions from the marketplace.
And this may get as I'd be display we would you be held virtually this year.
Julie Brown, senior Vice President and Chief Technical officer, whereas the prestigious 2020 cost burden im wrong, but I was assigned using lesions way. There's nothing like we were those president Oh and he was named the 2020 aside you fell.
The cost burden NIM, one crosby's room to Dr., but Oh outstanding technical achievement and contributions to development and commercialization Pos was an old materials and display technology.
Okay, and my lever engineering as they do so there's significant contributions deposits rose an old technology and it successfully transferred into commercial products.
Well I really do my on the well deserved Lucky machine and there was another exceptional contribution.
Well.
Also it this way we sincerely display presuming paper title. Realizing these new addition abuse boss was organic vitamin diamonds, which is knowledge of the experimental doing work was before and you know I suppose is there would be material provided by Universal display Corporation.
On that note during the call agencies.
Thank you, Steve and again, thank you everyone for joining our call today.
With respect or second quarter result in addition to the Covidien 19 related repurchases in the first quarter.
That would have likely occurred in Q2 soft consumer electronics spending impacted all of the man and factory utilization rates, which resulted in sluggish customer orders in line with the softness we indicated on our made conference call.
Revenues for the second quarter of 2020 were $58 million sequentially down from first quarter, 20 point $812 million and second quarter 29 teens $118 million.
Our first quarter 2020 revenues included the recognition by $24 million from the Chinese customer who purchase safety stock in Q4 20 million team duty free needed it concerns and an estimated $20 million of revenue that work customer to advance purchases due to cold is 19.
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Looking at six months or Earth have 2020 revenues were $170 million compared to revenues of $206 million in the first half.
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Our total material sales were $31.9 million in the second quarter compared to material sales of $66.6 million in the first quarter of 2020.
$76.3 million in the second quarter 2019.
Green emitter sales in the second quarter, or 2020, which include or yellow Green emitter were $24.2 million. This compares to $52.6 million in the first quarter 2020, and $16.2 million in the second quarter of 2019.
Red emitter sales in the second quarter 2020 were $7.5 million.
This compares to $13.9 million in their first quarter of 2020 and $16 million in the second quarter of 2019.
As we have discussed in the past.
The real buying patterns can vary quarter to quarter. Some of the contributing factors include the covert 19 issues that we've been discussing as well as consumer product and then cycles.
So the ramp schedule production loading rates device recipes product mix material ordering patterns customer inventory levels and customer production efficiency gains.
The number these factors are moving variables for our customers.
They are also moving variables for us.
Second quarter, 2020 royalty and license fees were $22.4 million.
This compares to $43.1 million in the first quarter or 2020 and $38.9 million in the second quarter of 2019.
Second quarter Twentytwenty Dcs revenues were $3.7 million. This compares to $2.6 million in the first quarter of 2020 and $2.9 million and second quarter of 2019.
Cost of sales for the second quarter, probably 20 were $12.6 million. This compares to $22.5 million into first quarter of 2020.
$24.1 million into second quarter of 29.
Go into Poland material sales were $10.3 million for is they dig into material gross margin of 67.8%.
Compared to 69.6% <unk> first quarter 220.
And they're comparable year over years quarter material gross margins of 71.2%.
As we have noted in the past material gross margins can vary quarter to quarter.
Second quarter 20, Twond operating expense.
Moving cost of sales was $46.5 million.
Third to their orders $45.3 million and a comparable year over year this quarter $45.4 million.
Operating loss of $1.2 million.
The second quarter 2020.
There are two last quarter's offer you called the $44.5 million and a year over year as comparable quarters operating income of $48.7 million.
Our first has 2020 operating income was $43.3 million compared to first half 2019 operating income of $83 million.
In the second quarter of 2020, we've had a tax benefit of $600000.
Net income for the second quarter, 2020 was $800000 or two cents per diluted share.
This compares to last quarter's $38.2 million or 80 cents per diluted share and they're comparable year over year quarter $43.4 million.92 per diluted share.
Our first half 2020, net income was $39 billion or 82 cents per diluted share compared to first half 2019, net income of $74.9 million or $1.58 per diluted share.
We ended the quarter were $644 million of cash and equivalents or over $13 in 50 cents a cash per diluted share.
And lastly.
Our board of directors approved a 15 cents quarterly dividend, which will be paid on September thirtyth 2022 stockholders of record as of the close of business on September 16 2020.
