MMRCDISCUSSION PAPER SERIES
No. 252

A comparative analysis between LCD panel and flat glass in the
TFT-LCD industry from process architecture-based view
Junichi Tomita
Faculty of Business Administration, Toyo University
February 2009

東京大学ものづくり経営研究センター
Manufacturing Management Research Center (MMRC)
Discussion papers are in draft form distributed for purposes of comment and discussion. Contact the author for
permission when reproducing or citing any part of this paper. Copyright is held by the author.
http://merc.e.u-tokyo.ac.jp/mmrc/dp/index.html

A comparative analysis between LCD panel and flat glass in the TFTLCD industry from process architecture-based view

Junichi Tomita

Abstract

What is the source of global competitiveness in Japanese “process industry”? And how
does its competitiveness relate with process architecture? It is hypothesized that a
product with integral architecture tended to have high global competitiveness, and a
product with modular architecture tended to have low one in Japan because Japanesemanufacturers have integral capabilities. There has already been some empiricalresearch (i.e., Ogawa, Shintaku, Yoshimoto, 2005; Fujimoto, Oshika, 2006; Fujimoto,
Ge, Oh, 2006). However, this type of research has focused on assemble products like
automobile and electronics industry, and rarely focused on material or equipment socalled “process industry” in spite that there has been many strong suppliers in Japan(Fujimoto & Kuwashima, 2002; Fujimoto, 2003). So, we attempt to research fromprocess architecture based view about LCD panel and flat glass in the TFT-LCD
industry. Our hypothesis is that above-mentioned about assemble products is also
applied to material or equipment. However, it is thought that process architecture (notproduct architecture) is more important in process industry than in assemble industry.
Keywords: process architecture, process industry, global competitiveness, LCD panel, flatglass

A comparative analysis between LCD panel andflat glass in the TFT-LCD industry from process
architecture-based view
Junichi Tomita
Faculty of Business Administration, Toyo University

Abstract

What is the source of global competitiveness in Japanese “process industry”? And how
does its competitiveness relate with process architecture? It is hypothesized that a
product with integral architecture tended to have high global competitiveness, and a
product with modular architecture tended to have low one in Japan because Japanesemanufacturers have integral capabilities. There has already been some empiricalresearch (i.e., Ogawa, Shintaku, Yoshimoto, 2005; Fujimoto, Oshika, 2006; Fujimoto,
Ge, Oh, 2006). However, this type of research has focused on assemble products like
automobile and electronics industry, and rarely focused on material or equipment socalled “process industry” in spite that there has been many strong suppliers in Japan(Fujimoto & Kuwashima, 2002; Fujimoto, 2003). So, we attempt to research fromprocess architecture based view about LCD panel and flat glass in the TFT-LCD
industry. Our hypothesis is that above-mentioned about assemble products is also
applied to material or equipment. However, it is thought that process architecture (notproduct architecture) is more important in process industry than in assemble industry.
Keywords: process architecture, process industry, global competitiveness, LCD panel, flat glass

