Flat Panel Displays in Perspective

September 1995

OTA-ITC-631

GPO stock #052-003-01438-6
Cover Photo Credit: Plasmaco, Inc.

Recommended Citation: U.S. Congress, Office of Technology Assessment, Flat Panel

Displays in Perspective, OTA-ITC-631 (Washington, DC: U.S. Government Printing

Office, September 1995).
iii

oreword

lat panel displays (FPDs) are increasingly important in this information-intensive era. Compared with the cathode ray tube used in televisions, FPDs are thin, lightweight, and power efficient. These displays

have enabled the development of portable computers and communication devices. Applications in automobiles and offices will increase, and

FPDs may eventually result in the fabled television-on-the-wall. FPDs represent a large and rapidly growing industry worldwide, and are expanding into

an increasingly diverse set of systems. American companies and researchers

have made many of the key innovations in FPDs, but U.S. firms hold a very

small share of the world market. Some observers have called for government

intervention to strengthen the U.S. industry. One area of concern—access to

displays for military use—has driven recent federal support for FPDs.

Flat Panel Displays in Perspective examines the potential benefits of a domestic, high-volume, FPD industry for the nation, and evaluates the role of

government policies in developing it. The report concludes that such an industry would provide both economic and national security benefits. The extent of these benefits is difficult to determine, however, largely because

trends in technology development and industry structure are resulting in

more displays at declining prices. The barriers to establishing a high-volume

FPD industry are formidable, and government tools to address them are limited. However, government funding can play a role by helping to build domestic sources for some displays, such as those used in military systems. An

additional finding is that the Department of Defense already uses some foreign displays, but it could take better advantage of FPD sources worldwide.

This report was requested by the Senate Armed Services Committee. It

was produced under the auspices of the Assessment on Innovation and Commercialization of Emerging Technologies, requested by the House Science

Committee (formerly the Science, Space, and Technology Committee) and

the Senate Commerce, Science, and Transportation Committee.

OTA would like to acknowledge the review comments and inputs from

members of the Innovation and Commercialization of Emerging Technologies Advisory Panel, as well as experts from government, academia, and the

FPD industry. However, the content of the report is the responsibility of OTA.

ROGER C. HERDMAN

Director
iv

dvisory Panel

Avtar S. Oberai

Chairman

Consultant

Paul Brickmeier

Vice President of Advanced

Development

SVG Lithography Systems, Inc.

Linda A. Capuano

Vice President

Conductus, Inc.

Sidney C. Chao

Hughes Environmental Systems,

Inc.

Robert Cook-Deegan

Director, Division of Behavorial

Sciences and Mental Disorders

Institute of Medicine

National Academy of Sciences

Mark Cunningham

Oppenheimer and Co.

Mark Eaton

President

JMC Ventures

Robert T. Fraley

Group Vice President and General

Manager

New Products Division

Monsanto Co.

Charles E. Harris

Chairman and CEO

Harris & Harris Group, Inc.

Maryellen R. Kelley

Visiting Professor

Industrial Performance Center

Massachusetts Institute of

Technology

Ken Kennedy

Director

Center for Research in Parallel

Computation

Rice University

William G. Morin

Director, Technology Policy

National Association of

Manufacturers

Mark Myers

Senior Vice President

Xerox Corp.

Walter H. Plosila

Executive Director

North Carolina Allicance for

Competitive Technologies

John T. Preston

Director of Technology

Development

Massachusetts Institute of

Technology

Michael A. Rappa

Associate Professor

Sloan School of Management

Massachusetts Institute of

Technology

Richard S. Rosenbloom

David Sarnoff Professor of

Business Administration

Harvard Business School

Maxine L. Savitz

Garrett Processing Division

Allied-Signal Aerospace

Louis Tornatzky

Director, Southern Technology

Council

Southern Growth Policies Board

Stephen Turner

CEO/President

Oncor Inc.

Les Vadasz

Senior Vice President

Intel Corp.

Note: OTA appreciates the valuable assistance and thoughtful comments provided by the advisory panelists. The panel does not,

however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report and the accuracy of its

contents.
v

roject Staff

Peter D. Blair

Assistant Director, OTA

Industry, Commerce, and

International Security Division

Audrey B. Buyrn

Program Director1

Andrew W. Wyckoff

Program Director

Industry, Telecommunications,

and Commerce Program

Julie Fox Gorte

Project Director2

Robert C. Weissler

Project Director

Innovation and Commercialization

of Emerging Technologies

Project

PRINCIPAL STAFF

Paul D. Semenza

Analyst

David J. Eichberg

Research Analyst

Jean E. Smith

Editor

OTA CONTRIBUTORS

Jerry Sheehan

Jack Nunn

James W. Curlin

Gerald Epstein

ADMINISTRATIVE STAFF

Liz Emanuel

Office Administrator

Karry Fornshill

Secretary

Diane Jackson

Secretary

Karolyn St. Clair

PC Specialist

PUBLISHING STAFF

Mary Lou Higgs

Manager, Publishing Services

Chip Moore

Production Editor

Christine Onrubia

Graphic Designer

Bonnie Sparks

Electronic Publishing Specialist

________________

1Until August 1994.

2Until April 1995.
vi

eviewers

Richard Archambault

Director, Computer Products

Sourcing and Manufacturing

AT&T

Claude Barfield

Director, Science and Technology

Policy Studies

American Enterprise Institute

Arpad A. Bergh

President

Optoelectronics Industry

Development Association

Curtis Casey

Vice President

Optical Imaging Systems, Inc.

Joseph Castellano

President

Stanford Resources, Inc.

Michael Ciesinski

Chief Executive Officer

United States Display Consortium

Steven Depp

Director, Subsystem Technologies

and Applications Laboratory

IBM

Daniel J. Devine

Vice President, Technology

Coloray Display Corp.

Kenneth Flamm1

Principal Deputy Assistant

Secretary of Defense

Department of Defense

Roland Haitz

Components Group

Hewlett Packard

Jeffrey Hart

Professor of Political Science

Indiana University

Mark Hartney

Advanced Research Projects

Agency

Department of Defense

Heidi Hoffman

Director, Industry/ Government

Relations

United States Display Consortium

Darrel Hopper

Wright Laboratory

U.S. Air Force

Joshua Lerner

Assistant Professor of Business

Administration

Harvard University

Susan MacKnight

Chief Economist

Japan Economic Institute

Glenn McLaughlin

Specialist

Congressional Research Service

David Mentley

Director

Display Industry Research

Stanford Resources, Inc.

Richard Nunno

Analyst

Congressional Research Service

Steven Pederson

Microelectronics and Computer

Technology Corp.

Roger Smith

Manager, Government Business

American Electronics Association

Phil Spletter

Microelectronics and Computer

Technology Corporation

Curtis M. Stevens

Chief Financial Officer

Planar Systems, Inc.

________________

1Current Affiliation: Brookings Institution
vii

Rex Tapp

President & CEO

Optical Imaging Systems, Inc.

Richard Thayer

Director, Government Affairs

AT&T

Richard Van Atta

Special Assistant for Dual Use

Technology

U.S. Department of Defense

Phillip Webre

Analyst

Congressional Budget Office

Charles Wessner

Program Director of Technology

and Competitiveness

National Research Council

Robert A. Young

Vice President, Product

Development

Coloray Display Corp.
ix

1 Summary and Policy Issues 1

Industry Overview 3

The Domestic FPD Industry: Cause For Concern? 10

Strategies and Policies for a Domestic FPD

Industry 18

2 The Domestic Flat Panel Display Industry:

Cause for Concern? 25

Demand for Flat Panel Displays 26

Supply of Flat Panel Displays 31

Effects on Related Industries 42

National Security Requirements 50

3 Strategies and Policies for the Domestic

Flat Panel Display Industry 61

Domestic Efforts to Domestic Efforts to

Commercialize FPD Technology 62

Strategies for Market Entry 65

Government Activity 75

APPENDICES

A Flat Panel Display Technologies and

Domestic Firms 89

B List of Acronyms 105

ontents
Summary

and

Policy

Issues

lat panel displays (FPDs) are thin electronic devices that

present images without the bulk of a picture tube. FPDs

have enabled the development of products from digital

wristwatches to notebook computers, have improved videocameras and other consumer goods, and will be the heart of

wide screen televisions that can hang on a wall. FPDs also present

critical information to military forces; they are replacing older

displays in aircraft, ships, and vehicles, and are allowing the development of new systems, such as head-mounted displays for individual soldiers.

FPD technology was largely developed in American laboratories, and much of the advanced research in new FPD technologies

takes place in the United States. However, the United States has

not had a significant capability to manufacture FPDs. Companies

capable of manufacturing displays have either decided not to do

so or, lacking the necessary financial resources, have been unable

to persuade other organizations to fund their efforts. U.S. firms do

not have an appreciable fraction of world market share.

Over the past few years, the size and scope of activities and

sales in the FPD industry have grown. As market demand for

FPDs has grown and the industry has moved into a more mature

phase, the role of capital expenditures and manufacturing knowledge has become preeminent. As investment costs have increased

and competition has intensified, entry into the mainstream market

segments has become more problematic for U.S. firms. These

firms continue to pursue established niche technologies and

technologies that are not commercialized. However, the market

segments for niche technologies remain a small part of the overall

FPD market, and new technologies must compete against an increasingly dominant entrenched technology. This situation leads | 1
2 | Flat Panel Displays in Perspective

to the conclusion that successful entry into this

market will be costly and difficult to achieve. This

conclusion, however, is not sufficient to argue

against a vigorous effort to enter into the FPD

market; rather, it demands that the rewards should

be large, given the risks to entry.

This report addresses two issues. First, is the

lack of a high-volume domestic FPD industry a

cause for national concern? Why might having

such an industry be important for the good of the

nation? Second, if the government wishes to foster such an industry, what policies might be most

effective? In particular, how likely is the Clinton

Administration’s National Flat Panel Display Initiative to succeed? OTA finds:

1. A high-volume FPD industry would confer a

range of commercial and military benefits on

the country. However, there is a good deal of

uncertainty regarding the exact nature of these

benefits, and it is difficult to weigh them

against the costs necessary to establish such an

industry (see chapter 2).

Although FPDs are clearly important economically and militarily, having a high-volume domestic industry may not be as critical as some have

asserted. An analysis of the economic benefits of

such an industry indicates that some trends in

technology development and industry structure

may prove as beneficial to users of FPDs as they

are to producers. FPDs comprise a diverse set of

technologies and applications, however, and the

picture remains a mixed one.

Furthermore, while the military importance of

FPDs is not altered by changes in technology and

markets, these changes may increase the choices

available to the military in gaining access to FPD

technologies. Specifically, changes in the global

FPD industry present new sources of displays. In

addition to efforts to develop a high-volume domestic industry, the Department of Defense

(DOD) could take advantage of these shifts and

encourage the growth of existing FPD capabilities.

2. The barriers to establishing a high-volume domestic FPD industry are formidable, and government tools to address them are limited

(including those in the National Flat Panel

Display Initiative). It will be difficult for even

a vigorous government program to foster the

development of a self-sustaining, domestic

high-volume industry. However, government

funding can play a role in developing domestic

sources for some displays (see chapter 3).

DOD states that its goal is to obtain early, assured, and affordable access to leading-edge display technologies. DOD’s approach to reaching

this goal is to encourage the development of a

dual-use FPD industry that produces large volumes of displays for commercial markets and is

also willing and able to give DOD early access to

specialized display technology. DOD’s own indicator of progress towards this goal—development

of a domestic FPD industry equaling 15 percent of

world production by the end of the decade—has a

low probability of being achieved. However,

DOD’s approach does include elements that are

likely to strengthen the domestic FPD industry.

The difficulties inherent in DOD’s approach do

not discount that approach, but they provide incentive to consider other policies as well.

The weakness of the U.S. industrial base for

FPDs has been a policy concern for several years,

and display technology is consistently flagged as

an area of concern in listings of critical technologies.1 DOD has played the lead role in supporting

the government’s development of FPD technologies, largely through its Advanced Research Projects Agency (ARPA). In particular, ARPA’s High

1 The most recent report from the National Critical Technologies Review Group identified high definition displays as the only area within

information and communication technologies—and one of only three among all technology areas—in which the U.S. technology position indicated a substantial lag relative to Japan or Europe; see National Critical Technologies Report, March 1995. Earlier reports (and the category

related to FPDs) include Department of Commerce, Emerging Technologies: A Survey of Technical and Economic Opportunities, spring 1990

(digital imaging technology); Department of Defense, Critical Technologies Plan, Mar. 15, 1990 (photonics); Report of the National Critical

Technologies Panel, March 1991 (high-definition imaging and displays); and Council on Competitiveness, Gaining New Ground, March 1991.
Chapter 1 Summary and Policy Issues | 3

Definition Systems (HDS) program has drawn

significant support from Congress.

The industry has attracted other government involvement in the form of: 1) antidumping tariffs;

2) research and development (R&D) programs under DOD and the Department of Energy (DOE),

the National Aeronautics and Space Agency

(NASA), and the National Science Foundation

(NSF); and 3) a commercialization program under

the Department of Commerce’s Advanced

Technology Program. OTA last investigated

FPDs in the context of the high definition television (HDTV) debate of the late 1980s; since that

report was prepared, circumstances have changed

(see box 1-1).

INDUSTRY OVERVIEW

It is estimated that worldwide sales of FPDs will

total $11.5 billion in 1995, and will double in value by the year 2000; some project the market will

grow to $40 billion by the end of the decade.2 The

largest demand for FPDs is for use in computers,

mainly portable systems such as laptops, notebooks, and handheld devices. These applications

use liquid crystal displays (LCDs), as does consumer electronics, the next largest category. The

other large application areas are business and

commercial systems, and industrial, communications, and transportation systems; both applications use electroluminescent (EL) displays and

plasma displays, in addition to LCDs (see box 1-2

for a description of FPD types).

Military demand accounts for less than one percent of the global FPD market, and is expected to

stay relatively constant through the end of the decade.3 Military displays use LCD, EL, and plasma

technologies like the commercial markets, but

often must satisfy rigorous performance specifications (for example, readability in bright sunlight, over wide viewing angles, and while

subjected to a wide range of temperatures). Also,

military displays often require size, packaging,

and electronic interfaces that are different from

displays used in the larger commercial markets.

Military systems currently use a mix of custom

FPDs and commercial FPDs, modified to military

specifications.

The global FPD industry uses a diverse set of

technologies to satisfy a broad array of applications (see appendix A). The dominant technology

is the LCD, which itself comes in many forms; the

primary variations are the active matrix LCD

(AMLCD) and the passive matrix LCD

(PMLCD). Measured by value of sales, LCDs account for approximately 87 percent of the FPD

market in 1995, evenly divided between active

and passive matrix types. By the year 2001, the

share held by LCDs as a whole is projected to be

about the same (88 percent), with AMLCDs accounting for 54 percent and PMLCDs for 34 percent.4 As the FPD market as a whole is projected

to double between 1995 and 2001, AMLCDs are

expected to grow by a factor of 2.5 during that period. Smaller shares are accounted for by plasma

and EL displays. In terms of value, these four FPD

types make up the vast majority of the FPDs currently in use (see table 1-1).5

2 Stanford Resources, Inc., projects that worldwide FPD market sales will be $19.5 billion in the year 2000 and $22.5 billion in 2001; David

Mentley, Director, Display Industry Research, Stanford Resources, Inc., San Jose, CA, personal communication, Mar. 21, 1995. Projections

made by Asian sources tend to be higher by as much as a factor of two; see “Scale of Liquid Crystal Industry Assessed,” in Flat Panel Display

1995, Nikkei Microdevices, Dec. 9, 1994, pp. 74-80 (translation provided by Maurice Cloutier, Foreign Broadcast Information Service).

3 Department of Defense, “Building U.S. Capabilities in Flat Panel Displays: The Flat Panel Display Task Force Final Report,” October

1994, chapter III.

4 Calculated from Stanford Resources, Inc., data, Mentley, op. cit., footnote 2.

5 Two other types of FPDs—light emitting diodes and vacuum fluorescent displays—account for less than 10 percent of FPD sales. Although representing larger shares of the FPD market than plasma and EL displays, these are low-information-content displays, which present

text and simple graphics in small display formats. These displays currently are not suitable for use in large and complex graphics applications,

and are not discussed in this report.
4 I Flat Panel Displays in Perspective

In 1990, the Office of Technology Assessment (OTA) released a report entitled The Big Picture:

HDTV & High-Resolution Systems,l The report came to the following conclusion regarding high resolution systems (HRS), which are primarily flat panel displays (FPDs):

A strong civilian HRS technology base IS necessary if many HRS technologies are to be available for defense

needs at all The low costs realized for HRS technologies in the commercial sector, however, will not be automatically translated into low-cost HRS for defense applications. The complexity and specialized nature of defense

systems result in long product cycles, high R&D and engineering costs, and stringent performance and reliability criteria that may have Iittle relationship to commercial needs...2

Congress demonstrated its concern about the state of the domestic FPD industry by funding FPD R&D

in the Department of Defense (DOD) at $75 million in fiscal years 1991 and 1992 In fiscal year 1993,

Congress appropriated nearly $170 million,

In 1994, DOD announced the National Flat Panel Display Initiative (NFPDI), It continues existing FPD

research, and introduces incentives for domestic firms to produce displays and for the armed services

to purchase them. In light of this new policy, it IS appropriate to revisit the FPD industry and relevant

government policies, and to examine the current state of affairs. In the five years since OTA last studied

FPD industry and policy, certain things remain unchanged, The Big Picture stated: “High Resolution

Systems (HRS) and related technologies are likely to play an important role in future military systems HRS technologies will, however, probably be driven primarily by the needs of the commercial

sector. ”3 This report confirms these findings, as does a separate OTA study,4 However, three major

changes have taken place that affect both the potential benefits of a domestic high-volume FPD industry and the costs of creating such an industry

Politico-Military Changes. The Big Picture gave several reasons to be concerned about relying on

foreign sources for advanced technology: 1) disruption of supply lines during a crisis, 2) pressure by

U.S. adversaries on foreign suppliers to withhold critical components, and 3) ease of access by U S

adversaries to foreign technology sources.5 As indicated by the example given in that report (that of

Soviet access to Japanese and Norwegian milling technology for making quiet submarine propellers),

the concerns at that time were based on Soviet access to-or potential control over—foreign technology with military applications, In particular, the concern was over Soviet threats to Japanese FPD producers, the only overseas sources in 1990. Today, the tensions and concerns rising from the Cold War

competition between the United States and the former Soviet Union have largely dissipated,

While the threats posed today by regional conflicts and terrorist groups are serious, it is not clear

how adversaries (such as terrorist groups or nations such as Iraq or North Korea) would be able to

obtain FPD technology ahead of, or even as soon as, DOD—from Japanese, Korean, or European firms,

or even from the former Soviet Union, In February 1995, for example, a subsidiary of the Russian ener-

(continued)

1 U.S. Congress, Office of Technology Assessment, The Big Picture: HDTV and High Resolution Systems, OTA-B P-C IT-64 (Washington, DC: U S Government Printing Office, June 1990)

2 Ibid., p 17

3 Ibid , p 16

4 U.s Congress, Office of Technology Assessment, Assessing the Potential for Civil Military Integration: Selected Case Studies,

OTA-BP- ISS-158 (Washington, DC U S Government Printing Office, September 1995)

5 Office of Technology Assessment, op. cit., footnote 1, pp. 16-17
Chapter 1 Summary and Policy Issues 15

gy company Gazprom announced a $4-million investment in SI Diamond Technology, an FPD firm

based in Houston, Texas. 6 A December 1994 report by the World Technology Evaluation Center described numerous other firms in Russia, Ukraine, and Belarus that are eager to collaborate with Western

companies in FPD development.7

Increased Diversity of Supply. In 1990, large-scale production of FPDs was just beginning There

were few experienced suppliers, and the demand created by the portable computing market was in an

early stage. The few companies with an operational large-scale FPD manufacturing capability were still

struggling with low production yields, and were not interested in entering into any type of custom production. Currently, however, there are several high-volume FPD producers in Japan; investments made

in Korea, Taiwan, and Europe will likely result in several more facilities within the next few years

In addition, the domestic industry has improved its ability to meet DOD requirements over the past

few years. This is largely due to investments made during the 1990s by DOD’s Advanced Research

Projects Agency (ARPA) High Definition Systems Program, the Commerce Department’s Advanced

Technology Program, and an increased level of cooperation and collaboration within Industry DODfunded companies such as OIS and Kopin have built capabilities for military display fabrication, Planar

has expanded its electroluminescent display production, and several new firms are developing field

emission displays.

The increasing diversity of high-volume FPD manufacturing (from a few Japanese producers in 1990

to many firms worldwide at present), plus the more advanced state of U.S. manufacturing, means that

the risk of supply vulnerability has decreased. In evaluating the need for building a high-volume domestic industry to better satisfy the relatively small defense need, the trend toward FPD supply diversity,

combined with the general openness in East-West relations detailed above, must be balanced against

the cost of establishing a high-volume domestic FPD industry.

increased Barriers to Entry Into High-Volume FPD Production. In 1990, Japan did not have the

commanding lead it now has; since then, Japanese producers have invested several billion dollars in

FPD production facilities. These investments have put Japanese producers well ahead of manufacturers in the United States, where investments have been in the hundreds of millions of dollars during this

period. The emphasis on increasing manufacturing volumes, decreasing production costs, and concentrating on standardized products means that, in large segments of the market, competition is based on

manufacturing, not design. In addition, the investment required to build a high-volume domestic FPD

industry has greatly increased; capital expenditures required for one world-class plant to manufacture

active matrix liquid crystal displays now approach half a billion dollars.

SOURCE: Office of Technology Assessment, 1995

6 Agis Salpukas, “Russians Invest in High-Tech U.S. Venture, ” New York Times, Feb 11, 1995, p 35

7 J William Deane (cd.), WTEC Panel Report on Display Technologies in Russia, Ukraine, and Belarus (Baltimore, MD: Loyola

College in Maryland, December 1994)
6 I Flat Panel Displays in Perspective

Flat panel displays (FPDs) are electronic displays that are much thinner than their screen size, measured diagonally. Like the most common type of electronic display, the cathode ray tube (CRT), FPDs

visually present electronic information, including text, graphics, and video. FPDs are also used as displays for computers, cameras, televisions, and other video systems, The FPD presents information in a

thin, lightweight package that can operate on a modest amount of power, whereas the CRT requires a

large package—typically as deep as the display is wide-that is heavy and consumes large amounts of

power.

FPDs have been available in various forms for several decades, but they are more expensive than

CRTs for most sizes and they have been slow in replacing the established CRT. However, FPDs have

enabled new portable electronics devices, such as laptop and notebook computers, pocket televisions,

and personal communicators, that would not be possible using CRT displays, They also have improved

other systems, such as aircraft cockpit displays, by replacing existing CRTs

Unlike CRTs, which are all quite similar in terms of the basic operating principle, FPDs use several

different technologies, Although they all serve the same function, and in some cases look very much the

same, the different technologies have varied performance characteristics and limitations, and are

manufactured using different materials and processes. However, most FPDs are generally comprised of

a pair of glass plates surrounding a material that filters external light or emits its own light, and use

manufacturing techniques closer to the production of semiconductor chips than televisions, Also, most

FPDs operate by controlling the color and brightness of each picture element (or pixel) individually,

rather than from one common source, as in the electron gun in a CRT, in general, FPDs can be categorized as follows,

Liquid crystal displays LCDs are the most prevalent type of FPD, and are used in notebook computers, pocket televisions, and personal digital assistants, LCDs use a material that acts like a shutter—

blocking, dimming, or passing light unobstructed, depending on the magnitude of the electric field

across the material, LCDs are lightweight and require little operating power. However, since LCDs only

modify light, they require an external source of light; while ambient light is used in simple displays, complex, rapidly changing color displays require a bright light, typically mounted behind the LCD screen,

There are two primary types of LCDs passive matrix and active matrix LCDs (PMLCDs and

AMLCDs, respectively), The PMLCD is the basic type of LCD; it is made by sandwiching liquid crystal

material between two glass plates, each of which contains a parallel set of transparent electrical lines,

The plates are arranged so that, looking through the display, the lines cross to form a checkerboard

pattern, or matrix. Every intersection of two lines forms a pixel, and the voltage across that pixel determines the shade of that pixel. PMLCDs are commonly used for gasoline pump displays, pager screens,

digital wristwatch readouts, and other applications that require a simple, inexpensive display; recent

manufacturing improvements, however, have led to the application of PMLCDs to more complex display

functions, AMLCDs use an electronic switch at every pixel, which provides faster switching and more

shades. With the addition of filters that pass only certain colors, AMLCDs produce vivid color graphics

in portable computer and television screens. The added complexity of manufacturing the switches results in a large, but diminishing, price premium compared with PMLCDs,

Plasma displays are used in systems that are viewed by many people, such as screens on the floor

of stock exchanges. They can be manufactured in larger sizes than LCDs and, unlike LCDs are visible

from angles far from straight-ahead viewing, Plasma displays use a gas trapped between the glass

plates to emit light when electric current is passed through the matrix of Iines on the glass, Mono-

(continued)
Chapter 1 Summary and Policy Issues 17

chrome (single-color) displays use a gas that emits an orange color; full-color plasma displays use

phosphors (similar to a CRT) that glow when illuminated by the gas Plasma displays are heavy and

require more power than LCDs, but may be more suitable for large screens to display high definition

television broadcasts.

Electroluminescent (EL) displays are found in emergency rooms, on factory floors, and in commercial transportation vehicles. A phosphor film between glass plates emits light when an electric field

IS created across the film. EL displays are lightweight and durable, and recently have become available

in full-color versions.

Field emission displays (FEDs) are not commercially available, but are anticipated to fill many display needs. An FED can be thought of as a flat CRT; as in the tube, electrons are emitted from one side

of the display and energize colored phosphors on the other side. Unlike the CRT, which uses one

source of electrons to sweep across the screen, FEDs have hundreds of emitters for each pixel. This

allows for rapid changes of the image on the screen, and has the advantage of redundancy, in the

event that some of the emitters fail, there are others to make up for it

Digital micromirror devices (DMDs) are miniature arrays of tiny mirrors, built on a semiconductor

chip. Each mirror can be tilted by changing the voltage at the location under that mirror. The DMD IS

used in a projector that shines light on the mirror array; depending on the position of a given mirror, that

pixel in the display reflects the light either onto a lens that projects it onto a screen (resulting in a light

pixel), or away from the lens (resulting in a dark pixel)

SOURCE Off Ice of Technology Assessment, 1995

LCDs are the most prevalent display in computer and consumer electronics applications. In

portable computers, 8- to 1 l-inch LCD screens

currently share the market. AMLCDscreens provide a brighter, faster, and sharper color display,

but can increase the cost of a portable computer by

several hundred dollars compared with a

PMLCD. Consumer electronics devices, such as

personal information and communication devices

and electronic games, typically use low-cost

PMLCDs.

Military display systems use a mix of customdesigned and -produced AMLCD, EL, and plasma

displays, as well as modified commercial LCDs

Large plasma displays are used in applications

where there are many viewers, such as financial

trading floors, and EL displays are used in medical, industrial, and transportation equipment. Digital micromirror devices (DMDs) are just

beginning to be used, and field emission displays

(FEDs), which have shown promise for many

FPD applications, are currently in the prototype

stage.

The vast majority of investments in FPD

manufacturing facilities have been made by private sources in East Asia to build LCD plants. One

source estimates that publicly announced investments through the early 1990s totaled $4.9 billion

in Japan, $2.0 billion in Korea, $300 million in

Europe, but only $200 million in the United

States. 6 Japanese producers account for most FPD

production worldwide. In 1994, Japanese companies produced 98 percent of AMLCDs, 90 percent

of PMLCDs, 65 percent of plasma displays, and

45 percent of EL displays, measured by market

6U.S. Display consortium, San Jose, CA, Annual Report 1994, p. 5.
8 I Flat Panel Displays in Perspective

Application areas

Size

(diagonal) Technology Basis of purchase Segment size

Portable computers 8-11 inch AMLCD, PMLCD price, performance large

Consumer electronics <10 inch PM LCD price medium

High performance products 2-10 inch AMLCD, EL performance small

Multiviewer information screens >20 inch Plasma, LCD, and DMD performance small

projectors

Medical, transportation, various E L performance, price small

industrial products

KEY: AM LCD = active matrix Iiquid crystal display; DMD = digital micromirror device; EL = electroluminescent display, LCD = Iiquid crystal display; PMLCD = passive matrix liquid-crystal display -

SOURCE: Office of Technology Assessment, 1995.

value. 7 Manufacturers in East Asian countries

other than Japan account for seven percent of

PMLCD production. in AMLCDs, one Korean

firm has begun volume production, another is in

the preliminary stages of production, and a third

has invested in a U.S.-based operation. Firms in

Taiwan and Europe are also investing in AMLCD

production facilities.

To a great extent, the major AMLCD producers

have settled on standard display sizes and types.

The standard display was the 10.4-inch VGA (video graphics array) in 1994-95, and is now moving

toward SVGA (super-VGA) screens larger than 11

inches; 13-inch XGA (extended graphics array)

screens have also been developed.8 One advantage of standard sizes and formats is that they allow manufacturers to produce large quantities of

the same item, which is necessary to drive down

manufacturing costs. One analyst estimates that

10-inch AMLCD manufacturing costs in Japan

have declined from $2,500 per finished display in

1991 to just over $1,000 in 1993; during the same

period, manufacturing yields—the fraction of acceptable displays produced—have increased from

10 percent to nearly 60 percent.9

Increases in production capacity also have

created downward pressure on prices as displays

become more widely available. One source estimates that Japan’s total monthly LCD output increased 62 percent from 1994 to 1995, while the

price of a laptop-size AMLCD fell 30 percent

from mid 1994 to early 1995.10 Price decreases in

AMLCDs may increase sales in such end-products as portable computers, in which AMLCD

screens are the costliest item. AMLCD producers

have also felt price pressure from inexpensive

PMLCDs, whose quality has improved.

For many computer purchasers, the main decision is between the two types of LCD screens, and

is made by weighing display quality against price.

Within each type, there are many similarities

among the different screens, and there is less differentiation on the basis of brand name than in other components, such as microprocessors. The

move toward standardized products and the continuous reduction in prices suggest that, in the

large and increasing portable computer market

segment, there will be commodity-like product

competition based on manufacturing costs. in oth7 Mentley, op. cit., footnote 2; production is measured by location of company headquarters.

8VGA is 

a standard for computer displays that is an array of information comprised of 640 rows and 480 columns; the intersection of every

row and column represents a pixel. SVGA is an 800- by 600-pixel array, and XGA is 1024 by 768 pixels.

Information Display, 1994), vol. I.

PCs,” Nikkei Weekly, Mar. 20, 1995, p. 8.
Chapter 1 Summary and Policy lssues 19

er parts of the market, applications demand more

diversified FPD performance and size, so that design and customization will be as important as

manufacturing costs, or perhaps more so.

An analogy can be made to the semiconductor

industry: there are custom-designed, applicationspecific integrated circuit chips (ASICs), mass

produced but design-intensive microprocessors,

and commodity dynamic random access memory

chips (DRAMs). AMLCDS for portable computers appear to be moving toward the commodity

end, whereas other types of displays will demand

diversified product designs.

There are no production facilities for portable

computer displays in the United States. Several

fledgling efforts produce, or are preparing to produce, AMLCDS for specialized applications, but

the domestic industry is strongest in the smallest

market segments—EL and plasma for military,

medical, and industrial applications.

DOD has awarded funding to Optical Imaging

Systems (OIS) to develop an AMLCD factory in

Michigan, which will produce small volumes (relative to comrnercial-scale plants) of custom displays for military and civil avionics. DOD has

also funded a consortium of Xerox, AT&T, and

Standish Industries (the leading domestic

PMLCD manufacturer) to develop AMLCD

manufacturing capabilities; these firms have not

announced plans to invest in a central production

facility. Kopin has also been supported by DOD

(and other government contracts), and has developed the capability to produce small, custom

AMLCDs in limited quantities. Two other firms,

ImageQuest (majority-owned by Hyundai) and

Litton Systems Canada, have built facilities to

produce AMLCDs for military use and commercial avionics. The largest display concern involving a U.S. firm is Display Technology, Inc. (DTI),

a joint venture between IBM Japan and Toshiba

that has built two plants in Japan.

A significant segment of the U.S. industry is

pursuing FPD technologies other than AMLCDs.

Planar is a world leader in electroluminescent

Probably the best known application of flat panel displays

(FPDs), portable computers comprise the largest single

market for high-resolution color FPDs.

FPDs, with more than half of the market. Photonics Imaging, Plasmaco, and Electro Plasma are

competitive in plasma displays (display technologies and U.S. firms are described in appendix A).

The U.S. industry has also been a leader in R&D

on new types of displays, fueled in large part by

the ARPA HDS program. ARPA grants have supported new technologies such as the DMD; ongoing programs support FED research. Both of these

technologies have the potential to leapfrog the

dominant AMLCD by offering superior performance and/or lower manufacturing costs.

The ARPA program has also been successful in

funding universities and consortia to train researchers, develop new technologies, and foster

the infrastructure needed to support a vibrant domestic industry. The U.S. Display Consortium,

funded equally by ARPA and industry (FPD producers, defense contractors, and commercial FPD

users), has been a cost-effective tool for infrastructure development, awarding contracts to

small FPD equipment and materials suppliers

who then create products available to the display

manufacturers.
10 | Flat Panel Displays in Perspective

THE DOMESTIC FPD INDUSTRY: CAUSE

FOR CONCERN?

The current concerns for the nation can be broadly

defined as follows:

 Economic Benefit. Some observers say that the

lack of a high-volume domestic FPD industry

could harm the nation because domestic firms

will be unable to: 1) sell to a large and growing

FPD market; 2) compete in product markets

that rely on FPDs as a critical component; and

3) benefit from the spillovers of FPD technology to other semiconductor-based products.

 National Security. According to DOD, the domestic FPD industry is not able, and leading

foreign suppliers are not willing, to provide the

military with early, assured, and affordable access to leading-edge FPD technology, which

DOD asserts is critical to national security.

These concerns can be analyzed separately, but are

interrelated because a stronger domestic FPD industry could result in benefits for both military

and economic security. DOD frames its FPD

policy strictly in military terms, but both concerns

are examined here because both have been raised

in support of an expanded government role in FPD

development.

In the past year, FPDs have attracted attention

as a policy issue because of DOD’s initiative to

create a domestic industry that can satisfy military

needs. In 1994, at the conclusion of an interagency

task force study on FPDs, DOD determined that it

requires early, assured, and affordable access to

leading-edge FPD technology of all types, and

that it did not have such access.11 DOD found that

even though it had supported FPD R&D for years,

domestic companies have not developed capabilities to meet its needs. If the domestic industry remains small, DOD reasoned, firms would be

unable to support the level of R&D necessary to

keep up with technology developments worldwide; thus, there is no reasonable assurance that a

leading-edge domestic technological capability

would be available to the military in the future.12

Finally, DOD found that the leading sources of

FPDs in Japan would not (based on corporate

policy) or could not (based on interpretations of

Japan’s export ban on military items) work with

DOD on its specialized requirements.

Because defense demand represents less than

one percent of the total FPD market, DOD is pursuing a dual-use strategy: attempting to exploit

commercial advances in R&D and manufacturing

to meet defense needs. Because the technologies

used in military displays are the same as those

used in commercial products, DOD’s approach is

to bolster the ability of domestic firms to produce

FPDs for both military and commercial markets.

DOD then plans to take advantage of the economies of scale provided by the volumes demanded

by commercial markets. Called the National Flat

Panel Display Initiative (NFPDI), the policy increases funding for FPD manufacturing technologies and promotes insertion of displays into

military systems, in addition to continuing an existing R&D program. A fourth part of NFPDI, designed to stimulate domestic and foreign demand

for domestic FPDs, has not yet been implemented.

DOD justifies NFPDI solely in national security terms, as the most efficient method for meeting

defense FPD needs. DOD states that it is not trying to build a domestic, high-volume commercial

industry as an end in itself or to achieve broad economic benefit. However, the dual-use approach

requires that a substantial commercial base exist

to be integrated with the military base, and the

commercial FPD base is currently inadequate.

Thus, NFPDI aims to create a domestic base that

can satisfy both military and commercial demands. This would likely create economic benefits as well, which could be regarded as spillovers

from satisfying the national security goals.

It is possible to evaluate NFPDI as a method for

meeting defense needs, and this report does so.

11 Department of Defense, op. cit., footnote 3, chapter I.

12 Department of Defense, Dual Use Technology: A Defense Strategy for Affordable, Leading-Edge Technology, February 1995, p. 12.
However, because some benefits would accrue to

the domestic commercial base from a successful

NFPDI, and many observers feel that the development of a high-volume domestic commercial FPD

industry is desirable in its own right, these potential benefits should be included in an analysis of

the NFPDI approach. Most of DOD’s specific requirements for FPDs more closely resemble those

for niche commercial market segments (such as

civil avionics, industrial, and medical systems)

than those for the largest commercial markets (in

portable computer and communications systems

and consumer electronics items). Thus, even if

NFPDI is successful in meeting military needs, it

may have limited impact on the largest commercial market segments.

There are also potential developments that

could bolster capabilities in the domestic commercial FPD industry, while only indirectly improving the domestic capability to produce FPDs

for military needs. An example would be an investment in a domestic FPD plant to produce displays for the portable computer market, the largest

single FPD application. 13 Such a factory would

likely be similar to current-generation factories in

Japan and Korea that produce displays for notebook computers, typically at volumes of approximately one million displays annually.

This type of plant would represent a huge increase in the domestic FPD production capacity,

providing a boost to domestic suppliers of materials and equipment. However, it would likely concentrate on producing large volumes of standard

displays (e.g., 11-inch-screens with SVGA resolution), and might not have arty direct effect on

DOD’s need for early, assured, and affordable access to leading-edge FPD technology for military

systems. The indirect effects could, nonetheless,

be substantial. The increased understanding of

FPD manufacturing processes acquired at such a

plant could benefit other domestic manufacturers,

and the added demand for inputs to the FPD

Chapter 1 Summary and Policy Issues | 11

Liquid crystal displays have enabled the development of

handheld computer and communications devices, such as this

pen-based computer.

production process would benefit the domestic infrastructure, contributing to DOD’s goal of developing a dual-use industry in the United States.