The dividend reflects our expected continued positive cash flow generation.
And commitment to return capital to our shareholders.
With that I will turn call back to Steve.
Thanks.
Well the speaking despite depend damage olos activity in the market continues to evolve and progress we remain encouraged and excited about the level of commercial development activity in the old pipeline.
Our history shows that we have successfully navigate challenging times and emerge stronger and better position.
Robust balance sheet lean operating model with no debt, we're continuing to build and expand our robust foundations best in class older technologies to help drive innovation and capitalize on the opportunities in the market.
There are also strategically increasing their head count around the world I need to grow in long term needs as a company and our customers.
You do see team continues to do an incredible job of supporting in enabling our customers with the discovery development and delivery of cutting edge energy efficient high performing old solutions bottom line. We are investing in the long term opportunities ahead of us fortifying our position for growth well into the future.
In closing I'd like to take this opportunity to each of our employees or drive desire dedication and hard elevating and she'd be universal displays accomplishments advancements we were committed to being a leader in the old ecosystem, achieving superior long term growth and delivering cutting edge.
Technologies, the materials for the industry for our customers for our shareholders and with that operator, let's start the acuity.
Thank you Mr. Abramson at this time will be conducting a question and answer session.
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One moment, please while we pull for questions.
The first question today comes from Sidney Ho of Deutsche Bank. Please proceed with your question.
Great and thanks for taking my question.
My first question is regarding the advanced purchases you discussed last quarter about $20 million sounds like there's something new in your customers have discussed an agreed to that given your constant dialogue with them do you have to deal whether those customers already yourself a need a portion of those purchases.
They tried to keep inventory at elevated level until the supply chain can't uncertainty subsides in other words would there be any any kind of headwinds that we should be thinking about going forward.
Thank you sitting in for your question and.
It really depends on demand. We you know that we did have $20 million that we feel were pre purchases and obviously this quarter was saw so it really would depend on whether the demand picks up and we believe that you know in Q3, it should pick up and then we believed.
It will flush out the inventory.
Okay. That's helpful. Maybe I follow up question I know you don't guide revenue quarter or even before this calendar year, but if you look at Q3 with some of the advanced purchase hopefully being used up.
The start of the ramp up with a new flagship phones, where the U.S. OEM and your large panel display customer starting production in China.
And they're trying to fight that is it Isnt reason why you won't get back Oh, even exceed the normalized level up revenue, which I know last quarter. I think you talked about being close to $80 million range. If you strip out all the onetime one time events.
Well I think that what we haven't seen so far.
In July has been a significant pickup in orders and shipments. The real question is whether it is sustainable.
And whether or not there or any additional possible interruptions that may occur due to market uncertainties.
But we have seen obviously Q, we've seen the first part of Q3 of the significant pickup from Q2.
Okay, maybe one last one if they can't goes I may what Redmond from your largest customer dropping off pretty sharply in Q2, I would've expected the ratio between materials licensing to increase but it actually went up in second quarter can you can you walk through that dynamics limited and related that how should we.
About that they show in Q.
Yes, the thank you Sydney for the question the material to royalty ratios depended on customer mix.
Because of global uncertainties, it's difficult for us to forecast via but based upon our history. We think good the ratio has historically oscillated between 1.5 into the warm and so it really does depend on customers and.
How we account for the placement fees in royalties based upon six so six accounting.
Great. Thank you.
Thank you.
The next question comes from Chris Sanker of Cowen and company. Please proceed with your question.
Yes.
My question and Oh students a just a follow up on the other questions did move.
The more until July.
Looking strong there'd be supported the Oh, Oh, you said in the month of.
Within the month of Germany, I Wonder UQM, you do I'd characterize it to be able to those two.
Luke on that.
There you see greenfield so congrats to be up look through June quarter from a revenue standpoint.
Well it in terms of talking about quarters, obviously, as we said we don't give guidance. However.
On our last call we knew that it was softer than we stated that the first month of Q2 was soft and what we're sitting today is we're seeing.
A difference and we're seeing a significant pickup.
Nor orders in Q3.
And the question is you know how sustainable is it as I stated, but yeah. It's the right now everything is on the upside.
Got it does the three how preliminary follow up you know.
Okay, and then kind of like the timeline between.
Lets just the hype it didnt do good blocks you couldn't go to do launched in Q.
Q4.
On the news gutsy your material to pick up and how would that basically.