1

INTRODUCTION
This paper aims to clarify the cause-and-effect relationships between global
competitiveness and process architecture in the Japanese “process industry” from anarchitecture-based approach. Moreover, we identify the source of competitiveness.
Concretely, we attempt to conduct exploratory research to compare the LCD panel andflat glass in the TFT-LCD (Thin Film Transistor Liquid Crystal Display) industry.
The global competitiveness of the Japanese automobile industry has been regarded ashigh, while that of the Japanese PC industry has been considered low. This is because
an automobile has an integral architecture whereas a PC has a modular architecture.
Moreover, Japanese manufacturers have organizational capabilities with integrationfrom an architecture-based approach (Fujimoto, Aoshima, Takeishi, 2001). However,this type of research has focused on assembled products such as those in theautomobile and electronics industries (i.e., Clark & Fujimoto, 1991; Baldwin & Clark,
2000; Ogawa, Shintaku, Yoshimoto, 2006) and rarely focused on materials or
equipments in the “process industry” despite the fact that there have been many strong
suppliers in Japan.
A few exceptional empirical research studies have been conducted on the processindustry. Fujimoto & Oshika (2006) tested the hypothesis that the product withintegral architecture had higher sustainable competitiveness than that with modular
architecture. They implemented a questionnaire survey concerning 254 products inJapan (81 products in the process industry and 173 products in the assembly industry)and developed an architecture index. Further, they analyzed the cause-and-effectrelationship between the architecture index, labor intensity index, and global
competitiveness scores such as export ratios, and overseas sales ratios by regression
analysis. In addition, they clarified that if the architecture index score was higher(more integral), then the global competitiveness score was significantly higher in boththe assembly and process industries. However, the content validity of the architectureindex was uncertain since the questionnaire data included the respondents’ subjective
bias.
However, the empirical research of Fujimoto, et al. identified the trade pattern ofsteel products in Korea, China, and Japan (Fujimoto, 2008; Fujimoto, et al, 2006). For2example, although Japan had imported the steel for the inner panel of automobiles
from Korea, it had exported a considerable amount of steel for the outer panel ofautomobiles to Korea and China. This is because the steel for the inner panel tended tohave a modular process architecture, whereas the steel for the outer panel tended tohave an integral process architecture that only Japanese manufacturers could producewith their organizational capabilities of integration in the steelmaking process. Process
architecture (not product architecture) is considered to be more important in theprocess industry than in the assembly industry (Fujimoto, 2003; Fujimoto &Kuwashima, 2002). Fujimoto, et al. (2006) discussed the abovementioned process
architecture of two types of steel for automobiles.
However, very little empirical research has been conducted on other processindustries. Hence, this paper focuses on the process industry and attempts to conduct
exploratory research to compare LCD panel and flat glass in the TFT-LCD industry. It
proposes to clarify the cause-and-effect relationships between global competitivenessand process architecture in these industries. Are they highly globally competitive?
What kind of architecture do LCD and flat glass in the TFT-LCD industry have? Thus,
we try to identify the source of competitiveness.

ARCHITECTURE-BASED APPROACH
Process industry, based on design theory in the manufacturing industry, is defined as“the industry whose design activities are mainly occupied by process design”(Fujimoto, 2003). It includes upstream of semiconductor or LCD, steel, flat glass,chemical, brewery industries. For example, a structure that achieves a target function
cannot necessarily be described as explicit knowledge in the steel industry. Thus, aproduct design tends to be omitted or simplified because designing the product is
unfeasible. As a result, functional design is directly translated into process design.
The question that arises, then, is what type of architecture do the products in theprocess industry have? Product architecture is defined as “the arrangement offunctional elements,” “the mapping from functional elements to physicalcomponents,” and “the specification of the interfaces among interacting physical3

components” (Ulrich, 1995). This concept is related to the following two aspects. One
is “the relationships between the function and structure of a system,” and the other is“to the extent to simplify or standardize the interfaces between elements of a system”(Fujimoto, et al., 2001). For example, if the relationships between the function andstructure of a system resemble one-to-one relationships, then product architecture is of
the modular type; however, if they are complicated, then product architecture is of theintegral type (see Fig.1).
Modular Type

Integral Type

F1

S1

F1

S1

F2

S2

F2

S2

F3

S3

F3

S3

Function

Structure

Function

Structure

Figure. 1 The basic type of product architecture
Source: Fujimoto (2003), Fujimoto & Kuwashima (2003) revised.

