Light Emitting Diodes technology pioneer Cambridge Display Technology Inc. (CDT) plans to raise $40.25m in an IPO on Nasdaq.
The company is raising money on the back of sharply rising revenue as it benefits from the boom in demand for flat screen displays. CDT claims that its Polymer Organic Light Emitting Diodes (P-OLEDs) technology is superior to the rival liquid crystal display (LCD) technology.
The Cambridge, UK-based company says its P-OLEDs are part of the family of Organic Light Emitting Diodes, which are matrixes of organic diodes that emit light when an electric voltage is applied.
It says that its P-OLED technology can be deposited on panels using processes such as high precision ink jet printing and is more efficient than the processes used by competing OLED technologies and requires fewer processing steps than the production of LCDs. CDT argues that LCDs have a complex structure requiring components such as backlights, color filters, spacers, diffusers and alignment layers while devices based on its P-OLED technology eliminate the need for these additional components.
CDT has licensed its technology to international companies such as Dai Nippon Printing, Delta Optoelectronics, DuPont Displays, OSRAM Opto Semiconductors, Royal Philips Electronics, and Seiko Epson. Several products using its technology are in the marketplace, including a mobile phone and an MP3 player and point-of-purchase and other promotional items.
The company quotes estimates by market research firm DisplaySearch that the flat panel display market grew from $24.1bn in 2000 to $43.5bn in 2003. DisplaySearch expects it to grow to an estimated $97bn by 2008, representing a compounded annual growth rate of approximately 19%.
But CDT’s potential for growth is even greater if it can take market share for LCD technology, which DisplaySearch says accounted for approximately 83% of total FPD sales in 2003.
DisplaySearch estimates that sales from OLED displays are expected to increase from an estimated $216.8m in 2003 to an estimated $3.1bn by 2008, a compounded annual growth rate of 70%.
With the latest LCD-based FPD fabs costing $2bn, CDT says that manufacturing plants using P-OLED can be built at a significantly lower cost and this could alter the competitive dynamics of the FPD industry by enabling new entrants.
While DisplaySearch’s forecast anticipates that OLED displays will initially be adopted for small to medium-sized products, CDT believes that larger display applications may represent a significant potential market.
It argues that OLED displays may have advantages over LCDs in larger applications such as laptop computers, desktop computer monitors and, in particular, TVs because of their sharper picture image and graphics, superior video response time, higher contrast ratios, wider viewing angle and potentially lower manufacturing cost.
It says that Seiko Epson unveiled a prototype 40-inch full-color P-OLED display and may offer displays for televisions in 2007 while Casio Computer also intends to produce large TV screens by the same date.
Developing a new technology is an expensive business and CDT says that since 1999, $216.4m has been raised through private placements, which has left more than half the company’s equity in the hands of venture capitalists.
The company is still burning money at an alarming rate and, but for the potential of the technology, would have difficulty attracting investment on the basis of its figures. Big license sales saw revenue hit $22.4m in 2001 but it fell back to $7m the following year before rising to $10.7m in 2003 when it made a net loss of $22.8m. In its first quarter to March 31, revenue increase 155% to $1.3m though the net loss almost doubled to $17.7m.