Through into next year.
Well, we are adjusting time supplier. So since we don't deal directly with the actual sellers of the phones. It we really well see a pick up when we start seeing pick orders from the factory and that really is depending upon their production schedules, but.
So when when they place orders were just in time supplier, we shift within 24 hours. So whenever a customer wants additional materials. We are there to give it to.
Got it they are willing to pay last night prisons crude doesn't matter to you.
From your matured and then when the substrate would be the flexibility.
No for US there essentially the recipe those same whether its glass plastic or any other substrate.
Thank you.
Thank you.
The next question is from Shannon Cross across research. Please proceed with your question.
Thank you very much I guess first.
What about your thoughts on Ob JP <unk>.
You know how you how we should think about it in relation to you acquired company and how you're going to work together and thank you and I apologize.
Yes.
Thanks, Shannon the urban K P is was formed to commercialize our Ob Jay will be JP technology and or the.
The only JP R&D will continue in Ewing, New Jersey, and Ob JP process and equipment scale. It will take place in L.D.J.P. headquarters, which will be in Silicon Valley.
We believe that over JP will pave alternative manufacturing passed for new levels of OLED TV performance with RGB side by side pixel structure architecture.
Very similar to small and medium size displays today and we believe that this technology will further expand OLED TV future market potential.
Okay, and it's just it didn't pick your portfolio that everything fell rolling through and.
For the finance financial perspective.
Yes, it's a wholly own sub then essentially they're going to do what they do out there and we actually will support them and everything that's behind the scenes out of our headquarters.
Okay, and then I'll bet, if that does not meet that about the yet.
It just after the debt on the call just any more thought any incremental pots and blow our how we should be about development there generally.
Well in terms of blue.
Yes, if there were making excellent progress and he did mentioned that there was a paper presented that as I D.
Regarding R&D by Samsung or using Blue phosphorescent emitter. So.
We are you know we're excited about the progress that we've made them. We're excited about the paper that was presented at this I'd.
Okay, and then night just last question and we think about the potential for the large.
Customer on the last it's going to be launching white OLED. They sell in and then like what's going on in terms of China.
<unk> point that we should be aware ivor or concerned about it at volumes ramp hopefully that can happen in 2020 wine that that might cause some volatility.
When you couldn't use a.
I'm sorry.
When you say break out yet.
Yes, I'm, sorry, well under six ethics accounting gets an average price. So they are the average price is built into the accounting under six so six so any discounts or resets of price or are taken into effect and when you come up with your average price per gram or per kilogram.
Okay. Thank you very much.
Thanks, Jim.
The next question is from a C.J. Muse Evercore. Please proceed with your question.
Good afternoon. Thank you for taking my question I.
I guess first question considering that you didn't guide for the quarter, we'd love to hear your thoughts on how three things progress versus your initial slots. So many ended the quarter, particularly as it relates to demand out of the Korea.
And you know as easy as you take through that any surprises in terms of inventory coming in.
Improvements in yield or.
Lower than expected utilization rates.
It obviously everything was.
Difficult just because of the.
Disruption in demand and the disruption and the ability to name that factor because of covert 19. So yes. This quarter was very weak as we anticipated when the on are cool and to be perfectly on is it never really picked up.
Okay. That's helpful and I guess second question.
Deferred revenues if I if I go December to March you actually started to decelerate.
Well, we accelerated in the June quarter, and it makes sense considering that fall off the materials to your largest customer.
But I guess your question age when do you can't get starts you a truly cease growing in start moving in India the direction.
Yeah, obviously this quarter the material.
Supply the material business sales were down and we still get paid.
Fees from our customers so because the material silver so weak you saw deferred revenues go up on the current and long term portion vote. So we expect it to start around as material sales soared to pick up in the second half of the year.
Great. Thanks, and has there ever was asking three I'll ask a third world as well.
The only JP investment.
How should we think about the implications to opex through the remainder of the year.
We don't really see any change in Opex, we had been looking at doing this for quite some time in the question was really timing.
We still expect AAPEX did go up by 10% to 15% excluding amortization for the year.
We are actually continuing to hire folks and so we're really staying on our plan to.
To continue the build for the future because we know that this is just a short term blip. So it should not impact our opex as intended.
Thank you.
Thanks Vijay.
The next question is from Brian Lee of Goldman Sachs. Please proceed with your question.
Hey, everyone. Thanks for taking my questions.