Fujimoto (2003) and Fujimoto & Kuwashima (2002) extended the architecture
concept to the production process, or process architecture, in the process industry
because it seemed to be more important to “process design.”
According to their research, “process” entails a system that is made up of a series of
production equipment, tools, workers, process of working, and operations forcommercialization. Production process functions by transforming raw materials to
produce a product with a specified structure. Further, a series of processes areformulated and a method to connect the process flow and layout is designed. This iswhat constitutes process design.
Moreover, process architecture is defined in a similar manner as product architecture.
However, its definition includes the following two aspects. The first is “therelationships between the structure and process of a system,” and the other, “therelationships between function and structure of a system.”
Furthermore, process architecture is classified into the following two types—modular
type and integral type. The former resembles one-to-one relationships such as the4relationships among the function, structure, and process of a system (Modular Type 1),
while the latter is similar to the relationships between the function and process of asystem (Modular Type 2; see Fig. 2, upper-side).
The integral type is constituted by complex relationships such as those between thefunction and structure of a system (Integral Type 1), the structure and process of asystem (Integral Type 2), the function, structure, and process of a system (Integral
Type 3), and the function and process of a system (Integral Type 4).
Other types of architecture are the open type or closed type (Fine, 1998; Baldwin &Clark, 2000). The former is of the modular type and is defined as “a system whose
interfaces among elements are standardized at the industry level.” Therefore, it enables
the design of a functional product by combining several elements (modules) acrossfirms. The latter is defined as “a system whose interfaces among elements are
standardized within a certain firm.” Therefore, it is only possible to combine several
elements within a certain firm to efficiently develop a functional product (Fujimoto, etal., 2001).
Modular Type 1

Modular Type 2

F1

S1

P1

F1

P1

F2

S2

P2

F2

P2

F3

S3

P3

F3

P3

Structure

Process

Function

Process

Function

Integral Type 1

Integral Type 2

F1

S1

P1

F1

S1

P1

F2

S2

P2

F2

S2

P2

F3

S3

P3

F3

S3

P3

Function

Structure

Process

Function

Process5

Structure

Integral Type 3

Integral Type 4

F1

S1

P1

F1

P1

F2

S2

P2

F2

P2

F3

S3

P3

F3

P3

Function

Structure

Process

Function

Process

Figure. 2 The basic type of process architecture
Source: Fujimoto (2003), Fujimoto & Kuwashima (2003) revised.

Architecture is a relative concept. For example, if the process elements of a systemincrease or the connections between functional elements and process elements increase,then process architecture becomes more complex and more integral; However, theopposite is also true. Moreover, architecture is also a dynamic concept. Hence,architecture is shifted from being integral to modular or vice versa (Fine, 1998;
Chesbrough & Kusunoki, 2001). Furthermore, if architecture is modular and open, thespeed of the transfer of technology from developed countries to developing countries
is more rapid (Ogawa, et al., 2005; Shintaku, et al., 2006b).
Thus, the questions that arise are as follows. What type of process architecture in theJapanese process industry achieved high global competitiveness? What was the sourceof competitiveness? In order to answer these questions, we conduct a comparative
analysis between LCD and flat glass in the TFT-LCD industry.

CASE STUDIES: LCD PANEL AND FLAT GLASS IN THE TFT-LCD
INDUSTRY
In this section, we analyze the global competitiveness of LCD panel and flat glass in
the TFT-LCD industry. The flat glass is one of the main components of LCD panel,and the LCD panel is one of the main components of the LCD TV. The analysis of the
LCD panel is partially based on Shintaku, et al. (2007; 2008) and that of the flat glass
is partially based on Tomita & Ogami (2008).
6

The case of the LCD panel
First, we analyze the case of LCD panel. Fig. 3 proffers the global market shares for
TFT-LCD panel production by country. Although Japan first developed andcommercialized the TFT-LCD panel in the early 1990s, Korea and Taiwan quickly
caught up with the process and surpassed Japan in the early 2000s (Shintaku, 2008;
Shintaku, et al, 2006a). Why did Japan lose its competitiveness so rapidly in the TFTLCD panel industry?
（％）
120
100
80
60
40
20
0
1995

1996

1997

1998

Japan

1999

2000

Korea

2001

2002

Taiwan

2003

2004

2005

China

Figure. 3 Global market shares for LCD panel production by country
Source：Shintaku, et al. (2007), Original Source：SERI (1999)，Display Research (2002,
2006)

This phenomenon cannot be fully explained by product architecture analysis. Since
the product architecture of the TFT-LCD panel appears to be integral, the mainfunction of the panel is its “display quality,” which comprises resolution, luminance,
contrast ratio, color reproductivity, response speed, viewing angle, and so on (SEMI
Color TFT-LCD Committee, 2005; Suzuki, 2005). Furthermore, the panel consists ofseveral main components, including an array substrate, a color filter, an alignment
layer, a liquid crystal, a polarizer, a driving circuit, and a backlight unit. The
relationships between the function and structure of this product system have a highinterdependency and are complex like those observed in the integral type shown in Fig.
1 (see Fig. 4).

