Universal Display Corp. (NASDAQ: OLED) Q2 2020 earnings call dated Aug. 06, 2020
Corporate Participants:
Darice Liu — Director of Investor Relations
Steven V. Abramson — President, Chief Executive Officer and Director
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Analysts:
Sidney Ho — Deutsche Bank — Analyst
Krish Sankar — Cowen and Company — Analyst
Shannon Cross — Cross Research — Analyst
C.J. Muse — Evercore — Analyst
Brian Lee — Goldman Sachs — Analyst
Mehdi Hosseini — SIG — Analyst
Andrew DeGasperi — Berenberg — Analyst
Jim Ricchiuti — Needham & Company — Analyst
Martin Yang — Oppenheimer — Analyst
Presentation:
Operator
Good day, ladies and gentlemen, and welcome to Universal Display’s Second Quarter 2020 Earnings Conference Call. My name is Brock, and I will be your conference moderator for today’s call. [Operator Instructions]
I would now like to turn the conference over to Darice Liu, Director of Investor Relations. Please proceed.
Darice Liu — Director of Investor Relations
Thank you, and good afternoon, everyone. Welcome to Universal Display’s Second Quarter Earnings Conference Call. Joining me on the call today are Steve Abramson, President and Chief Executive Officer; and Sid Rosenblatt, Executive Vice President and Chief Financial Officer. Before Steve begins, let me remind you that today’s call is the property of Universal Display. Any redistribution, retransmission or rebroadcast of any portion of this call in any form without the expressed 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 August 6, 2020. 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 hope that you are all continuing to stay safe and healthy. During this pandemic, our focus continues to be on the safety and well-being of our employees, customers, partners and community, safeguarding our 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 $800,000 or $0.02 per diluted share. The challenges of this pandemic continued to impact us in the second quarter, as customer orders and shipments declined. While COVID-19 uncertainties will likely weigh on consumer demand in the near term, we continue to invest and further strengthen our leadership position in the OLED ecosystem and expect to emerge a stronger partner to our customers and to the OLED industry. Long term, we believe the growth path of OLEDs is unchanged and remains robust. For the second half of the year, customers have expressed cautious optimism. And frankly, we have seen a pickup in demand as customer orders increased in the month of July. At the same time, we believe significant uncertainties still loom over the consumer and macroeconomic environments and that near-term demand visibility remains unclear. As a result of these ongoing uncertainties related to the COVID-19 pandemic, we believe it is prudent to continue to refrain from providing 2020 guidance. When visibility improves, we expect to resume providing annual guidance.
Looking to the OLED industry. Despite some near-term macroeconomic uncertainties, we are pleased to see activity broadening with new OLED fabs and new OLED products. Yesterday, Samsung hosted its first-ever Virtual Galaxy unpacking event and unveiled the Galaxy Note 20 and the Galaxy Note 20 Ultra 5G both with OLED screens, and for the first time in the Note series, the Galaxy Note 20 Ultra offers a vivid and bright dynamic AMOLED 2 times display and 120 Hertz refresh rate, which Samsung calls their best screen yet. The Galaxy Tab S7 plus, which has an extra-large 12.4 inch Super AMOLED display with 120 Hertz refresh rate, so you can take full advantage of the cloud-based gaming and high-definition streaming that 5G enables. The Galaxy Watch 3, a premium OLED smartwatch that has advanced health features. And the Galaxy Z Fold 2, the next-generation foldable OLED smartphone with enhanced refinements. The cover screen is 6.2 inches and the main screen is 7.6 inches, making them both larger than the first Galaxy Fold. Samsung also announced during its earnings conference call last week that it was planning to expand its OLED presence beyond mobile phones in areas such as foldables and IT devices to prepare for the anticipated resurgence in market demand. LG Display held a ceremony two weeks ago to announce that mass production at its second-gen 8.5 OLED TV fab in Guangzhou, China has commenced. LG Display’s first OLED TV plant in Paju, Korea can produce 70,000 sheets per month. And now at Guangzhou, LG Display’s production capabilities almost double to 130,000 substrate starts per month.