■ Economic Benefit

The economic benefits to the nation of having a

high-volume domestic FPD industry present an

uncertain picture. The benefits pertain to the FPD

industry itself, which has undergone rapid growth

in the past few years; U.S.-based users of FPDs,

such as computer companies; and related industries, like semiconductor devices.

It is not clear how important these benefits are

to downstream producers and related industries.

They have not yet been great enough to induce

firms such as computer or semiconductor

manufacturers to make the investments necessary

to create a high-volume, commercially oriented

domestic FPD industry. However, some downstream firms have made some moves in that direc13 To date, there has been no U.S.-based production of such FPDs. Sharp Corp. performs final assembly of portable computer screens at its

wholly owned U.S. affiliate in Camas, Washingston.
12 I Flat Panel Displays in Perspective

tion. Along with FPD manufacturers and DOD,

downstream users have supported the U.S. Display Consortium, which funds development projects by FPD equipment and materials suppliers,

and serves as a forum for communicating user

‘needs to FPD manufacturers.

Some downstream fins, such as Compaq and

Hewlett Packard, have also formed partnerships

with nascent FPD producers, some of whom believe that DOD’s support has created the climate

for these investments. Finally, IBM has joined

with Toshiba to create DTI, now one of the world’s

largest display-making operations. But DTI is 1ocated in Japan, and no firm has made the commitment to find a high-volume FPD plant located in

the United States.

The FPD Industry

The industry is currently valued at $11.5 billion,

and most forecasts put it at $20 billion to $40 billion by the year 2000. Having a substantial portion

of that industry in the United States could provide

high-value jobs. However, profitability may vary

across the industry. The AMLCD industry structure has become less concentrated recently as

more than 10 Japanese fins, three Korean firms,

two Taiwanese firms, and one European firm have

built, or are building, high-volume production facilities. If the pattern in other high-volume electronics industries is repeated here, entry by

Korean and Taiwanese firms will drive down

prices.

While product diversification exists in much of

the FPD industry, AMLCDs for portable computers—a large part of the FPDs produced—are moving toward commodity goods; that is, products

with similar core features that are produced by

multiple sources and compete on the basis of

price, rather than any distinguishing characteristics. Commodities tend to command low profit

margins unless the production capacity is insufficient to meet demand.

A recent report by a Japanese investment firm

states that a typical firm that began production in

1992 did not reach profitability until 1994, is likely to show zero profits throughout the second half

of 1995, and will return small profits in 1996 and

1997. 14 Although AMLCD manufacturers had

been unable to keep up with demand during the

early 1990s, the huge level of investment in

AMLCD production in Japan and Korea appears

to be more than sufficient to meet worldwide

demand. 15

Liquid crystal display projection panels can be used with

overhead projectors to present high resolution computer

graphics and video in group settings.

However, other commercial market segments-such as commercial avionics and automotive displays—will involve specialized

products, produced in lower quantities, that will

probably command relatively high profit margins

based on their particular features. FPD applications are quite diverse and have different demands

14 Hideki Wakabayashi, “Is Confidence in the Growth Potential of the LCD Panel Market About to Collapse?” Nomura Research Institute,

Tokyo, Japan, May 25, 1995.

15 One market analyst has documented that announced capacity to produce portable computer screens is five times the demand for 

screens, although announced capacity is greater than actual capacity, which in turn is greater than actual output. See David Mentley, “The Notebook Computer Market and Display Manufacturing Capacity,” SEMI International Display Report, vol. 4, No. 4, May 16, 1995.
Chapter 1 Summary and Policy Issues | 13

with regard to display size, shape, resolution,

power consumption, brightness, color, speed of

switching, interface to other components, and tolerance of environmental stresses, such as sunlight

readability, physical impact, acceleration, temperature, and electromagnetic energy.

These niche segments are likely to be more attractive to U.S. firms for two reasons: 1) the profits will likely be higher than for standardized

displays, and 2) U.S. firms tend to compete better

on the basis of improving product features than on

the basis of cutting manufacturing costs. However, these markets will not be ceded to U.S.

firms; some Japanese and Korean LCD producers

are moving into this market to diversify their commercial markets, and firms such as Hosiden and

Sextant Avionique are already established producers.

Downstream Industries

The commercial benefit of having a high-volume

domestic FPD industry would extend beyond the

FPD industry itself to include downstream U.S.

industries such as computers, communications

equipment, and consumer products. Often the display is the component that differentiates the

downstream product; in such cases, it is important

for the downstream firm to be able to purchase the

best FPDs available. However, because many Japanese FPD producers are vertically integrated

electronics companies, their first priority could be

to supply displays needed for the firm’s own endproducts. As a result, the U.S. firms that make

competing end-products might have to wait longer for the latest displays. Currently, large U.S.

FPD purchasers can negotiate early access because of their buying power; however, this may

not be the case for firms that require smaller volumes or more specialized products. A strong U.S.

FPD industry would make downstream U.S. firms

much less dependent on Japanese FPD producers.

However, even in the absence of a strong U.S.

industry, the competition among FPD producers

in Japan means that many producers want outside

customers to provide assured orders for their products. Also, the entry of new FPD producers based

in Japan, Korea, Taiwan, and Europe will give

U.S. display users more options, though many of

these new producers are also integrated electronics firms that could give priority to in-house

needs.

Access to the best off-the-shelf FPDs is not always enough. Sometimes U.S. end-product producers need displays customized to their

specifications. The best product design might require, for example, a different size display, a new

way of fitting the display into the product housing,

or a special electronic interface between the display and other components. Here, too, Japanese

dominance of the FPD industry could pose difficulties for U.S. firms. In many cases, Japanese

FPD producers have not been interested in customizing displays to U.S. customers’ specifications, particularly for small numbers of displays.

This may change, however, as announced capacity increases are realized.

In addition, U.S. customers may hesitate to

share sensitive product development information

with Japanese display producers who might use

that information to produce competing products.

The often-cited example of this problem is Sharp

Corp.’s Wizard personal digital assistant that

Sharp introduced soon after the Apple Newton,

which was produced by Sharp for Apple. Computer companies typically protect their designs by using rigorous nondisclosure agreements with their

FPD suppliers. These agreements are designed to

limit the flow of design information to competitors, including those within the same corporate

group as the display manufacturer. This seems to

provide a good deal of protection, but the possibility of integrating other functions onto the display

(see below) heightens concerns among some of

these companies. The appearance of new FPD

suppliers will ease these concerns somewhat by

giving U.S. firms more choices, though new suppliers could also limit supply or compromise designs.

The only domestic downstream firm that has

moved to gain direct control over FPD production

is IBM, whose Japanese subsidiary is a joint owner of DTI, a leading FPD manufacturer located in
14 I Flat Panel Displays in Perspective

Japan. This approach allows IBM some vertical

integration of FPD production and computer

manufacturing, but it has to cooperate in display

design and production with its co-owner, Toshiba,

a competitor in portable computers.

Integration

A technical trend that involves building electronic

components on the display itself could have serious implications for the end-users of displays in

the future. By integrating some of an end product’s nondisplay functions into the design and

manufacture of the FPD, there may be savings in

weight, power, number of components, and system costs. Such integration would add value to the

display, and would likely shift profits from the

end-product manufacturer to the FPD manufacturer. Integration would also lead to increased

control over the system design and functionality

by the FPD manufacturer, which would increase

end-product producers’ concerns about access to

needed displays and control over product development.

There is a spectrum of integration possibilities,

from a bare display to a computer on a display. The

current level of integration in computer screens involves mounting on the display only the circuits

that directly drive the display elements, along

with a few associated integrated circuits. The level

of integration could increase through advances in

chip packaging and mounting, further development of emissive displays (in which electronics

can be mounted on the back of the display without

obstructing the light source), or advances in depositing semiconductor circuits onto display

glass. Some experts predict that the next level of

integration will include the set of chips that define

the images to be displayed. The ability to integrate

extensive circuits, such as memory or microprocessor functions, is much further off, and the reasons for doing so are not yet clear.

Spill over to Related lndustries

Another commercial benefit would be the spillover of manufacturing technology into the semiconductor industry. Production of semiconductor

chips and

ment, and

FPDs shares some materials, equipprocessing techniques. Therefore, a

high-volume domestic FPD industry could

strengthen the base of materials and equipment

suppliers for the semiconductor industry, and develop process expertise that can help semiconductor producers.

The spillover is most prevalent in the equipment and materials inputs. FPD manufacturing

equipment leads some sectors of the semiconductor industry because it is designed to handle large

substrates and minimize contamination over large

areas during manufacturing. In the actual

manufacturing process, differences in required

linewidths, substrate size, output per substrate,

and cost of materials limit spillover.

Flat panel display desktop computer monitor offer compact

design and Iow power consumption compared with cathode

ray tube (CRT) monitors.

Because the semiconductor industry is likely to

remain much larger than the FPD industry, it could

provide a strong incentive for the development of

needed material and equipment inputs, even in the

absence of a domestic FPD industry. However, for

some equipment and materials suppliers, a highvolume FPD industry would probably represent a

large portion of their business.

■ National Security

While FPDs are increasingly important to the information-driven military, the low volumes and

nonstandard requirements of military FPDs make
Chapter 1 Summary and Policy Issues | 15

defense contracts unattractive to many commercially oriented FPD producers. DOD’s goal is to

guarantee early, assured, and affordable access to

FPD technology so it can design leading-edge

technology into military systems. DOD states that

investigations of Japanese display suppliers revealed that these firms will not provide it with early and assured access to leading-edge FPD

technology. DOD also states that it cannot afford

to purchase displays from a small, specialized domestic industry. Such an industry will have high

unit costs and will require large R&D subsidies to

keep up with the much larger commercial industry

(and even then will likely lag behind commercial

technologies).

However, the picture is not entirely clear. The

military has a variety of FPD needs; some can be

met by commercial displays, and others require

custom-designed FPDs. DOD can use three complementary strategies to gain secure access to FPD

technology and systems: 1) foreign FPD firms, 2)

U.S. niche FPD firms serving defense and commercial needs, and 3) a possible future high-volume, commercially oriented U.S. FPD industry.

The need for developing the third source depends

on the adequacy of the first two, what the third

would add, and what it would cost.

Foreign Access

In preparing its report on FPDs during 1993-94,

DOD mainly investigated and/or held discussions

with four firms based in Japan—Sharp, NEC,

DTI, and Hosiden—that accounted for more than

90 percent of AMLCD sales in 1993. 16 DOD

found that NEC and DTI were captive producers,

not selling displays on the open market; and Hosiden was judged to be in a precarious financial

state. Sharp, the leading FPD manufacturer, stated

unequivocally that it would not directly supply

DOD with displays and would not make customized FPDs for DOD’s use. Its stated reason was

that, as a matter of corporate policy, it is a consumer firm and will not sell directly for military uses

(some Japanese firms fear that selling in the military market will besmirch their reputation with

Japanese consumers). Sharp may, in part, be concerned that Japanese export control laws could be

interpreted to restrict selling even standard commercial displays to foreign defense forces.

There is also a fundamental business reason for

Sharp’s refusal. The small volumes, detailed specifications, and intrusive verification procedures

demanded by military procurement are not attractive to a high-volume FPD producer. Such a company must concentrate on increasing the

throughput and yield of existing product lines. Responding to detailed specifications for a few thousand displays is not justifiable for an operation

that produces millions of displays per year. Such

production economics will influence decisions regardless of location or ownership of the facility.

However, Sharp and other Japanese firms do

supply off-the-shelf displays to DOD’s contractors, who then customize the displays for military

use. OTA interviews with these contractors have

not revealed problems with timely supply of FPD

technology; however, potential problems exist in

adapting system designs to changes in FPD designs and ensuring an adequate supply of replacement displays after the systems are fielded and the

original design is no longer manufactured. Also,

while Sharp continues to be the leading AMLCD

manufacturer, its share of Japanese LCD production has fallen recently. Sharp’s share of Japanese

AMLCD production fell from 42 percent in 1993

to 36 percent in 1994; during the same period, its

share of PMLCD production fell from 24 to 20

percent.17

16 DOD points out that it is continuously monitoring developments in Asia and is holding follow-on discussions with FPD producers. Richard Van Atta, Special Assistant, Office of Dual Use Technology Policy and International Programs, U.S. Department of Defense, personal communication, June 7, 1995.

17 Market shares calculated from “Scale of Liquid Crystal Industry Assessed,” op. cit., footnote 2, chart 2 for firms’ production estimates,

and figure 1 for estimates of total production; years cited are Japanese fiscal years, which begin on April 1.
16 I Flat Panel Displays in Perspective

Flat panel displays present video and fright instrumentation

date in cockpit avionics using a fraction of the space and

weight of cathode ray tubes and electromechanical displays.

There are numerous other suppliers in Japan,

one established supplier in Korea, and a few other

Korean, European, and Taiwanese firms now investing in AMLCD production. There is a possibility that ongoing production investments will

result in large amounts of oversupply in the

AMLCD market, which could give DOD’s contractors more leverage over suppliers. The increasing application of AMLCDs to commercial

avionics and automotive systems may also increase the availability of FPDs suitable for military systems.

Currently, commercial off-the-shelf displays

are available to domestic integrators for as little as

one-third the cost of comparable custom-made

military displays.18 Thus, foreign display producers are, and could continue to be, a promising

source of low-cost displays for some of DOD’s

needs. The U.S. government could take measures

to enhance this source, for example, by seeking

clarification of Japanese laws regarding export of

dual-use products. It could also encourage Asian

producers to invest in manufacturing sites in the

United States. However, relying on foreign

sources for certain types of FPDs could conceivably put the military in a vulnerable position, susceptible to interruptions of supply and to

manufacturers not always willing to provide DOD

with early and assured access to FPD technology.

Niche Producers

DOD could continue to build and sustain an FPD

industry that concentrates on low-volume military

and commercial applications. Because military

needs are projected to remain small in volume for

the next 15 years (in the low tens of thousands

annually through the year 2009), those needs

could be filled largely by a small domestic industry that would also concentrate on applications

with similar requirements, such as commercial

avionics. As in the previous approach, military demands would be met by off-the-shelf items wherever possible, and by custom production in

selected critical applications. U.S. firms are relatively strong in niche technologies and applications, such as EL, plasma, and custom AMLCD

displays for military, industrial, and medical applications. This is, to a large degree, the result of

several years of investments by ARPA’s HDS program. These technologies and applications are

somewhat distinct from mainstream AMLCD application areas such as portable computers.

DOD has concluded that the small domestic capacity is not suitable for filling defense needs, and

present trends will not lead to this capacity. In addition, DOD states that buying from low-volume

domestic producers would mean high per-unit

costs. l9 Another concern is that the industry’s relatively small revenues could fund only limited

18 OTA estimates based on interviews with military program offices.

19 DOD estimates that the cost per unit for a small-scale defense unique producer is 100 times that of a larger, dual-use plant. Kenneth

Flamm, Principal Deputy Assistant Secretary (Economic Security) and Special Assistant (Dual Use Technology Policy), U.S. Department of

Defense, OTA briefing, May 18, 1995.
Chapter 1 Summary and Policy Issues | 17

R&D, making it difficult to keep up with the much

larger global industry in product development and

manufacturing, and denying military planners the

ability to utilize leading-edge display technologies. DOD argues that it would need to continually

pump in massive amounts of R&D support to help

the U.S. industry keep up and, even then, the U.S.

industry would likely fall behind. The department

has concluded that both high unit costs and the requirement for R&D subsidies would lead to high

total costs to DOD for a domestic industry dependent on niche markets.

However, there are other possible outcomes.

During fiscal years 1991-95, relatively modest

R&D support (on average $117 million per year

from DOD and another $10 million per year from

other government agencies) has made the U.S. industry substantially better able to meet defense

needs. For example, in AMLCDs, OIS has completed a pilot plant and Xerox and Planar have

joined together to produce military displays. Litton Systems Canada and ImageQuest have also

built low-volume AMLCD production facilities,

and plan to compete in the military market.

DOD could also help the U.S. industry tap into

developments abroad. As the Japanese have

shown in many industries, following the technological leader closely need not cost nearly as much

as blazing the technological trail. Being a follower

might cause concerns for DOD’s access to leading-edge displays. However, because the development cycle for military systems is several times

longer than for commercial FPDs, any technology

lags would likely be overshadowed by the development time of the system of which the FPD is a

part. Nevertheless, it could be argued that the long

development time increases the need for early access to display technology by military systems integrators. To address time lags, DOD is moving to

accelerate the insertion of FPD technology into

existing and planned military systems.

Another area in which the domestic FPD industry could take advantage of foreign investments is

in manufacturing technology. Much manufacturing technology is embodied in materials and

equipment used to manufacture FPDs, and the

availability of this equipment outside of Japan has

allowed the development of FPD plants in Korea

and Taiwan. It is reasonable to assume that Japanese equipment and materials suppliers would

also sell to U.S. FPD manufacturers. However, as

with finished displays, foreign materials and

equipment suppliers might not always supply

U.S. FPD firms in a timely manner. Also, tariffs

on input materials, which are often higher than for

finished displays, can put U.S. manufacturers at a

disadvantage. Rationalizing the tariff structure

could help domestic producers.

The lack of a high-volume U.S. FPD industry

could cause the U.S. supply base for FPD materials and equipment to deteriorate, increasing U.S.

dependence on foreign suppliers. Several U.S.

firms have developed key inputs to the FPD production process, including Corning’s glass substrate, Texas Instruments’ driver chips, and MRS

Technology’s panel printer equipment. These

firms are forced to concentrate their business—

and in some cases production—in Japan where the

bulk of FPD manufacturing occurs. They could be

reliable domestic sources; some U.S. production

facilities (including OIS and ImageQuest) have

been equipped with mostly U.S.-made inputs.

High-Volume Domestic Dual-Use Industry

The U.S. FPD industry has less than three percent

of the world market. Therefore, the domestic industry can fund only a small fraction of the

world’s R&D on FPDs, and could thus have

trouble keeping up with the latest technology.

DOD seeks to substantially increase the market

share of domestic producers, which would greatly

increase its ability to stay at the leading edge. Given the small military demand, a larger U.S. industry would have to serve primarily commercial

markets.

However, to create a high-volume commercial

FPD industry requires large investments. The capital investments in a world-class FPD manufacturing facility (close to half a billion dollars in capital

costs for AMLCDs, less for other technologies)

must be followed by a period during which an unknown investment of time and money must be

made to develop a reliable manufacturing process.

Because U.S. firms have not indicated a will-
18 I Flat Panel Displays in Perspective

Compact flat panel displays enable the use of global

positioning system (GPS) data and electronic maps to help

drivers find their way

ingness to make such investments, the dual-use

approach will likely require substantial government investment.

There is some tension between achieving a

large U.S. industry and making that industry relevant to DOD’s needs. The requirements of the

largest applications-AMLCDs for portable

computers and consumer electronics-are different from many military applications. Because

much of the competition in FPDs is based on highvolume manufacturing, R&D done for these applications might not have great relevance to what

DOD requires. Smaller commercial market segments, such as commercial avionics, more closely

match military applications.

Also, it is not clear how much a large U.S. industry would reduce unit costs for custom military

displays. A large commercial plant would likely

produce displays for portable computers, which

require large runs to increase production yield.

Once volume commercial production had begun,

it is likely that DOD would still face the problem

of requiring small volumes of product whose

specifications are different from most commercial

products, requiring separate production runs or

separate lines. Although domestic manufacturers

may be more willing than foreign firms to adapt

commercial lines to fulfill such needs, the added

cost due to tailored production would still result in

military displays with relatively high unit costs.

STRATEGIES AND POLICIES FOR A

DOMESTIC FPD INDUSTRY

The second issue addressed by this report is an

analysis of policies for fostering a high-volume

domestic FPD industry. The discussion of military and economic benefits identified reasons why

government has some interest in developing such

an industry in the United States. In order to analyze existing or proposed policies seeking to address the weak state of the U.S. FPD sector, it is

helpful to review the history of both private efforts

to commercialize FPD technology, and government programs to support generic FPD R&D and

product development for military requirements.

This examination reveals limitations to government influence in developing a high-volume

FPD industry because: 1) U.S. firms have historically chosen not to enter into FPD production, and

2) the government’s display requirements (to date,

largely for military purposes) are small and somewhat different from mainstream commercial

products. Nevertheless, government support has

sustained the industry through difficult times, and

could provide some incentives for broadening the

current production base.

DOD’s current policy, the National Flat Panel

Display Initiative (NFPDI), has set a goal of securing early, assured, and affordable access to

leading-edge FPD technology. DOD’s plan for attaining this goal is to invest in dual-use FPD

technologies, and to induce industry to invest in

high-volume production capacity. However,

DOD’s goal could potentially be reached by taking advantage of existing commercial FPD

sources (which are largely foreign) and custom

military FPD capabilities in the United States.

I Commercialization History

The majority of key FPD innovations were made

in the United States. Demonstrations of the first
Chapter 1 Summary and Policy Issues | 19

liquid crystal, active matrix, plasma, and electroluminescent displays were all made by the end of

the 1970s at U.S. laboratories, often within large

electronics corporations. None of these companies seriously tried to commercialize FPD

technology; several Japanese firms did. The history goes through three time periods.

In the 1970s, as simple devices that could display text and numbers became available, many

firms viewed FPDs as suitable mainly for lowcost, low-information-content displays for products such as watches and calculators—consumer

markets that many U.S. firms were exiting at the

time. Some firms decided that displays were important to their business, but opted to stay with the

mature cathode ray tube or to adopt light-emitting

diodes (which were initially competitive with

LCDs, but were inferior for color or graphic displays). By the end of the decade, as FPD innovators such as Westinghouse and RCA were exiting

consumer electronics altogether, they either

closed down or sold off their FPD efforts. As these

firms discontinued support for FPD research, a

new group of startup FPD firms was formed.

In contrast, Japanese electronics firms were

very interested in the watch and portable calculator markets, and developed LCDs as a way of differentiating their products. The first firm, Sharp

Corp., took notice of the work in American laboratories and began its own research in 1973.

During the 1980s, U.S. startup firms ran up

against an increasingly large development effort

among Japanese firms that were moving from

simple to complex FPDs. By the mid-1980s, several Japanese firms had developed portable television products using AMLCD screens. Aided by

some government programs, low capital costs relative to the United States, and large amounts of internal capital, Japanese firms began to make

investments in LCD production plants by the end

of the decade. The small U.S. firms were able to

secure startup and R&D funding, but very few

were able to raise enough money to build the facilities required for FPD manufacturing. By the end

of the decade, many of the nascent U.S. efforts had

failed.

In the 1990s, earlier Japanese investments have

resulted in the capacity to produce sophisticated

FPDs for consumer markets, and the pace of investment has increased. Announced investments

made by several firms are approximately $400

million for each state-of-the-art AMLCD manufacturing line; some of the firms have built several

lines. In this key FPD technology, Japanese firms

have developed an impressive store of manufacturing expertise, the result of billions of dollars in

manufacturing investments and several generations of display production.

The level of manufacturing sophistication, as

well as the sheer volume of production capacity

installed and announced in Japan, has created the

latest barrier to volume production of FPDs in the

United States. U.S. investments made during the

last few years, primarily by DOD and other government agencies, have sustained the domestic

R&D effort, and several promising technologies

have been identified and, in some cases, taken to

the prototype stage. But private sector commitments to large-scale production of FPDs have not

yet materialized.

❚ Strategies for Market Entry

There are several ways to develop a high-volume

domestic FPD industry. The first is to increase the

size of existing niche markets. By developing new

product types and applications, the market share

held by U.S. firms in LCD (including custom

AMLCD), EL, and plasma technologies could be

increased, even as the size of the overall market

grows. The advantages of such an approach are: 1)

it builds on existing strengths of the domestic industry, 2) it develops capabilities in technologies

of use to military systems, 3) it does not require

fundamental breakthroughs in technology, and 4)

the minimum efficient scale for such an FPD plant

is not large as in AMLCD plants for computer/

consumer markets. This strategy is limited by projections that call for market shares of FPDs other

than active matrix LCDs to diminish to a third of

the market by the end of the decade; market shares

of plasma and EL are projected to remain at a few
20 I Flat Panel Dispiays in Perspective

Flat panel displays in aircraft seat backs allow passengers to

individuality select information and entertainment choices.

percent. However, advances in HDTV could lead

to a large demand for large-screen monitors, an application that some have advocated will be best

filled by plasma displays.

Another approach would be to enter into highvolume production for the largest and fastest

growing market segment-AMLCDs for computer and consumer goods. This would require large

investments in the type of manufacturing technology used by East Asian companies in several large

AMLCD plants, and would involve catching up to

the market leaders by gaining experience in mass

manufacturing. While it may be the only way to

capture a large portion of the FPD market over the

next several years, it would require a series of

plant investments in the half-billion-dollar range,

along with a variable amount of investment during

the startup period at each facility. While such an

approach would satisfy some of DOD’s FPD

needs, modification of many of the displays

would still be required, and not all of DOD’s requirements can be met by AMLCDs.

A final approach would be to exploit a leapfrog

display technology that could either displace

AMLCDs as the market leader or create significant new market niches. Ideally, such a technology would offer both relatively low manufacturing

costs and performance not offered by existing display technologies. Many analysts have suggested

that field emission displays (FEDs) have the potential for unseating AMLCDs in the largest market segments. Several U.S. firms are at the

forefront of FED research, but the performance

and manufacturing costs of standard devices have

yet to be determined. Another potential leapfrog

device is the digital micromirror display (DMD),

which could provide large-screen performance superior to any known FPD. However, the DMD is

only suitable for projection display systems, and

is not a candidate for direct-view or portable devices.

■ Government Activity

Government activity in the FPD industry has taken two principal forms: 1) R&D support for development of military and generic commercial FPD

technologies, and 2) enforcement of U.S. antidumping laws. The support has largely come from

DOD research grants and cost-shared manufacturing development contracts. The FPD antidumping

case during 1990-93 served mainly to alienate

FPD producers from end-users and to separate

producers’ interests by FPD technology, rather

than providing an incentive for domestic production,

Government funding for FPD R&D has averaged more than $100 million per year from 1991

to 1995. Most of this was through ARPA’s HDS

program, an outgrowth of the concerns in the late

1980s that the United States should have a domestic HDTV industry.20 The ARPA HDS program

has made progress in developing an infrastructure

for FPD development by supporting equipment

and materials vendors through efforts such as the

U.S. Display Consortium and the Phosphor

Technology Center of Excellence. It has also

made grants-matched by private sector recipients—to build pilot facilities (called manufacturing testbeds) for domestic FPD manufacturing.

2 0See U.S. Congress, Office of Technology Assessment The BigPicture:HDTV and High Resolution Systems, OTA-BP-CIT-64 (Washington, DC: U.S. Government Printing Office, June 1990).
Chapter 1 Summary and Policy Issues | 21

Smaller efforts have been funded by the National Institute of Standards and Technology in the

Department of Commerce, under its Advanced

Technology Program, for development of generic

FPD manufacturing technologies. The Department of Energy’s national laboratories have also

funded FPD development work, and carry out a

DOD-funded FPD manufacturing program in the

National Center for Advanced Information Components Manufacturing. Basic research in FPD

technology has been supported by the National

Science Foundation, and NASA has funded the

insertion of FPDs into its systems, most notably

the Space Shuttle.

The experience of the FPD antidumping case

demonstrated the limited utility of trade laws as a

tool to foster a domestic industry. First, there were

legal issues, such as the definition of the FPD industry, that were not addressed by the government

in a coordinated manner. Second, there were limitations—such as application of the antidumping

duty to FPDs only, and not to end-products containing FPDs—that made the antidumping duties

less effective. Most importantly, the antidumping

laws are not well suited to address the lack of a

high-volume domestic FPD industry, something

that was determined more by investment choices

of U.S. firms than the pricing practices of Japanese firms.

❚ The National Flat Panel Display

Initiative (NFPDI)

DOD developed NFPDI because it concluded that

maintaining the status quo of R&D and (since

1993) manufacturing testbed funding would not

lead to the development of a domestic capability

to guarantee early, assured, and affordable access

to leading-edge FPD technology, and that foreign

firms were not willing or able to offer such access.

DOD believes that by investing in NFPDI now, it

can provide incentives to the private sector to

make the large investments required for high-volume commercial production, leading to a self-sustaining domestic industry that will allow the

military to buy cheaper FPDs in the future. DOD’s

target is for U.S. production of FPDs to comprise

15 percent of the global FPD market by the year

2000, from less than three percent in 1994.

NFPDI uses some of each of the strategies identified earlier: foreign access, niche markets, and

developing higher volume production. DOD

states that it will continue discussions with foreign producers over access to FPD technologies,

and that the NFPDI grants are open to foreignowned firms that commit to U.S. production. Other aspects of NFPDI continue previous programs

that emphasize specialized defense needs, such as

continued support of AMLCD manufacturing

testbeds at OIS and at Xerox/AT&T/Standish, and

the ARPA HDS core R&D program. However, the

thrust—providing incentives for domestic commercial and military production—is to encourage

higher volume, commercially oriented production. NFPDI is best understood as an umbrella

program that includes the preexisting core R&D

and manufacturing testbed programs funded

through ARPA and two new elements:

1. a series of competitions that award R&D incentives to firms willing to commit to domestic

production, and

2. purchase incentives for the armed services to

insert FPDs into existing and future military

systems.

The R&D incentives program has so far committed $48 million overall to three teams that have

presented the most credible business plans for

moving from prototype versions of FPDs to domestic volume production. The incentives are in

the form of government-funded R&D, matched

by the firms, to be used on significant process or

product technology improvements. In order to receive an incentive, a firm must have made a credible demonstration of its technological

capabilities and have devised clear and feasible

plans for moving the technology into military applications. In addition to matching the R&D funds

from DOD, the firms are required to make a commitment to investing at least three times the
22 I Flat Panel Displays in Perspective

There are several concerns regarding DOD’s

Medical, industrial, and transportation systems require the

display of bright, sharp images in a rugged package, such as

this electroluminescent display

amount of the R&D incentive in production plant

and equipment.21

The purchase incentives are through the Defense Production Act’s Title III program, and provide support to military system program offices in

return for adoption, or acceleration of adoption, of

domestically produced FPD technology. To date,

the Title III program has funded AMLCD technology exclusively, partly through supporting the

Xerox/AT&T/Standish manufacturing testbed

and partly through incentives to military programs that use AMLCDs. Rationalization of purchases by the entire executive branch, although

suggested by DOD, has not gone forward.

approach. First, while NFPDI may assist in the

creation of domestic FPD plants, the special nature of military displays will still raise the cost relative to commercial FPDs. Many of the specific

attributes of military displays are in packaging,

which requires external modifications to the raw

display, and in the specific sizes or shapes required by military systems. Some types of military displays, such as head-mounted systems,

have little commercial demand.

Second, it is not clear that the NFPDI funding

level, timing, and point of application will result

in a successful program. DOD has estimated that a

15-percent global market share by U.S. firms (up

from less than 3 percent in 1994) would result in a

sustainable domestic industry. This market share

would have required approximately $1.2 billion in

sales by U.S. firms in 1994; the actual industry

sales were less than $200 million.22 Projections

for the year 2000 (DOD’s target date for 15-percent market penetration), using growth trends in

current applications only, are for global FPDsales

of $20 billion; more optimistic predictions that

take into account predictions of new display applications go as high as $40 billion. Thus, to reach

DOD’s target, domestic sales must reach $3 billion to $6 billion by 2000. Stanford Resources,

Inc., has estimated the investment-to-revenue ratio for an AMLCD plant to be l-to-l; by this estimate, $3 billion to $6 billion would be required in

total investments in the next few years.23

DOD’s program plan is to award less than $200

million in R&D incentives, which require costsharing, to firms with credible plans for commer21 Mark Hartney, Program Manager, ARPA/ESTOq, U.S. Department ofq Defense, personal communication, June 7, 1995; Richard Van Atta,

Special Assistant, Office of Dual Use Technology Policy and International Programs, U.S. Department of Defense, personal communication,

Aug. 2, 1995. 22 Stanford Resources, Inc., estimates that the value of North American FPD production was$197million in 1994, out of a world market of

$8.2 billion; George Aboud, Stanford Resources, Inc., San Jose, CA, personal communication, June 12, 1995.

23This estimate is for AMLCD plants, and only covers the physical plant and equipment expenditures; it does not consider additional investment required during the startup period. Other types of plants may require less investment; for instance, field emission display developers anticipate that capital expenditures could be more than $100 million less than AMLCD plants. The investment to revenue ratio for such a plant is

uncertain at this time.
Chapter 1 Summary and Policy Issues | 23

cial production using current generation

technology. The cost-sharing will result in $400

million in R&D spending, shared equally by DOD

and firms. In addition, DOD requires that $600

million (three times the DOD grants) in plant and

equipment investments be committed by the

firms. Thus, DOD anticipates at least $1 billion in

direct investment to result from NFPDI, which is

one-third to one-sixth of the amount required to

reach the target market share.

However, DOD makes two further assumptions. First, it estimates that the program will

stimulate an additional $600 million to $1.4 billion in private sector investment in FPD manufacturing facilities. This additional investment

would increase the total to a range of $1.6 billion

to $2.4 billion. Second, DOD argues that, given an

improved understanding of AMLCD manufacturing an the potential for lower cost approaches to

FPD manufacturing, a more appropriate investment-to-revenue ratio would be in the range of

0.5-to-1 to 0.8-to-1.24 If the investment-to-revenue ratio is relaxed by one-third, to 0.67-to-1,

reaching 15 percent market share would require

$2 billion to $4 billion in investments. With these

two assumptions, the potential investment range

straddles the low end of estimated requirements.

As foreign experience has shown, it takes

several years of construction and trial manufacturing runs to bring a facility up to efficient, highvolume production. However, the construction of

such plants has not yet begun in the United States.

This also lowers the probability of developing a

domestic industry with 15 percent of global FPD

sales by the year 2000. DOD’s plans for reaching

this goal may need to be modified, or the goal may

need to be changed. It will be important to monitor

the progress of the first three recipients of the

NFPDI R&D incentives toward high-volume production; to date, none has announced plans for

high-volume production.

Finally, the NFPDI funds that are directly

aimed at providing incentives for production are

primarily for next-generation products. However,

discussions with industry indicate that funds for

improving the current manufacturing process

would probably be a more effective incentive.25

The goals for NFPDI could be realigned to be

more realistic, while at the same time serving

DOD’s needs. By emphasizing technologies other

than AMLCD, DOD could build on a solid

foundation in EL and plasma production and in

development of leapfrog technologies. Under this

approach, DOD could try to increase the production volumes for non-AMLCD displays. For

AMLCDs, DOD could rely on low-cost foreign

suppliers for most applications and high-cost, domestic sources for custom applications. DOD may

already be moving in this direction: although the

manufacturing testbed awards made in 1993 and

1994 use AMLCD technology, the three NFPDI

awards announced last fall went to EL and FED

proposals. At the same time, if AMLCDs increase

in market share as projected, it will be very difficult to capture an appreciable part of the overall

FPD market without high-volume AMLCD

plants.

In seeking to strengthen NFPDI, Congress

could consider the following policy options:

 DOD could pursue relationships with foreign

suppliers more seriously, including the possibility of U.S.-based production. One possibility for U.S. manufacturing is to transfer

technology from Display Technology, Inc., via

its American parent, IBM. Another possibility

would be for Sharp Corp. to invest in AMLCD

production at its plant in Camas, Washington,

24 Flamm, op. cit., footnote 19.

25 DOD notes that there is not always a sharp distinction between current and next-generation production technology. Hartney, op. cit.,

footnote 21.
24 | Flat Panel Displays in Perspective

where it currently performs final assembly of

FPDs. The government could provide incentives for such technology transfers.

 The U.S. government could negotiate with the

Japanese government to clarify Japan’s export

control laws for dual-use technology.

 The R&D incentive awards (which support

next-generation R&D as an incentive to highvolume domestic manufacturing) could be replaced by either support for current-generation

manufacturing technology development or

guaranteed purchases (see below).

 The government could guarantee FPD purchases of certain quantities at certain prices.

Such guarantees could encourage private equity investment and might allow firms to get bank

loans. However, because U.S. military needs

will only represent a few percent of the world

FPD market, guarantees of such purchases by

themselves cannot induce investment sufficient to capture a substantial share of the world

market. U.S. government civilian needs for flat

panel displays or products incorporating them

(e.g., computers) represent additional market

share, but guaranteeing that business to U.S.

FPD makers would likely run afoul of international trade rules.

 Congress could work with the Administration

to broaden the DPA’s Title III program to include technologies other than AMLCDs. This

would give military planners more flexibility

in choosing FPD technologies, and would support growth of niche markets in established

technologies and, potentially, leapfrog approaches to FPDs.
The Domestic

Flat Panel

 Display Industry:

Cause for Concern?

he lack of a strong domestic flat panel display (FPD) industry has led to two areas of concern for the nation: loss

of economic benefits and threats to national security. This

chapter examines the benefits that could accrue to the nation if a domestic high-volume FPD industry were developed.

The economic benefits (or potential losses if such an industry is

not developed) could come in three forms:

1. Profits that could accrue to manufacturers. Manufacturing

displays for a large and rapidly growing market could be

the source of profits and jobs for American companies and

workers.

2. Benefits to FPD users from having access to a domestic industry. Diversification of FPDs and increasing integration of functions onto the display have the potential to put domestic FPD

users at a disadvantage; developing a domestic capability

could ameliorate such problems.

3. Spillovers to related industries. There are some spillovers between FPD and semiconductor manufacturing processes; a

high-volume domestic FPD industry could help the materials

and equipment infrastructure of the semiconductor industry.

The profits that might accrue to domestic producers are dependent on the structure of the world FPD industry and markets, future growth patterns, technology developments, and product

uses. The potential benefits to downstream industries that use

FPDs are dependent on the structure of worldwide supply and the

development of display technology. Possible spillovers to related

industries will be driven by developments in manufacturing

technology and markets. All of these issues are investigated in the

first three parts of this chapter. | 25
26 | Flat Panel Displays in Perspective

The second set of potential benefits from developing a high-volume domestic FPD industry applies to national security. FPD technologies will

increasingly be used in the design, manufacturing,

and retrofit of military systems. The Department

of Defense (DOD) is concerned that it does not

have early, assured, and affordable access to leading-edge FPD technology for these systems.

There are three reasons for this concern:

1. Military demand is and will remain a small

fraction of the world FPD market, thus limiting

the effectiveness of DOD procurement in shaping the domestic industry;

2. Military display requirements are widely varying and often differ from commercial requirements in their final form; and

3. The concentration of FPD manufacturing capacity in Japan to date has raised concerns over

U.S. military access to FPD technologies.