7

Function

Structure

Resolution

Array Substrate

Luminance

Color Filter

Contrast Ratio

Alignment Layer

Gray Scale

Liquid Crystal

Color Reproductivity

Polarizer

Response Speed

Driving Circuit

Viewing Angle

Back Light Unit

Figure.4 Product architecture of TFT-LCD panel

For example, in order to achieve high luminance, some structural parameters, such as
the array substrate, color filter, alignment layer, liquid crystal, and polarizer, must be
fine-tuned and optimized. Other functions, too, need to be performed. This type ofarchitecture makes it difficult for developing countries to quickly reproduce the TFTLCD panel.
Although Japan had transferred its technology to Korea and Taiwan by means of astrategic alliance after the late 1990s (Shintaku, et al., 2006a), Korea and Taiwan hadsmoothly set up a lot of plants of generation five mother glass size, in spite of the factthat Japan had not invested in any similar plants. As a result, these countries reversed
the global market share of the TFT-LCD panel.
Subsequently, we attempt to clarify the logic behind such a phenomenon from aprocess architecture-based approach. The process flow of the TFT-LCD panel entails
the following four main processes: the array process, the color filter process, the cellprocess, and the module assembly process. The array process is one wherein aconsiderable number of thin film transistors and circuit/pixel patterns are formed on a
glass substrate like those in a semiconductor. This process involves several
subprocesses such as cleaning, deposition, coating, exposure, developing, etching, andashing. These processes are repeated several times in sequence to form the TFT array.
8

The color filter process is one wherein multicolored layers such as black, red, green,
blue matrices are formed to correspond with the TFT array. This process is similar tothe series of array subprocesses. Suppliers mainly produce the color filter and LCD
panel manufacturers buy it from them. However, recently, major panel manufacturers
have been manufacturing color filters themselves for cost reduction.
The cell process is the one used in assembling the LCD panel. This process consistsof several subprocesses such as printing/rubbing, filling/assembling, sticking, and soon. This process begins by printing and rubbing the alignment layer, filling (dropping
and vacuum) the liquid crystal and assembling the TFT array substrate and color filter,then sticking the polarizer on it, and finally, cutting this into several cells as in the caseof generation five mother glass size.
The module assembly process is performed at the end of the TFT-LCD module. This
process involves subprocesses such as mounting the driving circuits on the cells andassembling the backlight unit.

Function

Structure

Process

Resolution

Array Substrate

Array Process

Luminance

Color Filter

Color Filter Process

Contrast Ratio

Alignment Layer

Printing/Rubbing

Gray Scale

Liquid Crystal

Filling/Assembling

Color Reproductivity

Polarizer

Sticking

Response Speed

Driving Circuit

PCB Process

Viewing Angle

Back Light Unit

Assembly

Figure. 5 Process architecture of TFT-LCD panel

Fig. 5 illustrates the process architecture of the TFT-LCD panel. This is similar tointegral type 1 in Fig. 2. Although the relationships between the function and process
architecture are integral, those between the structure and process are one-to-one
9relationships. For example, an array substrate is processed by an array process as wellas other components (SEMI Color TFT-LCD Committee, 2005; Suzuki, 2005).
The array process consists of repeated subprocesses such as cleaning, deposition,
coating, exposure, developing, etching, and ashing; moreover, the components of thesubprocesses are highly interdependent. For example, the method of drawing a mask
pattern in the exposure process strongly influences the removal of the pattern in the
etching process. However, this kind of problem solving is generally done byequipment suppliers (Shintaku, et al., 2007).
Thus, if we analyze the panel process by dividing it into a large unit of analysis, thenprocess architecture seems to be integral (type 1 of Fig. 2). If the relationships between
the structure and process of the TFT-LCD panel are modular and open, new entrants
with adequate financing can buy the required equipments and material and rapidly set
up LCD plants. In fact, the Korean and Taiwanese manufacturers of the TFT-LCD
panel bought a lot of equipment with solutions from Japanese suppliers (Shintaku,
2008; Shintaku, et al., 2007). Hence, these countries smoothly set up many plants ofgeneration five size to build the TFT-LCD panel.
The case of flat glass
Next, we analyze the flat glass TFT-LCD panel. Table1 indicates the global shipment
shares of the flat glass industry for TFT-LCD by company. This industry maintained
oligopoly in the market, which only had four or five glass suppliers from its beginningin the early 1990s. The largest supplier was Corning in the US. AGC (Asahi Glass
Company) was the second largest supplier, the third was NEG (Nippon Electric Glass),
and the fourth was NHT (NH Techno Glass); furthermore, these companies wereJapanese suppliers. (However, NHT exited the market for the LCD-TV in Q4 2007.)
Therefore, the question that arises is why did the flat glass TFT-LCD industry
maintain oligopoly and how did the existing suppliers sustain competitiveness while
the existing Japanese manufacturers were rapidly losing competitiveness in the TFTLCD panel industry?
First, capital was believed to be one of the entry barriers in this industry. The glassindustry is capital-intensive because it takes a long time to earn a profit. However, itcosts only about 5 to 10 billion dollars to set up a flat glass plant for TFT-LCD, as
10