Although the revenue possible this quarter it looks like Samsung.
Was down a lot more than that deal we had LG and also China in aggregate. So is it fair to assume all I know last quarter. You said it was spread out across multiple customers that is it fair to assume based on.
The quarter on quarter trends that Samsung loved the most inventory of the pre buys from last quarter and then related to that.
Since we did buy more this quarter are they do the buffer stock from Q1 based on based on your read there.
Well I did we build towards customer by customer in terms of repurchases in who did it but you are correct in that you know the customer a is not Samsung and in this Q.
And we believe that as demand picks up that they should work their way through the repurchases that were related to.
Economic situation, the economic situation and trade related issues and the repurchases based upon.
When we talk to our customers, whether or not the coded 19 issues in terms of logistics of shipping and receiving and getting through customs would have an impact until we have been shipping and so we believe that particularly as their production picks up and are able to Turner factories up even though they've never rule.
The shutdown, but there are factory utilization rates are very low that they should use up this inventory.
Okay fair enough.
Then.
Indeed yelled at the early Q3 picked up you're referencing.
I know keeps you a soft across the board are you seeing the picked up more.
Related to spot phone orders or is it also he needs just based on the customer visibility out there.
Well I mean, if you look at customer Avi and see you can figure out who they are in customer a would use a customer b so is that customer.
Does manufactured TV.
Yeah, I guess I was just gotten maybe maybe I'll rephrase it but.
If it take Q3 <unk> not the reported results in Q2, but Q3, it sounds like you've seen some pick up in orders.
Are you seeing that.
He differently in spots on related pockets of your business versus the TV.
I would that go into specifics I think it's across the board.
Okay fair enough thanks, guys.
Brian.
The next question is from Mehdi Hosseini.
Fiveg. Please proceed with your question.
Yeah that high cure for taking my question I wanted to go back to.
Commentary regarding.
Luke.
During the week there were also a number of recruitment prison and students.
On the might be and Samsung has publicly.
But I do lucid Perry and their strategy and degrees to TV. So hungry reconcilement did hit because there was presented.
At least the areas that you're doing I'm, just trying to better understand you did that.
You're pursuing multiple different technologies or do something around that you think your non farm.
Well I there that's I'd, obviously the research.
[noise] conference and.
We know that everybody to be honest looks at lots of different things, but Mike really do you.
Have been in still or in the R&D.
Program and it's still a lot of and then two questions about it and but your folks look at lots of different things, but.
Across the board everybody and we believe that OLED, nor the future of displays and we'll continue to grow and.
There's always.
Things that pop up they're still making kindles with being technology. So.
It's a huge if industry as you're well aware.
Sure. Thank you again.
Go back to Oh.
Hi, Steve talked about significant capacity growth, which will be 21 versus 29 team and it seems like there is continued investment in China, who RGB all that and I'm. Just wondering if you can help us understand we the diversification of the end market there has been the pads.
<unk> telecom experience and must be two tablets and notebooks I'm wondering within the additional commitments.
Sure this.
Well in terms of the capacity as we've stated on the last call. We talk about the end of 19 through the end of 21 of 50% approximately 50% increase in the installed capacity.
And yeah, we still see that we haven't seen anything that we believe will change that.
And it is you know in China, you know that via we have multiple fabs that there are building and other Chinese customers are building new fabs.
Oh, he has a squandered on those.
Oh.
Got you either yeah I'm sorry.
LG has a TV facility and so.
So it's I think it's not just more area, but we are still.
Very confident that what we can see unless things really change in terms of depend on doing that it's still look like but still talking about approximately 50% growth.
Thank you.
Thank you.
As a reminder, if he would like to ask a question. Please press star one.
On your telephone keypad.
Our next question comes from Andrew Degasperi apparent Burke. Please proceed with your question.
Thanks for taking my question just had a quick one on China.
Just trying to maybe can you update in terms of what's been going on there for last six months beyond depend on like I mean have you seen a steady.
Improvement at the in the on that well aspect of their fabs in terms of production capacity and whereas I think caused since February.
Well.
We obviously you can't talk about their production capacity in their utilization rates were assessed our proprietary.
Data, but yeah, we have seen.
Or Chinese customers beer is a major player and we support all of our customers and we believe that they will all be very successful in the OLED business and it just is there some learning curves that they have to go through but I think that they will all be very successful in this business.