On the OLED TV OEM front, VIZIO announced at the end of June that its first OLED TVs, 55-inch and 65-inch 4K models, will be available in the fall. Less than a week later, Xiaomi debuted its first OLED TV in China, a 65-inch Master Series model for approximately $1,850. Moving to small and medium-sized panels. It has been reported that Mercedes Benz’ new S Class luxury sedan, which is expected to be unveiled in September will have, for the first time, an OLED infotainment system to be supplied by LG. And following up to the 2021 Escalade, it has been reported that the upcoming Cadillac Lyriq electric crossover is expected to be equipped with a curved 33-inch widescreen OLED display. In China, BOE technology completed construction of its third Gen-6 flexible OLED fab in Chongqing early last month. With an investment of $6.6 billion, this production facility is expected to have an installed capacity of 48,000 substrate starts per month and is slated to open next year. BOE continues to broaden its portfolio of OLED applications and recently showcased a 49-inch ultra-wide curved OLED display a narrow foldable OLED smartphone display and a 14-inch OLED notebook display with a narrow bezel at the 2020 Display Innovation China Forum and Exhibition. In mid-May, Tianma held a groundbreaking ceremony for its new Gen-6 flexible OLED fab in Xiamen. The $6.8 billion OLED fab is also expected to produce 48,000 substrate starts per month and is slated to open next year.
On the lighting front, at the end of June, Audi unveiled that its SQ5 SUV models will feature optional OLED taillights. According to Audi, in addition to perfect contrast, the benefits of digital OLED are a high level of homogeneity and minimal gap between the segments. Looking to the future, OLED is the perfect technology for executing personalized light design with a high degree of precision and extensive variability. This technology offers all sorts of opportunities for further development. On the UDC research and development front, we continue to strengthen our core competencies to further expand our market opportunities. As product specs of color gamut, efficiency and lifetime continue to broaden, our brilliant R&D teams are continually innovating and inventing new emissive materials and technologies, including new reds, greens, yellows and hosts to meet new customer, new application and new product road map needs. On the blue front, we continue to make excellent progress in our ongoing development work for our commercial phosphorescent blue emissive system. Last month, we issued an exciting announcement about the formation of OVJP Corporation to advance the commercialization of OVJP, our novel manufacturing process for maskless, solventless, dry direct printing of large area OLED panels. This wholly owned subsidiary will be based in Silicon Valley and led by Jeff Hawthorne, former CEO of Photon Dynamics. Jeff and his team will focus on the commercialization of OVJP with the initial focus on equipment scale up. OVJP R&D will continue in Ewing, New Jersey, where we are currently working on printing a full color phosphorescent 4K OLED panel. During the quarter, we celebrated our 20-year partnership with PPG, our exclusive manufacturer of our proprietary universal PHOLED phosphorescent emitters. Through these two decades, as OLED has evolved from an idea to a now mainstream player in the consumer electronics market, UDC and PPG have built a successful relationship of close collaboration as well as a wealth of manufacturing expertise and know-how. We believe that our extraordinary partnership will continue to drive growth, incredible value for our customers and innovative solutions for the marketplace.
And this week at SID display week, which is being held virtually this year, Dr. Julie Brown, Senior Vice President and Chief Technical Officer, was awarded the prestigious 2020 Karl Ferdinand Braun Prize by the Society of Information Display. And Dr. Mike Weaver, Vice President of PHOLED R&D, was named a 2020 SID Fellow. The Karl Ferdinand Braun Prize was awarded to Dr. Brown for her outstanding technical achievements and contributions to the development and commercialization of phosphorescent OLED materials and display technology. Dr. Mike Weaver has been named an SID fellow for his significant contributions to phosphorescent OLED technology and its successful transfer to commercial practice. We congratulate Julie and Mike on the well-deserved recognition and awards for their exceptional contribution to the display industry. Also at Display Week, Samsung Display presented a paper titled “Realizing deep blue emission in blue phosphorescent organic light emitting diodes,” which acknowledged that the experimental blue work was performed using a phosphorescent dopant material provided by Universal Display Corporation.