against the setting of a TFT-LCD panel plant that requires 200 billion dollars. In spiteof this fact, it was difficult for new entrants to enter this market.
Thus, the technology barrier was believed to be a more important entry barrier. Since
the flat glass for TFT-LCD was very thin (0.7 mm), it was very difficult to achieve
high productivity in its production. Thus, the question was how to produce the flatglass for TFT-LCD?
Table 1 global shipment shares of flat glass for TFT-LCD by company

Glass
Supplier

2003

2004 Q4

2005 Q4

2007 Q3

Country

Corning

50.0%

61.0%

65.0%

56.9%

US

AGC

30.0%

17.0%

16.0%

20.6%

NEG

11.0%

15.0%

14.0%

17.8%

NHT

9.0%

7.0%

5.0%

4.5%

SCHOTT

-

-

-

0.2%

Total

100.0%

100.0%

100.0%

100.0%

Japan

Germany

Source: Nikkei Sangyo Shinbun(2004), EM Data Service(2006), Display Research(2007)

This type of flat glass was manufactured by the following two methods. One was thefusion process, which was used by some glass suppliers; the other was the float
process, which was used only by AGC (EM Data Service, 2006; Iida, 2006; Suzuki,2005).
The fusion process was a major flat glass process for TFT-LCD that was invented by
Corning. This process enabled flat glass manufacturing by not touching the impurities
contained in the material in the melting chamber. It had sufficiently high physicalreliability and did not require the polishing process. Therefore, it needed smaller
investment than the float process. However, it could only narrow the size of flat glass
for TFT-LCD and tended to achieve lower productivity.
Pilkington invented the float process in the UK in 1952. This process introduced
many glass suppliers including the AGC and was used in construction and automotive
glass. It was a horizontal drawing forming method with a large capacity furnace. In
11addition, it needed a polishing process for TFT-LCD, and AGC needed a larger
investment to set up a plant. However, it was helpful for manufacturing wider flatglass for TFT-LCD.
Thus, this paper focuses on the float process. Further, we analyze this process from aprocess architecture-based approach because we believe that it is not important for theflat glass industry to analyze product architecture. As mentioned above, productarchitecture is defined as the relationships between function and structure. The flatglass for TFT-LCD is composed of several raw materials such as sand, soda ash,dolomite, limestone, cullet, and so on. However, these materials are melted in themelting furnace to form the specified structure (element) of the melting glass. Further,
we try to analyze the relationship between function and process.
The main function of flat glass for TFT-LCD contains several subfunctions such as
the coefficient of thermal expansion/shrinkage, substrate thickness variation, surface
cleanness, bubble, transmittance, density, and chemical durability. The main float
process for flat glass for TFT-LCD involves several subprocesses such ascompounding, melting, forming, annealing, cutting, polishing, and cleaning.
A detailed float process is as follows. Raw materials are fed into the melting furnace
by a batch charger at the optimum compound conditions. They are heated by thenatural gas burners to approximately 1,600° in the melting furnace. The molten glass
flows into the working end where the glass is allowed to cool slowly to about 1,100°.
Next, the liquid glass flows into the float bath furnace and lands atop a bath of molten
tin on which it floats; this is called the float method. The bath furnace is a sealed unit
with a controlled atmosphere of nitrogen and hydrogen. As the temperature gradually
decreases to 600°, the liquid glass forms a thin layer, called a “glass ribbon.” The
thickness of the glass ribbon can range from 0.5 to 25 mm. Its natural propensity is
supposed to be 6.8 mm thick. If the ribbon thickness is set at less than 6.8 mm, thespeed of the annealing leer must be faster; conversely, if the thickness is greater than
6.8 mm, the speed of the annealing leer must be slower.
As the formed glass ribbon moves out of the float bath furnace, it is left to cool on
the annealing leer in free air. It is necessary to bring the ribbon to an ambient
temperature in order to gradually produce glass without distortion. The cooled glass
ribbon exits the annealing leer and is sent to the cutting process. The glass passes the12on-line inspection system to eliminate any defects. Then, it is cut into sizes that meetthe customer’s requirements. Normally, the cut glass is transported to the customer;
however, the glass for TFT-LCD necessitates an optional process called “polishing,”
which minimizes the glass (substrate) thickness variation.
The relationship between function and process has a high interdependency and iscomplex (see Fig. 6). For example, in order to minimize the coefficient of thermal
expansion and shrinkage, some parameters of the process such as compounding,forming, and annealing must be fine-tuned (EM Data Service, 2006; Iida, 2006;
Suzuki, 2005). Other functions must be performed as well. Furthermore, the required
equipment is manufactured by the existing suppliers themselves.