DOD has determined that the best way to meet

its goal of early, assured, and affordable access to

FPDs is through a dual-use strategy that relies on

the development of a domestic high-volume FPD

industry. In order to examine the benefits that

would accrue to the military from the development of such an industry, it is instructive to examine the current status of the development and

procurement process for military FPDs.

As the final section in this chapter illustrates,

many military display requirements are currently

filled through a combination of foreign-produced

commercial displays and domestically produced

custom displays. While foreign suppliers may not

guarantee the timeliness and assured access that

DOD desires, defense contractors that modify foreign-produced commercial displays deliver systems that perform adequately for many missions

at a competitive price. Regardless of whether a

display is produced domestically or abroad, and

for both custom- and commercially manufactured

displays, the cost of adapting displays for military

systems is much higher than the cost of the display

itself.

DEMAND FOR FLAT PANEL DISPLAYS

The demand for FPDs is large and increasing by

more than 10 percent annually (measured by value). There are numerous technologies available

for creating an FPD. The demand is greatest for

liquid crystal displays (LCDs), and, increasingly,

for active matrix LCDs (AMLCDs) used in portable computing devices. The FPD market will exceed $10 billion in 1995, and is expected to range

from $20 billion to $40 billion by the turn of the

century. One source of uncertainty in the estimates

is the relationship between growing demand and

falling prices: it is not clear how rapidly manufacturing costs (and thus prices) for FPDs will fall,

which makes the increase in demand difficult to

predict. While critical to the U.S. military, FPDs

for military systems represent less than one percent of worldwide demand, and are not likely to

grow as a share of the overall market.

❚ Flat Panel Display Technologies and

Markets

FPDs are electronic displays that present images

in a thin package (see box 2-1). FPDs have been

used in two ways. First, they have been widely

adopted as replacements for mechanical or other

types of electrical displays for indicators, gauges,

and dials in numerous systems, such as watches,

calculators, gas pumps, and test equipment. Second, more complex FPDs have enabled the development of laptop computers, notebook computers, personal digital assistants, and other handheld and portable computers. In the future, FPDs

may begin to replace bulky cathode ray tubes

(CRTs) in desktop computer monitors and home

televisions, and may allow large-screen televisions thin enough to hang on a wall.

The world FPD industry has grown steadily

since the early 1980s (see figure 2-1). Growth was

fueled in the mid-1980s by the introduction of

FPD-based pocket televisions, and in the early

1990s by the use of FPDs in the rapidly growing

laptop computer market. Throughout the 1990s,
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 127

Flat panel display (FPD) is a term used to describe technology that presents visual information in a

package with a depth much smaller than its horizontal or vertical dimensions. FPDs can be used in

many applications that the cathode ray tube (CRT), the mainstay of video displays for five decades and

used in most home televisions and desktop computer displays, cannot The CRT is generally as deep

as the width of the screen; because the entire CRT IS glass, the package IS both heavy and large

In general, FPDs are constructed by sandwiching a material that IS electro-optically active (one

that—in response to an applied electric field-either modifies the transmission or reflection of an external light source, or emits light) between glass plates. Transparent horizontal and vertical electrical conductors are deposited on the plates, forming rows and columns in a grid pattern. Individual picture elements, or pixels, are defined by each intersection of a row and a column. The modulation or emission of

light by each pixel is controlled through the application of voltage to the electrodes. In some displays

(including passive matrix liquid crystal displays), the voltage difference between a pixel’s row-and-column electrodes directly acts on the material between the glass plates; in other displays (including active matrix liquid crystal displays), the voltages on a pixel’s row-and-column electrodes are used to set

an electronic element such as a transistor, which in turn acts on the material between the glass plates.

The latter approach gives better performance, but the added electronic elements make manufacturing

more difficult.

Figures and text can be represented on FPDs by the application of electrical signals to the display

matrix. The FPDs that account for the largest market share (measured by value), demonstrate the fastest predicted growth, and use the most challenging manufacturing process are high-information-content displays. ’ These displays are demanded by most computer, business, communications, and transportation applications, and a large fraction of consumer and industrial applications (see appendix A for

a more detailed discussion of FPDs).

1 .

2 .

3 .

4,

There are four types of commercially available high-information-content FPDs:

Passive matrix liquid crystal displays (PMLCDs) are one of the main types of transmissive displays. They

use liquid crystal materials, controlled by electrical signals on a grid, to affect the transmission of light.

Active matrix liquid crystal displays (AMLCDs) are another type of transmissive display. The AM LCD builds

on the PM LCD by using switching elements located at each pixel to control display performance.

Electroluminescent displays (ELs) are one type of emissive display currently available. EL FPDs use a solid

phosphor material that glows when exposed to an electric field.

Plasma displays, another type of emissive display, use a gas to create a single color directly or to create

multiple colors indirectly by energizing colored phosphors.

Other FPD technologies are being or have been evaluated and developed for high-information-content applications; the two most promlsing are: 1) the field emission display (FED), a type of emissive

FPD that IS a flat version of a CRT; and 2) the digital micromirror device (DMD), a reflective FPD that is

an array of miniature mirrors whose positions can be electrically controlled to reflect light, forming an

image on a screen. The four most common high-information-content FPD technologies can be

compared with the CRT in terms of several performance criteria (see table below).

(continued)

1 The U S Department of Commerce has defined any display with more than 120,000 pixels—corresponding to a

full-page display, consisting of 25 rows by 80 columns, with 5 by 7 dot matrix characters—as high information content A

more typical format IS VGA (video graphics adapter), comprised of 480 by 640 pixels, in a color display, there are three

copies of each pixel, for nearly one million pixels
28 I Flat Panel Displays in Perspective

Flat Panel Display Technologies Performance Comparison

Passive Active Electro- Cathode ray

Feature matrix LCD matrix LCD luminescent Plasma tube

Resolution

Luminance

Contrast

Ambient contrast

Gray scale

Number of colors

Viewing angle

Screen update time

Temperature range

Vibration capacity

Power

Volume

Weight

medium

medium

medium

medium

low

medium

low

slow

narrow

high

low

low

low

high

high

high

high

high

high

medium

fast

narrow

high

low

low

low

medium/high

medium

medium/high

low/high

medium

medium/high

high

fast

wide

medium

medium

low

low

medium/high

medium

low/medium

medium

medium

medium/high

high

fast

medium/wide

medium

medium

low

medium

high

high

medium

low

high

high

high

fast

wide

low

high

high

high

KEY LCD = Iiquid crystal display

NOTE Shaded boxes indicate display technology weaknesses,

SOURCE Louis D. Silverstein, “Color in CRT and LC Displays, ” 1994 SID International Symposium Seminar Lecture

Notes (Santa Ana, CA Society for Information Display, 1994), voI 2, p F-3/5.

■

■

■

■

■

■

■

■

Resolution is a measure of the smallest detail that can be displayed, for computing tasks that use graphic

Interfaces (such as Windows), high resolution is required,

Luminance is a measure of brightness, contrast is a measure of the ratio of a light pixel to a dark pixel,

and ambient contrast is a measure of contrast in the presence of ambient light Many applications, like

portable devices, demand high luminance, contrast, and ambient contrast.

Gray scale is the number of discrete levels (shades) to which a pixel can be set; this affects the degree

of shading possible in a monochrome (black and white) display, and is a factor in the number of colors

achievable by a color display.

Viewing angle is the angular measure of the decrease in contrast that results in viewing the display from

a position other than head-on, a low viewing angle means that the user must be directly in front of a screen

in order to perceive a comfortable level of contrast

Fast screen update time IS required for the display of full-motion video, as from a television signal, and

for the display of some computer tasks, such as rapid cursor movement,

Temperature range IS the breadth of ambient temperatures in which the display can effectively operate,

some displays are adversely affected by exposure to temperatures outside of a set narrow range,

Vibration capacity refers to the ability of a display to withstand external shocks without adverse effects

on performance.

Finally, low power consumption, volume, and weight are key attributes of portable displays

AMLCDs match or exceed the performance of CRTs in all categories except for viewing angle and

temperature range. The AMLCD is the fastest growing type of display technology, and it is likely to surpass the PMLCD as the largest FPD market segment, in terms of value, in 1996. The reason that AMLCD

technology has become the leading approach to FPD manufacturing is that the combination of high performance, low weight, and small volume it offers makes it well suited for use in portable computing devices, a fast-growing market, The main Iimitation to adopting AMLCD technology in other systems—such

as home televisions and desktop computers—has been the high manufacturing costs relative to the

(continued)
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 129

CRT, a mature and relatively inexpensive technology. EL and plasma displays match or exceed the performance of AMLCDs in some measures, and are used for military, industrial, medical, and other applications that demand high performance in viewing angle or temperature range. While offering the lowest overall performance, PMLCDs are a mature technology and are inexpensive to manufacture

PMLCDs offer adequate performance for applications such as simple text/numeric displays in equipment, appliances, and timepieces, and have also remained a low-cost alternative to AMLCD in less demanding portable computer applications.

The growing dominance of the AMLCD could be challenged by one of several FPD technologies in

development. in particular, FEDs are anticipated to match or exceed the performance of AMLCDs, and

may also have significantly lower manufacturing costs.

SOURCE Office of Technology Assessment, 1995

2 0

5

1.66 2.03

Actual

4.44 4.91

7.14

5.51

9.33

13.04

11.5

Projected

16.12

19.51

17.73

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

SOURCE David Mentley, Director, Display Industry Research, Stanford Resources, Inc. , San Jose, CA, personal communication, Mar 21, 1995
30 I Flat Panel Displays in Perspective

Consumer 20% Transportation 5%

siness/Commercial 10%

Communications 4%

Industrial 6%

Computer 55%

1995 Total Market =$11.5 billion

Consumer 18%

Transportation 3%

Communications 4% /

Industrial 5%

2001 Total Market = $22.5 billion

SOURCE: David Mentley, Director, Display Industry Research, Stanford

Resources, Inc. , personal communication, Mar 21, 1995

rapid growth in the market for portable computers

has driven the demand for FPDs and provided a

large application base for which standard types of

FPDs have been developed. in this large portion of

the market, manufacturing-based competition has

emerged; profits are dictated by manufacturing

costs rather than product design.

The projections in figure 2-1 represent an average annual growth rate of 12 percent between

1995, when the market is projected to be $11.5 billion, and the year 2001, when it is projected to be

$22.5 billion. Other sources have used higher

rates of growth in their projections. One source is

the Japanese electronics magazine, Nikkei Microdevices, which calculated that the growth rate of

LCD production from 1990 to 1995 has averaged

32 percent per year, with a predicted 1995 production value of 1.25 trillion yen (approximately $15

billion at current exchange rates).1 Projecting a

continuation of this growth rate, the magazine has

estimated that LCD production will exceed 4 trillion yen (approximately $47 billion using current

rates) by the turn of the century. The disparity in

these estimates reflects the uncertainties in this

growing industry. The more conservative estimate

in figure 2-1 is based on projected growth rates in

current applications; it does not include potential

new FPD applications. The Japanese estimates are

based on production plans; they do not take into

account whether or not the displays will actually

be purchased (seethe following section on display

supply).

The FPD technology projected to lead the market in growth is the active matrix liquid crystal

display (AMLCD, see box 2-l), which is used

in computers, the fastest growing application.

Most computer applications are portable devices:

laptops, notebooks, and handheld or pen-based

computers that require light, compact, and lowpower-consumption displays. Computers have

been the largest FPD application for the past several years and demand is projected to grow faster—at an average annual growth rate of

approximately 16 percent—than any other segment between 1995 and 2001 (see figure 2-2).

Firms have manufactured notebook screens that

are increasingly larger in diameter and higher in

1 “Scale of Liquid Crystal Industry Assessed,” in Flat Panel Display 1995, Nikkei Microdevices, Dec. 9, 1994, pp. 74-80 (translation provided by Maurice Cloutier, Foreign Broadcast Information Service). The estimates were taken from a poll of Japanese and Korean LCD producers; the years are Japanese fiscal years, which begin on April 1. in an article in the same publication, Samsung predicted a $28-billion LCD

market by the year 2000.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 31

resolution, and desktop PC and workstation FPDs

are now appearing in the market.

Other applications include consumer items, industrial equipment, communication systems, business systems, and transportation systems. The

consumer items that use FPDs include portable

televisions, video games, camcorders, personal

organizers, and memo devices; future applications may include high definition televisions. Industrial equipment includes test and analytical

equipment, medical instrumentation, and factory/

inventory control devices. Communications applications include portable phones, video phones,

and pagers. Business systems incorporating displays include office equipment, overhead projectors, financial terminals, and large-screen public

displays. Displays in transportation systems include instrumentation in pleasure boats, aircraft

cockpits, and automobiles, as well as passenger

entertainment systems in aircraft, trains, and, potentially, automobiles.

High-information-content displays (see box

2-1) account for more than 90 percent of the display market, measured by value. These FPDs are

currently based on several technologies, and many

more technologies are in the research and development stage. The leading technologies are the

passive matrix liquid crystal display (PMLCD)

and the AMLCD, each accounting for 43 percent

of the market in 1995 (see figure 2-3). AMLCD

technology is projected to grow at 16 percent

annually between 1995 and 2001, far outpacing all

other technologies. The growth of AMLCDs may

be limited by new color PMLCDs using dual-scan

technology, which approaches AMLCD performance at lower prices.

Much smaller shares are held by plasma displays (3 percent) and electroluminescent (EL) displays (1 percent), neither of which is expected to

grow as a share of the market before 2001.

Technologies that are only used for low-information-content applications, such as alphanumeric

indicators on appliances, make up another 10 percent of the FPD market. The leading technologies

in this market segment are light emitting diodes

(LEDs) and vacuum fluorescent displays (VFDs),

which to date have not been suitable for high-information-content displays. There is also a possibility that technologies not yet in production, such

as field emission displays (FEDs) and digital micromirror devices, may capture significant market

share in coming years.

❚ The Military Market

Current military applications include command

and control systems, aircraft cockpits, ground vehicles, air traffic control, and portable and head

mounted infantry systems. However, the military

portion of the FPD market is quite small, and is

not expected to exceed a few percent of the total

world market in the foreseeable future (see figure

2-4). DOD’s estimate of the military demand for

FPDs over the next 25 years shows modest growth

until 2009; projected annual demands range from

15,000 to 25,000 displays (see figure 2-5),

compared to an overall market demand in the tens

of millions. After 2010, when head mounted systems are expected to become standard equipment

for soldiers, the annual requirements will increase

sharply, but are not expected to exceed 100,000.

The largest component of future military demand—displays from 0.5 to 5 inches in diameter

used in projection and head mounted systems—is

currently a small part of the commercial market,

but may be used in the future for commercial projection displays and virtual reality systems.

SUPPLY OF FLAT PANEL DISPLAYS

The FPD industry is diversified in terms of applications markets and technology types, but there

is an increasing trend toward the use of LCDs, and

particularly AMLCDs, in portable computer and

communications devices. During the early 1990s,

a few Japanese companies such as Sharp, Toshiba,

and NEC dominated FPD production through

large investments in LCD manufacturing.

More recently, however, large investments in

LCD production have been made by many other

Japanese companies, as well as a few Korean, Taiwanese, and European companies, thus decreasing the industry concentration. Although FPD

demand growth rates are projected to be high, in-
32 I Flat Panel Displays in Perspective

vestments announced worldwide in FPD manu- margins have deteriorated since the end of 1994

facturing facilities will likely result in manufac- for leading AMLCD producers. The report asserts

turing capacity that will exceed demand. This will that a typical firm that began production in 1992

result in downward pressure on FPD prices did not reach profitability until 1994; is likely to

(which could stimulate additional demand), and show zero profits throughout the second half of

could also result in reduced profits for FPD 1995; and will return small profits in 1996 and

manufacturers. A recent report states that profit 1997.2

2 Hideki Wakabayashi, “Is Confidence in the Growth Potential of the LCD Panel Market About To Collapse?” Nomura Research Institute,

Tokyo, May 25, 1995.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 133

0.9

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

NOTE Values for 1995-2001 are projections

SOURCES Military market figures from Len Zuga, U S Military Display Markets :New Technologies, Upgrades, and Government

Funding Brighter? Market, Report 5207-16 (Mountain View, CA Frost& Sullivan, 1995), figures 3-1 and 3-2, size of world market

from figure 2-1 above

The large investments made by East Asian

firms have created barriers to production for potential U.S. entrants, and the recent growth of investment in AMLCDs has made entry in that

technology even less attractive. Taken as a whole,

the small investment made by U.S. firms has been

spread among several FPD technologies, and has

not been sufficient to develop high-volume production capabilities.

❚ FPD Production in Japan

Most current FPD production is in LCDs produced in Japan. During Japanese fiscal year 1994,

LCD manufacturers planned to produce more than

$8 billion in displays (see table 2-l). Japanese

manufacturers have made large investments in

LCD manufacturing plant and equipment since

the late 1980s. Definitive measures of investments are difficult to obtain because of difficulties

in verifying whether announcements have been

followed through, uncertainties in determining

exactly what the investments were for (i.e., physiDisplay sizes

1995-1999 2000-2009 2010-2019

SOURCE :U.S. Department of Defense, Building U.S. Capabilities in

Flat Panel Displays: Report of the Flat Panel Display Task Force, October 1994, figure 3-8
34 I Flat Panel Displays in Perspective

FY 1994b

FY 1989-93b FY 1994-95b

production value

Company investment (reported) investment (planned) (forecast)

Sharp 1,600 870 2,300

Toshibac

820 850 1,100

NEC 430 500 800

Seiko-Epson 535 180 700

Sanyo Electricd270 300 630

Hitachi 250 200 550

Casio Computer 835 100 450

Optrex 170 100 430

Hosiden 380 190 350

Matsushita Electric 640 200 350

Kyocera 105 150 130

Mitsubishi Electrice

525 430 40

Fujitsu 290 230 20

Othersf

640 200 400

Total 7,490 4,500 8,250

KEY: LCD = Iiquid crystal display

NOTES:

aThe values are reported in yen, because the Investments are given for multiple years in some cases, and there have been large fluctuations in

yen/dollar exchange rates during that period, no conversion IS made At the 1994 exchange rate of 100 yen/dollar, the figures translate to millions

of dollars

bThe Japanese fiscal year begins on April 1; FY 1994 ended March 31, 1995

C Figures for Toshiba include its investment in and production share from Display Technology, inc., a joint venture with IBM Japan.

dFigures for Sanyo Electric include Tottori Sanyo.

eFigures for Mitsubishi Electric are mainly comprised of Advanced Display Inc. , a joint venture with Asahi Glass.

fAlps Electric, Canon, Citizen Watch, Ricoh, Rohm, Seiko-Denshi Koygo, Sony, and Stanley Electric.

SOURCES. “Scale of Liquid Crystal Industry Assessed,” in Flat Panel Display 1995, Nikkei Microdevices, Dec. 9, 1994, pp. 74-80, chart 2 (translation provided by Maurice Cloutier, Foreign Broadcast Information Service), updates from H Wakabayashi, “IS Confidence in the Growth Potential of

the LCD Panel Market About to Collapse?” Nomura Research Institute, May 25, 1995

cal plant, capital equipment, or materials), and

other uncertainties. However, announced capital

expenditures are a reasonable guide to the order of

magnitude of Japanese FPD investments.

Total investments made through 1993 resulted

in roughly equal amounts of LCD output in 1994.

The leading firms had lower ratios of investment

to production than other firms; this is likely due to

the weighting of investments by the leaders toward the beginning of the measurement period,

which has resulted in increased production capacity. If one equates the value of production with

revenues, these estimates bear out an investment

to revenue ratio of l-to-l made by one industry

analyst. 3

The top three producers of LCDs (and, more

broadly, of FPDs) in 1995 are Sharp, Toshiba, and

NEC. Sharp is the leading producer of both

PMLCDs and AMLCDs (and is also a leading

producer of EL FPDs). Sharp’s dominance in

3 See David Mentley, “Forecast Inflation,” /international Display Report, Stanford Resources, Inc., San Jose, CA (distributed electronically

by SEMI Newsletter Service), Nov. 15, 1994. Announced production does not equal revenues, since some production may have gone unsold

and some sales may be from preexisting inventory. These figures are for LCD plants only, and do not include investments in other FPD technologies such as plasma; for example, Fujitsu, NHK, and Matsushita are leading plasma manufacturers. Fujitsu recently announced that it will invest

$941 million in a plant to produce plasma screens measuring one meter in diagonal; see “Fujitsu Betting On Plasma Display s,” Electronic Engineering Times, June 5, 1995, p. 28.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 135

Generation Zeroa First Second Third Fourth

Year begun 1987 1990 1993 1995 around 1997

Size of glass substrate 150x1 50 mm 300x350 mm 370x470 mm 550x650 mm 560x720 mm

150x200 mm 300x400 mm 380x480 mm 500x600 mm

320x400 mm 400x500 mm 500x700 m m

Displays per substrate 1 (6-inch) or 4 (6-inch), 6 (7-inch), 6(1 O-inch), 9(10-inch),

(number and size) 1 (9-inch) 4 (8-inch), or 4 (l O-inch), or 2 4 (14-inch), or 1 4 (1 6-inch), or 2

2 (l O-inch) (14-inch) (30-inch) (21 -inch)

New applications Portable TV Laptop PC Portable and Engineering

desktop PCs workstation

NOTE.

aThe first active matrix Iiquid crystal display fabrication lines used converted semiconductor equipment, dedicated lines were not built until the

late 1980s

SOURCES: Tannas Electronics, cited in Pete Singer, "Flat Panel Displays: An Interesting Test Case for the U.S. ,“ Semiconductor International, July

1994, P 78; Lawrence E Tannas and Robert A Burmeister, “Electronic Display Forum& EDEX’95 at SEMICON/FPD Yokohama, ’’ATlP95 20, Asian

Technology Information Program, May 13, 1995

LCD production has led to concerns about the potential for monopolistic behavior. However, due

to the continuing investments made by more than

15 other Japanese firms (see table 2-1) and other

companies, Sharp’s share of Japanese LCD production has fallen. in 1993, Sharp’s share of Japanese AMLCD production value was 42 percent,

but fell to 36 percent in 1994; in PMLCDs, its

share fell from 24 percent to 20 percent. 4 Toshiba

(including its share of Display Technology Inc., a

joint production venture with IBM) is the thirdlargest producer of both AMLCDs and PMLCDs;

most of its AMLCD production is used internally,

but it sells PMLCDs and some AMLCDs on the

merchant market. NEC is the second-largest

AMLCD producer (it does not make PMLCDs); it

has been increasing the share of its production

sold on the merchant market, from 30 percent in

1994 to 50 percent by the end of 1995.5

AMLCD manufacturing has been through several stages or generations (see table 2-2). The early

investments were devoted to funding the first two

generations of AMLCD manufacturing technology; present and planned investments are financing

the third and fourth generations. As manufacturing processes have become more complex, the required investment has increased. However,

capacity has increased in each generation, and as

each firm increased its manufacturing experience,

the yield (percentage of working displays) steadily improved. These two factors have brought

down manufacturing costs. Existing LCD production lines are comprised of three generations;

Sharp is the leading adopter of new production

technology (see table 2-3). Actual output of working displays from existing plants varies with the

number of displays per substrate and the yield

rate.

Several government-supported consortia in Japan have conducted R&D on display technologies, and government corporations have also been

involved. The leading government agencies for

display research have been the Ministry of Trade

and Industry (MITI) and the Ministry of Posts and

Telecommunications (MPT). The primary government consortia and corporations are:

4 Market shares calculated from “scale of Liquid Crystal Industry Assessed,” op. cit., footnote 1, chart 2 for firms’ production estimates and

figure 1 for estimates of total production. Years cited are Japanese fiscal years, which begin on April 1.

5 Charles L. Cohen, “Japan Puts More into LCD plants,” Electronic Buyers’ News, June 5, 1995, p. 1.
36 I Flat Panel Displays in Perspective

Initial capacity Full capacity

cost Substrate (substrates/ (substrates/

Company Generation Plant (¥100M a) size (mm) Date online month) b month) b

Sharp 1

2

2

Tenri NF1

Tenri NF2

Tenri NF3

Mie 1

Mie 2

Himeji

Himeji

IBM Yasu

Kagoshima 1

Kagoshima 2

Akita

Kobe

Kobe

Mobara

Mobara

Kochi (2)

Yonago

Yonago

Kumamoto(1)

Kumamoto(2)

270

250

250

530

n/a

280

320

400

200

330

300

180

200

100

300

285

205

180

280

130

320 X 400

360 X 465

370 x 470

n/a

550 X 650

Fall 1991

May 1994 June

1994

July 1995

July 1995

n/a

n/a

n/a

n/a

10,000c

30,000

15,000C

15,000C

5,000 C

n/a

3

n/a

DTI 1

2

3

300 x 400

360 X 465

550 X 650

Oct. 1991

June 1994

4th qtr. 1995

n/a

n/a

10,000

30,000

30,000

65,000 C

NEC 1

2

300 x 350

360 X 465

370 x 470

Aug. 1990

Dec. 1993

Late 1995

n/a

15,000

15,000

22,000

30,000

n/a 30,000

Hosiden 1

2

270 X 320

400 x 500

Aug. 1993

Late 1995

n/a

10,000

60,000

25,000 C

Hitachi 1

2

200 X 270

370 x 470

Late 1989 Late

1994

n/a

n/a

10,000

30,000

Casio 2 370 x 470 May 1994 n/a 12,000

Fujitsu 1

2

300 x 400

370 x 470

Mar. 1994

1996

n/a

n/a

8,000

26,000

Mitsubishi 1

ADI 2

300 x 400

370 x 470

Feb. 1993

June 1995

n/a 15,000

10,000 25,000

NOTES.

aThe values are reported in yen; because the Investments are given for multiple years in some cases, and there have been large fluctuations in yen/

dollar exchange rates during that period, no conversion IS made. At the 1994 exchange rate of 100 yen/dollar, the figures translate to millions of

dollars

bThe actual number of displays varies: see table 2-2 for potential displays for each substrate size.

cEstimate made by Nikkei Microdevices

SOURCE: “Scale of Liquid Crystal Industry Assessed,” in Flat Panel Display 1995, Nikkei Microdevices, Dec. 9, 1994, pp. 74-80, chart 3 (translation provided by Maurice Cloutier, Foreign Broadcast Information Service).

The program seeks to develop an LCD projector for high definition television (HDTV) applications. There are several companies

participating in the $30-million program, again

with 70-percent funding from JKTC. The primary participants are NHK, Seiko-Epson, and

NEC.

The Japan Broadcasting Co. (NHK), Japan’s

public broadcasting corporation, has been conducting research in HDTV for the past few decades. Its Science and Technical Laboratories

have a $60-million budget that funds nine research divisions, several of which involve display technologies. NHK has concentrated on

large color plasma panels for HDTV monitors.

It has a division dedicated to transferring

Giant Technology Corp. (GTC), a consortium

organized by the Japan Key Technology Center

(JKTC, a joint partnership between MITI and

MPT) in 1989 to develop meter-sized AMLCD

panels for high resolution displays and other

applications, including printing, copying, and

solar cells. This ambitious goal has since been

scaled back and GTC has begun to emphasize

AMLCD process technology and color plasma

display research. GTC has a budget of approximately $25 million, 70 percent of which comes

from JKTC and the remainder from the 17

member companies, including Thomson and

Hoescht.

High Definition Television Engineering Corp.

(HDTEC), also a JKTC-funded consortium.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 37

technology to the private sector, and carries out

joint development projects with industry.

 Nippon Telephone and Telegraph (NTT), which

does not manufacture equipment, but conducts

research and transfers it to the private sector.

Traditionally the government telephone corporation, NTT is now partially privatized.

❚ FPD Production in East Asia and

Europe

In addition to Japanese FPD investments, firms in

East Asia—led by Samsung of Korea—and in Europe—led by the consortium known as the Flat

Panel Display Co.—are also adding to the global

FPD production capacity.

Korea and Taiwan

Throughout East Asia (outside of Japan), there are

efforts to enter into the FPD industry; there is even

assembly of simple LCDs in the People’s Republic of China. In 1994, 7 percent of PMLCDs and

1 percent of AMLCDs were manufactured by East

Asian firms based outside of Japan.6 Especially in

PMLCDs, manufacturing has matured to the extent that Japanese firms have moved production—28 percent in 1992—to foreign sites owned

by Japanese firms.7

Japanese firms do not yet produce AMLCDs

outside of Japan. However, firms in the Republic

of Korea (South Korea)—Samsung in particular—are leading the race to develop AMLCD production capabilities, followed by companies in the

Republic of China (Taiwan). Korean and Taiwanese firms have entered the FPD industry for different reasons.8 In general, Korean firms appear to

view FPDs as an important industry on its own as

a potential successor industry to CRTs. CRTs are a

$2-billion industry in Korea, but Samsung estimates that the value of LCD production will overtake that of CRTs in 1998.9 FPDs are also viewed

as a companion industry to semiconductors, one

that could take advantage of the existing manufacturing infrastructure. It is also hoped that a strong

FPD industry will create large amounts of export

income; because the level of production for portable computers in Korea is low, firms plan to export

the screens to U.S. computer companies.

The drive to develop FPD manufacturing capabilities in Taiwan appears to be related to its role as

a home for personal computer manufacturers. Taiwanese companies have an even greater share of

the world computer monitor market (approximately 50 percent) than do Korean firms, and have

a growing share of the portable computer market.

In 1993, earnings from notebook PC production

exceeded those for desktop PC production, and

one source estimates that one-quarter of all notebook computers produced in 1995 will be made in

Taiwan.10 However, during 1993, an insufficient

supply of LCD screens meant that Taiwanese producers were unable to fill many orders; these firms

appear determined to become more independent

of FPDs supplied by Japan.

An issue that firms in both nations must address

is the lack of a materials and equipment infrastructure; most inputs are imported from Japan. Acquiring such inputs from other nations allows the

new producers to take advantage of the technology embodied in the inputs. However, it also keeps

6 David Mentley, Director, Display Industry Research, Stanford Resources, Inc., San Jose, CA, personal communication, Mar. 21, 1995.

7 Data from the Japanese Ministry of International Trade and Industry, cited in Department of Defense, “Building U.S. Capabilities in Flat

Panel Displays: Report of the Flat Panel Display Task Force,” October 1994, p. IV-2.

8 Tomohaku Nakamori, “Korea and Taiwan Furiously Pursuing Japan in TFT-LCD,” Nikkei Electronics, May 23, 1994, pp. 125-134

(translation in JPRS Report: Science & Technology Japan, Mar. 15, 1995).

9 Yoichi Funaki and K. Nozaki, “Korean Yield Shows Remarkable Growth; Taiwan’s Production Moves Toward Stable Supply,” in Flat

Panel Display 1995, op. cit., footnote 1, pp. 109-112.

10 See David Lieberman, “Taiwan Lags in Active-Matrix LCDs,” Electronic Engineering Times, Oct. 17, 1994, p. 27; Funaki and Nozaki,

op. cit., footnote 9; and Scott McCartney, “Small Companies Gain Ground in Notebooks by Buying From Taiwan,” Wall Street Journal, June 1,

1995, p. B1.
38 I Flat Panel Displays in Perspective

Company Investment

Samsung 1,250

LG Electronics 875

Hyundai 575

Daewoo-Orion 550

SOURCES: Nikkei Microdevices data, cited in William C.

O’Mara, “Active Matrix LCD Manufacturing,” in 1994 SID International Symposium Seminar Lecture Notes (Santa Ana, CA:

Society for Information Display, 1994), voI. 1, p M-3/19; “South

Korea. Industry Planning Major Drive Into LCD Market,” FBIS

Science & Technology Perspectives, Feb. 28, 1994, “ROK Moving ‘Full Scale’ Into Next-Generation Display s,” Pacific Rim Economic Review, June 29, 1994, pp. 25-26; and Laxmi Nakarmi,

“Look Out World—Samsung Is Coming, ” Business Week, July

10, 1995, p. 52

the cost of production high because spending on

FPD manufacturing equipment and components

(driver chips, color filters, and backlights) comprises the majority of FPD manufacturing costs.

To gain access to leading-edge technology, Korean firms have relied on technology transfer

agreements with second-tier Japanese firms and

some American firms. Samsung has taken several

such steps, including forming an alliance with Toshiba in 1993 to develop LCD integrated circuits;

signing a cross-licensing agreement with Fujitsu;

and, through the joint venture Samsung-Corning,

constructing a color filter factory expected to have

an annual capacity of 1.5 million 10-inchfilters.11

Hyundai is a majority owner of ImageQuest, a

California firm formed in 1992 with American researchers. LG Electronics (formerly Lucky-Goldstar) formed a $100-million joint research

corporation with the Japanese company Alps

Electric in 1994, and also has a technology agreement with Hitachi.12 Orion Electric, a subsidiary

of the Daewoo Group, has a technology transfer

agreement with Toshiba for PMLCDs. Orion has

announced plans to invest in AMLCDs in 1995.

Samsung is the most experienced LCD producer, having begun production of PMLCDs in 1984

and AMLCDs in 1993. It was the first Korean

company to mass produce AMLCD screens for

notebook computers, and has produced displays

as large as 14 inches. LG Electronics and Hyundai

began PMLCD production in 1988 and 1990, respectively; LG will begin mass production of

AMLCDs later this year, and Hyundai is transferring AMLCD technology from ImageQuest to a

line in Korea. Announced investments in LCD

manufacturing by these firms exceed those of

some of the lower tier Japanese firms (see table

2-4).

Monthly production of notebook-size

AMLCDs in Korea (primarily by Samsung and

LG Electronics) is expected to reach 150,000

screens by the end of 1995. 13 Hyundai expects to

produce approximately 30,000 displays per

month beginning in 1996. in Taiwan, mass production is scheduled to begin in 1997 (see table

2-5). There are several manufacturers of PMLCDs

in Taiwan, including Picvue, Nan Ya Plastics, and

Chung-Hua Picture Tubes. AMLCD production

has been led by Unipac and PrimeView International, both of which are producing AMLCDs up

to 6 inches in diagonal and are carrying out pilot

production of notebook screens. There have been

mixed reports on the progress of these firms toward volume production, citing difficulties in attracting skilled engineers and in maintaining

access to components. *4

11 "ROK Moving ‘Full Scale’ Into Next_ Generation Displays,” Pacific Rim Economic Review, June 29, 1994, p. 26; “Fujitsu, Samsung

Agree To Exchange LCD Technology, ’’Nikkei Weekly, Apr. 17, 1995, p. 22.

12 “Goldstar Signs New Foreign Technology Agreements,” Maeil Kyongje Sinmun, June 21, 1994, pp. 1 , 4 (summary in Pacific Rim Economic Review, Sept. 21, 1994); “South Korea: Liquid Crystal Display Assessed,” FBIS S&T Perspectives, vol. 10, No. 3, Mar. 31, 1995, pp.

18-19.

13 “South Korea’s Top Three Device Makers Investing Heavily in TFT LCD Technology,” Channel, vol. 8, No. 4, May 1995, p. 18.

14 Mark Carroll, “Taiwan Displays LCD Woes,” Electronic Engineering Times, May 29, 1995, pp. 18,22.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 139

Initial capacity Full capacity

Substrate size (substrates/ (substrates/

Company Plant location (mm) Date operational month) month)

Samsung Kihung 370 x 470 Dec. 1994 15,000 80,000

LG Electronics Kumi 370 x 470 Nov. 1995 40,000 80,000

Unipac Taiwan 320 X 400 Mar. 1997

PrimeView International

n/a n/a

Taiwan 370 x 470 Dec. 1997 24,000 n/a

KEY: AMLCD = Active Matrix Liquid Crystal Display

SOURCES: David Lieberman, “Taiwan Lags in Active-Matrix LCDs Electronic Engineefing Times, Oct 17, 1994, p 27, "Scale of Liquid Crystal

Industry Assessed,” pp. 74-80, chart 3, and Funaki Yoichi and K. Nozaki, ”Korean Yield Shows Remarkable Growth, Taiwan's Production Moves

Toward Stable Supply,” pp. 109-112, table 1, both in Flat Panel Display 1995, Nikkei Microdevices, Dec. 9, 1994 (translation provided by Maurice

Cloutier, Foreign Broadcast Information Service), “South Korea’s Top Three Device Makers Investing Heavily in TFT LCD Technology, ” Channel,

May 1995, p 18

The Republic of Korea has designated displays

a strategic industry, which allows tariff reductions

on imported inputs and access to lower cost capital from abroad. The Ministry of Trade, Industry

and Energy planned to fund display development

through its Electro-21 program, but failed to do

so; it has given only $6 million to an industry re15 However, in June 1994, ‘he search consortium.

Korean government announced that it would fund

a thin-film LCD research program at a level of

$156 million, and a program to develop next-generation flat displays at a level of $21 million. Both

programs are multiyear efforts, with private support exceeding government funding.16 Taiwan’s

Electronics Research and Service Organization

(ERSO) has worked with companies to develop

prototype FPDs, and has also been a source of

trained engineers for companies such as PrimeView. ERSO projects have included research on

AMLCD, plasma, and FED.17

in total, Korean firms have set a goal of reaching a 10-percent share of the world AMLCD market by the year 2000. Taiwanese firms are trying to

develop an indigenous supply of notebook screens

to lessen their dependence on foreign-made displays. If successful, these efforts will put a considerable amount of pressure on Japanese

manufacturers to reduce prices.

Europe

The European share of the FPD market has been

marginal to date; only in the production of plasma

displays does it have a significant presence (13

percent of world production in 1994). The largest

European FPD initiative is the Flat Panel Display

Co. (FPD Co.), a joint venture between the Dutch

electronics firm Philips NV, the French companies SAGEM SA and Thomson Multimedia, and

the German chemical firm Merck (see figure 2-6).

The company was formed in 1992 and is based in

Eindhoven, the Netherlands. FPD Co. has sold

tens of thousands of units, and has a goal of $100

million in global revenues in 1995.18

Philips is clearly the driver behind FPD Co.,

having built a pilot plant in Eindhoven in 1987

and planned for commercial production since

1991. 19 Philips has brought two assets to FPD

Co.: 1) a process for using thin film diodes that it

believes will provide better performance at a lower price than thin film transistor AMLCDs, and 2)

a large integrated circuit fabrication plant near

Eindhoven (the Maas facility), which had been

15 Andrew Pollack, “From Korea, a Challenge to Japan,” New York Times, May 12, 1994, p. D1 .

16 “Government-Supported Electronics Projects Outlined,” Pacific Rim Economic Review-South Korea, July 28, 1994.