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. With respect to our second quarter results, in addition to the COVID-19 related repurchases in the first quarter that would have likely occurred in Q2, soft consumer electronics spending impacted OLED demand and factory utilization rates. Which resulted in sluggish customer orders in line with the softness we indicated on our May conference call. Revenues for the second quarter of 2020 were $58 million sequentially down from first quarter 2020’s $112 million, and second quarter 2019’s $118 million. Our first quarter 2020 revenues included the recognition of $24 million from a Chinese customer who purchased safety stock in Q4 2019 due to trade-related concerns, and an estimated $20 million of revenue that were customer advanced purchases due to COVID-19 uncertainties. Looking at six months, our first half 2020 revenues were $170 million compared to revenues of $206 million in the first half of 2019. 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 and $76.3 million in the second quarter of 2019. Green emitter sales in the second quarter of 2020, which include our yellow green emitter, were $24.2 million. This compares to $52.6 million in the first quarter of 2020 and $60.2 million in the second quarter of 2019. Red emitter sales in the second quarter of 2020 were $7.5 million.
This compares to $13.9 million in the first quarter of 2020 and $16 million in the second quarter of 2019. As we have discussed in the past, material buying patterns can vary quarter-to-quarter. Some of the contributing factors include the COVID-19 issues that we’ve been discussing 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. Second quarter 2020 royalty and license fees were $22.4 million. This compares to $43.1 million in the first quarter of 2020 and $38.9 million in the second quarter of 2019. The second quarter 2020 Adesis revenues were $3.7 million. This compares to $2.6 million in the first quarter of 2020 and $2.9 million in the second quarter of 2019. Cost of sales for the second quarter of 2020 were $12.6 million. This compares to $22.5 million in the first quarter of 2020 and and $24.1 million in the second quarter of 2019. Cost of OLED material sales were $10.3 million, translating into material gross margins of 67.8%. This compares to 69.6% in the first quarter of 2020 and a comparable year-over-year’s quarter material gross margins of 71.2%. As we have noted in the past, material gross margins can vary quarter-to-quarter. Second quarter 2020 operating expense, excluding cost of sales, was $46.5 million, compared to last quarter’s $45.3 million and a comparable year-over-year’s quarter, $45.4 million.
Operating loss was $1.2 million in the second quarter of 2020 compared to last quarter’s operating income of $44.5 million and a year-over-year’s comparable quarter’s operating income of $48.7 million. Our first half 2020 operating income was $43.3 million compared to first half 2019 operating income of $83 million. In the second quarter of 2020, we had a tax benefit of $600,000. Net income for the second quarter of 2020 was $800,000 or $0.02 per diluted share. This compares to last quarter’s $38.2 million or $0.80 per diluted share and a comparable year-over-year’s quarter of $43.4 million or $0.92 per diluted share. Our first half 2020 net income was $39 million or $0.82 per diluted share compared to first half 2019’s net income of $74.9 million or $1.58 per diluted share. We ended the quarter with $644 million of cash and equivalents or over $13.50 of cash per diluted share. And lastly, our Board of Directors approved a $0.15 quarterly dividend, which will be paid on September 30, 2020, to 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 the call back to Steve.
Steven V. Abramson — President, Chief Executive Officer and Director
Thanks, Sid. Broadly speaking, despite the pandemic, OLED activity in the market continues to evolve and progress. We remain encouraged and excited about the level of commercial and development activity in the OLED pipeline. Our history shows that we have successfully navigated through challenging times and emerged stronger and better positioned. With a robust balance sheet, a lean operating model and no debt, we are continuing to build and expand our robust foundations of best-in-class OLED technologies to help drive innovation and to capitalize on the opportunities in the market. We are also strategically increasing our headcount around the world to meet the growing long-term needs of the company and our customers.
The UDC team continues to do an incredible job of supporting and enabling our customers with the discovery, development and delivery of cutting edge, energy-efficient, high-performing OLED solutions. Bottom line, we are investing in the long-term opportunities ahead of us and fortifying our position for growth well into the future. In closing, 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] The first question today comes from Sidney Ho of Deutsche Bank. Please proceed with your question.
