Universal Display Corp.(OLED) Q1 2021 Earnings Call Transcript

Universal Display Corp. (NASDAQ: OLED) Q1 2021 earnings call dated May. 06, 2021.

Corporate Participants:

Darice Liu — Director of Investor Relations and Corporate Communications

Steven V. Abramson — President, Chief Executive Officer and Director

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Analysts:

Brian Lee — Goldman Sachs — Analyst

Krish Sankar — Cowen & Company — Analyst

Mehdi Hosseini — SFG — Analyst

C.J. Muse — Evercore ISI — Analyst

Shannon Cross — Cross Research — Analyst

Sidney Ho — Deutsche Bank — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to Universal Display’s First quarter 2021 Earnings Conference Call. My name is Sherry, and I will be your conference moderator for today’s call. [Operator Instructions] I would now like to turn the call over to Darice Liu, Director of Investor Relations. Please proceed.

Darice Liu — Director of Investor Relations and Corporate Communications

Thank you, and good afternoon, everyone. Welcome to Universal Display’s first quarter earnings conference call. Joining me on the call today are Steve Abramson, President and Chief Executive Officer; Sid Rosenblatt, Executive Vice President and Chief Financial Officer. Before Steve begins, let me remind you today’s call is a property of Universal Display. Any redistribution, retransmission or rebroadcast of any portion of this call in any form without the express written consent of Universal Display is strictly prohibited.

Further, this call is being webcast live and will be made available for a period of time on Universal Display’s website. This call contains time-sensitive information that is accurate only as of the date of the live webcast of this call May 6, 2021.

During this call, we may make forward-looking statements based on current expectations. These statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. These risks and uncertainties are discussed in the company’s periodic reports filed with the SEC and should be referenced by anyone considering making any investments in the company’s securities. Universal Display disclaims any obligation to update any of these statements. Now I would like to turn the call over to Steve Abramson.

Steven V. Abramson — President, Chief Executive Officer and Director

Thanks, Darice, and welcome to everyone on today’s call. We are pleased to report that revenue in the first quarter of 2021 was $134 million, operating profit was $63.6 million and net income was $51.7 million or $1.08 per diluted share. Since our last earnings call, momentum in the OLED market continues to grow in small, medium and large consumer electronic applications. We are seeing a growing proliferation of OLED smartphones, ranging from premium to mid-range to low-end and foldable that have launched and/or slated to be launched this year. OLED TV demand continues to rise. Omdia market research recently reported that the average price of a 55-inch OLED panel declined 8.1% year-over-year in the first quarter of 2021, while LCD panel prices increased 73.9% in the same period.

As a result, the price delta between OLED and LCD TVs has further narrowed to $310 from $440. The OLED IT market is burgeoning with the launch of new products. Just last month, new OLED laptops, including the Xiaomi Mi Laptop Pro 15 and Dell XPS 13 9310 were unveiled. And in the gaming market, there our reports are, for the first time, Nintendo has selected an OLED screen for the new Switch Pro due to OLED benefits of higher contrast of faster response times. The adoption of OLEDs continues to expand, and is fueling the multiyear OLED capex growth cycle in which we are in.

In March, Samsung Display announced that it will aggressively expand its OLED presence in the gaming, smartphone and laptop markets. Samsung noted that its OLED displays a valuable feature befitting premium gaming content such as fast response times, vibrant colors and deep blacks.

Last week, Samsung held its Galaxy unpacked event and unveiled its Samsung Galaxy Book Pro and Galaxy Book Pro 360 OLED laptops. These are Samsung’s first ever Windows PC with Super AMOLED displays. Swiss certification and testing company, SGS, awarded the Galaxy Book Pro and Book Pro 360 with eye care display certification for reducing the harmful effects of blue light admissions compared to standard LCDs. And during its recent earnings call that also took place last week, Samsung commented on the growing adoption of OLED displays from flagship and mass market smartphones to entry-level models growing year-over-year.

The company also noted the growing contribution of OLED tablets, PCs and wearables while also highlighting that it was continuing to advance its first-mover lead in OLED displays. LG Display announced on its recent earnings call that its first quarter 2021 OLED TV shipment level was on par with its seasonally strong fourth quarter 2020 shipments of 1.6 million units, and reiterated its target of seven million to eight million OLED TV units this year.

