Synaptics, Incorporated Talks OLED Versus LCD Tech

By Ashraf Eassa Markets Fool.com

Most of the smartphones shipped today incorporate liquid crystal displays (LCDs). However, there has been a trend toward displays using a different technology called organic light emitting diodes (OLEDs) at the high end of the smartphone market.

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Image source: Synaptics.

Here's what DisplayMate's Raymond Soneria said about the advantages of OLEDs relative to LCDs in a recent article:

OLED displays provide a number of significant advantages over LCDs including: being much thinner, much lighter, with a much smaller bezel providing a near rimless design, they can be made flexible and into curved screens, plus they have a very fast response time, better viewing angles, and an always-on display mode.

It's little wonder, then, that display driver chip supplier Synaptics (NASDAQ: SYNA) offered some commentary about the future of OLEDs in mobile and its opportunities to capitalize on its adoption going forward on its most recent earnings call.

Let's take a closer look at that commentary to try to get a better understanding of where the mobile display industry is headed.

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Wider adoption in late 2017 and beyond

Synaptics CEO Rick Bergman said the company expects "the supply of OLED displays to start to expand meaningfully in late 2017 and continue to be featured primarily on flagship smartphones in 2018 due to its high cost versus LCD technology."

However, OLEDs might not be limited to the premium portion of the market for too much longer.

"Wider adoption of OLED technology in mainstream smartphones will likely take place in 2019," Bergman said.

Do LCDs have a long-term future?

The executive argued that although there will be some market shift away from LCDs and toward OLEDs, OLEDs won't destroy the market for mobile LCDs.

"We are forecasting that over the next several years, over 1.2 billion LCD smartphone displays spanning flagship, mainstream, and entry-level phones will be shipped each year," the executive asserted.

He then went on to say that he expects both OLED displays and LCDs to "continue to coexist in the market for the foreseeable future," noting that "both OLED and LCD have their advantages and disadvantages."

What this means for Synaptics

Bergman made sure to explain that Synaptics "has a large team of design engineers actively developing OLED [display driver integrated circuits, or DDIC] in collaboration with leading display manufacturers worldwide," no doubt to reassure investors that this upcoming industrywide display technology shift wouldn't leave Synaptics' business out in the cold.

On Dec. 13, Synaptics announced it would start sampling its R66452 DDIC "in the coming weeks." The company claimed the chip "includes [Synaptics'] best-in-class imaging processing and adds new state-of-the-art display technologies specifically designed to enhance OLED display."

The company had previously indicated that it was on track to begin sampling OLED DDICs by the end of the year, so things appear to be progressing as planned.

The press release also says the company plans to begin full production of this chip during the second half of 2017 "to meet the introduction of next-generation OLED smartphones."

Circling back to Synaptics' most recent earnings call, Bergman said there is usually a six-to-nine month gap between sampling and production shipments, suggesting it'll still be some time before Synaptics is bringing in real revenue from OLED DDIC sales.

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