17 Alan Patterson, “Taiwan Startups Eye LCDs,” Electronic Engineering Times, Mar. 21, 1994, p. 26.

18 Robert Gray, Product Engineer, FPD Co., San Jose, CA, persona] communication, June 5, 1995.

19 Ronald van de Krol, “Rival Systems Attack Japan’s Dominance,” Financial Times, May 3, 1995, p. VI.
40 I Flat Panel Displays in Perspective

|

10 45

I I

--> Equity

relationship

(in percent;

arrow indicates

direction of

investment

flow)

--> supply of

displays

or display

parts

KEY: FPD Co = Flat Panel Display Co ; SAGEM = Societe d’Applications Generales d’Electricite et de Mechanique; Thomson CSF = Thomson’s

aerospace and defense systems divisions; Thomson LCD = Thomson Liquid Crystal Display; Thomson MM = Thomson’s multimedia and consumer

electronics divisions.

NOTES: All percentages are rounded, Thomson SA is the parent company of Thomson MM and Thomson CSF, Philips NV IS the parent of all Philips

divisions,

SOURCES. Office of Technology Assessment, 1995, based on information from trade press and industry representatives

unused since Philips’ Megaproject bid in the late

1980s. 20 By the end of 1994, FPD Co. had invested nearly $300 million for capital improvements to the plant. in 1994, the consortium

announced that it was considering a second highvolume plant to be located in Taiwan, Singapore,

or the United States.

The Maas facility’s capacity has increased from

40,000 displays per month when commercial production began early in 1995 to 70,000 monthly;

FPD Co. hopes to increase production to 75,000

per month by the end of 1995.21 Along with a

small pilot plant in central Eindhoven, FPD Co.

may have a capacity as high as 100,000 displays

per month. It will produce both display components and finished displays; diagonal sizes range

from 2.8 to 10.4 inches, and larger displays are being developed.22 Initially, it is concentrating on

automotive, commercial projection, and airline

entertainment system applications. Between 25

20 Ronald van de Krol, “Europe’s Liquid Assets,” Financial Times, Dec. 22, 1994, p. 10.

21 van de Krol, op. cit., footnote 19; Gray, op. cit., footnote 18.

22 Robert Hartman, Group Leader, FPD Co., Advanced Development Center, Eindhoven, Netherlands, personal communication, May 24,

1995; Leo Pekelharing, U.S. Representative, FPD Co., San Jose, CA, personal communication, Apr. 3, 1995.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 41

and 30 percent of the displays are used internally

by Philips and Thomson (primarily for HDTV and

projection TV applications). The remainder of

FPD Co.’s production is sold commercially in Europe, North America, and Asia.23

Although a distinct legal entity, FPD Co. receives significant administrative support from

Philips, and shares research with all its parent

companies. SAGEM has contributed technology

to reduce the number of steps in thin film transistor (TFT) fabrication from between six and eight

to two or three, thus allowing FPD Co. to develop

TFTs in the future.24 Merck supplies liquid crystals to the venture. Philips and Thomson are also

important suppliers to, as well as customers of,

FPD Co.; for example, Philips produces the backlight for FPD Co. displays.25

In addition to FPD Co., several Thomson SA

enterprises are involved in FPDs (see figure 2-6).

Sextant Avionique is Europe’s leading manufacturer of avionic AMLCDs; its $700 million in total revenues is split almost evenly between civil

and military aerospace. Its military sales are all

made in Europe or to European manufacturers;

sales in the United States are limited to commercial avionics.

All of Sextant’s LCDs are supplied by Thomson LCD. Building on the Thomson-GE work

from the 1980s, Thomson moved LCD operations

from the United States to Grenoble, France. A

small plant (annual capacity in the thousands) produces 8- by 8-inch displays for use by Sextant, and

a new facility was recently completed to build 14-

by 14-inch AMLCDs; although monitor-sized

color prototypes have been built, the line has experienced production difficulties. In addition to

supplying Sextant’s needs, Thomson will use

these displays internally.26

Thomson SA has expanded its plasma facility,

which will have an annual capacity of approximately 5,000 displays. Although most panels are

sold in France where they are used in police and

military applications (rugged workstations), the

company’s U.S. operations sell plasma panels to

equipment manufacturers and integrators, mostly

small volumes (hundreds) of 13-inch displays for

military, industrial, and medical applications.

Thomson Multimedia has recently developed a

19-inch color plasma display prototype, with potential applications in professional workstations

and HDTV.27

In FEDs, PixTech (formerly Pixel) of France is

the leading firm. PixTech was formed in 1992 to

commercialize developments in FED technology

at the Laboratoire d’Electronique, de Technologie

et d’Instrumentation (LETI), a research laboratory

of the French atomic energy agency, which had

built on work done at the American firm, SRI International. PixTech is pursuing spatial color FED

technology and holds the rights to several cold

cathode technology approaches. PixTech is planning to build a medium-volume production line

(annual capacity of 50,000 or more) for 6-inch diagonal displays, and hopes to develop a 10.5-inch

FED by the end of 1995. Completing the circle,

PixTech has entered into alliances with Raytheon,

Texas Instruments, Futaba, and Motorola, to share

23 van de Krol, op. cit., footnote 19.

24 SAGEM transferred this technology from the French national telecommunications laboratory, CNET; see Richard L. Hudson, “Philips

Refits Dutch Plant in Bold Plan To Unseat Rivals,” Wall Street Journal, July 28, 1993, p. B4.

25 Gray, op. cit., footnote 18.

26 Larry Webster and Willy Moses, U.S. Representatives, Sextant Avionique, Miami, FL, personal communication, May 19, 1995.

27 Ernest Stern, President, Thomson Components and Tubes Corp., Totowa, NJ, personal communication, May 19, 1995.
42 | Flat Panel Displays in Perspective

experimental quantities and cross-license

technology.28

The European Union (EU) has supported some

FPD R&D.29 As part of the Third European Research and Technology Development Framework

Program, the European Strategic Programme for

Research and Development in Information

Technologies (ESPRIT) devoted less than $50

million to cost-shared display research during the

period 1990-94. The Fourth Framework Program,

scheduled to last through 1998, has budgeted

$128 million for displays. The main thrust is the

European Consortium Active Matrix (ECAM), an

industry-led project focusing on AMLCDs.

Started in January 1993, the ECAM project involves a total of 19 partners from the Netherlands

(Philips is the lead partner), France, Germany, the

United Kingdom, and Belgium, and is composed

of 11 projects. The overall aim is to develop

technologies and components that will make larger display sizes and/or higher resolutions feasible,

increase the number of potential applications of

LCD technology, and develop less complex designs and more cost-effective production methods. Smaller projects focus on FEDs and

ferroelectric LCDs.

While European entities are currently niche

players, the coordination provided by EU involvement and the interlocked investments by large

electronics firms could allow European companies to increase their share in plasma and

AMLCDs, and to lead the commercialization of

FED.

EFFECTS ON RELATED INDUSTRIES

Development of a domestic FPD industry could

benefit related industries—both users and suppliers—but there is considerable uncertainty regarding the size of those benefits. The presence of

domestic sources could enable U.S. firms competing in industries that use FPDs in their products

(so-called downstream industries such as portable

computer manufacturers) to work more closely

with suppliers of a critical component that accounts for a large fraction of the product’s value

and appeal to the customer. Collaborating with

foreign-based suppliers is difficult for some firms,

and there have been periods of undersupply of

FPDs in the past. However, most firms have supply arrangements with several producers, and the

current and proposed production capacity appears

sufficient to meet demand in the near future.

Additional integration of system functions

onto the display could also affect downstream industries by putting display manufacturers in a

stronger position relative to the system manufacturers. There are several technical paths such integration could take, but to date there has been

limited integration in high-volume production.

Finally, related industries, such as semiconductor

devices, could benefit from developments in a

high-volume domestic FPD industry. There are

several areas in common—largely in equipment

and materials inputs—between FPD production

and semiconductor device manufacturing. But

significant differences in the actual production

processes and in the size of the two industries will

limit such effects.

❚ Downstream Industries

Some observers argue that, for diversified products based on advanced FPDs, the lack of a domestic FPD manufacturing base could inhibit

competitiveness. Sometimes, the FPD serves to

differentiate the downstream product. In such

cases, it is important for the downstream firm to

be able to purchase the best FPDs available or to

have custom designs made. Since many Japanese

28 Bob Taylor, Manager, Flat Panel Displays, Texas Instruments, Dallas, TX, personal communication, Apr. 17, 1995; Hambrecht & Quist

and Needham & Co., Inc., PixTech Prospectus, July 18, 1995.

29 “Exploitation Within the ESPRIT Programme,” Euro Abstracts, No 32, May 1994, p. 303, reprinted in JPRS Science & Technology Europe/International Economic Competitiveness, JPRS-EST-94-017-L, July 11, 1994; Ken Werner, “U.S. Display Industry: On the Edge,” IEEE

Spectrum, May 1995, pp. 62-69.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 43

FPD producers are vertically integrated electronics companies, their first priority could be to supply displays needed for the firm’s own end

products, forcing U.S. firms that make competing

end products to wait longer for the latest displays.

A strong U.S. FPD industry would make downstream U.S. firms much less dependent on Japanese FPD producers.

In some products, the best design might require, for example, a different size display, a new

way of fitting the display into the product housing,

or a special electronic interface between the display and other components. Japanese dominance

of the FPD industry could pose difficulties for

U.S. firms. In many cases, Japanese FPD producers have not been interested in customizing displays to U.S. customers’ specifications,

particularly for small numbers of displays. This is

particularly true in military displays, which are required in custom versions and in small quantities;

Sharp Corp., for one, has refused to deal directly

with DOD requirements for FPDs.

In addition, relying on Japanese display producers who might use display designs to produce

competing products could put U.S. customers at a

competitive disadvantage. In cases where specialized requirements must be designed into the display, U.S. firms may hesitate to share sensitive

product development information with companies that are also downstream competitors. The

best known example of this problem is the Wizard, a personal digital assistant (PDA) introduced

by Sharp soon after Apple’s Newton, which Sharp

produced for Apple.

However, there are ways for downstream users

to limit the flow of design information. Computer

companies typically protect their designs by using

rigorous nondisclosure agreements with their

FPD suppliers. These are used to limit the flow of

design information to competitors, including

those within the same corporate group as the display manufacturer. This seems to provide adequate protection, and the growth in FPD

manufacturing capacity will ease these concerns

somewhat by giving U.S. firms more choices. Increasing competition in the market for standardized FPDs could make some firms more willing to

work on custom designs.

The only domestic downstream firm that has

moved to gain direct control over FPD production

is IBM, whose Japanese subsidiary is a joint owner of Display Technology Inc. (DTI), a leading

FPD manufacturer located in Japan. This approach allows IBM to vertically integrate FPD

production with portable computer manufacturing, but it has to cooperate in display design and

production with its co-owner, Toshiba, a competitor in portable computers. Aside from IBM, leading U.S. portable computer manufacturers (such

as Compaq, Apple, and Texas Instruments) rely

on multiple sources of display manufacturers to

supply relatively standardized computer screens.

These issues are of most concern in custom sectors of the FPD market. Sharp has been a pioneer

in developing new applications for FPDs, utilizing its core capabilities in LCD production to

create new products. Sharp used LCDs to create

PDAs and a large-format videocamera viewfinder, as well as to enter the portable computer market. However, there are several characteristics of

the largest segment of the FPD market—LCDs for

portable information systems—that place it toward the commodity end of the spectrum. This

suggests that although downstream users may

benefit from the development of a domestic, highvolume, manufacturing capability, the benefits

could be limited to the smaller segments of the

market in which display customization is required.

In the market for portable computer displays,

FPDs are becoming more like commodity items.

The majority of FPD plants in operation or under

construction are designed to produce screens suitable for notebook computers. While there have

not been strict product definitions, the standard

screen for this application has evolved from an

8.4-inch diagonal VGA (video graphics adapter, a

standard for computer displays that is an array of

information comprised of 640 rows and 480 columns) in the early 1990s, to a 10.4-inch VGA

screen in 1994, to what is becoming the new standard, 10.4- or 11.3-inch SVGA screens (super-
44 | Flat Panel Displays in Perspective

VGA, 800 by 600 pixels) that display 16.7 million

colors. Some XGA screens (extended graphics

array, 1024 by 768 pixels) have also been produced. Other than screen size, resolution, and color palette, there do not appear to be any strong

distinguishing characteristics from the consumer’s perspective.

Manufacturing considerations reinforce the

standardization of display types. Like integrated

circuits (ICs), manufacturing costs for standardized displays decrease with increasing cumulative

production of that item: the more screens produced, the less each costs to produce. The rate of

cost reduction for AMLCDs has been estimated at

half of that for ICs.30 To a large extent, the slower

rate of cost reduction in AMLCD production is attributable to the difficulty in producing what are

effectively large-area ICs on glass substrates. Display production has proven more difficult than

manufacturing semiconductor chips. Large

amounts of production have brought the yield—

percentage of useable displays—to 70 percent,

compared with semiconductors, where yields are

typically greater than 90 percent. Combined with

the large capital costs required for a state-of-theart production facility, this trend rewards high production volumes of a similar product; creating

customized versions of a display increases the

cost of manufacturing on that particular production line.

Manufacturing costs have been steadily reduced, however, and resulting decreases in display prices have reinforced the trend toward

commodity displays. One analyst estimates that

manufacturing costs in Japan for 10-inch

AMLCDs declined from $2,500 in 1991 to just

over $1,000 in 1993; during the same period,

manufacturing yields increased from 10 percent to

nearly 60 percent.31 During 1993, AMLCD prices

quoted by Japanese producers declined by approximately 17 percent; they fell by as much as 20 percent during the first three quarters of 1994, and by

25 percent during the last quarter.32 In dollar

terms, prices fell from $1,200 in mid-1994 to

$830 in early 1995.33

The principal cause of the rapid decline in

prices was the increase in productive capacity during 1994 as new manufacturing facilities were

brought online by Sharp, NEC, DTI, and other

firms; one source estimates that Japan’s total

monthly LCD output has increased 62 percent

since 1994.34 The increase in AMLCD production, combined with price pressure from improved

PMLCD screens, has resulted in diminishing

profits for AMLCD manufacturers.35 Growing

production capacity will drive the prices of standard displays down further. In the early years of

mass production of AMLCDs, manufacturing

was concentrated among a few firms in Japan.

30 Historical estimates for integrated circuits show a 28-percent decrease in unit cost for each doubling of production volume. See U.S.

Congress, Office of Technology Assessment, International Competitiveness in Electronics, OTA-ISC-200 (Washington, DC: U.S. Government

Printing Office, November 1983), p. 76. DOD has estimated the slope for AMLCDs to be 14 percent; Kenneth Flamm, DOD, presentation to

OTA, May 18, 1995.

31 William C. O’Mara, “AMLCD Manufacturing,” in 1994 SID International Symposium Seminar Lecture Notes (Santa Ana, CA: Society

for Information Display, 1994), vol. I. Another analyst estimates that yields are currently greater than 70 percent; Joseph Castellano, Stanford

Resources, Inc., San Jose, CA, personal communication, Apr. 14, 1995.

32 Japanese fiscal years; for historical prices, see “Scale of Liquid Crystal Industry Assessed,” op. cit., footnote 1, figure 4A. For recent

prices, see Wakabayashi, op. cit., footnote 2, figure 1. Also see estimates from Nihon Keizai Shinbun, quoted in Hisayuki Mitsusada, “Advanced

LCD Makers Look Beyond PCs,” Nikkei Weekly, Mar. 20, 1995, p. 8.

33 U.S. prices from Brooke Crothers and Rob Guth, “Cheaper LCDs Spur Notebook Price Breaks,” InfoWorld, Apr. 24, 1995, p. 1. Note that

while displays represent the largest single component in a notebook computer, even as performance (resolution, size, and number of colors) has

increased, screen prices have declined and are approaching those of microprocessors.

34 Estimates from Merrill Lynch Japan, quoted in Mitsusada, op. cit., footnote 32.

35 Wakabayashi, op. cit., footnote 2.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 45

However, the industry structure is becoming less

concentrated, and volume AMLCD production is

being developed in Korea, Taiwan, and Europe.

In general, as products mature and become

commodities, the basis for competition shifts

from product innovation to reduction of manufacturing costs and incremental improvements to performance. As this happens, production moves to

lowest-cost mass manufacturers that are most able

to offer standardized goods at steadily decreasing

ratios of price to performance. As with dynamic

random access memory chips (DRAMs, see box

2-2), successful entry by Korean and other firms

will likely have the effect of opening up competition on pricing and availability of AMLCDs,

which will have a salutary effect from the perspective of U.S. display users.

❚ Integration of Displays and Systems

FPDs could become critical to electronic products

if they incorporate functions that are presently

elsewhere in the systems that use displays. Known

as integration, this technology path would involve building increasingly sophisticated system

functions into the display itself, so that—in the extreme case—the display is the system. Under this

scenario, the location of display production would

be more important because, in many cases, it will

be the end product with little value added elsewhere. 36 Product competition would be design intensive, rather than manufacturing intensive, and

could result in a more diversified set of FPD products. In such a scenario, the inability to produce

displays domestically would handicap U.S. competitiveness in systems like portable computers

because the lack of an FPD manufacturing base

would limit the ability to produce integrated systems.

Integration comprises a spectrum of design and

manufacturing choices. The primary forms of integration are electronic, but there are also mechanical or functional forms; for example, designing

the display frame and system cover in notebook

computers as one structure to reduce weight and

size.37 The range of possibilities for electronic integration extends from complete integration at

one end to a bare display, which has only the electrodes that supply current, at the other. In the latter

case, there is no integration: circuitry that drives

the display, as well as the circuitry and mechanical

devices for the system of which the display is a

part, is located elsewhere in the system.

Electronic integration can be achieved in two

ways. One way is to mount IC chips onto the display glass. This method has been used for driver

chips (ICs that are the first level of interface between the display and the system), which improves the manufacturing process. Using such a

method to achieve higher levels of integration—

such as integrating sophisticated ICs like microprocessors or memory chips—is complicated by

limited space on the display glass, the complexity

of interconnections for such chips, and differences

in the product development cycles of ICs and

FPDs. While these complications may be overcome, it is not clear that FPD manufacturers will

have an advantage over computer manufacturers

in the integration of nondisplay functions.

The second method of achieving integration is

to extend the techniques used to build active matrix circuits—TFTs on glass—to more sophisticated circuits required by memory or

microprocessor functions. There are several technical barriers to this approach, however, and the

circuit density required may be hard to attain with

TFTs. In addition, mastery of AMLCD manufacturing has been difficult for the leading firms, who

36 For a discussion of the potential strategic implications of integration, see Michael Borrus and Jeffrey A Hart, “Display’s the Thing: The

Real Stakes in the Conflict Over High-Resolution Displays,” Journal of Policy Analysis and Management, vol. 13, No. 1, 1994, pp. 21-54.

37 Steven Depp, Director, Subsystem Technologies and Applications Laboratory, Thomas J. Watson Research Center, IBM, Yorktown

Heights, NY, personal communication, Apr. 11, 1995.
46 I Flat Panel Displays in Perspective

in examining the potential effects of foreign dominance of flat panel display (FPD) production on

related and downstream U.S. industries, it is instructive to consider experience with the semiconductor

industry over the past decade, in particular, the movement of leadership in production of dynamic random access memories (DRAMs) from the United States to East Asia is relevant,

During the 1980s, declines in the competitiveness of U.S. DRAM producers relative to Japanese

competitors led to concerns for the semiconductor industry, First, it was asserted that loss of dominance in DRAMs would harm manufacturing competitiveness in other integrated circuit (IC) products

because DRAMs were thought to be a technology driver for IC manufacturing as a whole Second, it

was argued that declines in domestic DRAM market share would hurt the competitiveness of downstream industries, such as computers, Third, some observers were concerned that the shift in DRAM

leadership to Japan would be followed by loss of leadership in production of semiconductor manufacturing equipment.

During the period from 1978 to 1986, Japanese firms’ share of world DRAM production increased by

roughly 60 percent, mostly at the expense of US firms; more recently, a large fraction of production

has been captured by firms in South Korea and Southeast Asia. 1 Concerns over the loss of leadership

in DRAM production led to a consortium (U.S. Memories) to offset the dominance of Japanese DRAM

producers, However, the consortium was abandoned after the entry of low-cost Korean manufacturers

caused a supply glut that resulted in multiple sources of supply and falling prices,

Although DRAM production for the merchant market (that is, through arms-length sales to electronics

manufacturers) has largely moved to Japan and South Korea, captive production (to satisfy internal

company demand) by firms such as AT&T and IBM has continued at a substantial level As the capital

investment required for a DRAM plant has increased, even these large firms have entered into joint production agreements; for example, IBM, Siemens, and Toshiba are collaborating on 256-megabyte

DRAM production technology,

Concerns over the strategic nature of DRAMs also contributed to the creation of Sematech in 1987,

Although the consortium abandoned its original goal to develop production processes for memory

chips and other ICs, it moved to supporting the development of a semiconductor supplier base. While

there is debate over the effectiveness of Sematech, most consider it to be successful, and the U.S.

firms recently regained leadership of semiconductor production,2 in the semiconductor supplier industry, domestic firms have also improved their position, After declining from 1981 to 1990, domestic

equipment manufacturers have increased their share of the world market to nearly 54 percent in 1994. 3

Although U.S. production of DRAMs has remained at roughly 20 percent market share since the late

1980s, U.S. producers regained the lead in worldwide semiconductor market share in 1993, largely by

recapturing shares of expanding markets in products such as microprocessors and application-specific

(continued)

1 For historical market shares, see U.S. Congress, Office of Technology Assessment, Contributions of DOE Weapons

Labs and NIST to Semiconductor Technology, OTA-ITE-585 (Washington, DC: U.S. Government Printing Off Ice, September 1993), figure 3-5 South Korean companies currently produce roughly 30 percent of DRAMs, and some analysts

predict they will surpass Japanese production; see David Hamilton and Steve Glain, “Koreans Move To Grab MemoryChip Market from the Japanese, ” Wall Street Journal, Mar, 14, 1995, p Al,

2 For a critical view of Sematech, see “Uncle Sam’s Helping Hand, ” The Economist, Apr. 2, 1994, p 77

3 Semiconductor Industry Association, The Information Highway: Paved with Silicon, March 1995, p 5,
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 147

integrated circuits (ASICs).4 Despite initial fears, the wide availability of low-priced DRAMs in recent

years demonstrates that end-users in the United States can benefit from increased international competition. For example, many U.S. firms are competitive in personal computer manufacturing. This may

also be the case in the commodity segments of the FPD market.

FPDs and semiconductors both comprise a spectrum of device types that are typically sold to downstream users such as computer, communications, and consumer electronics manufacturers. The semiconductor industry produces a wide variety of integrated circuits (ICs), ranging from DRAMs--devices

whose production requires a large capital investment, but are basically commodity items—to ASICs that

are highly diversified products. Microprocessors—which are design-intensive and require large investments in manufacturing technology, but are produced in standard types within each product generation-fall somewhere between DRAMs and ASICs. An analogous description of the FPD industry would

place standardized AMLCDs for notebook computers toward the commodity end, and complex custom

AMLCDs, which have row-and-column drivers integrated onto the display, at the diversified product

end. in between are the largest market segments (in value terms) —video displays for portable computers, communications devices, and games—that use both AMLCDs and PMLCDs.

There are limitations to the analogy, however. Perhaps the biggest difference is that in semiconductors, U S firms led the world in production before the loss of market share in commodity chips; in FPDs,

the U.S. industry has lagged firms in Japan. Thus, rather than moving from commodity to higher value

products, U.S. firms must either jump directly into production of diversified FPDs, or face entrenched

competition in the large segments of the market moving toward commodities.

SOURCE Office of Technology Assessment, 1995

4 For example, after declines in the early 1980s, U.S. share of the world market for microcomponents increased from

approximately 50 percent in 1986 to just under 70 percent in 1992, and U S share of ASICs increased from less than 50

percent in 1988 to 53 percent in 1992, ibid., p 1, and U S. Congress, Office of Technology Assessment, op cit., footnote

1, figures 3-6 and 3-7.

suffered through several years of production at flexible tape (often made of selectively conduclow yield levels. There is reason to conclude that

including extra components on the display will

only diminish yields.

Integrated Circuit Mounting Techniques

in the original method for attaching driver chips,

called chip-on-board (COB), they are mounted on

printed wiring boards that are connected to the display by metallic electrodes printed on a flexible

substrate. The connector is mechanically joined to

the row-and-column electrodes. Currently, the

most common technique is chip-on-film (COF),

also called tape automated bonding (TAB), in

which bare (unpackaged) chips are mounted on a

tive rubber that has electrodes printed on it) for

connection to the rows and columns. COF/TAB

enables narrower spacing than COB and, by eliminating the chip packages, reduces volume and

weight.

in the most advanced method of attaching chips

to the display, called chip-on-glass (COG), bare

chips are mounted directly onto the edges of the

display glass substrate and connected directly to

the electrodes. This method is the ultimate form of

integration using discrete driver chips; it can reduce the FPD volume and weight further, while

increasing the reliability of the connections between the drivers and the electrodes. The tradeoff
48 I Flat Panel Displays in Perspective

Chip-on-glass technology as seen on the edges of this plasma display, reduces manufacturing costs, improves reliability

and decreases package size.

with COG is that it is difficult to repair faulty chips

once they are mounted, and space is required

around the edge of the display glass to mount the

chips (which is counter to the design trend of

minimizing the area of the display glass).

Currently, the primary items mounted using

COF/TAB and COG are driver chips. The potential exists for other components, such as graphics

controller and power conversion circuits, to be

mounted in a similar fashion, but this has not yet

occurred.

In general, emissive displays offer greater potential for integration via COG techniques. The

back surface of the display glass is not utilized

(unlike transmissive displays such as LCDs, in

which the back surface of the glass must be left unobstructed so that light can pass through), thus

providing a large surface for mounting chips; the

difficulty is in making interconnections from the

back. FED developers are also investigating multilayer ceramic modules that embed the display on

one side of the substrate and chips on the other.

Depositing Silicon on Glass

A higher level of electronic integration is to fabricate electronic devices on the periphery of the display using the same or similar techniques used to

fabricate active matrix elements.38

As with mounting chips on the display glass,

there are limitations to this type of integration.

Amorphous silicon—the most commonly used

material for TFTs--is not well suited to the highspeed operation required for driver circuits, although a research group recently produced an

experimental version of art amorphous silicon

AMLCD with integrated drivers. 39

Use of polycrystalline silicon could allow devices to operate at higher speeds and enable the

fabrication of denser circuitry along the periphery

of the display. Although similar in some ways to

amorphous silicon fabrication, polycrystalline silicon typically requires deposition temperatures of

600 “C or more, compared to the 450 C maximum in amorphous silicon processing.40 The

higher temperatures require the use of quartz

substrates rather than glass, which expands or

breaks down at high temperatures. Quartz is more

expensive than glass and limited in diameter to a

few inches, thus limiting the application of polycrystalline silicon to small displays such as videocamera view finders and head-mounted displays.

Anew glass developed by Corning that can with38 An early expression of the concept of display integration can be found in T. Peter Brody and Paul R. Malmberg, ’’Large Scale Integration

of Displays Through Thin-Film Transistor Technology,’’ International Journal of Hybrid Microelectronics, vol. 2, 1979, pp. 29-38. 39 R. G. Stewart et al., “Circuit Design for a-Si AMLCDs with Integrated Drivers," p. 89, and H. Lebrun et al., “AMLCD with Integrated

Drivers Made with Amorphous-Silicon TFTs,”p. 403, in 1995 SID International Symposium Digest of Technical Papers, vol. 26 (Santa Ana,

CA: Society for Information Display, May 1995). 40 Recent research has demonstrated methods for reducing the deposition temperature for polycrystalline Silicon to the same as amorphous

silicon; see “Hitachi Advances in Low-Temp TFTs" Electronic Engineering Times, Oct. 17, 1994, p. 20.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 49

stand temperatures as high as 600 C may enable

polycrystalline silicon processes to be adopted

more widely.41

Single crystal silicon can also be used for making TFTs and other circuit elements. This process,

pioneered by Kopin Corp., has the highest electronic performance of all. A standard IC is fabricated on a silicon wafer, and then stripped off

and reattached to the glass panel of an FPD. This

allows the active matrix and other integrated

elements to be fabricated using proven semiconductor techniques. The display size is currently

limited to approximately one-inch diameter devices, used in head-mounted and projection systems, and production is still in the prototype stage.

❚ Spillover to Semiconductor

Manufacturing

Similarities between the semiconductor and FPD

industries have led to some synergy between their

associated materials and equipment suppliers. For

example, Semiconductor Equipment and Materials International (SEMI), which represents a large

part of the world industry, has an FPD division

with over 100 member companies. Such synergy

could result in spillover effects, especially if the

FPD industry were to become large compared

with semiconductors. Some aspects of FPD production will likely place demands on equipment

and materials suppliers that exceed requirements

posed by IC manufacturing.

In addition to common materials and equipment inputs—such as semiconductors, gases, and

deposition and photolithographic systems—some

aspects of FPD manufacturing have much in common with semiconductor fabrication; the creation

of hundreds of thousands of switching transistors,

involving the deposition of semiconductors, metals, and insulators in multiple, repeated photolithography steps onto a silicon substrate.42 Indeed,

the earliest AMLCD fabrication lines were modified semiconductor lines, and, initially, there

were spillovers between IC and FPD manufacturing. IC producers in Japan and Korea leveraged

their semiconductor production experience in entering AMLCD manufacturing. Due to growing

differences in production and markets, however,

spillovers are likely to be limited mostly to the

supplier level of the two industries. Thus, IC

manufacturers are not likely to face competition

from FPD producers, but IC fabricators that purchase equipment from FPD suppliers will have access to leading-edge technology that may not

otherwise be available.

Despite the strong current and projected

AMLCD growth rates, the FPD industry as a

whole will likely remain a fraction of the size of

the semiconductor industry (although some

equipment and materials suppliers rely on FPDs

for a large fraction of revenues). Worldwide revenues for semiconductor sales were $100 billion in

1994, compared with $9.33 billion in FPD sales.

Semiconductor sales are projected to reach $200

billion by the year 2000, compared with the $20

billion projected for FPDs.43 Given the larger potential market, equipment and materials suppliers

for the semiconductor industry will have incentive

to develop the needed tools, whether or not there

was an FPD industry driving some of the technological developments.

Even in the absence of a high-volume domestic

FPD industry, firms that supply equipment and

materials could sell to foreign FPD manufacturers. U.S. firms that supply FPD and semiconductor manufacturers have made inroads in supplying

foreign-based producers in Asia, such as Applied

41 The previous standard, Corning code 7059, has a strain point, or temperature limit, of 593 C; the new glass, Corning code 1737, has a

strain point of 666 C. See Dawne M. Moffatt, “Flat Panel Display Substrates,” in Flat Panel Display Materials, J. Batey, A. Chiang, and P. H.

Holloway (eds.), Symposium Proceedings, vol. 345 (Pittsburgh, PA: Materials Research Society, 1994), p. 163.

42 Borrus and Hart, op. cit., footnote 36.

43 Semiconductor sales data and projections from Semiconductor Industry Association, The Information Highway: Paved with Silicon,

March 1995, p. 1.
50 | Flat Panel Displays in Perspective

Materials (chemical vapor deposition), Photon

Dynamics (testing), Corning (glass), and Texas

Instruments (driver chips).

Spillover in Equipment and Materials

There are several areas in which FPDs drive semiconductor manufacturing processes, such as large

area substrates and contamination problems. FPD

manufacturers must have the capability to handle

and process large substrates, currently up to 24 inches on a side, all while minimizing contamination. Semiconductor manufacturers are currently

planning to move to 300-millimeter wafers

(approximately 12 inches in diameter) from which

the individual chips are made. The increased diameter requires larger handling equipment and

processing chambers, and the increased surface

area requires more stringent control of contamination. Both have been concerns for FPD manufacturers and suppliers.44

Another example is research on TFTs that has

resulted in the creation of memory devices made

out of polycrystalline silicon, with the potential

for application to ICs. Researchers have also investigated the use of amorphous silicon to fabricate ICs; and atomic layer epitaxy, a thin film

process developed to build EL displays, has been

suggested as an alternative to current semiconductor processes.45

In other areas critical to semiconductor

manufacturing, such as research on increasing the

resolution of lithography systems, FPDs are not

likely to be a driver for manufacturing technology.

Semiconductor chip design and manufacturing

constantly move toward narrower linewidths (the

minimum feature size that can be deposited using

semiconductor processing techniques) to fit more

circuits onto a given chip size. The size of FPD

pixels is fixed by the resolving capability of the

human eye, and larger overall display sizes (containing more pixels) are the goal for FPD design

and manufacturing.

Spillover in Production

While they share equipment, materials, and some

process steps, the economics and market sizes of

FPD manufacturing are different from those in

semiconductor device manufacturing. Semiconductors are generally fabricated on silicon wafers

in sets of roughly 100 chips. Each is about one

centimeter across, can be tested before final packaging, and has little value in its unpackaged state.

FPDs are fabricated on glass substrates that must

have high surface quality and are larger, more

fragile, and more temperature-sensitive than silicon. For laptop-size screens, six finished display

panels are typically yielded from each substrate;

each must be nearly completed before testing, and

represents a significant investment in materials

and process time. As the direct spillovers between

the two types of manufacturing are limited, separate corporate divisions and facilities are used for

FPD and semiconductor manufacturing.

One exception to the differences in the two

manufacturing processes is the digital micromirror device developed by Texas Instruments. In this

display, miniature mirrors that are deposited as a

part of an IC chip reflect light to form an image.

The device is fabricated on standard semiconductor lines, and circuit elements are created along

with the mirror array. In this case, there are direct

spillovers between IC and FPD production processes.

NATIONAL SECURITY REQUIREMENTS

Although the military demand for FPDs comprises a small part of the overall display market,

military applications use a variety of FPD technol44 For example, Applied Materials Corp. developed a prototype production system for 300-millimeter integrated circuit substrates based on

its FPD production tool. See Walter Andrews, “Equipment Vendors Gear Up for 300-Millimeter Wafers,” Electronic News/VLSI Research Report, July 17, 1995.

45 See Chappell Brown, “Polysilicon TFTs Used in E2PROM Operation,” Electronic Engineering Times, Nov. 21, 1994, p. 37; “Amorphous

Silicon Shows Promise,” Electronic Engineering Times, June 5, 1995, p. 39; and “ALE Process Resurfaces,” Electronic Engineering Times,

Feb. 27, 1995, p. 37.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 51

ogies and have a wide range of requirements. In

many cases, intensive design and ruggedization of

FPDs (see box 2-3) are necessary to assure adequate performance in military environments. For

platforms facing less stringent environments, existing commercial products may offer sufficient

performance.

In general, DOD has three options for acquiring

displays. It can purchase custom FPDs from domestic producers, commercial FPDs from domestic producers, or commercial FPDs from foreign

producers. Currently, DOD relies on a combination of domestic custom and foreign commercial

displays. The commercial displays are much less

expensive, but require more ruggedization than

custom FPDs.

Military programs base their choices of display

on mission requirements and available budgets.

The tradeoffs between commercial and custom

displays for military applications center on price

and performance; this issue is of particular importance for AMLCDs used in aircraft cockpits.

There is a sharp debate over the suitability of

commercial AMLCDs in DOD applications;

while some see custom AMLCDs as prohibitively

expensive, others are not convinced that commercial displays can provide adequate performance.

Currently, several programs are using foreignproduced commercial AMLCDs. Cost constraints

are the primary factor in these decisions. However, some programs have utilized greater flexibility in AMLCD selection by determining

requirements from the specific operational environment of the application, rather than from Military Specifications.

As AMLCD technology is adopted for increasingly demanding commercial applications such as

avionic and automotive displays, the performance

of commercial products will be better suited for

military needs. As custom suppliers move into

these markets and gain manufacturing experience,

their costs will decrease. These two trends suggest

a convergence of military and some commercial

FPDs, particularly in AMLCDs.

❚ Military FPD Applications

Military systems use several different FPD

technologies (see table 2-6). To date, military

FPDs have been used mostly in portable computers, handheld devices, and large area displays on

submarines and surface ships. Cockpit avionics is

likely to be the next major application for FPDs.46

The fundamental technologies used in military

FPDs are the same as in the commercial market.

However, military displays differ in the size and

shape of the display, and the need to adapt the display to extreme operating environments, including a wide range of temperatures, ambient

lighting, and shock. Military display manufacturers must produce design-intensive products specific to military systems. These characteristics do

not give the manufacturer experience in commercial, large-scale manufacturing. Contractors that

ruggedize and integrate standard commercial

products into military systems perform very specialized steps to enhance and protect the basic display (see box 2-3).

Battlefield Systems

One group of military display applications is portable battlefield information and communication

systems, which include portable and vehicular applications. There are more than 25,000 AMLCD

portable computers and PMLCD handheld devices in the military.47 More than 5,000 handheld

terminal units with alphanumeric PMLCDs are

used by forward observers for targeting calcula46 For purposes of this section, discussion of military FPDs is limited to applications in military systems, rather than in standard office equipment.

47 Roger Johnson, Senior Vice President, Science Applications International Corp., San Diego, CA, personal communication, July 13,

1995; since the early 1990s, AMLCDs have increasingly displaced EL and PMLCDs in these portable systems.
52 I Flat Panel Displays in Perspective

Converting a flat panel display for use in a military system—which involves enhancing the integrity of

the display to withstand extremes of temperature, shock, and vibration—is called ruggedization. The

nature of ruggedization depends on the display technology used, the nature of the system, and its operating environment. Electroluminescent and plasma displays, for example, are much more resistant to

shock and temperature variations than are liquid crystal displays LCDs Some systems, such as fieldtest equipment, are neither mission critical nor continuously exposed to strenuous conditions, others

are, such as a tank commander’s tactical display. One of the most demanding applications is a cockpit

avionics display.

Cockpit displays must be readable in direct sunlight and resistant to large variations in temperature.

in addition, some applications require that the display be compatible with Night Vision Imaging Systems. 1 The active matrix LCD (AMLCD) is the primary type of cockpit flat panel display, due to its exceptional performance in direct sunlight. However, this performance comes with a tradeoff: LCDs only

perform well in a limited temperature range, thus requiring additional ruggedization to allow them to

operate under temperature extremes.2

Both commercial and custom AMLCDs require a large amount of ruggedization, typically including

heaters, redundant backlights, electromagnetic interference filters, shock- and vibration-resistant packaging, and drivers, polarizers, and electronic connectors capable of withstanding wide variations in

temperature and humidity (see table below).