In addition, it has been reported that LG Display will proceed with its investment for additional capacity at its OLED TV plant in Guangzhou, China. LGD’s second OLED TV fabs current capacity is 60,000 plates per month of Gen-8.5 substrates. The new phase will add 30,000 plates per month of capacity bringing the Guangzhou facility to 90,000 plates per month. On the small and medium front, it has been reported that LGD is progressing with design wins in the smartphone and automotive markets.

In late March, Mercedes, a reported partner of LG displays, unveiled the interior cabin of its new flagship electric car, the EQS. As a unique 56-inch flexible OLED display that is made from three different OLEDs that spans almost the entire width of the car. BOE technology recently announced that it shipped approximately 36 million flexible AML apparels in 2020.

As BLE looks to 2021, it is targeting to double its AMOLED panel shipments once again. On the capacity front, it has been reported that BOE’s third Gen-6 OLED fab in Chongqing will start production this year. This new fab, when fully ramped, will have a capacity output of 48,000 plates per month, similar to BOE’s two other Gen-6 fabs in Chengdu and Mianyang.

In late March, Tianma held a ceremony to celebrate each new R&D center called the Hubei Yangtze River Nove Display Innovation]. According to reports, one of the products that Tianma showcase at the event was COE, or color filter on encapsulation technology, which Tianma calls CFOT, or color filter on touch, for foldable displays. And last month, Visionox announced additional smartphone design wins with Honor. The panel maker is currently ramping its new Gen-6 flexible OLED fab in Hefei, which has a capacity start of 30,000 plates per month. Switching gears to OLED lighting. Audi unveiled a new concept electric car, the A6 e-tron at auto Shanghai last month.

As noted by Audi, one new feature is a 3-dimensional OLED taillights. This architecture makes it possible to experience the dynamic OLED light show, not only in two dimensions, but with an impressive 3D spatial effect. Audi also noted that the ultra bright homogenous and high contrast digital OLED combination tail lights can increase the level of safety on the roads.

As OLED activity continues to flourish, we remain steadfast in our commitment to advancing our robust OLED materials and technology leadership. On the materials front, we are investing, innovating and commercializing new emissive materials and technologies, including new reds, greens, yellows and hosts.

With respect to blue, we continue to make excellent progress in our ongoing development work for our commercial phosphorescent blue emissive systems. We also continue to advance our work in organic vapor jet printing, our novel manufacturing process for maskless, solventless, dry direct printing of large area OLED panels, and expect to have an alpha system during 2022. It’s been an exciting time in the OLED industry and for us.

Since our last call with you, we announced that along with PPG, we are jointly establishing a new manufacturing site in Shannon, Ireland for the production of our highly efficient, high-performing universal filed materials. The new facility will be designed to double the production capacity and diversify the manufacturing base for our phosphorescent emitters to meet the growing OLED market demand and evolving industry requirements.

We also announced new extended OLED technology license and material purchase agreements with LG Display and Visionox. Both agreements run for five years until the end of 2025. And last month, Universal Display Corporation was named to financial times the America’s Fastest Growing Companies 2021 list. On that note, let me turn the call over to Sid.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Thank you, Steve, and again, thank you, everyone, for joining our call today. Revenues for the first quarter of 2021 were $134 million compared to fourth quarter 2020’s $141.5 million, and Q1 2020’s $112.3 million. Our total material sales were $79.8 million in the first quarter of 2021 compared to material sales of $62.5 million in the fourth quarter of 2020 and $66.6 million in the first quarter of 2020. Green emitter sales in the first quarter of 2021, which include our yellow green emitters, were $60.5 million. This compares to $48.2 million in the fourth quarter of 2020 and $52.6 million in the first quarter of 2020. Red emitter sales in the first quarter of 2021 were $19.1 million. This compares to $14.3 million in the fourth quarter of 2020 and $13.9 million in the first quarter of 2020.

As we have discussed in the past, material buying patterns can vary quarter-to-quarter. Some of the contributing factors include COVID-19 issues as well as consumer product demand cycles, capacity ramp schedules, production loading rates, device recipes, product mix, material ordering patterns, customer inventory levels and customer production efficiency gains. Since a number of these factors are moving variables for our customers, they are also moving variables for us.

