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AUO goes on the pick list +4


I've often spoken about how solution-based processing represents a sea change in the AMOLED industry, and there are signs that it will finally start to see commercial use in the next year or two:
Taiwan has been a hotbed of innovation for AMOLED technologies, and I suspect that the shift may also herald its serious entry into mass AMOLED manufacturing.  An upcoming SA article will focus on AU Optronics as the primary beneficiary of such a move, in conjunction with the Apple secret lab that I wrote about two weeks ago.  AUO's latest work in transflective watch faces shows that there may be promise in combining AMOLED with Mirasol technology I mentioned there.

It's highly uncertain how things will play out, but AUO is a potentially ideal partner for Apple because it is pure producer rather than a competitor.  If Apple wants to leap frog the display industry, the more than 15,300 patents and nearly 22,000 applications that AUO holds worldwide will be vital, especially considering that AUO has already been successful in proving them against both LG Display and Samsung.  AUO's RGBY architecture could make for a clear lead in the mobile arms race, especially if eventually combined with innovations from ITRI such as PCOLED.

AUO has been a pioneer of AMOLED technology from the very beginning.  It developed the world's first double-sided screen in 2004 and its list of more recent AMOLED technological achievements includes

The company can continue to play both sides of the LCD/AMOLED battle in large screens via its alliance with 3M (MMM) on QDTVs.  Furthermore, AUO's AMOLED screens for phones are finally competitive and the current lineup of watch faces looks to be clearly best in class and earning wins in new products already.

I doubt the stock will really take off without publicity on the Apple angle, but I also see little downside given a PE of just 5 and 5% dividend yield.  Note also that cash flow is expected to almost double from 19 to 37 cents per share, due to cost cutting.  Nonetheless, subscribers should consider this a GRoDT stock, until there's more evidence of real collaboration and/or industry progress.