Means of Achieving Rugged Features in Active Matrix Liquid Crystal Displays

Feature Achieved in display by Achieved in external modification by

Brightness larger aperture design brighter backlight

Redundant light source n/a redundant backlight

Sunlight readability black matrix and AR coatings antireflective coatings

Driver integrity chip on glass stronger driver interconnects

Viewing angle thinner cell collimators and diffusers

Shock resistance unit integrity by design reinforcing LCD unit; covering glass

Vibration resistance unit integrity by design reinforcing LCD unit; covering glass

Cold resistance liquid crystal materials heaters on glass

Heat resistance liquid crystal materials and polarizers thermal design and extended temperature

polarizers

Humidity resistance bonding bonding

Sand/dust resistance bonding bonding, filters, housing

SOURCE: Office of Technology Assessment, 1995, based on interviews with manufacturers and Integrators

(continued)

1 This feature requires that pilots using monochrome night vision be able to distinguish levels of shading The current

requirement IS for 64 levels, most commercial and some military AMLCDs have achieved 256 levels

2 Low temperatures affect LCDs primarily in two ways 1 ) a reduction in response time and color gamut shift necessitates the need for heaters and programmable look-up tables, and 2) the backlight required for an LCD-based display

must incorporate heaters in order to turn on at cold temperatures in addition, liquid crystal materials and polarizers

often suffer Irreversible damage at temperatures above 90 oC.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 153

Ruggedizing a commercial AMLCD involves activities almost entirely external to the display itself.3

Because many of the firms that ruggedize commercial displays use the same processes for military and

commercial systems, they amortize costs across a large volume of units. For a custom AMLCD, ruggedizing is partially achieved through the design and fabrication process, but external modifications are

still necessary. Although they use displays designed for military use, many firms that ruggedize custom

displays do so in low volumes, resulting in higher costs for ruggedization for military use. Despite the

greater amount of ruggedization necessary for a commercial display, the LCD unit itself accounts for

between one-fifth and one-third of the finished display price in both custom and commercial displays,

given the price premium for a custom display, ruggedized custom displays are quite expensive. 4

However, custom AMLCDs are expected to deliver superior performance, largely through their ability

to withstand extreme environments. Some in industry and the military argue that ruggedized commercial displays still will not withstand severe conditions experienced in some applications The failures of

polarizer adhesives in high humidity and liquid crystal materials in very high temperatures are the most

frequently cited problems. Inexpensive commercial displays could have shorter life cycles, boosting

costs for redesign and replacement over those of custom AMLCDs that are likely to last longer 5

However, some argue that extreme conditions are experienced only on rare occasions or only in high

performance aircraft and can be addressed by modifications to operational procedures or system requirements. Many other military applications, in aircraft and other systems, do not have such severe

operational environments and could use commercial off-the-shelf displays. 6 Commercial AMLCDs lead

or equal their custom counterparts in several areas important to ruggedization, including use of a black

matrix, chip-on-glass technology, and low-temperature-resistant liquid crystal materials.7 in addition, a

reduced design life using a ruggedized commercial display may actually be less costly and allow newer technology to be incorporated into platforms sooner. Finally, as the commercial market expands to

address the needs and harsher conditions seen in the portable and automotive products, the level of

ruggedization required for a commercial display will diminish.

SOURCE Office of Technology Assessment, 1995.

3 Randall E. Orkis, “F-16 Retrofit Application Using a Modular Avionics System Architecture and Color Active Matrix

Liquid Crystal Displays, ” SPIE International Symposium on Optical Engmeering in Aerospace Sensing. Cockpit Displays Conference, April 1994, and “An Improved Full Color F-16 A/B and F-16 C/D Multi-Function Display Using a Ruggedized COTS Active Matrix Color Liquid Crystal Display, ” SPIE International Symposium on Aerospace/Defense Sensing and Dual Use Photonics: Cockpit Displays II, April 1995.

4 Firms that ruggedize commercial AMLCDs available for $1,000 to $4,000 charge from $5,000 to $20,000 for the

finished system To ruggedize a custom display costing approximately $12,000, the system price IS in the range of

$35,000 to $50,000 Increasingiy, custom display manufacturers and integrators are pursuing commercial options to

help reduce costs, Dan Doyle, Director of Display Products, Electronic Designs Inc. , Westborough, MA, personal communication, Aug 3, 1995

5 James Moore, Naval Air Defense Center (Ret ), Warminster, PA, personal communication, July 5, 1995, Keith Toby,

F/A-l 8 avionics Team Leader, Naval Air Warfare Center, Indianapolis, IN, personal communication, July 5, 1995, and

Curtis Casey, Vice President, Optical Imaging Systems, Northville, Ml, personal communication, July 14, 1995

6 Donald Pinsky, Interstate Electronics (Ret.), Costa Mesa, CA, personal communication, May 2, 1995, Roger Johnson, Senior Vice President, Science Applications International Corp., San Diego, CA, personal communication, July 13,

1995, Gary Broderson, Senior Electrical Engineer, Advanced Concepts, Naval Air Systems Command, Arlington, VA,

July 17, 1995, Dan Hamilton, Ogden Air Logistics Center, Hill AFB, UT, personal communication, June 27, 1995, and

Randall E Orkis, Principal Research Scientist, National Security Division, Battelle Memorial Institute, Columbus, OH,

personal communication, May 5, 1995

7 A black matrix within the LCD unit enhances sunlight readability, chip-on-glass technology improves Iine driver

interconnects and active area size of the whole display Automotive displays now available from Sharp Corp have these

features, Randall E Orkis, Principal Research Scientist, National Security Division, Battelle Memorial Institute, Columbus, OH, personal communication, July 25, 1995.
54 I Flat Panel Displays in Perspective

Potential display

Military system Display applications technologies

Avionics Cockpit displays in fixed-wing and rotary aircraft AM LCD

Vehicular/shipboard Navigation, situation, and weapons displays in tanks, ground AMLCD, EL, Plasma

vehicles, ships, and submarines

Portable Helmet mounted displays, laptops, handheld devices, test AMLCD, PMLCD, EL

equipment, communications equipment

Workstations and Command and control displays, large tactical and map dis- AMLCD and DMD projecpresentations plays, simulation and 3-D systems tors, Plasma

KEY: AMLCD = active matrix liquid crystal display; DMD = digital micromirror device, EL= electroluminescent display; LCD = liquid crystal display,

PMLCD = passive matrix liquid crystal display

SOURCES: Len Zuga, U.S. Military Display Markets: New Technologies, Upgrades, and Government Funding Brighten Market, Report 5207-16

(Mountain View, CA: Frost & Sullivan, 1995), and Office of Technology Assessment, 1995

tions and communication, for example.48 Such

devices are lightweight, consume little power, and

are relatively inexpensive. AMLCDs are used in

portable computers for test and maintenance

equipment; the Army has used 13,000 ruggedized

portable computers in its Lightweight Computer

Unit (LCU) program, which provides test, maintenance, and diagnostic units for tanks and aircraft. A commercial AMLCD, purchased from a

foreign manufacturer, is being used for the LCU

screen .

49 Ruggedization appears to have been satisfactory for these LCUs; because field units can

be replaced easily, there are no major concerns regarding their failure.50

Several programs have been examining the

suitability of AMLCDs, plasma panels, and EL

displays for vehicular applications. Mobile multiple launch rocket targeting systems, which require

large, rugged screens, have used EL and plasma

displays. in the future, vehicular FPDs will display various video motion and graphic images in

trucks, tanks, and ships, including infrared vision

enhancement, fire control, and targeting data.

Given the similarities to conditions that avionic

systems are exposed to (high temperatures and

bright ambient light), the AMLCD is currently the

leading contender. Examples include the Driver

Vision Enhancement and the Commander’s Tactical Display for the Bradley Fighting Vehicle.

Plans call for individual soldiers to wear helmetmounted displays (HMDs) that use small, veryhigh-resolution AMLCDs or possibly active

matrix EL displays. HMDs are high performance

devices that will likely require custom manufacture; several domestic companies are developing

this technology.

Large Area Displays

Large area workstation displays in aircraft, surface ships, submarines, and stationary positions

(such as the Airborne Warning and Command

Systems (AWACS) situation displays and Seawolf submarine sonar displays) are used for a wide

range of logistical, tactical, and surveillance

tasks.51 There are approximately 15,000 large area

displays, typically 20 inches or larger; these

48 Al Rodriguez, product Manager, LCU Program, Fort Monmouth Army Base, NJ, personal communication, July 28, 1995.

49 Ibid.; the first 3,000 units used monochrome PMLCDs; the remainder have used color AMLCDs.

50 Ibid., and Johnson, op. cit., footnote 47.

51 With 14 CRTs on each plane, the AWACS fleet alone constitutes approximately 500 displays; Robert Zwitch, System Engineer, Product

Support Division, Warner Robins Air Logistics Center, Warner Robins AFB, GA, personal communication, June 28, 1995.
Chapter 2 The Domestic Flatpanel Display lndustry: Cause for Concern? | 55

Military flat panel displays, such as this tactical map display

must be designed or modified to withstand the adverse

conditions imposed by military environments.

displays could use several different FPD technologies. 52Replacing bulky CRTs with FPDs in these

platforms will reduce weight, space, and costs. To

date, several hundred large area FPDs have been

fielded; these have mostly employed EL and plasma displays because of their light weight, compact design, scalable screen sizes, and high

resolution, although projection displays are also

used.

Very large area displays are used for presentations, briefings, and strategic map displays in command and control rooms like those at the North

American Air Defense Command (NORAD). Direct view plasma panels and projection systems,

using small FPDs such as Kopin’s Smart Slide

AMLCD or Texas Instrument’s Digital Micromirror Device (DMD), are contending technologies

for this group.

Cockpit Avionics

Military avionics demands higher performance

and greater reliability than most other applications. Avionic displays present critical flight, targeting, and communications information to the

pilot in harsh environments. As FPDs enable multiple functions to be performed by a single display,

their performance becomes even more crucial to

mission success and pilot survival. Even within

avionics, however, the variety of platform types

creates a range of operational environments and

necessary display features. High performance,

bubble canopy fighters require displays that: 1)

can be read in very high ambient light; 2) are

exposed to very high, direct sunlight heat (over

90 “C); and 3) can endure the shock, vibration,

and stress of high altitudes, radical maneuvering,

and combat. Transport planes and many helicopters operate in much less demanding environments; lower ambient light, altitudes, and

temperature ranges relax conditions imposed on

the display. Wider viewing angles for side-by-side

pilots in such platforms are more important than

in fighter aircraft.

The services have nearly 7,000 existing fixed

wing aircraft and about 2,000 helicopters, each

with multiple displays. In total, the potential market for retrofits exceeds 25,000 displays. Sinceretrofitting an aircraft is usually spread out over

several years, this may result in an annual demand

of a few thousand displays.53 Given the high ambient light conditions in cockpits-and the requirement for video rate, full color, and high

5 2Randall E. Orkis et al., "A Full Color, High Resolution, 21” Common Large Area Display Set To Replace 19” CRTs in Several USAFC4

1

Applications:’ 1995 SPIE International Symposium on Aerospace/Defense Sensing and Dual Use Photonics Cockpit Displays II, April 1995;

Ted Klapka, Deputy Assistant Program Manager for Systems Engineering for P-3C,. Maritime Surveillance Aircraft Program Office, Arlington.

VA, personal communication, July 13, 1995. 53 David E. Mentley, “Flat Panel Displays for Military Airplanes:’ International Display Report, Stanford Resources, Inc., San Jose, CA

(distributed electronically by SEMI Newsletter Service), July 15, 1994; Darrel G. Hopper and Daniel D. Desjardins. “Requirments for

AMLCDs in U.S. Military Applications,” SPIE International Symosium on Aerospace/Defense Sensing and Dual Use Photonics: Cockpit

Displays II, vol. 2462, April 1995, table 1.
56 Flat Panel Displays in Perspective

Ruggedizer/ AMLCD

Military platform integrator source Program status

Portable Systems

Light computer unit (Army) SAIC Hitachi approximately 13,000 delivered

Helmet mounted display (ARPA) Hughes Kopin prototype

Vehicular/Shipboard

Aegis fire control (Navy) EDI Sharp approximately 25 delivered

Commander’s tactical display (Bradley, Litton Litton prototypes

Abrams)

Driver vision enhancement (Bradley) Interstate Hosiden operations testing

Avionics

F-1 8 (Navy) Kaiser OIS engineering/development

V-22 (Navy) Kaiser OIS engineering/development

CH-46 (Marines) Allied-Signal OIS operations testing

C-130H CGR (Air Force) Grimes Sharp approximately 300 produced

UH-1 N (Navy) Grimes Sharp operations testing

SH-60B (Navy) Loral DTI n/a

F-1 6 CGR (Air Force) EDI Sharp operations testing

RAH-66 (Army) Litton Litton operations testing

KEY: AMLCD = active matrix liquid crystal display; ARPA = Advanced Research Projects Agency; CGR = Combined Air National

Guard and Reserve; DTI = Display Technology, Inc. ; EDI = Electronic Designs, Inc.; OIS = Optical Imaging Systems, SAIC = Science

Applications International Corp.

SOURCE, Office of Technology Assessment, 1995, based on personal communications with defense contractors and military program offices

resolution avionics displays—AMLCDs appear

to be the best technology currently available to replace aging CRTs and electromechanical instruments.

❚ Custom and Commercial AMLCDs:

Choices and Convergence

There is much debate over the cost of custom

AMLCDs and the suitability of commercial products for military applications, particularly in

avionics. Custom FPDs offer reliable, high-quality performance in severe environments. However,

commercial displays offer an affordable and often

adequate solution for many programs, given sufficient ruggedization (see box 2-3). Although prices

vary across applications, finished displays

manufactured specifically for high performance

avionics applications typically cost roughly three

times as much as ruggedized commercial displays. 54 in many instances, custom AMLCDs offer superior performance: greater resolution,

wider viewing angle, and greater environmental

integrity. in others, commercial technology is still

ahead—in areas such as grayscale and chip-onglass interconnects—although custom units do

conform to military requirements. in general, custom displays deliver greater performance and reliability than commercial units, but at a much

higher price. This is the basic tradeoff faced by

military programs. The choices made differ from

program to program (see table 2-7).

Program choices reflect immediate needs, budgetary constraints, and operational missions and

environments of their platform. Many older aircraft, especially those in the Air Force Reserve

and Air National Guard (known as the Combined

54 Johnson, op. cit., footnote 47; Randall E. Orkis, Principal Research Scientist, National Security Division, Battelle Memorial Institute,

Columbus, OH, personal communication, May 5, 1995; Dan Doyle, Director of Display Products, Electronic Designs Inc., Westborough, MA,

personal communications, May 22-24, 1995; and Klapka, op. cit., footnote 52.
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? 157

With niche markets in avionics and automotive displays emerging, commercial manufacturers are

developing active matrix liquid crystal displays (AMLCDs) distinct from those used in consumer products such as notebooks and personal digital assistants (PDAs). in order to operate under conditions

including high ambient light, vibration, shock, and extreme temperature variations, displays for avionics

and automotive applications must perform at higher levels than commercial off-the-shelf versions. Several Japanese manufacturers are selling AMLCDs specifically designed for these applications Sharp

produces a 4-inch automotive display that is being used in Delco products for police vehicles.1 This

AMLCD offers an operational temperature range from -30oC to +85 ‘C, a black matrix to improve sunlight readability, and vibration and shock resistance superior to its other displays. 2 FPD Co. of Europe is

selling automotive displays to BMW.3 Hyundai’s investment in ImageQuest of California may allow it to

offer AMLCDs in its automobiles.

Commercial avionics producers also use commercial AMLCDs. Hosiden supplied most of the displays to Honeywell for the Boeing 777 cockpit, and several firms, such as Toshiba, supplied the 3-inch

AMLCDs for Traffic Collision Avoidance Systems required by the Federal Aviation Administration on all

commercial jets.4 Optical Imaging Systems has worked with several avionics companies, including Allied-Signal and Meggitt of Britain, to develop commercial avionics; its 5ATI (4- by 4-inch active area Air

Transport Indicator) is used in several hundred Federal Express aircraft. Litton Systems of Canada is

supplying multifunction AMLCDs for the Lockheed C-130J, an aircraft designed for commercial and military use 5

SOURCE. Office of Technology Assessment, 1995.

1 Steven Shields, Senior Scientist, Hughes Aircraft Co., Carlsbad, CA, personal communication, May 10, 1995,

Sharp Electronics Exhibition, Society for Information Display (SID) Conference, Orlando, FL, May 22-24, 1995

2 Sharp Electronics, ibid.; Randall E. Orkis, “An Improved Full Color F-16 A/B and F-16 C/D Multl-Function Display

Using a Ruggedized COTS Active Matrix Color Liquid Crystal Display, ” SPIE International Symposium on Aerospace/

Defense Sensing and Dual Use Photonics: Cockpit Displays II, April 1995, p, 5.

3 Robert Gray, Product Engineer, FPD Co., San Jose, CA, personal communication, June 5, 1995

4 James Byrd, Technical Specialist, Cockpit Control Displays, Aeronautical Systems Center, Wright-Patterson AFB,

OH, personal communication, June, 19, 1995; Curtis Casey, Vice President, Optical Imaging Systems, Northville, Ml,

personal communication, July 14, 1995.

5 Van Angelo, Manager, Business Development, Displays, Litton Systems Canada Ltd., Etobicoke, Ontario, personal

communication, May 4, 1995.

Guard Reserve, or CGR), face reliability and are active duty and combat aircraft. High costs and

maintainability problems; these programs need the lack of certain features (such as gray levels sufimmediate (often stop-gap) replacements to keep ficient for contrast in night vision conditions) distheir planes operational. Such programs also have suaded the CGR from using custom FPDs for its

small budgets for these retrofits. in reserve, defen- recent retrofit. Ruggedized automotive displays

sive, and transport missions, aircraft are not as from Sharp Corp. (see box 2-4) are currently in oplikely to face intense battle or flight conditions as erational testing and evaluation for the CGR.55 At

55 The Combined Guard Reserve has chosen a ruggedized commercial AMLCD for several F-16 and C- 130H air wings; Dan Hamilton.

Ogden Air Logistics Center, Hill AFB, UT, personal communication, June 27, 1995, and Orkis, op. cit., footnote 54; Randall E. Orkis, “An

Improved Full Color F-16 A/B and F-16 C/D Multi-Function Display Using a Ruggedized COTS Active Matrix Color Liquid Crystal Display, ”

SPIE International Symposium on Aerospace/Defense Sensing and Dual Use Photonics: Cockpit Displays II, April 1995, p. 4.
58 | Flat Panel Displays in Perspective

least two other programs, the Navy’s UH-1N and

the P-3C, have also selected ruggedized commercial AMLCDs.56 Rockwell-Collins, the only contractor to bid on the UH-1N using a custom

domestic FPD, was informed that it lost the contract because of price.57

Other programs, such as the F-22, RAH-66,

and F-18, involve both new and retrofitted aircraft

whose operational environments impose adverse

conditions. Aircraft with bubble canopies that fly

high altitude combat missions place high demands on display integrity and performance. Programs with these requirements and—for new

aircraft—larger development budgets have chosen custom displays. The foreign sales program of

F-16s to Europe and Taiwan is currently undergoing a mid-life upgrade and is evaluating custom

AMLCDs produced by Optical Imaging Systems

(OIS); this evaluation may impact the choice for

the Air Force’s active duty F-16s and F-15s.58

Some high performance aircraft programs are

also drawing on trends in the commercial avionics

market. The CH-46 program took advantage of a

commercial avionics display developed by OIS

and Allied-Signal (see box 2-4); redesign costs

were limited to driver attachment, bonding, and

packaging.59 As more standard commercial products emerge, military programs that make use of

them will save thousands of dollars by avoiding

nonrecurring engineering costs for unique designs

and production.60 The military increases these

benefits by designing and adapting common display units and requirements for multiple platforms.61

AMLCD choices available to military programs have been facilitated by DOD initiatives

and supporting legislation. The Perry Memo of

June 29, 1994, and the Federal Acquisition

Streamlining Act (FASA) of 1994 require program offices to justify the use of military specifications and afford them more freedom to draw

from industry design, standards, and products

when procuring display systems.62 The Active

Matrix Liquid Crystal Cockpit Display project,

56 Bob Lehman, Naval Air Warfare Center, Warminster, PA, personal communication, June 27, 1995. The 6- by 8-inch display for the P-3 is

one of many retrofits to that aircraft, several of which are using domestic custom displays; Klapka, op. cit., footnote 52.

57 Michael McDonald, Marketing Manager, Rockwell-Collins Avionics and Communications, Cedar Rapids, IA, personal communication,

July 14, 1995; recognizing that, for many programs, the primary constraint is on price, Rockwell-Collins has decided to switch to commercial

FPDs for future bids.

58 Tom Liberio, Avionics Engineer, F-15 Program Office, Avionics Systems Center, Wright-Patterson AFB, OH, personal communication,

July 20, 1995; James Byrd, Technical Specialist, Cockpit Control Displays, Aeronautical Systems Center, Wright-Patterson AFB, OH, personal

communication, June 19, 1995; Orkis, op. cit., footnote 54.

59 Bob Mack, Naval Air Warfare Center, Warminster, PA, personal communication, June 26, 1995; Chris Mulford, Marketing Department,

Commercial Avionics Systems, Allied-Signal Inc., Miami, FL, personal communication, July 12, 1995; Curtis Casey, Vice President, Optical

Imaging Systems, Northville, MI, personal communication, July 14, 1995. The display may also be used in a P-3 retrofit; Klapka, op. cit., footnote 52.

60 Dimensions of 6- by 8-inches, 4- by 4-inches, and 3- by 3-inches are becoming standard sizes for commercial avionics; McDonald, op.

cit., footnote 57.

61 The CGR hopes to use avionics developed for its F-16 retrofits for its A-10s and C-130s; Hamilton, op. cit., footnote 55. The Common

Displays Program, part of the Air Combat Electronics Program Office, works jointly with program offices (currently with the AV-8 and F-18) to

acquire common avionics for multiple platforms; Harlan Smith, Air Combat Electronics Program Office, Common Displays Program, Naval

Air Warfare Center, Indianapolis, IN, personal communication, July 17, 1995. See also Darrel G. Hopper et al., “Draft Standard for Color Active

Matrix Liquid Crystal Displays (AMLCDs) in U.S. Military Aircraft: Recommended Best Practices,” WL-TR-93-1177, Avionics Directorate,

Wright Laboratory, Air Force Materiel Command, Wright-Patterson AFB, OH, June 1994.

62 William Perry, Secretary of Defense, Memorandum for the Secretaries of the Military Departments, Subject: Specifications and Standards—A New Way of Doing Business, June 29, 1994; Federal Acquisition Streamlining Act, Public Law 103-355 (Oct. 13, 1994); see also U.S.

Congress, Office of Technology Assessment, Assessing the Potential for Civil-Military Integration: Technologies, Processes, and Practices,

OTA-ISS-611 (Washington, DC: U.S. Government Printing Office, September 1994).
Chapter 2 The Domestic Flat Panel Display Industry: Cause for Concern? | 59

under Title III of the Defense Production Act (see

chapter 3), provides funds to program offices to

offset the cost of custom AMLCDs.

Another trend that blurs the distinction between custom and commercial displays is the

emergence of niche markets for higher performance commercial AMLCDs. Increasingly, FPD

manufacturers that sell to low-volume avionics

markets, such as OIS and Litton Systems Canada,

are working more closely with commercial

manufacturers and markets to reduce the cost of

custom units (see box 2-4). While some unit

prices of custom displays in production volume

have dropped nearly 50 percent, they are still at

least twice the price of commercial displays.63

Concomitantly, several high-volume producers

are developing displays specifically for more

rugged automotive and avionics environments.

As custom producers look for commercial opportunities and solutions—and as commercial producers look to niche markets—the products, their

performance, and their suitability for applications

will converge.

The fact that programs have arrived at divergent solutions to meet their display requirements

suggests that no FPD exhibits superiority. Very

high performance platforms, such as the F-22 and

the Space Shuttle, require very durable displays

with redundant features and custom design; commercial displays may be adequate for reserve aircraft and transports. Yet the vast majority of

military aircraft—fighter jets, bombers, and helicopters—lies between these two extremes. The

distinction is not unique to aircraft. The Driver Vision Enhancement Program plans to introduce an

inexpensive, infrared video display system for

tanks and trucks. Contractors have been encouraged to keep costs low and use commercial products.64 The Commander’s Tactical Display for the

Bradley Fighting Vehicle, however, is a high performance, multifunction display providing the

user with crucial mission information; to date, this

program has considered only a custom display.65

Custom manufacturers and some program offices are concerned that although ruggedized commercial FPDs have low up-front costs, their

performance may not hold up, potentially imposing greater costs through shorter life cycles.66

Others counter that, with ruggedization and maintenance, commercial displays provide excellent

performance without the high cost of custom

units.67 Shorter life cycles, coupled with modular

architecture, could allow for less expensive retrofits to introduce newer display features, which

continue to be led by the commercial sector.68

Military programs are testing and evaluating

both commercial and custom AMLCDs. At the

same time, niche markets in avionics are pursued

by both custom and commercial manufacturers.

Over the next few years, DOD will be able to determine how well commercial displays hold up in

military platforms, and custom manufacturers

such as OIS, Litton, and ImageQuest will compete

in commercial markets with high-quality displays.

63 OTA interviews with program officers revealed that during 1994, the unit price (in production volumes) of custom avionics FPDs from a

domestic manufacturer was approximately $10,000 to $12,000, while a commercial off-the-shelf unit cost between $3,000 and $4,000; by

mid-1995, some custom FPDs cost approximately $6,500, while commercial prices vary between $1,000 and $4,000 (prices do not include

ruggedization and integration costs).

64 Chuck Daz, DVE Program Representative, Texas Instruments, Dallas, TX, personal communication, July 28, 1995.

65 Ibid.; Van Angelo, Manager, Business Development, Displays, Litton Systems Canada Ltd., Etobicoke, Ontario, personal communication, May 4, 1995.

66 Casey, op. cit., footnote 59; James Moore, Naval Air Defense Center (Ret.), Wallington, PA, personal communication, July 5, 1995.

67 Doyle, op. cit., footnote 54; Hamilton, op. cit., footnote 55; Orkis, op. cit., footnote 54.

68 Orkis, “An Improved Full Color F-16 A/B and F-16 C/D Multi-Function Display Using a Ruggedized COTS Active Matrix Color Liquid

Crystal Display,” op. cit., footnote 55.
Strategies and

Policies for the

Domestic Flat Panel

Display Industry

he U.S. flat panel display (FPD) industry is currently

comprised of a number of relatively small and innovative

firms that carry out leading-edge research, some prototype development, and manufacturing for niche and custom markets. With the exception of some low-informationcontent FPD manufacturing, however, there is no domestic mass

manufacturing for commercial markets. 

U.S. firms have developed many of the basic FPD technologies. The innovations in product development and manufacturing

processes, however, have come largely from Japan, where large

electronics firms have led in the commercialization of the FPD.

Historical factors loom large in the domestic FPD industry’s

weak presence in manufacturing, largely in the form of decisions

made by U.S. firms (mostly to stay out of manufacturing) and

Japanese companies (to invest heavily in manufacturing). Another factor has been the role of government programs, which have

sustained an innovative industry, but oriented it toward technologies and market sectors outside the commercial mainstream.

Some observers advocate public and private investments in active matrix liquid crystal display (AMLCD) manufacturing to

catch up to Japanese companies. However, the enormous capital

costs required by AMLCD manufacturing, and the commanding

lead Japanese firms have in production technologies, lead others

to suggest a leapfrog approach that entails pursuing a technology

that can displace AMLCDs. Still others argue that many FPD

types will become commodities, and, like dynamic random access memory chips, will be plentiful on the world market. They

advocate placing an emphasis on technologies that are established and in which U.S. firms are already competitive in small, | 61
62 | Flat Panel Displays in Perspective

niche markets. These approaches—emphasizing

catch-up, leapfrog, or established technologies—

are based on different assumptions and imply different roles for the private sector and government.

Three decades of research into display technology by U.S. companies and laboratories have led

to numerous approaches to displaying electronic

information on a flat screen. The U.S. government, mainly through Department of Defense

(DOD) research and development (R&D) programs, has been a source of support and a market

for these innovations. Despite this activity, there

has been limited manufacturing and few attempts

to commercialize FPDs in the United States during the past 15 years. While U.S. companies have

a presence in the defense and avionics markets, no

firms manufacture FPDs domestically for the

largest portion of the world market—portable

computer displays—primarily because no firms

have made the capital investments for large-scale

FPD production.

The issues surrounding government support of

FPD R&D and production have been debated in

Congress and the executive branch for several

years. A contentious trade case during 1990-93

created divisions within the industry and also

drew attention to its condition. Previous Congresses have shown strong support for FPD research within DOD’s Advanced Research

Projects Agency (ARPA) High Definition Systems (HDS) program. In 1994, the Clinton Administration created the National Flat Panel

Display Initiative, consolidating ongoing display

R&D programs and offering cost-shared R&D

support to firms that present a credible plan to

manufacture displays for the commercial and defense markets. This initiative has drawn the FPD

issue into the larger debate over the role of government in technology commercialization.

DOMESTIC EFFORTS TO

COMMERCIALIZE FPD TECHNOLOGY

The commercialization of the AMLCD in the

1980s resulted from a convergence of two

technologies that were several decades old. First,

the existence of the liquid crystal phase of matter

was identified in organic compounds by European

scientists in the late 19th century; second, the concept of a switching device, constructed by layering thin films of semiconductors, was patented in

the early 20th century. These ideas were ultimately combined in American laboratories in the

1970s in the form of an AMLCD. It was not until

the 1980s, however, that the AMLCD was commercialized by a Japanese company.1

The liquid crystal state was first observed by

the Austrian botanist Reinitzer in 1888, and

named soon after by the German physicist Lehmann. They discovered that certain compounds

had a transition state between the solid and liquid

states that took the form of a cloudy liquid containing areas with crystal-like molecular structure. In 1911, the twisted-nematic structure, later

to become the basis for the liquid crystal display

(LCD), was described by the French scientist

Mauguin. Work was carried out in the following

decades in Europe and the Soviet Union, reaching

a peak in the 1930s. The Marconi Wireless Telephone Co. received the first patent for a liquid

crystal device—a light valve, or switch—in 1936.

In the late 1950s, a research group led by James

Fergason at the Westinghouse Research Laboratories discovered that liquid crystals could be used

as temperature sensors. Finally, in the 1960s, the

1 Useful references on the history of FPD development include: T. Peter Brody, “The Thin Film Transistor—A Late Flowering Bloom,”

IEEE Transactions on Electron Devices, vol. ED-31, No. 11, November 1984, pp. 1614-1628; David E. Sanger, “Invented in U.S., Spurned in

U.S., A Technology Flourishes in Japan,” New York Times, Dec. 16, 1990, p. 1; Richard Florida and David Browdy, “The Invention That Got

Away,” Technology Review, August/September 1991, p. 42; Joseph A. Castellano, Handbook of Display Technology (San Diego, CA: Academic Press, 1992); George H. Heilmeier, “Reflections on Innovation and Invention,” The Bridge, winter 1992, pp. 12-16; and Damian Saccocio,

“Strategy & New Business Development: The Case of the Missing U.S. Display Industry,” unpublished Ph.D. thesis, Rensselaer Polytechnic

Institute, Troy, NY, May 1994.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry | 63

accumulated scientific knowledge was put to use

in electronic displays, leading to large amounts of

new research in the field.

The concept for the thin film transistor (TFT)

was patented in the United States in 1933, preceding the now-dominant field effect transistor. The

TFT is a solid state device that allows current to

flow in proportion to a control voltage; it is an amplifier. The TFT uses layers of thin film materials,

rather than the bulk single crystal silicon of which

integrated circuits are made. The first working device was developed in 1962 at RCA Laboratories,

using a cadmium selenide semiconductor. In addition to RCA, groups at GE, Hughes, IBM, Raytheon, Zenith, Westinghouse, and Philips were

devoted to TFT research in the 1960s. By 1970,

partly due to the immature state of TFT technology, the field effect transistor became the dominant

approach applied to integrated circuits, and only

Westinghouse pursued research on TFT devices

and applications.

At RCA, George Heilmeier and Richard Williams led research into the use of liquid crystal materials in electronic displays beginning in the early

1960s. The group discovered many of the basic

principles underlying liquid crystals currently in

use, and fabricated crude alphanumeric, graphic,

and television displays. Active matrix displays, in

which switches (typically TFTs) are deposited on

the display glass to control individual picture elements (or pixels), were announced by another

RCA group in 1971. 

But translating research breakthroughs into

products was much more problematic. While the

central laboratory pursued basic research, the researchers failed to sell their discoveries to the application-oriented engineers and managers

elsewhere in the company. The near-term markets

were simple display applications in calculators,

watches, and other commodity products that RCA

and other large U.S. electronics firms were moving away from. Corporate management did articulate a vision of a “picture-on-the-wall” display.

However, this was a distant goal and, to the extent

it was possible, it may have threatened divisions

whose product expertise was based on the cathode

ray tube (CRT). The product divisions did not support the research effort, and RCA canceled its efforts to commercialize LCD technology in the

1970s.

Westinghouse became involved in LCDs

through the application of its thin-film transistor

research and made a more extensive effort to commercialize LCD technology. As with RCA, however, the crucial commitment to manufacturing

did not materialize. As a manufacturer heavily involved in both the semiconductor and television

industries in the 1960s, Westinghouse had the

right mix of capabilities to pioneer AMLCDs. It

also had a vigorous proponent of AMLCDs in T.

Peter Brody, whose research group was the first to

report construction of a thin-film transistor

AMLCD in the early 1970s. Demonstrations of

active matrix electroluminescent (EL) panels followed the LCD work. A fully operational alphanumeric panel was developed in 1974, and a

simple video display in 1978.

Internal support for display research was transferred several times during the 1970s. As the

semiconductor devices groups at Westinghouse

fell under the weight of competition from integrated circuits, they pulled support from the TFT

research. Support was acquired from the consumer electronics divisions, which viewed LCDs as a

way to reverse Westinghouse’s losses in television

market share, until the firm left the television market in the early 1970s; another patron was found in

the electron tube division, which was closed later

in the 1970s. In 1979, the company shut down

TFT and active matrix display research altogether.

The 1970s also saw the inception of firms dedicated solely to the development of liquid crystal

and other display technologies. In 1969, James

Fergason left Westinghouse and formed the International Liquid Crystal Co. There he invented

the twisted nematic field effect (TN) LCD, which

was to become the most common type of LCD.

After delays in the filing, Fergason eventually received a patent for the invention in 1973. However, researchers at the Swiss firm, F. Hoffmann
64 | Flat Panel Displays in Perspective

LaRoche, had been carrying out similar work and

published their results in 1971.2 Finding it difficult to interest electronics companies that were using light emitting diodes for displays, and facing a

court battle over ownership of the invention, Fergason sold his patent to the Swiss firm.3 During

the 1970s, other companies formed to work with

liquid crystal materials, including Optel, Princeton Materials Science, Microma, and Micro Display Systems, manufacturing such items as digital

watch displays.

Japanese LCD production also began in the

1970s, following a path similar to their entry into

electronics—from simple, low-cost devices to

more complex systems, backed by consistent

manufacturing investment. Starting with simple

low-information-content displays, firms like

Sharp Corp. (which began research on liquid crystals in 1968 and produced the first liquid crystal

calculator display in 1973) learned how to

manufacture more complicated matrix displays.

They were then well positioned to capitalize on

the growing demand for FPDs created by the development of portable computers and televisions

in the 1980s.

The 1980s witnessed a rapid increase in

AMLCD development. Several startup firms in

the United States emerged as spinoffs of the canceled display programs of the large firms, but the

activity was primarily among Japanese electronics firms. In 1983, Seiko-Epson demonstrated the

first prototype AMLCD in a pocket television.

The quality of the display triggered great interest

in active matrix technology: more than 20 companies around the world demonstrated AMLCD prototypes in the period 1984 to 1991.4 In addition to

AMLCD developments, alternatives to the passive matrix LCD (PMLCD) were being developed

that improved display performance without the

use of active elements. In the early 1980s, researchers at the Brown Boveri Research Center in

Sweden developed the supertwisted nematic

(STN) LCD, which greatly improved the contrast

and viewing angle of PMLCDs.5

Peter Brody left Westinghouse in the wake of

the LCD program cancellation, and was able to attract enough venture capital to start a firm called

Panelvision in 1980. Panelvision bought equipment from Westinghouse’s TFT labs, and began

developing a process for AMLCD production. In

1984, Panelvision became the first U.S. company

to sell AMLCDs. However, it was unable to build

a high-volume production capability, and thus

could not make enough sales to break even. Panelvision raised $13 million in venture capital during

the early 1980s, which was not enough to build a

plant. The firm’s efforts to raise more capital were

hindered by doubts among investors as to the

company’s ability to compete with the Japanese in

manufacturing. In 1985, Panelvision’s board of

directors sold the firm to Litton Industries, which

turned it into an aircraft cockpit display division

and moved it to Canada.

Brody then sought support from U.S. computer

companies for a startup to produce AMLCDs.

While Apple showed interest, no computer company wanted to provide funding for such a costly

undertaking, although IBM began funding internal R&D in AMLCDs in 1985. Most computer

manufacturers did not consider it necessary to

create a domestic base for display manufacturing;

they were able to depend on Japanese firms, which

were rapidly developing production capabilities

for LCDs. In 1987, Brody turned to the idea of

2 M. Schadt and W. Helfrich, “Voltage Dependent Optical Activity of a Twisted Nematic Liquid Crystal,” Applied Physics Letters, vol. 18,

No. 4, Feb. 15, 1971, pp. 127-128.

3 Kathleen K. Wiegner, “It’s a Damned Shame,” Forbes, July 23, 1990, p. 277.

4 W. E. Howard, “Thin Film Transistor/Liquid Crystal Display Technology: An Introduction,” IBM Journal of Research and Development,

vol. 36, No. 1, January 1992, pp. 3-10.

5 T. J. Scheffer, and J. Nehring, “A New, Highly Multiplexable Liquid Crystal Color Display,” Applied Physics Letters, vol. 45, No. 10, Nov.