Sidney Ho — Deutsche Bank — Analyst
Great. And thanks for taking my question. My first question is regarding the advanced purchases you discussed last quarter about $20 million. It sounds like it’s something you and your customers have discussed and agreed to. But given your constant dialogue with them, do you have a view whether those customers already use up at least a portion of those purchases? Or are they trying to keep inventory at elevated level until the supply chain kind of uncertainty subsides? In other words, will there be any kind of headwinds that we should be thinking about going forward?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Thank you, Sidney, for your question. And it really depends on demand we know that we did have $20 million that we thought were prepurchases. Obviously, this quarter was soft. So it really would depend on whether the demand picks up, and we believe that in Q3, it should pick up. And then we believe that it will flush out the inventory.
Sidney Ho — Deutsche Bank — Analyst
Okay. That’s helpful. Maybe a follow-up question. I know you don’t guide revenue by quarter or even for this calendar year. But if you look at Q3, with some of the advanced purchases hopefully being used up, the start of a ramp-up for the new flagship phones for the U.S. OEM and your large panel display customers starting production in China in the China fab that is, is there a reason why you won’t get back or even exceed the normalized level of revenue which I know last quarter, I think you talked about being close to $80 million range, if you strip out all the one-time events.
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, I think that what we have 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 are any additional possible interruptions that may occur due to market uncertainties. But we have seen, obviously we’ve seen the first part of Q3 have a significant pickup from Q2.
Sidney Ho — Deutsche Bank — Analyst
Okay. Maybe one last one, if I can if I may. With revenue from your largest customer dropping off pretty sharply in Q2, I would have expected the ratio between materials and licensing to increase, but it actually went up in the second quarter. Can you walk us through that dynamic a little bit? And related to that, how should we think about that ratio in Q3?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Thank you, Sidney, for the question. The material to royalty ratio is dependent on customer mix. Because of global uncertainties, it’s difficult for us to forecast. But based upon our history, we think that the ratio has, historically, oscillated between 1.5 and 2:1, so it really does depend on customers and how we account for the license fees and royalties based upon 606 accounting.
Operator
Thank you. Next question comes from Krish Sankar of Cowen and Company. Please proceed with your question.
Krish Sankar — Cowen and Company — Analyst
Yeah, hi, Steve, just a follow-up on the earlier questions from Sidney. If the month of July is looking strong, is there a way you can just pose it with how you felt in the month of April and the month of January, i.e., the first month of Q1 and Q2? And how do you characterize it today versus those 2? And based on that, is it fair to assume sequentially September has to be up versus June quarter from a revenue standpoint?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, 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 soft, and we stated that the first month of Q2 was soft. And what we’re stating today is we are seeing a difference, and we are seeing a significant pickup in our orders in Q3. And the question is, how sustainable is it, as I stated. But yes, right now, everything is on the upside.
Krish Sankar — Cowen and Company — Analyst
Got it. Got it. That’s very helpful. And then as a follow-up, can you just help us understand kind of like the time lag between, let’s just say hypothetically, there’s a flagship phone going to be launched in Q4. At what point do you start seeing your material sales pick up? And how would that basically like pass-through into next year?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, we are a just-in-time supplier. So since we don’t deal directly with the actual sellers of the phones, we really will see a pickup when we start seeing orders from the factory. And that really is depending upon their production schedules. But so when they place orders, we’re a just-in-time supplier, we ship within 24 hours. So whenever a customer wants additional materials, we are there to give it to them.
Krish Sankar — Cowen and Company — Analyst
Got it. Very helpful. And then last one if I can squeeze in, does it matter for you from a material revenue standpoint if the substrate is either flexible or rigid?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
No. For us, essentially the recipes are the same, whether it’s glass, plastic or any other substrate.
Operator
Thank you. The next question is from Shannon Cross of Cross Research. Please proceed with your question.
Shannon Cross — Cross Research — Analyst
Thank you very much. I guess my first one is, can you talk a bit about your thoughts on OVJP? What how you, how we should think about it in relation to your core company and how you’re going to work together and that? And then I have a follow-up.
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Yes. Shannon, the OVJP is was formed to commercialize our OVJP technology. And the OVJP R&D will continue in Ewing, New Jersey and OVJP process and equipment scale up will take place in OVJP headquarters, which will be in Silicon Valley. We believe that OVJP will pave an alternative manufacturing path for new levels of OLED TV performance with RGB side-by-side pixel structure architecture, very similar to small- and medium-sized displays today. And we believe that this technology will further expand OLED TV’s future market potential.