First quarter 2021 royalty and license fees were $50.9 million. This compares to $75 million in the fourth quarter of 2020 and $43.1 million in the first quarter of 2020. First quarter 2021 Adesis revenues were $3.3 million. This compares to $4 million in the fourth quarter of 2020 and $2.6 million in the first quarter of 2020. Cost of sales for the first quarter of 2021 were $23.3 million. This compares to $27 million in the fourth quarter of 2020 and $22.5 million in the first quarter of 2020. Cost of OLED material sales were $21 million, translating into material gross margins of 74%. This compares to 61% in the fourth quarter of 2020, and the comparable year over year’s quarter material gross margins of 70%.

As we have noted in the past, material gross margins can vary quarter-to-quarter. First quarter ’21 operating expense, excluding cost of sales, was $47.1 million, down from last quarter’s $48.8 million and up year-over-year from the comparable quarter’s $45.3 million. Operating income was $63.6 million for the first quarter of 2021 compared to last quarter’s $65.8 million and a year-over-year’s comparable quarter’s $44.5 million.

First quarter 2021 income tax rate was 18.9%. Net income for the first quarter of 2021 was $51.7 million or $1.08 per diluted share. This compares to last quarter’s $53.9 million or $1.13 per diluted share, and the comparable year-over-year’s quarter of $38.2 million or $0.80 per diluted share. We ended the quarter with approximately $727 million in cash and equivalents, or $15.36 of cash per diluted share. Moving along to guidance. Our outlook for the year remains unchanged.

As we noted in last quarter’s conference call, we expect 2021 revenues to be in the range of $530 million to $560 million, with a ratio of material royalty license revenues expected to be in the ballpark of 1.5:1. And lastly, our Board of Directors approved a $0.20 quarterly dividend, which will be paid on June 30, 2021, to stockholders of record as of the close of business on June 15, 2021. The dividend reflects our expected continued positive cash flow generation and commitment to return capital to our shareholders. With that, I will turn the call back to Steve.

Steven V. Abramson — President, Chief Executive Officer and Director

Thanks, Sid. Last month, we celebrated our 25th year as a NASDAQ-listed company by virtually ringing the opening bell. It was an incredible milestone that we share with our employees, customers, partners and all of our stakeholders.

For 27 years, of which 25 years has been as a NASDAQ-listed company, Universal Display Corporation has stood for vision, innovation and reality. In 1994, our founder, Sherwin Seligsohn had learned about a novel technology called organic light emitting diodes, or OLEDs, and foresaw its revolutionary path in the display and lighting landscape, and so began Universal Display’s story.

1996, when bulky CRTs were still in everyone’s homes, we took the company public with just a Princeton University research contract, no full-time employees and one patent pending. It took us 17 years of breakthroughs, challenges and triumphs to achieve our first profit in 2011, and we have been profitable ever since.

Since our inception in 1994, we have invested approximately $700 million in research and development to advance our company from a startup to a leading player in the global OLED ecosystem, and we continue to invest heavily in a number of strategic OLED programs for our long-term growth. Our technologies and energy-efficient phosphorescent materials can be found in virtually every commercial OLED display and lighting product in the world.

You can learn more about our phosphorescent technology as well as our strong corporate stewardship in our recently published 2020 Corporate Social Responsibility report, which can be found on our website.

And finally, I would like to take this opportunity to thank each of our employees for their drive, desire, dedication and heart in elevating and shaping Universal Display’s accomplishments and advancements. We are committed to being a leader in the OLED ecosystem, achieving superior long-term growth and delivering cutting-edge technologies and materials for the industry, for our customers and for our shareholders. And with that, operator, let’s start the Q&A.

Questions and Answers:

Operator

[Operator Instructions] Our first question is from Brian Lee with Goldman Sachs. Please proceed.

Brian Lee — Goldman Sachs — Analyst

Hi, everyone. Thanks for taking the questions. Kudos on the solid quarter here. I guess in terms of guidance, Sid, I’m just trying to understand a little bit about the thought process. And reiterating guidance, you just did $134 million in Q1 revenue. So you’re basically implying flat revenue for the next three quarters to get to the low end of guidance, maybe $140 million a quarter to get to the high end. And we’ve typically seen Q1 be on the low end of revenue seasonally for you outside of inventory build period.

So I guess the question is, is the guidance embedding a lot of conservatism here? Is it due to supply chain risk? Or is there something about Q1 results that maybe aren’t going to flow through into higher growth in the next few quarters like we typically see? So just trying to reconcile a bit here.

Steven V. Abramson — President, Chief Executive Officer and Director

This is Steve. My line is okay. Sid is muted.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Sorry. Is that better?