15, 1984, pp. 1021-1023.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry | 65

creating large (20- to 40-inch diagonal) AMLCD

displays for the military market, with an eye toward future high definition television (HDTV)

markets. The approach was to tile small AMLCDs

together in a display larger than the current

10-inch models.

With funding from well-known technologists

and the venture capital arm of Westinghouse,

Brody founded Magnascreen in 1988. The firm

marketed its technology to defense customers

and, in 1988, was awarded a contract by ARPA (at

that time DARPA) to develop a 45-inch display.

Technical difficulties in creating tiled displays

made progress difficult in this type of FPD. In addition, the growing presence of Japanese

manufacturers in the LCD market, and their announcement of the Giant Technology Corp. effort

to build a 40-inch AMLCD display by 1995 (later

scrapped), deterred venture capital support for the

Magnascreen project, and it has not entered commercial production.

The Panelvision and Magnascreen FPD programs were not the only ones to fall short in pursuit of commercial success during the 1980s.

Small firms, many started by veterans of the canceled programs at the large electronics firms,

opened and closed during the decade; among them

were Alphasil, Crystal Vision, LC Systems, Plasma Graphics, and Sigmatron Nova. Many large

companies closed or sold off flat panel programs,

including AT&T, Control Data, Exxon’s EPID

and Kylex, GE, GTE, IBM, NCR, and Texas

Instruments.6

Some of the closures resulted in successful

startups. The closure of the Owens-Illinois plasma

effort resulted in Electro-Plasma and Photonics

Systems, both of which produce plasma displays;

IBM’s former plasma display division became

Plasmaco; and Tektronix spun off Planar, a successful electroluminescent display firm. But none

of these small companies has the financial resources and manufacturing experience of a major

electronics concern, and none has developed highvolume production of FPDs. Other domestic FPD

operations were bought by foreign firms and

transferred abroad: in addition to Panelvision

(now part of Litton Systems Canada), GE’s

AMLCD operation was sold and moved abroad,

and is now part of the French firm, Thomson

LCD.

The commercialization of LCD technology

demonstrates a pattern of early innovations and

initial commercialization efforts at large electronics firms, followed by closure and/or spinoff of

display operations to startup firms that encountered competition from large, integrated Japanese

manufacturers. Domestic efforts to commercialize plasma displays (see box 3-1) and electroluminescent displays (see box 3-2) have been

somewhat more successful. U.S. firms have a

stronger position in these technologies than in the

LCD-based displays, partially due to military demand, but neither technology accounts for more

than a small part of the commercial market.

STRATEGIES FOR MARKET ENTRY

At the beginning of the 1990s, the U.S. FPD industry consisted mainly of small, research-oriented firms that produced, if anything, small

volumes of displays. The FPD market was still

largely low-information-content devices, though

screens for portable televisions and computers

were being produced in Japan. FPD sales began to

grow strongly in 1990, spurred by the boom in

portable computers. The vast majority of this

business was captured by Japanese FPD producers. A divisive dumping case caused further fragmentation within the U.S. FPD industry because it

pitted different technical approaches to manufacturing FPDs—and the companies that championed the technologies—against each other. The

case also drove a wedge between the fledgling domestic FPD industry and display users (computer

6 U. S. Congress, Office of Technology Assessment, The Big Picture: HDTV and High Resolution Systems, OTA-BP-CIT-64 (Washington,

DC: U.S. Government Printing Office, June 1990), table 5-1, p. 71.
66 I Flat Panel Displays in Perspective

The use of the gas discharge effect for display purposes goes back as far as early demonstrations

of television in 1927. The modern history of plasma displays began in the 1950s with the development

of the Nixie tube, which displayed a single digit or character, and was the first nonmechanical electronic display device, The first demonstration of a plasma display was an alternating current (AC) display

developed in 1964 at the University of Illinois. By the end of the 1960s, Owens-lllinois had commercialized the AC plasma display, which it called Digivue. Burroughs and Fujitsu made key innovations in AC

plasma during the 1970s The first direct current (DC) plasma displays were segmented displays developed in the 1970s to replace the Nixie tube. Later in the decade, dot-matrix versions were developed

Military support of plasma research and development led to the first large displays (greater than one

meter in diameter), developed by Photonics Imaging (a spinoff of the Owens-lllinois effort) in the early

1980s, Several large companies made attempts to produce plasma displays during the 1970s and

1980s, including IBM, Texas Instruments, and AT&T. The difficulties in making AC plasma displays at a

low cost have shifted some of the emphasis in plasma R&D to DC versions, in 1993, the value of U.S.-

produced plasma displays accounted for 22 percent of the world total; however, the entire plasma market accounts for approximately three percent of the overall flat panel display market,

SOURCES :Larry Weber, “Plasma Display s,” in Flat Panel Displays and CRTs, Lawrence E Tannas, Jr (ed ) (New York, NY Van Nostrand Reinhold, 1985), Larry Weber, “Plasma Display s,” 1994 SID International Symposium Seminar Lecture Notes (Santa Ana, CA

Societyfor information Display, 1994), vol. I; and Damian Saccocio, “Strategy & New Business Development The Case of the Missing

U.S. Display Industry, ” unpublished Ph.D. thesis, Rensselaer Polytechnic Institute, Troy, NY, May 1994

manufacturers) by forcing a choice over which in- these firms produce high- and low-informationdustry to support-displays or computers.

The tensions over the dumping case did not begin to subside until 1993, when the last remaining

FPD antidumping tariff was dropped and the

United States Display Consortium (USDC) was

formed (see box 3-3). Since that time, the trend

has been toward greater cooperation among the industry (including FPD equipment and materials

suppliers, manufacturers, and users), government

agencies (primarily DOD), and academia. This

cooperation has been a means by which the relatively small domestic display efforts can be combined. However, the domestic industry is still

comprised of many small producers pursuing a

host of display technologies, and there are no

commercial high-volume manufacturing plants in

the United States.

Appendix A gives a sense of the breadth of current FPD efforts in the United States. The industry

is diverse and not easily categorized. in general,

however, it is comprised of firms that are divisions

of, or owned by, diversified firms and small firms

that are dedicated to display production. Some of

content displays, but most pursue research or are

in the development stage. What many companies

do have in common, especially firms at the leading edge of technology, is support provided by

government R&D contracts, primarily from

ARPA, and involvement in display consortia (see

box 3-3).

in general, the strategies used by or available to

domestic FPD firms can be described by some

combination of approaches that emphasize technologies to: 1) catch up, 2) increase established

niches, or 3) leapfrog. Catch-up involves investing in and gaining manufacturing experience in

AMLCDs. Several technologies are currently

used to serve niche markets, such as plasma, EL,

and some types of LCDs Current candidates for

leapfrog technologies are led by field emission

displays and digital micromirror devices.

Regardless of the strategy, any attempt to enter

into commercial high-volume manufacturing of

FPDs will involve significant investment. If the

investments made in Korea and Japan are an indication, the initial investment for an AMLCD
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry 167

Electroluminescence was first observed by the French scientist Destriau in 1936, but did not attract

much attention until the 1950s when lighting and display researchers began investigating the phenomenon, The difficulties of making bright, reliable electroluminescent (EL) displays caused most research

groups to abandon EL research in the 1960s. A concerted effort to commercialize EL displays was

made by Sigmatron. Despite having demonstrated several products, the company attracted Iittle investment or market interest, and went out of business by the end of the 1960s. As with liquid crystal displays LCDs the 1970s saw dedicated efforts by Japanese firms to commercialize EL technology, and

Sharp was a leader. Sharp’s work resulted in a monochrome EL television demonstrated in 1978, spurring U.S. firms to revisit EL displays—with the support of Army research laboratories at Fort Monmouth,

New Jersey, and Fort Belvoir, Virginia.

The year 1983 was a milestone in EL development. Sharp introduced the first commercial EL display

product; Grid Computer introduced one of the first portable computers, which used a six-inch diagonal,

320- by 240-pixel EL display; and Planar was spun off from the Tektronix display division. EL displays

are one of the few success stories for the U.S. flat panel display industry; in 1994, Planar held over 50

percent of the world market for EL displays. As a share of the total flat panel display market, however,

EL displays are even smaller than plasma, accounting for only one percent.

SOURCES Joseph A. Castellano, Handbook of Display Technology (San Diego, CA Academic Press, 1992), p 6, and Christopher

N King, “Electroluminescent Displays, ” 1994 SID International Symposium Seminar Lecture Notes (Santa Ana, CA Society for Information Display, 1994), voI. I.

plant—the catch-up strategy—will entail at least manufacturing costs, and a well-developed FPD

$400 million in capital costs, plus additional funding for upgrades. Since there is no manufacturing

experience in leapfrog technologies, the investment required is difficult to estimate; however,

some have estimated the cost of a field emission

display plant to be $300 million. The established

technologies also appear to require lower outlays

than AMLCDs, with one recent exception: Fujitsu

has announced that it will invest $941 million in a

plant to produce plasma screens that are one meter

in diagonal.7

Any U.S. entrant would face tough competition. Japanese firms have spent years moving

from simple, low-information-content FPD

manufacturing to the complex AMLCDs now

made in large volumes for commercial markets.

Some of these firms are entering their third generation of AMLCD manufacturing (see chapter 2).

This experience has enabled them to reduce

materials and equipment infrastructure exists—

largely in Japan—to supply the manufacturers.

Until U.S. firms gain experience, following a

catch-up strategy means competing directly with

experienced manufacturers who can set a price

based on a much lower manufacturing cost. Without government intervention, these firms are likely to lose money initially in order to compete in

world markets. With a strategy based on established technologies, U.S. firms face the challenge

of expanding their current market niches. To leapfrog the AMLCD (assuming the manufacturing

cost is competitive), the new entrants will be

forced to compete with an established technology,

possibly requiring user education. One approach

using established or leapfrog technologies would

be to target markets in which AMLCD is not currently established, such as large-screen televisions or computer workstation monitors.

7 “Fujitsu Betting On Plasma Displays,” Electronic Engineering Times, June 5, 1995, p. 28.
68 I Flat Panel Displays in Perspective

Display consortia have developed as a means of addressing the disadvantages of an industry comprised

mainly of small firms, and as a vehicle for presenting a unified position to government agencies in dealing with

trade cases, R&D funding, and design of government programs. The United States Display Consortium (USDC),

formed by industry and the Defense Department’s Advanced Research Projects Agency (ARPA) in 1993, has

been the most active in trying to bring together the disparate industry players into a critical mass, A conclusion

reached by many in the flat panel display (FPD) industry during the dumping case of 1990-93 was that ties were

needed within and between the various levels of the industry, and that the weak infrastructure for FPD manufacturing was both a result of the low level of FPD production and a barrier to increasing that level. Using experience

from Sematech as a model (and hiring a former Sematech executive as its first CEO), the USDC has focused its

efforts on improving the infrastructure for display manufacturing in the United States, It has gone about this task by

creating links between the three main segments of the industry: equipment and materials suppliers, FPD manufacturers, and display users (see figure below),

USDC: A Vertically Integrated Approach

Develop specification

required for nextgeneration equipment

and materials

FPD USERS

MILITARY & AVIONIC

COMMERCIAL

End-user systems

with FPDs

that differentiate

products

L materials

KEY: FPD = flat panel display; SEMI/NAFPD = Semiconductor Equipment and Materials International, North American Flat

Panel Display Division; USDC = U S Display Consortium

SOURCE: U.S. Display Consortium, 1995

By coordinating the flow of information—requirements and standards—and funding from users and manufacturers to equipment and materials suppliers, USDC aims to foster the development of a more robust manufacturing

infrastructure, This will improve and standardize FPD manufacturing, and lead to high-quality production of FPDs

to meet users’ needs, As neither the infrastructure nor the manufacturing base is well developed, the USDC sees

its challenge as “the unprecedented task of developing two industries concurrently. ” 1 This is in contrast to Sematech’s challenge, which was to improve the infrastructure for a mature manufacturing industry, USDC members

participate at three levels 1) users, 2) manufacturers and developers, and 3) equipment and materials suppliers,

Membership at the end of the consortium’s first year of operation represented a large segment of display manufacturers and suppliers, and several large users of displays (see table below).

(continued)

1Annual Report, U S Display Consortium, San Jose, CA 1994, p. 5.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry 169

USDC Membership

Manufacturers and developers AT&T

Coloray

Electro-Plasma

Kent Display Systems

Kopin

Motif

Norden Systems-Westinghouse

Optical Imaging Systems

Commercial users Apple Computer

AT&T

Chrysler

Compaq Computer

Military users Allied Signal

Honeywell Defense Avionics Systems

Hughes Electronics

Kaiser Aerospace and Electronics

Photonics imaging

Planar Systems

Plasmaco

Silicon Video

Standish Industries

SI Diamond Technologies

Three-Five Systems

Xerox Palo Alto Research Center

Delco Electronics

IBM

in Focus Systems

Sun Microsystems

L i ys ems a ad td.

Rockwell International

Science Applications International Corp.

Smiths Industries Aerospace

Equipment and Over 100 members of the North American Flat Panel Display Division of Semiconmaterials suppliers ductor Equipment and Materials International (SEMI-NAFPD)

NOTE Texas Instruments announced its intention to join USDC in 1995

SOURCE U S Display Consortium Annual Report, 1994

USDC’s activities have been coordinated closely with ARPA’s display programs, and ARPA has been

Instrumental in initiating and sustaining the consortium. ARPA awarded a $20-million grant for that purpose

in 1993, and an additional $25 million in 1995. All grant money is matched with member funds that, in the

first year of operation, reached 51 percent of the USDC’s budget. Most of the USDC’s expenditures fund

development contracts for FPD materials and equipment suppliers; 12 such contracts were Initiated in the

first year, funding development in areas such as color filters, testing, coating, etching, glass inspection and

handling, lithography, and optical films.

The earliest display group was the Advanced Display Manufacturers of America (ADMA), formed to

petition the government on the dumping charge, and its affiliated research arm, the American Display Consortium (ADC, formerly the ADMA Research Consortium). Currently comprised of 17 U.S. FPD developers

and manufacturers, the ADC works to advance the industry by supporting research and development on

several generic, precompetittve FPD manufacturing technologies. The ADC has won two National Institute

for Standards and Technology Advanced Technology Program (NIST ATP) awards. A 1991 grant of $7.3

million, combined with cost sharing by ADC participants, created a five-year, $14.9-million program for the

development of automated inspection and repair technologies, and advanced electronic interconnection

and packaging technologies. A $6.4-million grant awarded in 1993 has funded a three-year, $13-million

program for the development of color FPD manufacturing technologies, including etching and exposure

tools and alignment and masking methods. ADC members perform the program research at their own facilities. Results, sometimes patented and licensed, are shared through quarterly technical reports.

The ADC is also a charter member of the Phosphor Technology Center of Excellence (PTCOE) at the

Georgia Institute of Technology. This ARPA-funded, three-year, $10-million program involves the PTCOE,

several universities, research centers, and the ADC in improving phosphors for use in plasma, electroluminescent, and field emission displays (initially, phosphors for liquid crystal display backlighting were on the

research agenda, but have been dropped). The ADC does not financially contribute to the center, although

its members receive funding for participating in phosphor research. The ADC is also closely affiliated with

the USDC; two member companies represent the ADC on the USDC Governing Board, and ADC members

who choose to participate in the USDC sit on its Technical Council, enabling communication and coordination of the two consortia’s efforts and activities.

SOURCE: Office of Technology Assessment, 1995
70 | Flat Panel Displays in Perspective

❚ Catch-Up Approaches

The catch-up strategy advocates moving down the

path of the dominant technology for producing

flat panel displays—AMLCD—because it represents the best combination of manufacturing experience, materials and equipment infrastructure,

suitability for important commercial applications,

and capability for integration with existing semiconductor manufacturing. With this strategy, U.S.

firms—perhaps with government assistance—

would make the required investments to enter into

volume manufacturing of AMLCDs, for which

there is a large and growing demand. Firms could

use a combination of existing domestic technology and technology transferred from foreign

manufacturers.

Catch-up entails risks that have so far proved

overwhelming. First, the investment required for

a state-of-the-art AMLCD manufacturing facility

is on the order of $400 million. Substantial further

investment would be required to cover initial

losses because it is very difficult to bring

manufacturing lines to an acceptable yield of

workable displays. Because the leading Japanese

firms have had several years and two to three generations of manufacturing experience in AMLCD

technology, new entrants would immediately be

subjected to pricing at or below their initial

manufacturing costs.

U.S. firms could accelerate the learning process

by tapping into the AMLCD manufacturing expertise of the leading Japanese FPD manufacturers. This could be accomplished by licensing

agreements, joint ventures, or involvement of Japanese companies in U.S. FPD public-private consortia. The only current example is the

IBM-Toshiba joint venture, Display Technology,

Inc. (DTI), but all of its operations are in Japan.

Sharp Corp. has initiated some FPD development

at its plant in Camas, Washington, but most activity is limited to assembly of foreign-made components.

The only continuous production of AMLCDs

in the United States has been at Optical Imaging

Systems (OIS), which has been a low-volume

supplier of displays for military and commercial

avionics markets. It received a $48-million

matching ARPA grant in 1993 to build a new facility, designed as a pilot plant for developing higher

volume manufacturing techniques. OIS has developed plans for migrating its current manufacturing process to high-volume production in a

proposed adjoining facility.

Kopin Corp., with some assistance from DOD,

has begun production of small format (approximately one inch in diameter) high resolution

AMLCDs for head-mounted and projection systems. Xerox Palo Alto Research Center, long a

pioneer in AMLCD technology, is working with

Standish and AT&T on a $50 million ARPA contract, matched dollar for dollar by the firms, to

evaluate manufacturing techniques. Xerox fabricates the active matrix, Standish assembles the

LCD, and AT&T packages the displays in systems. To date, these firms have not announced any

plans to develop a central, high-volume facility.

Two other firms also have or are developing capabilities for domestic production. ImageQuest, a

California-based firm that is majority owned by

the Korean conglomerate Hyundai, is building an

AMLCD production facility with the goal of competing in military and civilian avionics markets.

Litton Systems Canada, which bought the U.S.

firm Panelvision, has a limited AMLCD production capacity and is building a low-volume production line. Although located in Canada, it is

considered a domestic firm (North American) for

the purposes of DOD’s Defense Production Act

Title III program to foster local production of

AMLCDs (see “Government Activity” below).

The large capital investments required by highvolume AMLCD manufacturing demand the participation of entities larger than any U.S. firm

currently manufacturing FPDs. Several large

firms could potentially play such a role. One obvious candidate is IBM, which is half-owner of

DTI, one of the largest producers of AMLCDs.

Others include AT&T and Motorola. All of these

firms have large internal demand for FPDs and

manufacturing experience in electronics. Other

U.S. computer companies have been involved in

FPD development (Compaq, Hewlett-Packard,
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry | 71

and Apple are all sources of capital, and Texas

Instruments is carrying out internal development); these firms could also provide large internal demand for FPDs. To date, none of these firms

has announced plans to enter into domestic FPD

manufacturing.

Materials suppliers such as Corning could also

play a role. Corning is a leading supplier of LCD

glass substrates, has established joint ventures to

produce display glass in Japan and Korea, and is

pursuing (with support from ARPA) a new method for fabricating color filters. Corning states that

it would build a plant to finish glass (and potentially add color filters to the substrates) in the

United States if sufficient demand existed.8

A successful catch-up would require perseverance to lower the manufacturing cost of a standardized product over several generations. An

example is the videocassette recorder (VCR):

while a U.S. firm pioneered video-recording

technology, Japanese firms developed the

technology into a low-cost consumer product (see

box 3-4). Multiple generations of design, production, and market testing, together with strong

attention to the development of manufacturing

skills, were essential to progress from a breakthrough technology to a low-cost product. This

points out some of the difficulties involved in a

catch-up strategy.

❚ Niche Market Approaches in

Established Technologies

As discussed earlier, U.S. firms are strongest in

niche markets that use established technologies,

such as EL and plasma. Several U.S. firms have

also made a good business in PMLCDs. The niche

market approach would use the existing strengths

of the domestic industry to increase market share

in niche technologies, by both increasing shares of

existing applications and creating new applications. Some of the established technologies are

well suited to military, industrial, medical, and

transportation market segments. Some may also

be critical to development of new products, such

as high definition televisions. By enhancing current efforts in known areas, the niche strategy

seeks to build the domestic industry by avoiding

the large investments and increasing price competition in the mainstream computer and consumer display markets.

U.S. firms are competitive in plasma and EL

display production. Some firms, including Babcock, Cherry, and Dale, manufacture low-information-content displays in volume, but use

plasma technology similar to that used in high-information-content FPDs. Others, such as Photonics, Plasmaco, and Electro Plasma, are producing

large-format, high-information-content displays

for military and specialized commercial markets,

and have plans to manufacture for larger commercial markets, such as HDTV. Planar, the largest

manufacturer of EL displays worldwide, is also

the largest U.S. FPD firm, and has entered into alliances with AMLCD developers. Photonics and

Planar have received numerous DOD R&D contracts to extend the capabilities of plasma and EL

technology.

The leading PMLCD producer in the United

States is Standish Industries, which manufactures

low-information-content displays for commercial

markets, and more complex displays—often using active matrix components produced by other

companies such as Xerox—for military programs.

Several firms, including In Focus Systems,

Nview, Positive Technologies, and Proxima, repackage (usually imported) displays for commercial applications. Another leading PMLCD firm,

Three-Five Systems, is moving from integrating

imported LCDs to manufacturing its own domestically.

The difficulty inherent in the niche strategy is

that, by definition, it does not attempt to compete

in the largest segments of the market; without

large markets in future applications, it is limited in

growth potential. However, firms such as Planar

have exploited segments that, while small relative

8 Bob Yard, Corning Worldwide Marketing, Corning, NY, personal communication, June 21, 1995.
72 I Flat Panel Displays in Perspective

The commercialization of videocassette recorder (VCR) technology for the consumer market is often

viewed as a classic case of U.S. firms inventing a technology, only to have Japanese firms copy it and reap

the benefits of market dominance. Upon further inspection, this case points to other issues related to the gap

between initial technological breakthroughs and large-scale production of a product for a mature market, Successful firms did not merely replicate an Invented artifact in large quantities, Multiple generations of Iterated

design, production, and market testing, as well as strong attention to the development of manufacturing skills,

were essential to win.

Ampex made the first video tape recorder (VTR) breakthrough in 1956 and cross-licensed it with RCA.

Ampex then grew fearful that RCA would be first to introduce a solid-state VTR, and collaborated with Sony

(also Intending to gain access to the Japanese market), Ampex marketed a solid-state VTR in 1962 and had a

dominant share of the market, but then decided to pursue markets far from its core capability in magnetic

recording technology, Japan’s national broadcasting corporation, NHK, imported an Ampex VTR, invited engineers from electronics firms to examine it, and provided data to a VTR research group funded by the Ministry

of International Trade and Industry (MITI). Rather than doing market research, Japanese firms emphasized

the development of Innovative electronics products that they believed would create future markets. Forced by

Ampex’s refusal to grant further patent rights to develop its own technology, the Victor Company of Japan

(JVC, half owned by Matsushita) was the first to release a two-head (rather than four) VTR, in 1960,

When Sony demonstrated the first solid-state VTR in 1961, using a two-head helical scan technique, Ampex did not believe it would be commercially successful. Instead, Ampex tried to leapfrog Japanese efforts

with its portable Instavideo. It was well received, but never reached production because of the firm’s doubts

about mass production capabilities. Instead, Ampex turned to Toamco, its joint venture with Toshiba, to produce the product, but they never solved the production problems. RCA, having similar production doubts

(about the scanner heads), turned to Bell& Howell, which also failed in production. Matsushita faced production problems also, but, despite cutbacks, kept its main cadre of manufacturing engineers Intact, preserving a

capability for the future by temporarily assigning them to research. Sony’s approach was one of systematic

manufacturing efforts iterated with market tests of product generations. The company had its VCR design

team build several prototypes, put them in competition with each other, selected the best, worked for 18

months on pilot models, and followed it into production. JVC also kept the design and production staffs in

close contact, and selected staff with expertise in design, manufacturing, and marketing. Sony selected the

losing approach (Betamax), but had built up production capabilities through production of U-Matic and Betamax lines.

What really mattered in the race to commercialize VCR technology was not the precise sequence of entry

into the R&D competition, but which firms possessed the right technological capacity when the window of

opportunity opened. Since product performance was bound up in manufacturing technique, the path to competitive advantage lay in incremental design improvements and the integration of design and manufacturing.

Learning by trying was the central task of being a pioneer in VCRS,

But the Japanese firms also possessed a strategic clarity that was Iacking in the U.S. firms. Ampex and

RCA were more opportunistic, Iooking for breakthroughs that were elusive. The bold technical stroke was

lacking because the firms had not developed the manufacturing skills that the Japanese had acquired

through Incremental progress. U.S. firms also viewed shortcomings as failures rather than as Iearning experiences. Japanese firms had a high degree of organizational consistency and management with technical understanding during the development of VCR technology. The Japanese did not simply copy U.S. technology,

They entered the field early and persisted, similar to their efforts in compact cars, digital computers, numerically controlled machine tools, semiconductor memories, and computer printers.

SOURCE :Richard S Rosenbloom and Michael A Cusumano, “Technological Pioneering and Competitive Advantage The Birth of the

VCR Industry, ” California Management Review, vol. 29, No 4, summer 1987, pp. 51-76
Chapter 3 Strategies and Policies for the Domestic Flatpanel Display Industry

to the overall FPD market, are large absolutely;

other firms, such as plasma produceers, hope to exploit demand for screens that are too large for current AMLCD manufacturing capacity. Growth

areas for niche technologies could be in largescreen displays, such as HDTV applications.9

■ Leapfrog Efforts in New Technologies

Like the niche approach, the leapfrog strategy

argues that the Japanese lead in AMLCD production is insurmountable, and that other technologies could provide a lower ratio of price to

performance than the AMLCD. This approach relies on U.S. strengths in breakthrough innovations

to develop a new technology with characteristics

superior to the AMLCD. Leapfrog technology

would shift FPD technology to a new learning

curve, rather than have U.S. firms follow Japanese

firms down the existing AMLCD curve. By producing a product comparable or superior to the

AMLCD at a comparable or lower manufacturing

cost, the leapfrog approach would position domestic firms to capture a large share of a growing

market.

A growing number of firms are pursuing R&D

in technologies that have the potential to leapfrog

the dominant AMLCD by providing equivalent

performance at a lower production cost. The leading candidate is the field emission display (FED),

developed at SRI decades ago but commercialized

only recently by the French company, PixTech.

Texas Instruments (TI) and Raytheon (which are

assisted by an ARPA contract) and, more recently,

Motorola, have licensed PixTech’s technology, as

has the Japanese firm, Futaba. The agreements

provide for cross-licensing between PixTech and

FED technology developed by each of the other

firms.

Other FED approaches are being pursued by

U.S. firms, including Coloray Display, Crystal173

Field emission displays use technology similar to cathode ray

tubes (CRTs) in a thin, lightweight pa&a9e and could offer

performance superior to AMLCDs at lower cost.

lume, FED Corp., Micron Display Technology, S1

Diamond Technology, and Silicon Video Corp.

Many of these firms have also received government support in the form of ARPA, Advanced

Technology Program, and Small Business Innovative Research grants. While some of these firms

envision competing with AMLCDs in the laptop

display market, a more suitable application may

be in large (greater than 20-inch diagonal) displays for television and computer monitors, a size

to which producers have been unable to extend

AMLCD technology. FED has the potential to

outperform AMLCDs in terms of most viewing

characteristics and to offer a lower manufacturing

cost. It should be noted, however, that very few

working FEDs have actually been made and production experience with these displays is very

limited.

Another leapfrog candidate is the digital micromirror device (DMD), pioneered during the early

1990s by TI with support from ARPA. TI has not

yet produced the display in commercial quantities, although it has entered into product development agreements with In Focus, Nview, Proxima,

9 Fujitsu plans to produce 42-inch Plasma screens in time for the 1998 Winter Olympics in Nagano, Japan; see “Fujitsu Betting On Plasma

Displays,” op. cit., footnote 7.
74 I Flat Panel Displays in Perspective

Texas Instruments has adapted standard semiconductor

manufacturing techniques to build its digital micromirror device, a miniature array of over 400,000 mirrors, for use in projection display systems.

Rank Brimar, and Sony. 10 Aura Systems is also

pursuing a similar technology. The limitation of

this technology is that it can only be used in projection systems, a much smaller part of the market

than direct-view displays.

The leapfrog strategy has often been viewed as

entailing little risk and perfectly suited to the innovative culture exemplified by Silicon Valley. But

this view obscures the risks and costs this strategy

entails. First, mass manufacturing of displays using a leapfrog technology could involve many unforeseen problems not encountered by the

small-scale efforts to date. All of the proposed

technologies require substantial investments in

order to scale up from current capabilities to commercial volumes, and they require significant experience in the specifics of mass manufacturing. If

history is any guide, the weaknesses of the U.S.

FPD industry lie not in any lack of innovative

technologies, but in the lack of access to longterm, patient capital and the willingness to tackle

manufacturing challenges, which require continuous and incremental process innovations. Their

dedication to solving manufacturing problems,

rather than their breakthrough technology developments, has brought Japanese firms to the forefront of FPD technology.

A second concern is that the AMLCD is becoming entrenched and difficult to dislodge, barring any large differences in cost or performance.

Once the supply structure has developed around a

dominant technology, suppliers, producers, and

users resist adopting a new one.

A final risk is that the trend toward integration

of functions such as computing onto the display

(see chapter 2) is accelerating, and it could favor

AMLCDs. The transistors used in AMLCDs are

similar to semiconductor devices, which operate

on modest voltages. However, many of the emissive technologies require high voltages to operate.

These voltages are not compatible with standard

integrated circuit levels (although FED voltages

are moving toward chip voltage levels, and the

DMD is similar to a semiconductor chip). This

could present difficulties for integrating circuitry

onto the display.

The leapfrog approach requires a technical

breakthrough, as well as honing the manufacturing process for an alternative technology. Both involve risks, including technical hurdles in

large-scale production for a technology that has

not been identified. Leapfrog approaches have a

mixed record of success. While Japanese companies devoted their efforts to an analog HDTV standard, U.S. firms, first in competition and then in a

collaborative effort, developed a more capable

digital HDTV standard. This has given U.S. firms

new opportunities to compete. However, in VCRs

(see box 3-4), RCA attempted to leapfrog analog

magnetic tape recorders with video disks read by

lasers. Now common in stereo and computer systems, such technology was not well developed at

the time (too expensive to produce), and lost out to

the established video tape.

10 Ronnie Dunn, Program Manager, Digital Imaging Venture Projects, Texas Instruments, Dallas, TX, personal communication, May 24,

1995; “Sony, TI Team Up in New Display Technology, ’’Nikkei Weekly, Mar. 6, 1995, p. 1.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry 175

Agency FY1991 FY1992 FY1993 FY1994 FY1995 FY 91-95

Defense 77.0 79,5 167.1 173,0 100.7 597.3

Commerce 1.8 5.3 6.0 5.2 4.3 22.6

Energy 0.3 1.0 3.5 6.0 7.0 17,8

NASA 1,3 1.3 1.3 1.3 1.3 6.5

NSF 0.0 0.3 0.4 0.4 0.4 1.5

Total 80.4 87.4 178,3 185.9 113.7 645.7

KEY NASA = National Aeronautics and Space Administration, NSF = National Science Foundation

SOURCES For Department of Defense spending, see table3-2 below; for other agencies, see U.S. Congress, Congressional Research Service, Flat

Panel Display Technology: What is the Federal Role? (Washington, DC Mar 24, 1995), table 1

GOVERNMENT ACTIVITY

U.S. government funding for FPDs, including

R&D and insertion programs, has been dominated

by DOD (see table 3-l). Prior to 1989, a small

amount of display R&D was funded by the individual services’ laboratories for their individual

mission needs. Since 1989, ARPA has been the

driving force in display R&D, prompted first by

congressional interest and, since 1994, by Administration programs. in the Department of Commerce, the National Institute of Standards and

Technology’s Advanced Technology Program

(ATP) has made several awards to FPD consortia

for precompetitive research. The Department of

Energy funds some display research in its multiprogram laboratories, and coordinates the National Center for Advanced Information Components

Manufacturing (NCAICM). The National Science

Foundation (NSF) also supports some FPD R&D,

and the National Aeronautics and Space Administration (NASA) is retrofitting systems such as the

Space Shuttle with FPDs.

❚ ARPA-Funded Programs

in 1989, in the wake of concerns over domestic

display capabilities for competition in HDTV,

ARPA initiated the High Definition Systems

(HDS) program, originally called High Definition

Display Technology. Program funding in the first

two years was $5 million and $30 million, respectively. in fiscal years 1991 and 1992, Congress appropriated $75 million for HDS. in 1993,

Congress increased the HDS funding to $161 million, including $25 million designated specifically for “AMLCD Technology,”ll and $60 million

to fund NCAICM at Sandia National Laboratories. It also appropriated just under $10 million for

the Tactical Display Systems program (TDS),

which includes the Head Mounted Display program (HMD). Outlays were slightly less, due to a

reduction in appropriations (see table 3-2).

in 1994, the Clinton Administration requested

$57 million, which Congress increased to $85

million. in addition, ARPA funded $9.3 million

for display R&D through the TDS program, and

$25 million through the Technology Reinvestment Project. Another $40 million in DOD funds

was used by authority of Title III of the Defense

Production Act (see below for description), which

included $30 million to partially fund the Xerox/

AT&T/Standish manufacturing testbed, and $10

million for purchase incentives to the military services. 12 in 1995, the Administration requested

$68 million for the ARPA HDS program, which

Congress increased to $82 million. in addition,

another $15 million was requested for the TDS

program.

11 As OIS was the only domestic manufacturer of AMLCDs at the time, it was widely regarded that this appropriation was earmarked for the

Troy, Michigan firm. See Douglas Harbrecht, “Did Commerce Pull the Plug on Flat-Screen Makers?” Business Week, July 5, 1993, p. 32; and

John B. Judis, “Flat Panel Flop,” The New Republic, Aug. 9, 1993, pp. 16-21. OIS notes that they were awarded the contract based on a competition with numerous respondents; Curtis Casey, Vice President, OIS Northville, Michigan, personal communication, Apr. 17, 1995.

12 An additional $10 million in fiscal year 1994 appropriations is being spent in fiscal year 1995.
76 I Flat Panel Displays in Perspective

Program FY1991 FY1992 FY1993 FY1994 FY1995

ARPA High Definition Systems 74.4 75.0 152.2 84.5 81.6

ARPA Tactical Display Systemsa10,1 9.3 14,7

ARPA Technology Reinvestment Project 25.0

DOD Services 2.6 4,5 4,8 4.2 4,4

Defense Production Act Title Illb50.0

Total 77.0 79.5 167,1 173.0 100.7

KEY ARPA = Advanced Research Projects Agency; DOD = Department of Defense

NOTES

aARPA’s Tactical Display Systems Program IS made up of the Head Mounted Displays (HMD) and Tactical Information Assistants (TIA) Programs,

only the HMD Program is directly related to flat panel displays

bAt the time of this writing, the Title Ill Program was expecting an additional $10 million in funding

SOURCES: U.S. Department of Defense, Advanced Research Projects Agency, Research, Development, Test and Evaluatlon, Project Level Summary Reports, various years; U.S. Department of Defense, Budding U.S. Capabilities in Flat Panel Displays: Report of the Flat Panel Display Task

Force, October 1994, table 71, Mark Hartney, Program Manager, Advanced Research Projects Agency, Electronic Systems Technology Office,

personal communications, July 1995,

High Definition Systems

ARPA’s HDS program was initiated in 1989 to develop the domestic capability to manufacture

FPDs by bringing together firms from the three

levels of the FPD industry: 1) materials and equipment, 2) display manufacturers, and 3) end-users.

The first phase, from 1990-92, focused on building up the capability of the materials and equipment sector of the industry, and also supported

research in advanced display technologies. The

first phase resulted in a series of technical breakthroughs in display R&D (see table 3-3).

Phase Two of HDS, begun in 1993, added support of FPD manufacturing testbeds to the ongoing R&D programs. The first manufacturing

testbed award, for $48 million, was made to OIS

which matched the grant. The plant, located in

Northville Township, Michigan, is scheduled to

begin production in 1995. The planned production

capacity is 160,000 AMLCD displays annually.13

OIS estimates that one-quarter of this capacity

will be devoted to military needs. 14 in 1994, a

$50-million award was made to a partnership consisting of AT&T, Xerox, and Standish Industries,

also matched by the companies. This testbed is

distributed at four sites among the firms, and will

develop high resolution displays and advanced

packaging for intelligence applications. in addition to meeting defense needs, the testbed will allow AT&T and Xerox to develop the capacity to

supply internal display needs for market testing.

Another aspect of HDS Phase Two has involved

support for the domestic display manufacturing

infrastructure. For that purpose, ARPA awarded

$20 million to the U.S. Display Consortium

(USDC; see box 3-3) in 1993, and an additional

$25 million in 1995. Both awards were matched

by the consortium’s member companies.

ARPA HDS also funded NCAICM, a cooperative research program in FPD and microelectronics technologies operated by Sandia National

Laboratories in conjunction with Los Alamos and

Lawrence Livermore National Laboratories, with

facility and personnel contributions from the Department of Energy (DOE). A one-time appropriation of $60 million was made for NCAICM in the

1993 Defense Appropriations Bill. Approximately $48 million is used for joint industry-lab projects, one-half involving FPDs and one-half for

manufacturing other information technology

components (e.g., electronics and photonics).

Sandia is spending $12 million to administer the

13 This assumes four displays are produced from every set of substrates; the line will be able to handle substrates up to 17 inches in diameter.

Vincent Cannella, “Made in the USA: High Volume AMLCDs,” Semiconductor International, February 1995.

14 Casey, op. cit., footnote 11.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry 177

Company Achievement

Xerox Corp. 13-inch diagonal AM LCD with 6.3 million pixels (most to date)

Texas Instruments Full color HDTV format digital micromirror display (first of its kind)

Planar Systems Full color, 10-inch diagonal EL display with VGA resolution (first color)

Photonics Imaging Full color, 30-inch diagonal high resolution plasma monitor

Micron Display Technology Full color, 0,7-inch FED head mounted display

Kent State University 8.5- x 1 I-Inch, 120 dots per inch reflective display with image memory

Standish Industries Manufacturing facility for STN LCD and color filters

KEY: AMLCD = active matrix liquid crystal display, ARPA = Advanced Research Projects Agency, EL = electroluminescent, FED = field emission

display, HDS = High Definition Systems, HDIV = high definition television, LCD = Iiquid crystal display, STN = super twisted nematic, VGA = video

graphics adapter

SOURCE Department of Defense, Advanced Research Projects Agency, Electronic Systems Technology Office, “High Definition Systems Program

Fact Sheet, ” Mar 8, 1995

center, move facilities outside of the laboratory secure area, and carry out several precompetitive research projects approved by an oversight board

(composed of national laboratory, ARPA, and industry representatives).