Function

Process

Coefficient of thermal
expansion/ shrinkage

Substrate thickness
variation

Compounding

Melting

Surface cleanessForming

BubbleAnnealing

TransmittanceCutting

Density

Polishing

Chemical durability

Cleaning

Figure 6 Process architecture of flat glass for TFT-LCD

13

Therefore, the process architecture of flat glass for TFT-LCD is integral (type 4) andclosed, thus, making it difficult for developing countries to rapidly reproduce flat glass
for TFT-LCD. As mentioned above, this industry is still holding oligopoly in themarket. We believed that the source of the competitiveness of the existing suppliers
has organizational capabilities, i.e., integral quality control, and coordination between
the upstream and downstream processes (Tomita & Ogami, 2008).

DISCUSSION
We compare the LCD panel with flat glass in the TFT-LCD industry. If the type ofprocess architecture of a product differs, the sustainability of global competitivenesschanges in the same industry. As observed in the case of LCD panels, the relationships
between function and structure are integral. When the relationships between structure
and process are modular and open, developing countries can rapidly catch up with
developed countries.
On the contrary, as observed in the flat glass case, if the relationships between thefunction and process are integral, then developing countries cannot rapidly catch up
with developed countries. In other words, a product with type 4 integral process
architecture may sustain higher competitiveness than a product with type 1 integral
process architecture (see Fig. 2).
From our discussion, it is observed that the source of sustainable competitiveness iswithin a series of production process. We propose the following hypothesis:
Hypothesis: A product with a type 2, 3, or 4 integral process architecture has higher
sustainable competitiveness than a product with a type 1 integral process
architecture (Fig. 2).
Moreover, whether a product has a process architecture of the open or closed type isvery important factor. Even if a product has a modular process architecture—in thecase where the architecture is closed—the speed of technology transfer fromdeveloped countries to developing countries will be slower because the required14

equipment or raw materials are not traded. However, a product with a modular andclosed process architecture will not have sustainable competitiveness because it isbelieved that it is easier to reverse engineer and reproduce the product.
As seen in the case of flat glass for TFT-LCD, the source of sustainable
competitiveness is organizational capabilities, i.e., integral quality control andcoordination between upstream and downstream processes (Tomita & Ogami, 2008).
In fact, the basic manufacturing method of flat glass was already published after its
development. However, the importance of these capabilities has yet to be established.
These discussions lead to the following implication. A product with high technology
does not always have high competitiveness. From the perspective of the process
architecture-based approach, even if the relationships between function and structure
are integral––in the case when the relationships between structure and process are
modular and open––developing countries (firms) can rapidly catch up with developed
countries (firms).
However, a product with low technology may be able to achieve highcompetitiveness. If the relationships between function and process are integral, or the
relationships between structure and process are integral, then a product with such a
process architecture may be able to sustain higher competitiveness. The strategic
implication is that it intertwines production know-how or coordination know-how witha product and sells the product overseas. As a result, its global competitiveness may
become higher and sustainable. This strategic logic is called the “capsulization of
coordination know-how” (Shintaku, et al., 2006b).