Steven V. Abramson — President, Chief Executive Officer and Director

There you go. Yes.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

So Brian, in terms of — I apologize for that. In terms of our guidance for the year, we do believe that the 560 — the $530 million to $560 million is in the range that we expect for the year. I know that when you do the math, it doesn’t quite look like there’s — as we said on the other call, we expect the second half to be better than the first half. But the ongoing pandemic has resulted in supply chain disruptions, including some semiconductors. And we think it’s best right now to maintain our guidance, which we’re currently comfortable with.

Brian Lee — Goldman Sachs — Analyst

Okay. Fair enough. Just to be clear, there’s nothing unique about Q1 like pull forward or inventory builds like we’ve seen in certain periods over the past several years. You wouldn’t — there’s nothing you called out. So I’m assuming it’s — if there’s nothing notable about the sort of demand patterns you saw in the quarter?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

No. There’s nothing in there. I mean, historically, as you’ve seen, quarter-by-quarter, it can be lumpy by customer. And as you can see in this quarter with Chinese customers being higher versus last quarter.

Brian Lee — Goldman Sachs — Analyst

Fair enough. And then last one for me also on the guidance, and I’ll pass it on. Gross margin, 74% on materials. I know it’s going to be lumpy and bounce around. It’s proven to be that way, just if you look at Q4 to the Q1 progression. But coming into the year, it sounded like you had a bit more muted view on what the gross margin result would be for materials in 2021 versus historical, and then you come right out and you’re back to the historical level. So any thoughts or changes in thoughts around the gross margins that you could achieve on materials for the year?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

No. Obviously, our gross margins are, as we stated, dependent upon our product mix. And this quarter’s product mix really translated into about 70% gross margin range. We still think that for the year, it’s going to be 65% to 70%. And as we talked about in the fourth quarter, there were some things in the fourth quarter that really affected, which are developmental materials, which were sold in the fourth quarter in a larger quantity than historically, and that’s lumpy also.

Brian Lee — Goldman Sachs — Analyst

Alright. Thanks, guys. I’ll pass it on.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Alright. Thank you, Brian.

Operator

Our next question is from Krish Sankar with Cowen & Company. Please proceed.

Krish Sankar — Cowen & Company — Analyst

You have [Indecipherable] my question. I had two of them. First one, really good sales from China, and I understand your largest customers obviously expanding in China. I’m just wondering, as they expand and as their efficiency and yield improves, do you think there is a risk that the business from that customer might slow down given that the had leadership in the past, which might get is all down the road. Then I had a follow-up.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

It has historically, with Chinese customers, been lumpy. And so yes, it’s difficult for us to predict. I mean, obviously, we spend a lot of time talking to our customers, and we’ve built in what we believe to be where we think we’ll be for the year into our guidance. But it really — there is a number of issues that will affect the rest of the year, which — there’s COVID-19 issues and some of the semiconductor weakness issues. So we’re comfortable where we are.

Krish Sankar — Cowen & Company — Analyst

Got it. Got it. That’s very helpful. And then as a quick follow-up. Sir, how should we think about the OpEx growth for this year? Is this the seeing as you reiterated last quarter?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Yes. We gave guidance in the last quarter of OpEx growth, which — when talked about it, we expect it to increase in the range of 20% to 25% year-over-year. R&D up about 25%, SG&A, about 15%, which — and increased spending on OVJP and that — and developing that technology. And we expect our tax rate to be about 19%, give or take, a few basis points. We do expect our 2021 operating margins to be approximately 40% to 45%.

Krish Sankar — Cowen & Company — Analyst

Thank you very much. I will get back in queue.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Thank you.

Operator

Our next question is from Mehdi Hosseini with SFG. Please proceed.

Mehdi Hosseini — SFG — Analyst

Yes. Thank you. And Steve, thanks so much for all the details, especially with the evolving end market penetration and landscape. I just want to reconcile something. When I look here at Samsung and LG, it seems to me that over the past maybe three to six months, there is less of a OLED capex and especially with China, doing really well with LCD, maybe the LCD capex has gone up. And I’m just trying to reconcile in the near term if there is a downward pressure on OLED capex, how does that change your view on end market demand or a square inch of OLED shipment in 2022? And I have a follow-up.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Well, I think right now, in terms of what the customers are saying and all of our customers have noted on recent calls, they’re committed to OLEDs. And I think that there has been — there’s obviously demand and market issues that may caused some changes, but we believe that the proliferation of OLEDs is really in the very beginning. And it’s a really young industry. We think that our customers are really wed to OLEDs, and everything you hear about it. Will there be some things that maybe get delayed a little bit here and there? Yes. But overall, we really are very bullish on where the market is going.