Great and then in terms of the <unk> hundred 20, or its refreshed that Emmett refreshed technology that Samsung rolled out.
Would you say that the meaningful improvement in terms of the the product and you could that potentially spur additional adoption of the OLED technology and the other from and I T models.
Well, we think that.
There are led the display is major part public so all of these products because we're visual people.
And you're seeing screens gets larger and larger because everybody using them more and more.
Core.
That's why Youre.
Power efficiency and used aircrafts wasn't material. So important is that they're using their screens more and more woodson Granger battery and having a larger screen Granger battery. So we think any improvements.
In the picture quality and repressed grades is great for the industry is great for us.
Got it and then just one last one on Ob JP.
I know you've already made some comments on it just shows that this was all plan in terms of.
The the initiative I just wondering did you reached the technical milestone and this is sort of the next step that to bring into commercial production or was this sort of just playing the long independent.
That technology maturing enough for you to.
Partner with with someone else.
Well it we think that we've made a lot of progress on the technology ourselves.
You know in our facility, we're scaling up our system, which is a six by since 16 substrate. So that we can make red green and blue or color displays we've got great results.
Early results in lifetime.
You can see we talked about green lifetime. So you know what we intend to do and that Jeff do is look at all the options and come up with the best path to get this technology commercialized in the most efficient manner.
Great. Thanks.
Thank you.
Your next question is from Jim at recovery of Needham and company. Please proceed with your question.
Hi, Good afternoon, I'm wondering if you get it loose.
Well that tell us whether this recovery.
Pick up that you're seeing orders had seen in July hedge gain.
Having from both regions, both countries, China, and Korea, or <unk> as the picked up in more pronounced in China, which was feeling the effects of covert early.
Greetings and Colorado.
I think it's across the board Jim.
We've seen it from both.
Okay.
And then just regarding the paper.
Samsung.
To that Youre aside the confidence.
Well when papers are given I would assume in a this is probably not the flows.
Good day parts and <unk>.
It was like this is it fair to say.
Well this is a Samsung paper and what they're doing is is the looking got phosphorus and blue.
Essentially really talking about you know that you need a deep blue phosphorescent emitter to get.
The best display and the most power efficient display.
And just in R&D.
Jack and we don't talk specifically about R&D projects with our customers.
But this is the first time that anybody has really presented anything like this.
And acknowledge the fact that views or blue listed material.
Okay, but what I would guess that it's not a complete surprised that.
But it seems to be April is gone.
Yes.
Okay.
As you say when you move.
But I.
The paper as good as I'd keeps the papers.
Why it until they actually published limit I believe it was two days ago that.
I believe it was on the fourth or fifth third that these papers, where then becoming public through the as I'd be web site. So you have to you have to go there approaches that access to the content and I think it's a couple of days ago that this came out.
Thanks, a lot.
Thanks, Jim.
The next question is from Martin Yang of Oppenheimer. Please proceed with your question.
Hi, I came here right.
Yes.
Hi, how can you talk about your view on the capacity.
Operating in China, and how that compares to three months ago do you think that this year's capacity additions.
It's tracking has or below or slower again expected.
Yes.
Well I did beyond that because of coated 19, I think everything is slower than we would have anticipated a year ago.
We added in terms of the actual opening of the Fabs and also getting.
Two utilization rates up and production schedules because of the fact that they.
Could not get employees.
And all of the other issues that are associated with one of the factory. During this pandemic. So do we think it's slower yes, but we think that there's.
A long terms impact we don't think so we think long term the old led industry.
And all of this is just all positive not this is obviously something that nobody anticipated and it's going to cause some slowdown.
Mhm.
I think in past you have stayed at some capacity.
The magnitude of capacity addition, in 21 over 29 team, which delayed some 21 change your you or your estimates were forecast for that capacity addition.
Eating more more capacity additions and be moved into next year.
Oh, well, we don't we really do ended the year ended the year end of 19 to end up 21, and we don't see any real difference there's been no announcements that things are not happening everything that we built into that number is happening could there be slippage quarter wise and or six month.
But yes, but right now we do not see anything that makes us think that it's not going to be approximately 50% in square meters of glass increasing capacity.
Got it thank you.
Thank you.
Thank you. This concludes the question and answer session I would like to turn the program back.
<unk> for any additional for closing remarks.
Thank you all for joining the told today and we wish you all a safe and good night. Thank you.
This concludes today's conference you may now disconnect.
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