CONCLUSION
We have analyzed the global competitiveness of the LCD and flat glass in the TFTLCD industry using the process architecture-based approach. In the TFT-LCD panel
industry, although Japan had first developed and commercialized the TFT-LCD panelin the early 1990s, Korea and Taiwan rapidly caught up with the process, andsurpassed Japan in the early 2000s.
As a result of our analysis, in the case where the relationships between the structure15

and process of the TFT-LCD panel are modular and open, Korean and Taiwanesepanel manufacturers purchased a lot of equipment with solution from Japanesesuppliers and smoothly set up many plants of generation five to produce the TFT-LCD
panel. (Shitake, et al., 2007; 2008). This type of phenomenon has also been observedin the semiconductor industry or optical storage industry since the late 1990s(Shintaku, 2006).
From the early 1990s, the flat glass for TFT-LCD industry maintained oligopoly inthe market, which comprised only four or give glass suppliers. As a result of ouranalysis, in the case where the relationships between function and process are integral
and closed, this type of process architecture makes it difficult for developing countries
to rapidly reproduce the flat glass for TFT-LCD.
Further, we compared the LCD panel with the flat glass in the TFT-LCD industry. If
the type of process architecture of a product differs, the sustainability of global
competitiveness changes in the same industry. We proposed the hypothesis that a
product with an integral process architecture of types 2, 3, or 4 has higher sustainable
competitiveness than a product with a type 1 integral process architecture (Fig. 2). As
seen in the case of the flat glass for TFT-LCD, the source of sustainable
competitiveness has been its organizational capabilities.
The strategic implication is that it intertwines the processes of coordination knowhow and a product, which is called the “capsulization of coordination know-how”(Shintaku, et al., 2006b), and sells such a product overseas. As a result, its global
competitiveness may become higher and sustainable.
We will attempt to analyze these two industries in more detail and test theabovementioned hypothesis in our future research. Furthermore, we will attempt toanalyze the cause-and-effect relationship between global competitiveness andarchitecture in other process industries.

REFERENCES
Baldwin, C. Y. & Clark, K. B. (2000) Design Rules: The Power of Modularity, MIT
Press, Cambridge, MA.
16

Chesbrough, H.W. and Kusunoki, K. (2001) “The modularity trap, in Nonaka, I. andTeece, D.J. (eds.), Managing Industrial Knowledge. London: Sage
Publications, pp.202–230.
Clark, K. B. & Fujimoto, T. (1991) Product Development Performance: Strategy,
Strategy, Organization, and Management in the World Auto Industry,
Harvard Business School Press, Boston.
EM Data Service (ed.) (2006) LCD Market for Insight into 2008, EM Data Service.
Electric Journal (ed.) (2006) A Guide for Component Technology in LCD Industry,
Electric Journal.
Fine, C. H. (1998) Clockspeed: Winning Industry Control in the Age of Temporary
Advantage, Peruseus Books, MA.
Fujimoto, T. (2001) Introduction to production management ( ), Nihonkeizai
shinbunsha. (in Japanese)
Fujimoto, T. (2003) “An essay on possibility of Japanese-style process industry,”
MMRC-J-1 Discussion Paper. (in Japanese)(http://merc.e.u-tokyo.ac.jp/mmrc/dp/pdf/MMRC1_2003.pdf)
Fujimoto, T. (2004) “System emergence and organizational capability,” The Josai
Journal of Business Administration, 1(1), pp.1–24.
Fujimoto, T. (2006) “Architecture-based comparative advantage in Japan and Asia,”
MMRC-F-94 Discussion Paper.
(http://merc.e.u-tokyo.ac.jp/mmrc/dp/pdf/MMRC94_2006.pdf)
Fujimoto, T. (2008) “Capability building and decision of architecture in processindustry,” MMRC-J-190 Discussion Paper.
(http://merc.e.u-tokyo.ac.jp/mmrc/dp/pdf/MMRC190_2008.pdf)
Fujimoto, T., Aoshima, Y., & Takeishi, A. (2001) Business Architecture, Yuhikaku. (inJapanese)
Fujimoto, T., Ge, D., & Oh, J. (2006) “Competition and cooperation in automotive
steel sheet production in East Asia,” MMRC-F-73 Discussion Paper.
(http://merc.e.u-tokyo.ac.jp/mmrc/dp/pdf/MMRC73_2006.pdf)
Fujimoto, T. & Kuwashima, K. (2002) “Functional chemical and Japanesemanufacturing industry for the 21century,” in Functional chemical industry
research project (ed.) Functional chemical, Kagaku kogyosha, pp.87–143.
17