Shannon Cross — Cross Research — Analyst
Okay. And I just assume since it’s a wholly owned sub, everything is still rolling through from a financial perspective, modeling?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Yes. It’s a wholly owned sub, and essentially, they’re going to do what they do out there, and we actually will support them in everything that’s behind the scenes out of our headquarters.
Shannon Cross — Cross Research — Analyst
Okay. And then I’ll just throw this out because nobody’s asked about blue yet. And Steve, you did discuss it a bit on the call. Just any more thoughts, any incremental thoughts on blue? Or how we should think about development there beyond what you said on the call?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, in terms of blue, as Steve said, we’re making excellent progress. And he did mention that there was a paper presented at SID regarding R&D by Samsung on using blue phosphorescent emitter. So we’re excited about the progress that we’ve made, and we’re excited about the paper that was presented at SID.
Shannon Cross — Cross Research — Analyst
Okay. And then just last question. As we think about the potential for the large customer in the U.S. that’s going to be launching more OLED based phones and then with what’s going on in terms of China. Are there any breakpoints that we should be aware of or concerned about as volumes ramp, hopefully, second half and in 2021 that might cause some volatility?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
When you say I’m sorry, when you say breakpoints I’m sorry. Well, under 606 accounting, it’s an average price. So there the average price is built into the accounting under 606. So any discounts or resets of price all are taken into effect and when you come up with your average price per gram or per kilogram.
Shannon Cross — Cross Research — Analyst
Okay, thank you very much.
Operator
Thanks. The next questions And the next question is from C.J. Muse of Evercore. Please proceed with your question.
C.J. Muse — Evercore — Analyst
Yeah. Good afternoon and thank you for taking my question. I guess, first question, considering that you didn’t guide for the quarter. I would love to hear your thoughts on how things progressed versus your initial thoughts coming into the quarter, particularly as it relates to demand out of Korea. And as you think through that, any surprises in terms of inventory coming in, improvements in yield or lower-than-expected utilization rates?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
It obviously, everything was difficult just because of the disruption in demand and the disruption in the ability to manufacture because of COVID-19. So, yes, this quarter was very weak as we anticipated when we on our call. And to be perfectly honest, it never really picked up.
C.J. Muse — Evercore — Analyst
Okay. That’s helpful. And I guess second question. Deferred revenues, if I go December to March, actually started to decelerate but now have reaccelerated here in the June quarter. And it makes sense considering the fall off of materials to your largest customer. But I guess the question is, when do you think that starts to truly cease growing and start moving in the other direction?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Yes. 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 sales were so weak, you saw the deferred revenue go up on the current and long term portion, both. So we expect that to start to turn around as material sales start to pick up in the second half of the year.
C.J. Muse — Evercore — Analyst
Okay. And considering everyone’s asking three, I’ll ask a third one as well. The OVJP investment, how should we think about the implications to opex through the remainder of the year?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
We don’t really see any change in opex. We have been looking at doing this for quite some time, and the question was really timing. We still expect opex to go up by 10% to 15%, excluding amortization for the year. We are actually continuing to hire folks. And so we are really staying on our plan 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.
C.J. Muse — Evercore — Analyst
Thank you.
Operator
Thank you. The next question is from Brian Lee of Goldman Sachs. Please proceed with your question.
Brian Lee — Goldman Sachs — Analyst
Hey, everyone. Thanks for taking the questions. Just if I look at the revenue per customer this quarter, it looks like Samsung was down a lot more than BOE and LG and also China in aggregate. So is it fair to assume I know last quarter, you said it was spread out across multiple customers. But is it fair to assume based on the quarter-on-quarter trends that Samsung had the most inventory of the pre-buys from last quarter? And then related to that, since BOE did buy more this quarter, are they through the buffer stock from Q1 based on your read there?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, we don’t talk customer-by-customer in terms of repurchases and who did it, but you are correct in that the customer, a, is not Samsung in this Q. And we believe that as demand picks up that they should work their way through the prepurchases that were related to the economic situation and trade-related issues and repurchases, based upon when we talk to our customers, whether or not the COVID-19 issues in terms of logistics of shipping and receiving and getting to customs would have an impact. And so we have been shipping. And so we believe that, particularly as their production picks up and they’re able to turn their factories up even though they’ve never really shut down, but their factory utilization rates were very low, that they should use up this inventory.