Mehdi Hosseini — SFG — Analyst

Got it. Thank you. And then — and I’m just trying to better understand end market dynamics. And I do think that OLED TVs offer something unique, especially with Samsung trying to build out a market presence in the high end with the quantum dot OLED. But is there anything other than that like in terms of quality of the display or 8K that you can offer us to better understand how OLED compares to emerging new technologies like mini LED?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Well, mini LED is an LCD technology. I mean OLED technology is — has been — it’s power efficient. It gives you the best picture quality, whether it’s TVs or from mobile devices. And it’s not a backlit technology. It’s less complicated. And as you see that for mobile devices, we’re almost — we’re 1/3 of the smartphone market with OLEDs, and we’re moving into the low and mid-range with OLED displays when mobile devices.

So the benefits of an OLED compared to LCDs, whether it’s mini LEDs or other type of LCDs is the benefits of all OLED technology. It gives within form factor, I think that flexibility, bendable, rollable technology is something that no other technology can do. So when you look at all the benefits of OLED that we’ve talked about for all these years, that’s really why it is in the mobile devices first because of power efficiency. And for TVs, it’s the best picture quality.

Mehdi Hosseini — SFG — Analyst

Alright. Thank you.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Thank you.

Operator

Our next question is from C.J. Muse, Evercore ISI. Please proceed.

C.J. Muse — Evercore ISI — Analyst

Hi. Good afternoon. Thank you for taking the question. I guess first question, pretty surprised your deferred revenues actually increased Q-on-Q, and your LG revenues came in a little bit light, at least versus our expectations. So curious, is that a result of your new agreement with LG? And I guess, could you expand on that?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Yes. The new extended 5-year agreement with LG and Visionox were effective on January 1, 2021. They end at the end of 2025. The impact is under ASC 606, we expect just to continue. But the fact that we did this, this is a new agreement essentially for LG. So you do see changes because we signed these agreements in deferred revenue.

C.J. Muse — Evercore ISI — Analyst

So was there an expectation for greater revenues here in 2021 before signing that agreement? And what kind of change has that had on your outlook for calendar ’21 revenues?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

We’re comfortable with our guidance where we are. I didn’t expect it to change our 2021 revenue guidance by signing these agreements. I mean when we gave our guidance, we kind of knew what was going on with these agreements. They just weren’t executed until then. But we knew what the results would be.

C.J. Muse — Evercore ISI — Analyst

Great. As my follow-up, you had big numbers from both BOE as well as Tianma. And I guess the question here is, is that supply chain risk mitigation in terms of building some inventory? Or is there concern in China around getting access to materials out of the U.S. given rising U.S.-China tensions?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

No. The revenues in China did increase obviously. But historically, they have really been lumpy. There’s nothing that we’ve called out specifically in this quarter as we have in the past when the customers told us that that’s what they’re doing. We just think that it’s customer-by-customer and purchasing department by purchasing department.

C.J. Muse — Evercore ISI — Analyst

Thank you.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Thanks, C.J.

Operator

Our next question is from Shannon Cross with Cross Research. Please proceed.

Shannon Cross — Cross Research — Analyst

Thank you very much. Just a couple of questions. You said you have about — I think this was right, 30% of the smartphone market at this point. What percent of the market do you think is addressable to you given where pricing is maybe in the next couple of years? Just trying to think of what opportunity for upside there is, especially with some of the comments out of Samsung recently.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Yes. I think that the addressable market, eventually, we believe, will be the entire smartphone market. Samsung is moving from the high end to the mid-range. And they now have some low end phones that — I think entry-level phones that are in the $240 range or something like that. So we do think that this will continue to grow.

Shannon Cross — Cross Research — Analyst

And how are you thinking about China TVs from an OLED perspective — not necessarily the vendors, but the market in general, I know there was some pressure on China’s TV market. I guess it was last year. And are you expecting to see it kind of rebound when you look at the second half?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

In terms of market perspective, and where — it’s difficult for us to talk about one area specifically in another. I mean I think that OLED TVs are the best TVs ever. I think that some of the pressure that you saw was pretty much across the board on the demand side, there was weakness because of COVID-19.