(in Japanese)
Fujimoto, T. & Oshika, T. (2006) “Empirical analysis of the hypothesis of architecturebased competitive advantage and international trade theory,” MMRC-F-71
Discussion

Paper.

(http://merc.e.u-

tokyo.ac.jp/mmrc/dp/pdf/MMRC71_2006.pdf)
Iida, T. (2006) “The trend of LCD glass substrate,” in Electric Journal ed. (2006) A
Guide for Component Technology in LCD Industry, Electric Journal.
Ogawa, K., Shintaku, J., & Yoshimoto, T. (2005) “Architecture-based advantage offirms and nations: New global alliance between Japan and catch-up
countries,” MMRC-F-48 Discussion Paper.
(http://merc.e.u-tokyo.ac.jp/mmrc/dp/pdf/MMRC48_2005.pdf)
SEMI Color TFT-LCD Committee (ed.) (2005) Color TFT-LCD (revised edition),
Kyoritsu shuppan.
Shintaku, J. (2006) “The forming of manufacturing network in the East Asia andpositioning of Japanese firms,” MMRC-J-92 Discussion Paper.
(http://merc.e.u-tokyo.ac.jp/mmrc/dp/pdf/MMRC92_2006.pdf)
Shintaku, J. (2008) “Manufacturing technology strategy of LCD industry in Korea,”
Akamon Management Review, 7(1), pp.55–74.
(http://www.gbrc.jp/journal/amr/index.html)
Shintaku, J., Kyo, K., & Zuh, Y. (2006a) “The growth and firm strategy of LCD
industry in Taiwan,” Akamon Management Review, 5(8), pp.519–540.
(http://www.gbrc.jp/journal/amr/index.html)
Shintaku, J., Ogawa, K., & Yoshimoto, T. (2006b) “Architecture-based approaches tointernational standardization and evolution of business models,” MMRC-F96

Discussion

Paper.

(http://merc.e.u-

tokyo.ac.jp/mmrc/dp/pdf/MMRC96_2006.pdf)
Shintaku, J., Park, Y., Tomita, J., Tatsumoto, H., & Yoshimoto, T. (2007) “Architecture
and international division of labor in LCD industry,” 14th National
Convention of Japan Academy of International Business Studies, Takasaki
City University of Economics, Japan, 28 & 29th October 2007. (inJapanese)
Shintaku, J., Tatsumoto, H., Yoshimoto, T., Tomita, J., & Park, Y., (2008) “Technology
18transfer and international division of labor from product architecture based
view,” Hitotsubashi Business Review, 56(2), 42-61. (in Japanese)
Suzuki, Y. (ed.) (2005) How to Manufacture LCD, Nikkan kogyo shinbunsha, (inJapanese)
Tomita, J. & Ogami, M. (2008) “Manufacturing strategy of AGC in Asia,” Akamon
Management Review, forthcoming. (in Japanese)(http://www.gbrc.jp/journal/amr/index.html)
Ulrich, K. T. (1995) “Product architecture in the manufacturing firm,” Research Policy,
24, pp.419–440.

19