Brian Lee — Goldman Sachs — Analyst
Okay. Fair enough. And then in these the early Q3 pickup you’re referencing, I know Q2 is soft across the board. Are you seeing the pickup more related to smartphone orders? Or is it also in TVs, just based on the customer visibility you have there?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, I mean, if you look at customer A, B and C, you can figure out who they are when customer A who is usually customer B. So that customer does manufacture TVs.
Brian Lee — Goldman Sachs — Analyst
Yes. I guess I was just maybe I’ll rephrase it. But specific to Q3, not the reported results in Q2, but Q3, it sounds like you’ve seen some pickup in orders. Are you seeing that any differently in smartphone-related pockets of your business versus the TV?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Without going into specifics, I think it’s across the board.
Brian Lee — Goldman Sachs — Analyst
Okay, fair enough. Thanks guys.
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Thanks, Brian.
Operator
The next question is Mehdi Hosseini of SIG. Please proceed with your question.
Mehdi Hosseini — SIG — Analyst
Yes, that. Thank you for taking my question. Yes. I want to go back to a commentary regarding deep blue. At the same display week, there were also a number of papers and presentations on the MicroLED, and Samsung has publicly talked about diversifying their strategy as it relates to TV. So how can I reconcile the paper that was presented with everything else that they’re doing? I’m just trying to better understand if this is a if they’re pursuing multiple different technologies? Or if there is something that I’m missing? And I have a follow-up.
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, the SID, obviously, is a research conference. And we know that everybody, to be honest, looks at lots of different things. But MicroLEDs have been and still are an R&D program, and there’s still a lot of unanswered questions about it. And but folks look at lots of different things. But across the board, everybody and we believe that OLEDs are the future of displays and will continue to grow. And there’s always things that pop up. They’re still making kindles with e-ink technology. So does it’s a huge industry, as you’re well aware.
Mehdi Hosseini — SIG — Analyst
Sure. And then I want to go back to in the past, you’ve talked about significant capacity growth for 2021 versus 2019. And it seems like there is continued investment in China for RGB OLED. And I’m just wondering if you can help us understand with the diversification of the end market, there has in the past been a thought or talk on expanding the market into tablets and notebook. And I’m wondering if there is any additional comments if you can share with us.
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, in terms of the capacity, as we stated on the last call, we talked about the end of 2019 through the end of 2021, a 50% approximate 50% increase in the installed capacity. And we still see that. We haven’t seen anything that we believe will change that. And it is in China, you know that BOE has multiple fabs that they’re building and other Chinese customers are building new fabs. LG has its Guangzhou yes, I’m sorry. LG has its TV facility. And so it’s, I think it’s not just one area, but we are still very confident that what we can see unless things really change in terms of the pandemic. It still looks like we’re still talking about approximately 50% growth.
Operator
Thank you. [Operator Instructions] Our next question comes from Andrew DeGasperi of Berenberg. Please proceed with your question.
Andrew DeGasperi — Berenberg — Analyst
Thanks for taking my question. Just had a quick one on China. Just trying to maybe if you can give us an update in terms of what’s been going on there for the last six months beyond the pandemic? I mean, have you seen any improvement on the technical aspect of their fabs in terms of production capacity and or have things paused since February?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, we, obviously, can’t talk about their production capacity and their utilization rates because that’s their proprietary data. But we have seen our Chinese customers, BOE 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’s just there’s some learning curves that they have to go through, but I think that they will all be very successful in this business.