The goal of the display portion of the NCAICM

program is to develop flexible manufacturing

technologies that can be applied to low-cost, highvolume production of large area emissive FPDs,

mainly plasma, FED, and EL. 15 The emphasis on

non-AMLCD technologies reflects an assessment

that LCDs will be limited to medium area (less

than 20-inch diagonal) displays. These technologies also match the technical capabilities of the

participating national laboratories.

The projects are organized into two phases.

Phase I projects involve research on precompetitive materials, processes, and equipment, utilizing

NCAICM staff and facilities; the results are in the

public domain. Phase II projects are joint industry/lab efforts performed at the industry sites,

NCAICM facility, or other DOE labs as appropriate; the resulting intellectual property rights may

be claimed by the firms. Phase I projects include

development of an economic model of a flat panel

display factory, construction of metrology equipment for FEDs, and construction of a phosphor

characterization facility. There are 13 Phase II

FPD projects, including support of color plasma

development at Photonics Imaging; EL development at Planar and UNIAX Corp.; FED development led by FED Corp., Micron Display

Technology, SI Diamond Technology, and Silicon

Video Corp.; and development projects in areas

common to all FPD technologies.

Finally, the Phosphor Technology Center of

Excellence, led by the Georgia Institute of

Technology, has been funded under HDS to train

scientists and engineers for research and development of phosphor technologies. Five universities,

the American Display Consortium, and the David

Sarnoff Research Center are also founding members. The research emphasis is on emissive FPDs,

since phosphors are a key component in all types

of emissive displays. Originally the center

planned to investigate improved phosphors for

LCD backlighting, but this goal has been set aside

by the member companies. 16

Head Mounted Displays

in 1992, ARPA established the HMD program to

create small, high resolution FPDs that can be

mounted in military helmets. Table 3-4 lists some

15 "Program Status Report,” National Center for Advanced Information Components Manufacturing, February 1995.

16 Paul H. Holloway et al., “Blue and Yellow Light Emitting Phosphors for Thin Film Electroluminescent Displays,” in Flat Panel Display

Materials, J. Batey, A. Chiang, and P. H. Holloway (eds.), Symposium Proceedings, vol. 345 (Pittsburgh, PA: Materials Research Society, 1994),

pp. 289-298.
78 I Flat Panel Displays in Perspective

Company/Team Achievement

Kopin Corp., Planar Systems, David AM LCD and AMEL displays using single crystal silicon, with 1.3 million

Sarnoff Research Center, and pixels on a square-inch display

Standish Industries

Displaytech Low voltage reflective FLCD color display

KEY: AMLCD = active matrix Iiquid crystal display, AMEL = active matrix electroluminescent, ARPA = Advanced Research Projects Agency, FLCD =

ferroelectric liquid crystal display

SOURCE: Department of Defense, Advanced Research Projects Agency, Electronic Systems Technology Office, “Head Mounted Displays Program

Fact Sheet, ” Mar 9, 1995.

of the HMD results in small displays. The program has also developed several approaches to integrating FPD technology into soldier systems.

❚ The National Flat Panel Display

Initiative

in 1993, the Clinton Administration’s National

Economic Council (NEC) and Council of Economic Advisors identified the U.S. FPD industry

as an example of the need to coordinate the commercial and defense development and production

of technology-intensive systems. The NEC asked

DOD to conduct a study to determine whether

FPDs were important to military security, and if

so, what should be done about the weakness of the

domestic industry. in April 1994, after a year-long

multiagency study, the National Flat Panel Display Initiative (NFPDI) was announced. 17 NFPDI

seeks to apply three policy tools to help develop a

domestic industry that can provide DOD with early, assured, and affordable access to FPD technologies: 1) continuation of ARPA R&D and

manufacturing testbed programs, 2) awarding

R&D grants to firms planning to manufacture

FPDs, and 3) applying DOD funds to procurement

programs if they use domestic FPDs.

NFPDI was developed to meet defense needs

by fostering a high-volume commercial FPD industry. 18 The primary justification for NFPDI relates to national security: if the government

cannot be assured of an unimpeded flow of a critical component, U.S. national security capabilities

may be damaged. The rationale is that without a

capability for volume production in the United

States, the technology base for displays (i.e., what

DOD has traditionally supported) is in jeopardy,

regardless of the amount of R&D. The initiative

comes under the Administration’s dual-use

policy, which calls for DOD to use commercial capabilities wherever possible and to focus on capabilities that will support both defense and

commercial technology bases. The Administration has stated that national security requirements

will not be met by current foreign or domestic suppliers; the leading display manufacturer (Sharp

Corp.) will not make custom displays for U.S. defense needs; and U.S. firms are behind in FPD

manufacturing technology.

Another rationale is related to linkages between

the defense and commercial technology bases.

DOD’s argument is that the concentration of the

display industry in Japan is a threat to the military’s ability to procure advanced technology, and

Japanese control over materials and equipment

supplies could impede the access of U.S. display

firms to those critical inputs. If a high-volume domestic FPD industry were created, larger amounts

of R&D could be conducted by corporations, supported by revenue streams; ultimately, display

R&D could be funded by industry at a higher level

than the current government funding. To the extent that other industries draw from the same base

of technology as FPDs, the lack of a U.S. research

17Department of Defense, “National Flat Panel Display Initiative,” Apr. 28, 1994.

18Department of Defense, “Building U.S. Capabilities in Flat Panel Displays: Report of the Flat Panel Display Task Force.” October 1994.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry 179

Program Element FY1994 FY1995 FY1996 FY1997 FY1998 Total

Core R&D 5 0 82 4 8 6 8 6 8 316

Manufacturing testbeds 7 5 0 0 0 0 7 5

R&D Incentives 2 5 0 50 50 7 4 199

Purchase incentives 2 0 2 0

Total 170 8 2 98 118 142 610

NOTE aAt the time of this writing, the Active Matrix Liquid Crystal Cockpit Display Project of the Title I I I Program was expecting an additional $10 million in

funding for purchase incentives

SOURCES: Electronic Engineering Times, May 2, 1994, p 1, Mark Hartney, Program Manager, Advanced Research Projects Agency, Electron/c

Systems Technology Office, personal communiations, July 1995

and manufacturing base for FPDs could impede

the competitiveness of those industries, and their

ability to meet military needs.

The goal of the initiative is to use ongoing DOD

investments in FPD research to encourage the development of a domestic capability for manufacturing FPDs in commercial volumes, which DOD

expects will better serve defense needs than the

current U.S. industry can. The initiative is comprised of four main elements (see table 3-5).

NFPDI can be viewed as an umbrella program

consisting of: 1) existing ARPA R&D programs

(including HDS and HMD); 2) ongoing ARPA

manufacturing testbeds; 3) R&D incentives

funded via ARPA’s Technology Reinvestment

Project (TRP) and the Defense Production Act,

Title 111 (DPA); and 4) purchase incentives funded

via DPA. Approximately two-thirds of NFPDI

funding is devoted to ongoing ARPA HDS programs in R&D projects and manufacturing testbed

awards, discussed previously. The two new aspects of NFPDI are the R&D and purchase incentives programs.

R&D Incentives

NFPDI awards R&D grants to firms that: 1) have

demonstrated prototype or pilot production of

leading-edge FPD technologies, and 2) make

commitments to invest in high-volume FPD

manufacturing. The awards are based on a firm’s

commitment to high-volume production (for

commercial and defense markets), the quality of

the proposed research, and a commitment to

match the government R&D support. The exact

type of technology is not a determining factor in

the awards. The goal is to induce companies to begin manufacturing based on current technology by

awarding support for follow-on or next-generation R&D.

The NFPDI awards will provide R&D grants,

matched dollar for dollar by the firms; the awards

are predicated on commitments by the firms to

make capital investments of at least three times

the government contribution. DOD estimates that

private investments could total as much as 10

times the R&D grants. 19 in October 1994, DOD

announced three winners in the first competition,

funded by ARPA’s Technology Reinvestment

Project (see table 3-6). The method of indirectly

funding production through the promise of R&D

subsidies is designed to comply with restrictions

on government production subsidies, ratified in

the final version of the Uruguay Round treaty of

the General Agreement on Tariffs and Trade.**

19 Mark Hartney, Program Manager, ARPA/ESTO, Arlington, VA, personal communication, June 7, 1995.

20DOD notes that the policy was cleared with the Office of the U.S. Trade Representative; however, some observers have made the case that

NFPDI may violate the subsidies rules. See George Kleinfeld and David Kaye, “Red Light, Green Light? The 1994 Agreement on Subsidies and

Countervailing Measures, Research and Development Assistance, and U.S. Policy,” Journal of World Trade, December 1994, p. 43.
80 I Flat Panel Displays in Perspective

Team leaders/members Fundinga Description

Planar Systems 29.2 Thin film and active matrix EL display

Advanced Technology Materials, Allled-Signal, Boeing, research for head mounted applicaComputing Devices Canada, Georgia Institute of Technol- tions

ogy, Hewlett-Packard, Honeywell, Lawrence Livermore

National Laboratory, Los Alamos National Laboratory,

Oregon Graduate Institute, Positive Technologies, University of Florida

Silicon Video 67.2 Development of manufacturing

Accufab Systems, Advanced Technology Materials, Law- technology for FEDs

rence Livermore National Laboratory, Planar Systems

Texas Instruments, Raytheon 25.5 Manufacturing research for FED proEG&G Power Systems, Georgia Institute of Technology, duction, based on technology from

Lockheed Sanders, MRS Technology PixTech

KEY” ARPA = Advanced Research Projects Agency, EL = electroluminescent, FED = field emission display

NOTE:

aTotal project cost; ARPA and team contributions subject to negotiations, ARPA plans to spend a total of $48 million on these projects

SOURCE: Advanced Research Projects Agency, 1995

Purchase Incentives

Title III of the Defense Production Act of 1950, as

amended in 1992, authorizes the President to enter

into procurement of “industrial resources or critical technology items essential to the national defense” outside of the normal government

procurement rules. Such procurement is authorized in the absence of a declared national emergency if the President determines that “the

combination of the United States national defense

demand and foreseeable nondefense demand is

not less than the output of domestic industrial capacity” for the industrial resources or critical

technology items, including the output that would

be created by the procurement.21

The current Title 111 certification covers

AMLCD technology exclusively, and is called the

Active Matrix Liquid Crystal Cockpit Display

(AMLCCD) project.

22 Through qualifications

and accelerated procurement, the AMLCCD project is designed to: 1) accelerate the insertion of

AMLCD technology into military avionics; 2)

create cost savings through volume purchases;

and 3) boost domestic manufacturing capabilities.

To date, the AMLCCD project has received

$20 million.23 The funding is used as an incentive

for military programs that are designing new aircraft, designing retrofits, or procuring aircraft to

consider and purchase AMLCDs for the cockpit

avionics. Military programs receive project fund

21 Defense production Act Amendments of 1992, Public Law l02-558.

22 This specification appears to have emerged from work on a draft standard guideline for cockpit AMLCDs at Wright-Patterson AFB, the

initiation of the NFPDI as a whole, and specific congressional reference to AMLCD technology in several DOD appropriations reports. See

Darrel G. Hopper and Daniel D. Desjardins, “Requirements for AMLCDs in U.S. Military Applications,” Cockpit Displays 11, Proceedings of

the SPIE, vol. 2462, April 1995; Department of Defense Appropriations Bill, 1993, 102d Congress, Report 102-627, Report of the Committee

on Appropriations (to accompany H.R. 5504), June 29, 1992, p. 203; Department of Defense Appropriations Act 1995, 103d Congress, H.R.

4605, Section 8119.

23 

A total of $50 million was budgeted for Title III; $30 million was used to help fund ARPA’s second cost-sharing grant for an AMLCD

manufacturing testbed. An additional $10 million for the AMLCCD project has been approved by DOD.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry 181

Number of Funding

Military program AMLCDs ($ millions) Funding for Program status

AH-64 Longbow over 4,000a 7.60 qualification

DVE over 2,500a0.75 qualification

P-3C (two programs) 500b1.59 purchases

280b0.70 qualification

CH-46 665b4.23 purchases

C-141 376b

3.39 purchases

Common Display Program 2,500 a

1,25 qualification

(AV-8B, F-18)

qualifications testing

qualifications testing

production in 1996

qualifications testing

low rate initial production

production in 1996

qualifications testing

KEY: AMLCD = active matrix Iiquid crystal display, DVE = driver vision enhancement

NOTES

aPotential number of displays required for retrofit or upgrade of existing platforms

bActual number of displays under contract for platform retrofit.

SOURCES “Active Matrix Liquid Crystal Cockpit Display Project, ” DOD briefing slides received June 7, 1995, John Blevins, Active Matrix Liquid

Crystal Cockpit Display project office, Wright-Patterson AFB, personal communication, July 21, 1995; Darrel G Hopper and Daniel D Desjardins,

“Requirements for AMLCDs in U S Military Applications,” Cockpit Displays II, Proceedings of the SPIE, voI 2463, April 1995, table 1

ing to defray the cost of qualifying (that is, testing

in the operating environment) and for accelerated

and volume purchases of AMLCDs.24 in return,

the program must require, and the contract must

use, a domestic AMLCD manufacturer.25 Programs are selected for funding based on their requirements, planned procurement, and potential

impact on the industry. Seven programs currently

participate in the project (see table 3-7).

DOD believes the Title III project could stimulate demand by more than 4,000 AMLCDs and

boost domestic sales by as much as 400 percent in

fiscal year 1996.26 This could help low-volume

manufacturers to develop production experience

and help military programs extend limited resources. Title 111 has the additional benefit of

fostering display commonality across programs.

For instance, the Common Displays Program of

the Naval Air Warfare Center is helping the AV-8B

and F-1 8 programs qualify the same display, accelerating insertion by almost a year.27

Participating program offices receive several

benefits from taking part in Title III. It enables

them to procure high performance AMLCDs for

new and retrofitted systems that operate in strenuous environments; these include bubble-canopy

and high-altitude aircraft such as F-22s and F- 18s.

By supporting qualification activity, Title III

funding introduces FPD technology to programs

that otherwise might not consider it; for example,

the AH-64 Longbow program will upgrade its

cockpit design from CRTs to AMLCDs.28 Although Title III purchase incentives reduce the

cost of domestic, custom-made AMLCDs, there

24 The AMLCCD project only provides funding for purchases of unfinished AMLCDs; the basic unit includes the glass substrates, active

matrix array and color filters, and row-and-column drivers. For a description of AMLCDs, see appendix A.

25 For the purposes of the Title III program, domestic refers to any business that performs research, development, and manufacturing in the

United States or Canada. The program’s contract with the prime contractor will typically have a separate line item that stipulates the amount that

the prime contractor is to use for a domestic display manufacturer, and another that requires that products delivered under the contract make use

of that display.

26U.S. Department of Defense, “Active Matrix Liquid Crystal Cockpit Display Project,” briefing material received June 7, 1995.

Program develops common avionics requirements across platforms by promoting communication between users and suppliers to define performance specifications and leveraging these specifications for use in other platforms. Harlan Smith, Air Combat Electronics Office, Naval Air

Warfare Center, Indianapolis, IN, personal communication, July 17, 1995.

28 Frank Bick, Army Aviation Troop Command, personal communication, June 26, 1995.
82 | Flat Panel Displays in Perspective

continues to be a large cost differential between

commercial and custom displays (see chapter 2).

For some programs, even Title III funding cannot

bridge the gap between the cost of custom

AMLCDs and the programs’ limited budgets.

Instead, these programs relax some performance

requirements, and use less expensive, commercial

AMLCDs.29 Price reductions in domestic

AMLCDs for commercial avionics are closing

this gap.30

The Title III requirement for domestic

manufacturers excludes some defense integrators

that purchase commercial AMLCDs from foreign

sources and ruggedize them (see box 2-3). These

firms argue that such requirements prevent programs from considering their lower cost products.

Others argue that the domestic requirement puts

all integrators on an equal footing; even using a

domestic source, the integrators could draw on

their ability to ruggedize inexpensively to produce

a high performance, lower cost product.31

Partly as a result of congressional interest, Title

III funding is limited to AMLCDs (unlike the rest

of NFPDI). However, AMLCDs are not a good

match for all of the wide range of DOD’s FPD

needs; for instance, large area displays in Airborne

Warning and Command Systems planes could use

plasma or projection FPDs to replace existing

CRTs. Broadening Title III projects to other FPD

technologies could bring these incentives to other

applications, further equip DOD with state-ofthe-art technology, and bolster the domestic FPD

industry.

❚ Trade Policy

Trade policy can also affect the incentives for investment in FPD manufacturing. One area is tariffs. Tariffs on imported FPDs are low—zero on

FPDs for computer applications with a diagonal

screen size up to 12 inches, 3.7 percent on FPDs

for computer applications with larger screens, and

5 percent on FPDs for televisions. In comparison,

FPD tariffs are zero in Japan, 4.4 to 4.9 percent in

the European Union (EU), 5 to 7.5 percent in Taiwan, and 9 percent in Korea. FPD parts and components imported into the United States often face

higher tariffs, discouraging domestic FPD

manufacturing.

Antidumping Duties

Another possible trade policy tool is the imposition of antidumping duties when imports are sold

at less than fair value. Such duties are permitted

under the rules of international trade, though recent changes in these rules narrow their permitted

application somewhat. Formally, and as a matter

of expressed Administration policy, antidumping

cases are legal proceedings, to be decided on legal

rather than policy grounds; in practice, policy concerns sometimes enter into dumping determinations.

The FPD industry has already tried to use antidumping duties as a weapon against imports.

While substantial duties were placed on AMLCDs

from Japan from 1991 to 1993, the result of those

duties was to drive some computer manufacturing

offshore rather than to encourage U.S. AMLCD

29 Colonel Dan Hamilton (Ret.), Combined Air National Guard and Air Force Reserve F-16 Program, Ogden Air Logistics Center, Hill AFB,

UT, personal communication, June 27, 1995; Frank McKinney, Assistant Program Manager for Systems Engineering, Naval Air Systems Command, Arlington, VA, personal communication, June 28, 1995; and Bob Lehman, Team Leader, Navy UH-1N Program, Naval Air Warfare

Center, Warminster, PA, personal communication, July 5, 1995.

30 One Program Officer found that Title III funding helped bridge the remaining price gap; Commander Ted Klapka, Deputy Assistant Program Manager for Systems Engineering, P-3C, Maritime Surveillance Aircraft Program Office, Arlington, VA, personal communication, July

13, 1995. For discussion of commercial avionics, see box 2-4.

31 Defense integrator, personal communications, June 5 and July 24, 1995.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry | 83

production; no new producer emerged, and no existing producer substantially increased production. The case also engendered friction by pitting

U.S. FPD producers against U.S. computer

manufacturers, and some FPD producers against

others. This conflict had to be overcome before

U.S. industry could work cooperatively (see box

3-3).

The FPD Antidumping Case

In the early 1990s, the FPD market grew sharply

and Japanese FPD producers reaped the rewards.

As miniaturized disk drives, keyboards, and other

components became available at reasonable

prices, computer manufacturers developed the

first truly portable computer, the laptop. Laptops

required FPDs; the CRTs used in desktop computers were too heavy and bulky and used too much

power. Early laptops used EL and plasma displays, but the desire for high-resolution color

graphics led manufacturers to the LCD. U.S. laptop manufacturers (primarily IBM, Apple, Compaq, and Tandy) required thousands of displays

per month. U.S. FPD producers had never produced such volumes, and lacked the capital to

ramp up for such production.

Many Japanese FPD producers, in contrast, had

experience in volume manufacturing, ready access to capital, and internal demand for displays.

While orders from U.S. laptop manufacturers to

U.S. display producers might have enabled the latter to get financing to ramp up production, U.S.

laptop manufacturers did not want to rely on unproved suppliers. Instead, the orders went to Japanese display producers, helping them to increase

their already superior manufacturing capacity.

As one weapon against imports, in July 1990,

several American FPD producers filed a joint antidumping petition with the U.S. Department of

Commerce’s International Trade Administration

(ITA) and with the U.S. International Trade Commission (ITC), an independent government

agency whose commissioners are appointed to

long terms by the President, but who are not otherwise responsible to the President. The petition alleged that high-information-content FPDs from

Japan were being sold in the U.S. market at less

than fair value (i.e., dumped), and that the sales at

below fair value had caused material injury to the

U.S. industry that produced such displays.32 Under U.S. law, if these allegations were found to be

true, the government would levy antidumping duties on those imports in an amount sufficient to

bring the price up to the imports’ fair value.

Antidumping investigations proceed as follows. The ITA divides the imports in question into

one or more classes or kinds of merchandise. For

each class of merchandise, ITA determines whether any petitioners produce a like product in the

United States; if not, that class of merchandise is

removed from the investigation. For each remaining class, the ITA determines whether U.S. sales at

less than fair value have occurred and, if so, what

the dumping margins are (i.e., the percentages by

which the sale prices need to be increased by antidumping duties to bring them up to fair value). For

each class in which sales at less than fair value

have occurred, the ITC defines which domestic industry produces like products, and determines

whether the dumped imports in that class have

been a cause of material injury to the corresponding U.S. industry. (The ITC’s definition of like

products need not agree with the ITA’s definition.)33 The purpose behind the notions of class of

merchandise and like product is that antidumping

duties are justified only if U.S. producers and for32 U.S. Department of Commerce, International Trade Administration, Import Administration, “High Information Content Flat Panel Displays and Display Glass Therefor From Japan,” Federal Register 55(142):30042-30043, July 24, 1990. High-information-content flat panel

displays were defined as having at least 120,000 pixels, with or without color, and using liquid crystal, plasma, or electroluminescent technologies.

33 19 U.S.C. 1673, 1677(4)(A); see Hosiden Corp. v. United States, United States Court of International Trade, Case No. 91-10-00720, Slip

Op. 92-229 (Goldberg, J.), Dec. 29, 1992.
84 | Flat Panel Displays in Perspective

eign producers of dumped imports actually compete.

Formally, the FPD antidumping case was decided by applying the legal concepts of class of

merchandise, fair value, like products, material

injury, and causation to the facts at hand. However, both the legal concepts and the facts were

sufficiently ambiguous that, in practice, both the

ITA and the ITC, if they wished, had plenty of

flexibility to let their decisions be influenced by

political views that legally had no weight. Such

views include whether the country needed a commercial FPD industry, what responsibility laptop

manufacturers had to support a domestic FPD industry, and to what extent antidumping duties

would harm U.S. laptop manufacturers and/or

force their operations offshore (see box 3-5). It is

difficult to say to what extent such political considerations influenced the decisions of the ITA

and ITC.

Initially, the ITA defined all high-informationcontent FPDs as being in one class of merchandise, and the ITC defined the corresponding U.S.

industry as all producers of high-informationcontent FPDs. Late in the process, however, ITA

reversed its decision and found four classes of

merchandise—PMLCDs, AMLCDs, EL displays, and plasma displays—on the grounds that

the classes had different functional capabilities

(e.g., power consumption, viewing angle, brightness, and weight) that “establish the boundaries of

the FPD’s ultimate use and customer expectations.”34

This change profoundly affected the investigation’s results. No petitioner produced PMLCDs;

therefore, ITA removed PMLCDs from the investigation.35 The ITA found dumping margins of under half a percent for plasma displays, which,

under U.S. law, are regarded de minimus, and the

products are considered not to be dumped. Thus,

PMLCDs and plasma displays—which accounted

for over 75 percent of the value of high-information-content FPDs imported from Japan in

1990—could continue to be imported as before.36

The ITA found dumping margins of 62 percent for

AMLCDs and 7 percent for EL displays.37 In

1990, AMLCDs accounted for only about 15 percent by value of Japanese high-information-content FPDs, and EL displays accounted for under 5

percent.38 (In contrast, U.S. production of highinformation-content FPDs was predominantly

ELs.39) In order for antidumping duties to be levied against these imports, the ITC had to find

that, though relatively modest in amount, these

imports had caused material injury to U.S.

manufacturers of like products.

Despite ITA’s switch, the ITC found that all

types of high-information-content FPDs were like

both the imported AMLCDs and the imported EL

displays, based on “overlaps in physical characteristics and uses.”40 Thus, the ITC considered injury to the U.S. high-information-content FPD

producers as a whole. In August 1991, the ITC

deemed it appropriate to consider the injury from

34 U.S. Department of Commerce, International Trade Administration, Import Administration, “High Information Content Flat Panel Displays and Display Glass Therefor From Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition,” Federal

Register 56(136):32376-32402, July 16, 1991, p. 32379.

35 Ibid., pp. 32380-32382.

36 U.S. International Trade Commission, Certain High-Information Content Flat Panel Displays and Display Glass Therefor From Japan:

Determination of the Commission, Investigation No. 731-TA-469, USITC Publication 2413, August 1991, p. 9.

37 U.S. Department of Commerce, op. cit., footnote 34, p. 32401.

38 U. S. International Trade Commission, op. cit., footnote 36, p. 9, fn. 1.

39 U.S. International Trade Commission, Certain High-Information Content Flat Panel Displays and Display Glass Therefor From Japan:

Views on Remand in Investigation No. 731-TA-469 (Final), USITC Publication 2610, March 1993, p. I-22.

40 Ibid., p. I-12; see also U. S. International Trade Commission, op. cit., footnote 36, pp. 7-12.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry 185

An issue of great importance hovered over the public debate concerning the flat panel display (FPD)

dumping case: to what extent would the imposition of tariffs on FPDs negatively impact the domestic

production of laptop computers? Specifically, what was the impact of the tariffs on domestic computer

manufacturing employment? The computer industry asked the Commerce Department to carry out a

balancing test, in which jobs in the small FPD industry would be weighed against jobs in the computer

industry, By statute this consideration was irrelevant; however, some believe that the Commerce Department did informally consider such downstream effects,

Since displays represented a large fraction of the cost of producing laptops, in some cases making

up half of the production cost, U.S. manufacturers of laptop computers (Apple, Compaq, IBM, and

Tandy) argued that imposition of any substantial duties on active matrix liquid crystal displays

(AMLCDs) would force them to move domestic production offshore. It should be noted, however, that

there were no tariffs imposed on passive matrix Iiquid crystal displays (PMLCDs) or plasma displays,

which together accounted for over 98 percent of laptop displays in 1991. The AMLCD market was

growing rapidly at the time, however.

Japanese computer manufacturers (many of which manufactured displays, and were thus named in

the dumping case) had recently begun moving final assembly operations to the United States This was

partly in response to the 100-percent duty levied on laptops imported from Japan in 1987, in retaliation

for Japan’s slowness in opening its semiconductor market, After a semiconductor agreement was

reached in 1991, the duty was revoked, removing the penalty for assembling laptops offshore and importing them to the United States. With the imposition of stiff tariffs on the single most expensive component of laptops, assembly in the United States became much more costly (anhdumping duties were

not assessed on finished products containing AMLCDs, such as laptops).

After the antidumping duties were imposed, the Japanese company, NEC, canceled plans to assemble laptops in Massachusetts. 1 in September 1991, Toshiba announced that its American subsidiary would cease assembling laptops with AM LCD screens, moving operations back to Japan Hosiden

Corp., supplier for the Apple PowerBook series, stopped shipping screens soon after duties were imposed, diverting shipments instead to Apple’s plant in lreland.2 in addition, Dolch Computer Systems

moved its laptop production from California to Germany, and Compaq shifted production abroad from

Texas 3

in October 1991, IBM and Apple unsuccessfully petitioned the Commerce Department for permission to set up foreign trade subzones, which would allow them to import AMLCDs duty-free for assembly at their U S laptop manufacturing sites. The completed laptops would then be subject only to the

four-percent U S computer tariff, or duty-free export 4 in November 1991, IBM’s chairman, John Akers,

stated that the computer-maker might be forced to move assembly of laptops containing AMLCDs offshore because the displays, imported from the IBM-Toshiba joint venture Display Technology Inc. , were

subject to the AM LCD tariff 5 IBM closed its North Carolina assembly plant in 1992

(continued)

1 Douglas Harbrecht, “Did Commerce Pull the Plug on Flat-Screen Makers?” Business Week, July 5, 1993, p 32

2 David E. Sanger, “U.S. Tariff Appears To Backfire, ” New York Times, Sept 26, 1991, p. D. 1 The Commerce Department has

estimated that Apple Imported 70,000 laptops from its Ireland facility in the first year of the anhdumping order

3 Lisa Picarille, “Government Color LCD Tariffs Hurt Companies, ” Infoworld, Nov 18, 1991, p S83, John M Gleason and Muthu

Karuppan, “Folly in Trade and Technology Policy, ” IEEE Technology and Society Magazine, summer 1993, pp. 6-7

4 Jack Robertson, “IBM, Apple Computer Seek Trade Zone for Display s,” Electronic News, Oct. 28, 1991, p 1

5 David E Sanger, “1 B M Chief Issues Threat on U S Tariff,” New York Times, Nov. 8, 1991, p D4.

4
86 I Flat Panel Displays in Perspective

Ultimately, the effects of the tariff may have been limited by the fact that, in many cases, only final

assembly of laptop computers was taking place in the United States; many components, in addition to

displays, are manufactured offshore, As a result, the jobs lost due to moving assembly offshore may be

few and of a nature that added little value, Finally, lost assembly jobs probably were relatively few

compared with the across-the-board layoffs by computer-makers in the 1990s. 6

in principle, the antidumping duties could have induced Japanese AMLCD manufacturers to transfer

production to U.S. sites, However, officials from Toshiba and NEC attested to the difficulties of increasing production yields in their Japanese plants, The immense difficulties manufacturers were having

ruled out transfer of technology to the United States,7 Sharp opened an AMLCD facility in Camas,

Washington, in 1992; however, only final assembly work is done at this facility

The effect of dumping duties on downstream (or upstream) industries is not currently a factor in the

deliberations of the International Trade Administration or the International Trade Commission because

the trade laws do not provide for such consideration, But it may be crucial to gauge the effects of trade

decisions on related industries. Many proposed remedies for enhancing the international competitiveness of domestic manufacturers include a revamping of trade laws or an increased coordination of

technology and trade policies,8

SOURCE: Office of Technology Assessment, 1995

6 Neal Boudetta, “Battle Heats Up Over Flat-Panel Tariff, ” PC Week, February 1993

7 Shin Kusunoki, “Japan to the Rescue?” Electronics, October 1991, pp. 27-28

8 For an example, see council On Competitiveness, “The Flat Panel Display Antidumping Decision, ” in Road map for Results Trade

Policy, Technology and American Competitiveness, (Washington, DC: July 1993), pp. 23-38.

both AMLCD and EL imports together, and found On remand, the ITC found, in March 1993, that

that the combined imports were a cause of material injury to the U.S. FPD producers.41 As a result,

antidumping duties were initially levied on both

AMLCDs and EL displays from Japan.42 However, on appeal, the Court of International Trade

found that the ITA’s determination that AMLCDs

and EL displays constituted separate classes of

merchandise compelled the ITC to consider separately the injury from each class of imports, and

remanded the case to the ITC with instructions to

do S0. 4 3

the AMLCD imports, while modest, were a cause

of material injury to the U.S. industry, especially

by making it harder for U.S. firms to get investment capital needed to gain production experience

and realize economies of scale. However, the ITC

found that the smaller EL imports were not a cause

of material injury. Thus, antidumping duties were

levied only on AMLCD imports.44 However,

these duties were removed shortly thereafter. in

November 1992, OIS the only petitioner to produce AMLCDs, and under new ownership, had re41U.S. International Trade Commission, op. cit., footnote 36, pp. 23-27.

42 

U.S. Department of Commerce, International Trade Administration, Import Administration, “High Information Content Flat Panel Displays and Display Glass Therefor From Japan: Antidumping Duty Orders, Federal Register 56(171):43741-43742, Sept. 4, 1991.

43 Hosiden v. United States, Op. cit., footnote 33, p. 18.

44U.S. International Trade Commission, op. cit., footnote 39, pp. I-1; I-1, fn. 3, I-15 through I-22; II-1; and VI-1 through VI-9.
Chapter 3 Strategies and Policies for the Domestic Flat Panel Display Industry | 87

quested that the duties be removed. In March

1993, the ITA removed the duties on the grounds

that no domestic producer of like products supported retaining the duties.45

This history does not mean that antidumping

duties could never be a part of a U.S. policy to foster an FPD industry. In the antidumping case, the

Commerce Department seemed hostile to the domestic FPD industry and seemed to work at crosspurposes with the ITC. If the Commerce

Department had handled the case differently,

which it had discretion to do, different FPD

manufacturers would not have been pitted against

each other, and duties would likely have been imposed on more types of FPDs and been in force

longer. However, several cautions would apply to

any use of antidumping proceedings as a policy

tool. First, there are ramifications in terms of international trade rules and international goodwill.

Second, antidumping duties would hurt downstream industries, such as computers, that might

then need some offsetting government help.

Third, antidumping duties by themselves, as was

shown, are no guarantee that domestic production

will start; if at all, such duties can be effective only

as a supplement to domestic programs.

45 U.S. Department of Commerce, International Trade Administration, Import Administration, “High Information Content Flat Panel Displays and Display Glass Therefor From Japan: Final Results of Changed Circumstances Administrative Review, Revocation of the Order and

Termination of Administrative Review,” Federal Register 58(121):34409-34414, June 25, 1993.
Appendix A:

Flat Panel Display

Technologies

and Domestic Firms A

Many technologies are used to create flat panel displays

(FPDs). Some were developed years ago and fill small

market niches; others have been brought to the stage of

mass manufacturing and are now mature products; still

others have yet to be commercialized, but promise superior performance and lower costs, compared with current technology. Nu- . merous domestic firms are pursuing FPD technologies; most are

small firms that focus on one or a few display approaches, but

larger firms have also expressed interest. The distinguishing characteristic of the domestic FPD industry is the absence of high-volume manufacturing (see table A-1 for an overview of FPD

technologies and domestic firms).

Chapter 3 outlined three potential strategies available to domestic FPD firms seeking a larger role in the global industry: 1)

expand niche markets using established technologies; 2) catch up

to leading-edge active matrix liquid crystal display (AMLCD)

production; and 3) develop new leapfrog technologies. The following sections describe the technology choices associated with

each approach, and place the activities of domestic firms into this

framework.

ESTABLISHED TECHNOLOGIES: LCD, EL, PLASMA

Two of the oldest FPD technologies are liquid crystal displays

(LCDs) and emissive displays. LCDs are the primary example of

transmissive FPDs, which modulate an external light source.

Emissive flat panel displays use materials that emit light when an

electric field is applied, through phenomena that include gas discharge, phosphorescence, fluorescence, and semiconductor photoemission. 189
Production

capacity

2,3 million

2 to 3 million

Technology

‘Passive matrix LCD:

TN and STN

Leading U.S. firms

Standish

Three-Five

Strengths Weaknesses Foreign competition

response time, slow (TN)

medium (STN); viewing angle

limited; not scalable (TN); poor

color

no full color yet

many firms in Japan, Taiwan,

Korea, China, and Southeast

Asia

low cost, simple

manufacturing

Electroluminescent Planar

Norden Systems

120,000

5,000

bright; low

power; simple

manufacturing

Sharp

Gas plasma Electro Plasma

Plasmaco

Photonics

bright, multicolor;

scalable

high voltage; limited gray scale Fujitsu, Matsushita/ NHK,

Plasma Display Technical

Forum, Thomson

many firms in Japan; several

in Korea and Taiwan

6,000

15,000

5,000

Active matrix LCD:

amorphous silicon

TFT

Active matrix LCD:

other TFT and thin

film diodes

OIS

ImageQuest

Xerox PARC

40,000

4,000

low quantities

excellent color,

resolution

expensive; some yield

problems; power hungry

back-light, limited size

new technology; expensive

substrate; difficult to scale up

Xerox PARC, David

Sarnoff Research

Center, Kopin

low quantities;

(Kopin: 200,000

displays less than

one inch)

high resolution Sony, Flat Panel Display Co.,

Litton Systems Canada

Field emission display SI Diamond, FED,

Coloray, Silicon

Video, Raytheon,

Micron Display, Tl,

Motorola

experimental

quantities only

may be scalable new technology PixTech

Japanese, Korean firms

Digital micromirror

device

Tl, Aura Systems experimental

quantities only

uses semiconductor

processing

large-screen projection

applications only

Active addressed LCD Motif, Positive

Technologies

low quantities,

external

producers

high resolution;

video rate; wide

new technology; needs special

drivers; not scalable

Optrex

viewing angle

KEY LCD = liquid crystal display, OIS = Optical Imaging Systems, PARC = Palo Alto Research Center, STN = supertwisted nematic, TFT = thin film transistor, TI = Texas instruments, TN = twisted nematic.

SOURCES: U.S. Department of Defense, Building U.S. Capabilities in Flat Panel Displays. Report of the Flat Panel Display Task Force, October 1994, table 2-1 (using Department of Commerce data), company reports, Office of Technology Assessment interviews with companies,
Appendix A Flat Panel Display Technologies and Domestic Firms | 91

❚ Passive Matrix Liquid Crystal Displays

Liquid crystal (LC) materials are organic substances that flow like liquids, but possess the ordered physical properties of crystalline solids.

The type of liquid crystal materials used most

often in displays is the nematic LC, which consists

of rod-like molecules. Weak intermolecular forces

in the nematic LC tend to make the molecules

align themselves parallel to each other along the

long axis, similar to the schooling of fish. However, the molecules are not ordered in well-defined layers, and electromagnetic forces can rotate

and translate the molecules relative to each other.

The method by which LC materials modulate

light is by altering the polarization of light as it

passes through the LC layers.

An LC cell is fabricated by enclosing LC material between two glass plates, each with transparent metallic electrodes deposited on its inside

surface. To control the orientation of the molecules, the electrode layers are coated with a polymer deposited in a hard varnish form, which is

then brushed in a straight line. The rod-like molecules tend to align themselves parallel to the direction of brushing on the glass. Polarizer sheets

(which pass only light that is polarized parallel to

the lines on the sheet) are attached to the outside of

each glass plate, with the polarization direction

oriented parallel to the alignment direction.