Shannon Cross — Cross Research — Analyst

Okay. My final question is just with regard to inflationary pressures that people are seeing out there. Are you seeing any pressures on materials required by PPG? And do you feel like you have the opportunity, if you need to I’m not sure you even would need to hear, but to push pricing through to some of your partners, again, on the material side?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

There’s two answers to that question. One, as we’ve stated in the past, our contracts have pricing for the length of the contract. So pushing something or would be difficult. The one thing that we talked about is iridium and iridium has gone up. We’ve we have actually, for a number of years, been managing iridium, and we’ve been building inventory that you can see on our balance sheet of raw materials going up every quarter and that we want to make sure that, a, we have a constant supply and have a significant amount of inventory that we have, and that has allowed us to manage our cost structure.

Shannon Cross — Cross Research — Analyst

Okay. Thank you.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Thanks, Shannon.

Operator

Our next question is from Sidney Ho with Deutsche Bank. Please proceed.

Sidney Ho — Deutsche Bank — Analyst

Thanks for taking my question. My first question is in reiterating your full year revenue guidance, it sounds like you’re being a little conservative because of the supply chain disruption, do you have an estimate how much that may impact your revenue guidance for this year? And if you can follow-up to that is where are you seeing the most impact of those supply chain disruptions? I assume it’s not from your own supply chain? And then I have a follow-up. Thanks.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Well, I mean, to be honest, I mean, given — we obviously don’t give quarterly guidance or give guidance in all the components that we are seeing. But one of the issues that I just talked about with China was iridium. But our materials have already in it, but that’s not the only component. So that there’s a number of — in that is a number of other materials, overhead and a lot of other things that’s in it. So that is not going to impact — every dollar doesn’t go dollar increases.

So — but in terms of what we’re seeing, we are still comfortable with our guidance. We were — as we said on the last call, you’ve got COVID-19 issues that still could impact what we’re doing. And the demand side, whether it completely recovers and how fast it does, just why we have a range of $530 million to $560 million. So we are still comfortable with where we are at this time.

Sidney Ho — Deutsche Bank — Analyst

Okay. Maybe my follow-up question is on the IT side of things, I know there are a number of models that companies have announced but Apple has officially announced the mini LED display. Does that change your deal about your opportunity for OLED display? And specifically in the IT market? I know you addressed the TV market a little earlier and a different question. Thanks.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Well, I think that the industry is still young. You’ve heard there’s a big push from Samsung on the IT market. I think talking about Apple and mini LEDs. Their tablets are LEDS or LCDs anyway. So — but I think there is a big push for the benefits of OLEDs, and we just continue — we feel that, that will continue to grow. Because the IT market using OLEDs is really very, very small.

Sidney Ho — Deutsche Bank — Analyst

Okay. Great. Thanks.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Thank you, Sid.

Operator

[Operator Instructions] Our next question is from Krish Sankar with Cowen & Company. Please proceed.

Krish Sankar — Cowen & Company — Analyst

I think within the follow up. I just want to check, Sid or Steve. To the extent you can talk about. Obviously, there’s a Display Week coming on, and everyone has read about the Samsung abstract and the blue. So let’s see if you can talk about it, kind of curious your view on it. And along the same path, if and when blue gets commercialized, is it going to be plug and play? Or do you need to change some of the design, like a heat shrink or any such thing when you try to put it into a smartphone?

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Well, thank you. Obviously, Display Week is coming up, and there’s a lot of chatter about what will happen. There’s really nothing we can say until the papers are presented. So regarding that, there’s nothing we can talk about what was coming up. We do obviously talk about a paper that was talking about blue that has the same author that had it in last year.

In terms of commercial blue, we have stated that it’s not plug and play. You would need to make modifications to your drivers and your back plane in order to adopt our technology for blue because phosphorescent uses 75% less power. So it is a redesign it isn’t new capex. It is really just a redesign. So as they introduce new products and new SKUs, they will design those that our technology into those.

So as we stated, a number of times in the past, even if I had something that met all the commercial specs today, it would be nine to 12 months that before you start seeing it in products. But we are continuing to make excellent progress.

Krish Sankar — Cowen & Company — Analyst

Thank you very much.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Thank you.

Operator

Thank you. This concludes the question-and-answer session. I would like to turn the program back to Sid Rosenblatt for any additional or closing remarks.

Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director

Again, thank you, everyone, for your time today. We appreciate your interest and your support, and everybody, have a good night. Thank you.

Operator

[Operator Closing Remarks]