Andrew DeGasperi — Berenberg — Analyst
Great. And then in terms of the 120 Hertz refresh, dynamic refresh technology that Samsung rolled out, would you say that’s a meaningful improvement in terms of the product? And could that potentially spur additional adoption of OLED technology and other film and IT models?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, we think that the display is a major part of what sells all of these products because we’re visual people, and you’re seeing screens get larger and larger because everybody is using them more and more for that’s why power efficiency and using our phosphorescent material is so important, is that they’re using their screens more and more which then drains your battery and having a larger screen drains your battery. So we think any improvements in the picture quality and refresh rates is great for the industry and is great for us.
Andrew DeGasperi — Berenberg — Analyst
Got it. And then just one last one. On OVJP, I know that you’ve already made some comments on it, just generally that this was all planned in terms of the initiative. I was just wondering, did you reach a technical milestone, and this is sort of the next step that to bring it to commercial production? Or was this sort of just planned along independent of that technology maturing enough for you to partner with someone else?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, we think that we’ve made a lot of progress on the technology ourselves. In our facility, we’re scaling up our system, which is a 6 times6-inch substrate so that we can make red, green and blue full color displays. We’ve got great results, early results in lifetime you can see. We talked about green lifetime. So what we intend to do and let 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.
Andrew DeGasperi — Berenberg — Analyst
Great, thanks.
Operator
Thank you. Our next question is from Jim Ricchiuti of Needham & Company. Please proceed with your question.
Jim Ricchiuti — Needham & Company — Analyst
Hi, good afternoon. I’m wondering if you could at least might be able to tell us whether this recovery and the pickup that you’re seeing or have seen in July has been coming from both regions both countries, China and Korea? Or has the pickup been more pronounced in China, which was feeling the effects of COVID earlier? Can you give us any color on that?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
I think it’s across the board, Jim. We’ve seen it from both.
Jim Ricchiuti — Needham & Company — Analyst
Okay. And then just regarding the paper that Samsung gave at the SID conference. Typically, when these papers are given, I would assume, and this is probably not the first, that you guys have some input in papers like this. Is that fair to say?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, this is a Samsung paper. And what they were doing is looking at phosphorescent blue. And essentially, literally talking about that you need a deep blue phosphorescent emitter to get the best display and the most power-efficient display. And it’s an R&D project, 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 acknowledged the fact that it used our blue emissive material.
Jim Ricchiuti — Needham & Company — Analyst
Okay. But I would guess that it’s not a complete surprise that I would assume you knew the paper was coming.
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Yes.
Jim Ricchiuti — Needham & Company — Analyst
Okay. Can you say when you knew it was coming?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
The paper SID keeps the papers quiet until they actually publish them. And I believe it was two days ago that I believe it was on the fourth or the third that these papers were then becoming public through the SID website. So you have to go there and purchase access to the content. And I think it’s a couple of days ago that this came out.
Jim Ricchiuti — Needham & Company — Analyst
Thanks a lot.
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Thanks, Jim.
Operator
The next question is from Martin Yang of Oppenheimer. Please proceed with your question.
Martin Yang — Oppenheimer — Analyst
Hi, can you hear me?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Yes,
Martin Yang — Oppenheimer — Analyst
All right. hi, sir. Can you maybe talk about your view on the capacity ramp-up in China and how that compares to three months ago? Do you think that this year’s capacity addition is tracking ahead or below or slower than expected?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, to be honest, because of COVID-19, I think everything is slower than we would have anticipated a year ago. And in terms of the actual opening of the fabs, and also getting factory 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 running a factory during this pandemic. So do I think it’s slower? Yes. But do we think that there’s a long-term impact? We don’t think so. We think long term, the OLED industry and all of this is just all positive. This is, obviously, something that no one anticipated. And it’s going to cause some slowdown.
Martin Yang — Oppenheimer — Analyst
I think in the past, you have stated some capacity the magnitude of capacity addition in 2021 over 2019. Will delays in 2021 change your estimates or forecast for that capacity addition? Meaning, more capacity additions being moved into next year?
Sidney D. Rosenblatt — Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Well, we don’t we really do end of the year to end of the year, end of 2019 to end of 2021. 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 months’ wise? 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 increase in capacity.
Martin Yang — Oppenheimer — Analyst
Got it. Thank you.
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
Thank you all for joining the call today, and we wish you all a safe and good night. Thank you.
Operator
[Operator Closing Remarks]