In the typical application of nematic LC materials, the twisted nematic (TN) liquid crystal display, each polarizer is oriented parallel to the

direction of brushing on the adjacent glass plate,

and the polarizer/glass plate pair is placed orthogonal (at a right angle) to the other pair. Since the

alignment axes at the two LC-glass boundaries are

now rotated 90 degrees relative to each other, the

LC molecules align themselves in a spiral configuration within the cell, forming a helix (about an

axis orthogonal to the cell faces) from one glass

plate to the other. The LC molecules form layers

parallel to the glass plates; each successive layer

has a preferred direction rotated slightly from adjacent layers.

In the most common TN LCD configuration,

called the normally white mode, the polarization

of light entering the LC layer is twisted 90 degrees

as it passes through the LC material, and is transmitted by the second polarizer (see figure A-1).

Thus, with no applied field—the off state—the

cell is light. When an electric field is applied

across the cell, the LC molecules rotate parallel to

the field, perpendicular to the faces of the LC cell.

In this configuration—the on state—the polarization of the light is unaltered as it passes through

the LC material. Because the polarization direction of the light as it exits the liquid crystal layer is

oriented orthogonal to the second polarizer, the

light is blocked, and the cell appears dark.

A TN LCD is made by creating a matrix of row

and column electrodes; each intersection of a row

and a column defines a pixel. Each pixel is selected to be on or off (light or dark) through application of an electrical signal to a given row, and

an additive or subtractive signal to each of the columns along that row. This produces relatively

large voltages across the on pixels and smaller

voltages across the off pixels. The entire matrix is

scanned on a row-by-row, or multiplex, fashion,

which means that each pixel is refreshed once per

scanning period, typically one sixtieth of a second

(16.7 milliseconds). Since LC materials typically

remain in the untwisted state for hundreds of milliseconds after being refreshed, there is not a noticeable decay in pixel brightness between scans.

Multiplex addressing allows a matrix of x rows

and y columns to be addressed with a total of x

plus y electrodes, rather than the x times y that

would be required with direct addressing, in

which each pixel has an electrode dedicated to it

alone. Thus addressing a color VGA (video graphics array) display through multiplexing requires

just over 2,000 electrodes, compared with nearly

1,000,000 electrodes that would be required to directly address each pixel. Gray levels—intermediate pixel brightness between light and

dark—can be created by turning the pixel on and

off either within a pulse or from frame to frame.

The performance of the TN LCD is limited by

an inherent tradeoff between contrast and the

number of pixels, or resolution. Since both the

electrode voltage and the rate at which the display
92 I Flat Panel Displays in Perspective

SOURCE: Terry Scheffer and Jurgen Nehring, "Supertwisted Nematic (STN) LCDs ” in 1994 SID Intemational Symposium Seminar Lecture Notes

(Santa Ana, CA. Society for Information Display, 1994), vol. 1, seminar M-1, figure 1

pixels are updated (the refresh rate) are fixed, increasing the number of pixels decreases the difference between on and off signals and the amount of

time that a voltage is applied to each pixel. Passive

matrix schemes thus work well only for small

numbers of rows in a TN LCD matrix, after which

off pixels accumulate enough voltage to turn on

partially. This effect, called crosstalk, increases

with increasing numbers of rows in an array; for

array sizes large enough to display television and

computer images at an acceptable speed, the contrast between pixels becomes unacceptably low.

This tradeoff between contrast and number of

lines in the matrix has limited the use of TN LCDs

to simple text and numeric displays in which the

LC cells are arranged in fixed segments and are

addressed directly, instead of through a matrix (for

instance, watch and calculator displays).

The most effective method for enhancing the

performance of a multiplexed LCD is to increase

the amount of twist in the LC cell above the 90 degrees used in the TN LCD. When the twist angle

within the LC layer is increased to 270 degrees,

the transmission of the LC becomes more sensitive to differences in voltage. Higher contrast ratios can be obtained through this technique, and

larger numbers of pixels can be addressed

compared with the TN LCD. The introduction of

such supertwisted nematic (STN) LC displays enabled the use of LCDs in computer displays.

Although they perform better than TN LCDs in

large displays, STN LCDs still suffer from cross-
Appendix A Flat Panel Display Technologies and Domestic Firms | 93

talk and, thus, from the tradeoff between contrast

and array size, or resolution. The scan time for a

frame is too slow for full motion video display.

Another limitation is that the large amount of twist

results in separation of the color spectrum, called

birefringence, producing nonuniform colors

across the display. By using a second STN display

with the opposite twist (double STN) or a layer of

birefringent retardation film (film-compensated

STN), true black and white displays can be fabricated. The latter approach is preferred because of

its thin profile and light weight, and can be modified to display color through the placement of red,

green, and blue color filters on one of the glass

plates.

Despite these limitations, and the narrow viewing angle that limits most STN displays to singleperson viewing, STN LCDs have found wide use

as displays in portable computer screens and

handheld electronic devices, and are the most

common choice for passive matrix LCDs

(PMLCDs). A recent innovation, called dualscan, improves PMLCD performance by splitting

the display horizontally and addressing each half

independently. This reduces the effective number

of rows in the display and, thus, the amount of

crosstalk.

Standish Industries (Lake Mills, Wisconsin) is

one of the most experienced American producers

of PMLCDs. With $25 million in annual sales,

Standish produces more than two million displays

per year. These are mostly low-information-content displays for commercial and industrial applications, such as tractors, gas pumps, and office

equipment. Standish also makes some customized

military applications and collaborates with other

firms on AMLCD development (see next section).

Three-Five Systems (Phoenix, Arizona), a

manufacturer of passive matrix LCDs, had sales

growth of 125 percent in 1994, to $85.5 million.

Three-Five sells nearly five million LCDs per

year (mostly manufactured in Asia) for use in

handheld telecommunications, medical devices,

and some military devices. Most of Three-Five’s

LCDs are low-information-content, alphanumeric displays, although a small portion are 1/4 VGA

in resolution. In 1995, a new manufacturing facility opened in Phoenix. The facility, which has a

capacity of over 280,000 square feet of LCDs per

year, will produce more than 50 percent of ThreeFive’s LCDs; the remainder will continue to be

purchased from Asian suppliers.

❚ Electroluminescent Displays

Electroluminescence is the nonthermal emission

of light generated by the application of an electric

field to a material. Common arrangements use

copper sulfide particles in a zinc sulfide lattice to

serve as conductive or semiconductive inhomogeneities, ejecting electrons into a phosphor where

they recombine to activate the emission process.

Electroluminescent displays (ELs) can be fabricated using a powder suspended in an insulator

or, in the thin film EL (TFEL), using a thin (typically 0.5 microns) continuous film prepared by

sputtering or vacuum evaporation (see figure

A-2). The phosphor film is enclosed between two

thin, transparent, insulating films, which are, in

turn, sandwiched by transparent conductors. This

conductor-insulator-phosphor-insulator-conductor stack acts as a capacitor; no light is emitted until the voltage reaches a threshold determined by

the properties of the insulator and phosphor films.

At the threshold voltage, electrons trapped at the

insulator-phosphor interface are released into the

phosphor film, activating luminescence. After

passing through the phosphor, the electrons are retrapped at the second insulator-phosphor boundary; on reversal of polarity, the action is repeated

and the electrons return to the original interface.

Above the threshold voltage, the brightness increases steeply with applied voltage, until a saturation voltage is reached.

The phosphor film often used is manganesedoped zinc sulfide, which emits yellow light. Other phosphors that have been developed emit blue,

green, red, and white light, with varying brightness. The development of phosphors with adequate brightness in these colors has enabled the

fabrication of full-color TFEL displays. ELs can

be constructed to operate at video rates, have good

brightness characteristics, and are thin and reliable. Like plasma, EL displays are limited by high
94 I Flat Panel Displays in Perspective

Copper-coated zinc sulfide

thick-film

I

Doped zinc sulfide

light emitting

thin-film

Aluminum oxide Aluminum

thin-film row electrode

Tin oxide ,

column

electrode

Light output

Dielectric thin-film I Row electrode

source

,

Column

electrode

Light output

SOURCE Joseph A Castellano, Handbook of Display Technology (San Diego, CA: Academic Press, 1992), figures 61 and62

power requirements and difficulties controlling

gray levels.

Planar (Beaverton, Oregon) is the world leader

in EL manufacturing. Roughly half of Planar’s

annual production of 120,000 displays are

manufactured in the United States, and half at its

plant in Finland. Most of its $60 million in 1994

sales were in medical and industrial high-information-content displays. About 12 percent of sales

were derived from military markets. Planar Advance, an avionics division recently acquired from

Tektronix, is conducting cooperative R&D with

Xerox on AMLCDs. Planar is leading a project

funded by the Department of Defense’s Advanced

Research Projects Agency (ARPA) on thin film

and active matrix EL technology for headmounted displays.

Norden Systems (Norwalk, Connecticut), a

subsidiary of Westinghouse, has produced EL displays since the early 1980s. Its plasma display

plant in Connecticut was refitted in 1983 to

manufacture EL displays. Norden earns most of

its sales from customized, rugged, high performance military applications. The company plans

to pursue more commercial and industrial markets, including transportation applications.

❚ Plasma Displays

Plasma devices operate on the principal of gas discharge. When subjected to an electric field, certain

gases ionize, or break down into electrons and

ions, causing the gas to glow. Plasma display fabrication is similar to LCD and EL manufacturing:

glass plates with electrical conductors arranged

orthogonal to each other encase the active material

(typically a neon mixture) in a vacuum. The intersections of the row- and column- electrodes define

the display pixels, effectively creating an array of

miniature neon lamps. The characteristic color of

plasma discharge is orange; in order to create color

plasma displays, an ultraviolet-emitting gas is

used to cause phosphorescent cell coatings—

arrayed in sets of red, green, and blue—to glow.

The ability to fashion plasma display panels

with high resolution (greater than 50 pixels per

inch) in sizes greater than one meter in diameter

has led some to consider using plasma technology
Appendix A Flat Panel Display Technologies and Domestic Firms | 95

for high definition television displays. However,

plasma systems have some drawbacks, including

high power requirements; high cost and electronics complexity; and generally thick display panels.

Plasma displays use either direct current (DC)

or alternating current (AC) drive schemes. By

supplying a voltage level equal to half of the

threshold ionization voltage for the gas to both a

row electrode and a column electrode, the gas in

the pixel at the crossover point will discharge,

emitting light. Since each pixel is emitting for

only a fraction of the time, the display is somewhat dim. DC plasma displays can use batteries as

power sources, which allows for portability, but

the low efficiency of plasma systems requires large

amounts of power, limiting such applications.

To enhance the brightness of plasma displays, a

method of keeping the pixels glowing for a longer

period of time is necessary. This can be accomplished by using AC as the energizing source. The

fluctuations of the AC signal cause charge to be

added to existing charge on the electrodes, triggering another discharge. The pixels fire every time

the voltage reverses, which is a greater proportion

of the time, and the effect is a brighter display.

Photonics Imaging, a subsidiary of Photonics

Systems (Northwood, Ohio), manufactures both

monochrome and color AC plasma displays. Its

facility has a capacity of 5,000 displays per year,

which are mostly used in military applications.

Photonics recently demonstrated a prototype of a

21-inch, 1280- by 1024-pixel, full-color, video

rate display.

Plasmaco (Highland, New York) manufactures

high-information-content AC plasma displays. Its

plant has a capacity of 15,000 monochrome displays per year. Plasmaco recently developed a

21-inch, 640- by 480-pixel color prototype. Although all of the work on monochrome units is

completed internally, Plasmaco purchases some

of its color display subassemblies, including glass

substrates, from foreign producers. Plasmaco

sells mostly to business and commercial markets,

and some to the military.

Electro Plasma (Milbury, Ohio) has been producing AC plasma displays since the mid-1970s.

Its facility produces between 5,000 and 7,000 displays per year, mostly for military and medical applications. Electro Plasma is working on a color

plasma display.

Other manufacturers, such as Babcock, Cherry,

and Dale Electronics, produce low-informationcontent plasma displays for industrial controls,

medical devices, and arcade games. Annual display revenues for these firms is in the range of $10

million to $15 million.

❚ Other Emissive Displays

Two other types of FPDs are commonly used in

low-information-content applications, such as appliance indicators and simple text or numeric displays. Vacuum fluorescent displays (VFDs)

operate on a principle similar to cathode ray tubes.

A wire filament (cathode) is heated, creating thermal emission of electrons. The electrons accelerate past a grid structure and land on an anode,

which is covered with a phosphor that emits light

in response to the incident electrons. The VFD is

in essence a flat cathode ray tube (CRT), but, unlike the CRT, is used only in small, simple displays. It is a mature and inexpensive technology,

however, and is used widely in products such as

videocassette recorders. The dominant producers

are Japanese companies, including Futaba, NEC,

and Ise.

Light emitting diodes (LEDs) are solid state devices typically fabricated from single crystal gallium-based semiconductors. Light emission is

created at the junction of two materials having different concentrations of available electrons, causing flow across the junction. When electrons are

combined with holes, light is emitted as a byproduct. Hewlett Packard (Palo Alto, California)

is a leading manufacturer of LEDs. Although

LEDs are very inexpensive and reliable, the difficulty of constructing large arrays has limited display applications to simple indicators and gauges.
96 I Flat Panel Displays in Perspective

Feature Passive matrix Active matrix

Liquid crystal mode supertwisted nematic twisted nematic

Contrast ratio 10-20:1 >100: 1

Viewing angle (degrees)ahorizontal: ±30 horizontal ±60

vertical: ±25 vertical +45, -30

Gray scale 16 256

Response time (milliseconds) 100-200 30-50

Multiplex ratiob480 >1000

Size (Inches diagonal) 17 <14

Manufacturing simple complex

cost — moderate high

NOTES

aViewing angle IS defined as the angle from the perpendicular to the display within which the image IS visible at a contrast ratio greater than 5 bMultiplex ratio determines the Iimit of addressable Pixel rows for the display.

SOURCES: Thomas L. Credelle, “Passive Matrix Liquid Crystal Displays, in JTEC Panel Report on Display Technologles in Japan,

Lawrence E Tannas and William E. Glenn (eds.) (Baltimore, MD: Loyola College in Maryland, June 1992), table 4 2: F C Luo, “Active

Matrix LC

table 151

Vol. 1, Birendra Bahadur (ed.) (Singapore: World Scientific, 1990),

Several

organic

LEDs,

Displays, ” in Liquid Crystals: Applications and Uses,

research groups have experimented with

polymers that emit light (as opposed to

which are made from inorganic substances). Such materials could be used in the future to create low-cost, flexible displays.

THE LEADING COMMERCIAL

TECHNOLOGY: ACTIVE MATRIX LIQUID

CRYSTAL DISPLAYS

The tradeoff between contrast and resolution in

PMLCDs is a result of requiring the LC to handle

both transmission modulation and addressing

tasks. Active matrix addressing provides away of

avoiding this tradeoff through the use of nonlinear

switching elements at each pixel. Table A-2

compares passive and active matrix technologies

in terms of several performance and production

characteristics,

By addressing each pixel via a semiconductor

switch and holding it in a steady state until addressed during the next scan, the active matrix allows for control over the transmission function of

each pixel individually and independent of all other pixels. Since there is no crosstalk to limit the

number of available pixels, AMLCD technology

allows large, high-resolution displays. Since color

displays require a threefold increase in the number

of pixels, active matrix addressing has enabled

high performance LCDs for computer and television screens.

in an AMLCD (figure A-3), there is one switching element per pixel; this is typically a thin film

transistor (TFT), but diodes have also been used in

some AMLCDs. The TFTs in each row have one

terminal connected to a row-addressing electrode

(figure A-4). When a pulse is applied to a row

SOURCE: Steven W Depp, Director, Subsystem Technologies and Applications Laboratory, Thomas J. Watson Research Center, IBM, 1995
Appendix A Flat Panel Display Technologies and Domestic Firms 197

Column select (data, source)

SOURCE. Arthur H Firester, “Active Matrix Technology,” in JTEC Pane/ Report on Display Technologies in Japan, Lawrence E Tannas and William

E Glenn (eds.) (Baltimore, MD Loyola College in Maryland, June 1992), figure 51.

electrode, each of the TFTs in the row is turned on,

and the pixels in that row are ready to be addressed. The column electrodes, connected to a

second terminal on the TFT, provide the appropriate voltage to set the gray level for each pixel. The

third terminal of each TFT is connected to the active area of the LC cell. The LC material acts as a

charge-storing capacitor, sandwiched between the

TFT and a common electrode deposited on the

other glass plate (a thin-film capacitor that stores

charge is often added to each pixel). Each pixel

can only be addressed when its TFT is on, thus

eliminating pixel crosstalk; when the TFT is off,

the charge is held in the LC capacitor until the next

scan cycle, eliminating any effects due to relaxation of the LC material.

By allowing for many more pixels and using

them in a redundant fashion, the AMLCD can produce better quality color than the PMLCD. Each

pixel in a color display is made up of three or four

subpixels, filtered in the additive primary colors

(red, green, and blue; often with an additional

white or redundant color pixel), which are combined to create other colors. Multiple gray levels,

combined with additive color, produce a large color palette. The use of absorptive color filters

makes color AMLCDs quite robust to use under

conditions of bright ambient light (such as encountered in aircraft cockpits), since most of the

ambient light is absorbed by the color filters and

not reflected back to the observer (as with a cathode ray tube).

Color displays also increase the power required

to produce a given screen brightness, as color filters typically absorb 75 percent of the incident

light. Together with the polarizers, which absorb

about 60 percent, and the nontransmitting portions of the LC layer, which absorb roughly 50

percent, the overall transmission of a color

AMLCD is about 5 percent. The fluorescent
98 | Flat Panel Displays in Perspective

lamps used in backlighting are efficient sources;

even considering losses due to the diffusing plate

used to smooth out the light from the narrow

tubes, the backlight systems have efficiencies of

15 to 35 lumens per watt of electrical power. Accounting for the display transmission, the overall

efficiencies for color AMLCDs are typically in the

range of 1 to 2 lumens per watt. This is superior to

the efficiency of cathode ray tubes, which are in

the range of 0.5 to 3 lumens per watt.

Several types of nonlinear devices are used in

AMLCDs to select and isolate individual cells for

active matrix LCDs. The most common are amorphous silicon, polycrystalline silicon, and cadmium selenide TFTs. Due to several decades of

solar cell research, amorphous silicon (a:Si) has

the advantage of being the best understood material, and is used by most of the leading producers of

AMLCDs.

❚ Amorphous Silicon Thin Film Transistor

AMLCDs

The predominant AMLCD TFT technology is the

hydrogenated amorphous silicon thin film transistor (a:Si TFT). The a:Si TFT can be deposited at

temperatures below 400 C, allowing for the use

of inexpensive glass substrates. While a:Si is well

suited for the pixel elements, it has a low electron

carrier mobility, limiting its use in fabricating

row- and column-driver circuits. Column drivers

must rapidly send data to all the pixels in a row

during a row scan, and operate at frequencies

greater than 10 megahertz in large arrays (row

drivers are less demanding, operating in the kilohertz, because each row is held on while all the

column data lines are pulsed). Unless the device

features are 5 microns or less, a:Si cannot be used

to fabricate display driver circuitry, which must be

implemented in integrated circuits.

Optical Imaging Systems (OIS, Troy, Michigan) has built a medium-volume AMLCD

manufacturing facility in Northville, Michigan,

with a capacity of 40,000 displays per year. The

majority of OIS’s revenues comes from military

programs. OIS produces customized FPDs for

military systems and also sells displays to defense

contractors, who then further modify the displays.

OIS also produces some displays for commercial

systems, such as avionics, and is developing standard displays for such applications. In a cooperative development agreement with Apple, OIS has

agreed to provide limited quantities of 10.4-inch

displays for portable computer replacements. OIS

is considering construction of a high volume (as

large as 1 million displays per year) plant to supply such a market.

AT&T High Resolution Technologies (Berkeley Heights, New Jersey), Standish Industries, and

Xerox Palo Alto Research Center (Palo Alto,

California) are working together in the American

Display Manufacturing Partnership (ADMP),

which received an ARPA grant to develop

manufacturing processes for AMLCDs. In addition to Standish’s LCD fabrication capability, Xerox’s AMLCD development and AT&T’s

packaging capabilities will be used to develop

product prototypes. Although the ADMP began in

1991, the three firms have made no decision yet to

move forward with any joint manufacturing operations

ImageQuest Technologies (Fremont, California) is majority-owned (60 percent) by Hyundai,

and works closely with Kent State’s Liquid Crystal Institute. Its first product, a 6- by 8-inch

AMLCD, is undergoing evaluation for a military

display program. By 1997, ImageQuest expects

its manufacturing facility to have a capacity of

4,000 displays per year.

Sharp Microelectronics Technologies (Camas,

Washington) is a wholly owned subsidiary of

Sharp Corp. of Japan. Over 300,000 AMLCDs

and PMLCDs are assembled at the facility each

year. Complete LC glass cells, backlights, and

printed wiring boards are imported from Asia

(mostly Japan). Sharp Microelectronics provides

these standard LCDs for original equipment

manufacturers of laptop computers in the United

States.

❚ Other AMLCDs

Polycrystalline silicon (p:Si) is similar to a:Si, but

is deposited and annealed at a higher temperature
Appendix A Flat Panel Display Technologies and Domestic Firms | 99

(above 600 C) to give it a quasi-crystalline structure and higher electron mobility. The high temperature required for this process has limited

production device sizes to approximately five inches in diagonal on quartz or high-quality glass

substrates. The high electron mobility of p:Si allows the fabrication of drivers with the speeds

necessary for large arrays on the same substrate as

the TFTs. As the driver electronics (which are external to the display in a:Si AMLCDs) comprise

much of the cost in AMLCD production, this

could reduce manufacturing costs. The p:Si TFT

was used in the first commercial LCD display, a

2-inch pocket television offered by Seiko-Epson

in 1984. Expansion of the technique to larger displays has been slow, however. At present, the p:Si

process has a market niche in projection displays

and videocamera viewfinders that use AMLCDs

of a few inches or smaller. Xerox’s Palo Alto Research Center and SRI’s David Sarnoff Research

Center (Princeton, New Jersey) are developing

p:Si displays.

One of the first materials used in TFTs was cadmium selenide (CdSe), which outperforms a:Si in

several ways. Because of difficulties in handling

CdSe and the dominance of silicon materials, it

has only been used in a limited number of custom

displays. Litton Systems Canada (Etobicoke, Ontario) uses CdSe for AMLCDs in its cockpit

avionics systems.

Single-crystal silicon (X:Si) processing involves fabricating circuitry on a conventional silicon substrate, removing the circuit, and bonding it

onto a display substrate (glass or plastic) that is

then used to assemble an AMLCD. Active matrix

circuits using x:Si have higher electron mobility

than p:Si, and higher optical transmission than

other AMLCDs.

Kopin Corp. (Taunton, Massachusetts), with

assistance from DOD, developed the x:Si technique for producing AMLCDs. To date, the company has been successful in using the process to

build a high resolution display on small (1/2-inch

or 1-inch) squares. Kopin’s facility has a capacity

of 200,000 displays per year, but has only produced small quantities to date. These small

AMLCDs are used in helmet or head mounted displays (HMD) and in projection systems.

WAH III Technology (Novato, California) is

also developing single-crystal silicon AMLCDs.

Rather than peeling the etched circuitry from the

silicon wafer, the WAH III process leaves the matrix and incorporates a reflective surface between

the wafer and the active matrix. This small reflective AMLCD is currently used only for spatial

light-modulating applications, but could develop

into HMD and projection technology.

Future TFTs may be fabricated from organic

polymers using simple printing techniques. Research groups have fabricated such devices and

are developing production techniques. Unlike

current TFTs, which use metals and semiconductors in a complex process, transistors made from

organic polymers would be flexible. This would

allow for plastic displays, which would be less

costly to produce and lighter than glass displays.

Since transistors require connections between

the row, column, and LC electrode at each pixel

(figure A-4), TFT arrays must be fabricated by depositing the row- and column-electrodes and the

TFTs on the same glass substrate. This has caused

manufacturing problems because any deposition

defects at the multiple crossover points lead to

short circuits, creating bad individual pixels, rows

of pixels, or columns of pixels. These problems

have led to use of switching devices that only require connection to the column electrodes, thus

separating the electrode sets onto separate substrates; semiconductor diodes have been used in

this role, typically using metal-insulator-metal

(MIM) fabrication techniques. The production

process is simple, uses low-cost glass substrates,

and can be done at temperatures below 300 C.

Diode arrays can be produced more reliably than

TFT arrays because the row electrodes are fabricated on one glass substrate and the diodes and

column electrodes are fabricated on the other,

avoiding the possibility of crossed electrodes on

either layer. MIM devices do suffer from limited

nonlinearity and strong temperature sensitivity,

resulting in gray scale nonuniformities. In terms

of manufacturing cost and complexity, and device
100 I Flat Panel Displays in Perspective

Transparent electrodes

Cathodes Strobe 1 Strobe 2 \

Ionized gas

(oft-) (on) (plasma)

SOURCE: Joseph A Castellano, Handbook of Display Technology (San

Diego, CA Academic Press, 1992), figure 812

performance (contrast ratio and color display),

MIM technology falls between the TFT AMLCD

and passive matrix LCDs The leading firms in

this area are Seiko-Epson of Japan and FPD Co. of

Europe.

Another hybrid approach to AMLCDs involves

using channels of ionized gas instead of rows of

TFTs as the switching mechanism, combining gas

plasma and LCD technologies. in plasma-addressed LC (PALC) displays, the channels are

etched into the glass substrate, filled with an inert

gas such as helium or neon, and sealed (figure

A-5). The channels make up the rows of the array,

and are fitted with two electrodes. When a voltage

is applied to the electrodes, the gas in the channel

becomes ionized and conducts current. The columns run perpendicular to the gas channel rows,

and supply the analog pixel data. The LC is sandwiched between the row electrode array and the

gas channels. Because the ionized gas is needed to

complete the LC charging circuit, the column data

voltages only have an effect on the pixels in a row

for which a plasma channel is switched on. Thus,

by charging the channel rows in sequence and

sending data signals during the time the gas is

switched on, the display is addressed row by row.

Unlike AMLCDs that use TFTs, this technology

is not limited in size by the semiconductor deposition process, and thus could potentially allow for

low-cost production of large displays. PALC

technology was developed by Tektronix (Beaverton, Oregon), which spun off a firm called Technical Visions, Inc. to pursue it; the new firm has

developed a 16-inch prototype and signed a development agreement with Sony.

LEAPFROG TECHNOLOGIES: FED, DMD,

and OTHER LCDs

Several FPD approaches currently underdevelopment could result in displays that produce higher

quality images, require less power, and cost less

to produce than commercially available FPDs.

The two leading technologies are the field emission display and the digital micromirror device.

While these technologies could leapfrog the

AMLCD, they are closely related to established

technologies such as the cathode ray tube and the

semiconductor chip.

❚ Field Emission Displays

The field emission display (FED) is similar to the

cathode ray tube in that it aims beams of electrons

at phosphors deposited on the inside of a glass

screen that emit light. Rather than one large electron gun, however, the FED uses arrays of microemitters in a flat display matrix. Each pixel

consists of a large number of microemitters (often

thousands), each about 1 micron in size and made

of metal (such as molybdenum), silicon, or diamond, sealed in a vacuum (see figure A-6). Electrons are ejected from the microemitters under a

high electrical field, and are accelerated onto the

opposing phosphor. The redundancy of emitters

for each pixel allows for failures of individual

emitters without performance degradation, and

the proximity of the microemitters to the phosphors provides sharp focusing. Production difficulties can arise from nonuniformities in the

microemitters (resulting in brightness variation)

and loss of vacuum (reducing microemitter performance). By replacing the microemitters with a

thin diamond film, deposited by a silk-screening
Appendix A Flat Panel Display Technologies and Domestic Firms 1101

Glass faceplate

Glass frit seal

Silicon dioxide

Silicon film

Glass backplate

Light output

I Molybdenum microtips

Iridium tin oxide conductor

Phosphor

Niobium gate metal

Nickel electrode

<---- Glass tube “tipped-off”

SOURCE: J.A. Castellano, Handbook of Display Technology (San Diego, CA: Academic Press, 1992), figure 91

process, some of the fabrication difficulties can be

mitigated.

PixTech of France was formed in 1992 to commercialize developments in FED technology at

the Laboratoire d’Electronique, de Technologies et

d’Instrumentation (LETI), a research laboratory

of the French atomic energy agency that had built

on work done at the American firm, SRI International. PixTech holds the rights to several FED approaches, and produced the first 6-inch diagonal

FED. PixTech has formed alliances to accelerate

the commercialization of FED; in addition to the

Japanese firm Futaba, PixTech has signed bilateral cross-licensing agreements with Texas Instruments (TI; Dallas, Texas), Raytheon (Quincy,

Massachusetts), and Motorola Corp. (Schaumberg, Illinois). Under the agreements, PixTech licenses FED technology developed at LETI, in

return for the technology developed by each of the

U.S. firms as it existed at the time of the agreement, and as it is subsequently developed over the

period of the agreement, expected to be three

years.

Raytheon, TI, and Motorola have also collaborated with the government to develop FED

technology; Raytheon and TI are leading an

ARPA project, and Motorola has worked with

Sandia National Laboratories.

Coloray Display Corp. (Fremont, California)

is also developing FEDs, and plans to begin

pilot manufacturing in 1997 or 1998. Coloray is

concentrating R&D efforts on low-voltage phosphors, glass sealing, electron optics, and lithography to improve manufacturing processes.

Current R&D work is focusing on a process to

construct larger FEDs.

FED Corp. (Hopewell Junction, New York) is

developing a 7-inch, high-resolution FED for customized military applications. The company began building production facilities in 1994; the

facility has a capacity of 10,000 plates per month.

It has also worked with Zenith on large screen applications and with two other U.S. firms on a

10.5-inch prototype.

Micron Display Technology (Boise, Idaho) is a

subsidiary of Micron Technologies, a leading U.S.
102 I Flat Panel Displays in Perspective

SOURCE: Gary Feather, Marketing Manager, Digital Imaging Venture

Projects, Texas Instruments, 1995,

producer of memory chips. Micron has produced

high-resolution, l-inch FEDs for head-mounted

displays, and has plans to produce FEDs of 10 inches and larger for portable computers.

SI Diamond Technology (Houston, Texas) has

pioneered the use of thin diamond films instead of

microemitters, with the assistance of several government grants. The company has developed a

monochrome prototype, and initial production is

planned for 1996. In work with the Phosphor

Technology Center of Excellence, SI Diamond

has devised and is patenting a means to extend the

lifetime of low-voltage color phosphors to 25,000

hours. The company is also working with Russian

partner, DiaGasCrown, on thin film diamond

technology.

Silicon Video Corp. (Cupertino, California) is

building prototypes and plans for full volume production in 1997. It is the leader of an ARPAfunded project to develop FED manufacturing

technology. The company has strong corporate

backing and the cooperation of Compaq and Hewlett Packard.

■ Reflective Displays

Reflective devices form images by controlling individual mirror elements in an array. Since an

image cannot be viewed directly from a mirror

array, reflective systems operate in projection

mode, in conjunction with a high-intensity light

and optical system. The image is projected onto a

translucent screen from behind, or an opaque

screen from the front, and allows large groups to

view computer or television images.

The primary technique under investigation is

called the digital micromirror device (DMD), developed by TI. The DMD is an electromechanical

structure that is deposited using conventional

semiconductor materials, processes, and fabrication lines in a standard integrated circuit chip

package. The device contains an array of transistors over which an aluminum layer (etched into an

array of square micromirrors) is deposited. Each

mirror corresponds to a transistor, and is attached

at two diagonally opposing comers to support pillars with torsion bars (figure A-7). Current passing through a transistor creates an electrostatic

field, causing the mirror to tilt in response. In one

position (the light state), the mirror reflects light

from an illumination source to a projection system; in the other position (the dark state), the light

is reflected away from the projection system. By

flipping the mirror between light and dark states,

continuous gray levels may be produced—the

more often the mirror is in the light state, the

brighter the corresponding pixel. By combing the

reflection from three different colored light
Appendix A Flat Panel Display Technologies and Domestic Firms | 103

sources, a full-color display can be created. The

response time of the device is very fast, and displays of 442,000 mirrors have been fabricated

with scan rates of 100 per second. TI has not yet

produced the display in commercial quantities, although it has entered into product development

agreements with In Focus, Nview, Proxima, Rank

Brimar, and Sony. Aura Systems (El Segundo,

California) is developing a similar technology, but

one that uses an analog, as opposed to digital,

scheme.

❚ Other LCD Materials and Addressing

Schemes

LCDs made from ferroelectric liquid crystals

(FLCs) exhibit switching speeds that are much

faster than nematic LCDs, and have inherent

memory: once set, the FLC remains in the same

state, even after the electric field is removed. This

memory property provides a method for getting

around the tradeoff between contrast and resolution because, even in large arrays, individual cells

remain at a constant state indefinitely. Since FLCs

only have two states, however, they are not capable of displaying gray scales—and thus full color—which is a barrier to their use in computer and

television displays. FLCs use a thin LC layer, producing wide viewing angles, because viewing

angle increases with decreasing LC thickness.

However, the tight assembly tolerances required

by the thin layer make them hard to produce and

sensitive to shock and vibration.

As yet, FLCs have not been produced in any

large amounts, but Canon of Japan has developed

several prototypes. In the United States, Displaytech and Boulder Nonlinear Systems (both of

Boulder, Colorado) produce custom FLCs for research applications.

Another material in the research stage is the

polymer-dispersed liquid crystal (PDLC)—also

referred to as nematic curvilinear aligned phase

(NCAP)—which scatters light at rest and transmits light under the presence of an electric field.

The PDLC/NCAP display is made by encapsulating LC material in a transparent polymer, which is

then sandwiched between layers of plastic coated

with a transparent conducting film. The walls of

the capsules do not alter the random alignment of

the LC, causing scattering and an opaque appearance in the off state. The application of an electric

field causes the LC molecules to be aligned with

the field. The LC material then appears transparent and the pixel is on. Since they do not require

the use of polarizers (which account for a large

share of transmission loss in LCDs), PDLC displays have high transmittance. In addition, PDLC

materials can be deposited on flexible plastic substrates. This could allow for high volume production runs on equipment used for handling polymer

film. Due to difficulties in addressing arrays of

pixels, however, PDLC cannot currently be multiplexed into high-information-content displays.

Raychem Corp. (Menlo Park, California) is

currently developing PDLC displays, which are

used with a reflective backing in a projection system. Kent Display Systems (Kent, Ohio) has developed a polymer-stabilized cholesteric-texture

LCD; this LCD transmits as much as 90 percent of

incident light, and is targeting low-informationcontent applications such as highway signs.

The response time of STN LCDs is just fast

enough to follow cursor movement on a computer

display, but too slow to display full motion video

images. In an effort to improve video performance, several methods—referred to variously as

active addressing, adaptive scanning, or multiline

selection—have been developed to replace the

common multiplex technique. These approaches

use algorithms, hard-coded into electronic circuits

off of the display, to drive the rows and columns in

complex ways. Instead of sending a high voltage

pulse down the rows, a set of predetermined signals (in the case of active addressing, based on

Walsh functions) are applied to multiple rows simultaneously and a voltage, whose value depends

on the state of the pixels in that column, is applied

to the columns. The algorithms determine which

rows need which signals, and calculate the proper

column voltage within the timeframe allotted. In

addition, the LCD has to be capable of switching

at video rates; this means decreasing the cell thickness and using fast LC material. The active ad-
104 | Flat Panel Displays in Perspective

dressing approach allows for any number of lines

(currently up to 255) to be addressed simultaneously.

In Focus Systems (Tualitin, Oregon) developed

the active addressing technique, and is the world

market leader in PMLCD projection systems. Although their products use both AMLCDs and

PMLCDs, these displays are acquired externally,

mostly imported, and incorporated into their systems. In Focus has invested this know-how in Motif (Wilsonville, Oregon). Motif is a $21-million

joint venture between In Focus and Motorola to

produce PMLCDs using the active addressing

technique for use in commercial and communications applications. Initial plans to build a pilot

manufacturing plant were scrapped in 1994, and

the development of the application-specific integrated circuit (ASIC) prototype needed for active

addressing was 18 months behind schedule. In

March 1995, Motorola announced its intention to

drop its share in the venture. Positive Technologies (San Diego, California) has developed the

adaptive scanning technique for PMLCD performance enhancement. Although the technology

has been provided to other producers of LCDs for

business, transportation, and military applications, volumes have remained small. Multiline

selection has been developed by Optrex of Japan,

and is used in commercially available displays.
Appendix B:

List of

Acronyms

a:Si amorphous silicon

AC alternating current

ADC American Display Consortium

ADMA Advanced Display Manufacturers

of America

ADMP Advanced Display Manufacturing

Partnership

AFB Air Force Base

AMLCCD Active Matrix Liquid Crystal

Cockpit Display project (DOD)

AMLCD active matrix liquid crystal display

ARPA Advanced Research Projects

Agency (DOD; formerly DARPA)

ASIC application-specific integrated

circuit

ATI air transport indicator

ATP Advanced Technology Program

(NIST, DOC)

AWACS Airborne Warning and Command

Systems

CGR Combined Guard and Reserve

(U.S. Air Force, DOD)

COB chip-on-board

COF chip-on-film

COG chip-on-glass

CRT cathode ray tube

DARPA Defense Advanced Research

Projects Agency (DOD; now

ARPA)

DC direct current

DMD digital micromirror device

DOC Department of Commerce

DOD Department of Defense

DPA Defense Production Act

DRAM dynamic random access memory

DTI Display Technology, Inc.

DVE Driver Vision Enhancement

program (U.S. Army, DOD)

ECAM European Consortium Active

Matrix

EDI Electronic Designs, Inc.

EL electroluminescent

ERSO Electronics Research and Service

Organization (Taiwan)

ESPRIT European Strategic Programme for

Research and Development in

Information Technologies

ESTO Electronics Systems Technology

Office (ARPA, DOD)

EU European Union (formerly

European Community)

FASA Federal Acquisition Streamlining

Act of 1994

FBIS Foreign Broadcast Information

Service

FED field emission display

FLC ferroelectric liquid crystal

FPD flat panel display

| 105
106 | Flat Panel Displays in Perspective

GATT General Agreement on Tariffs and

Trade

GTC Giant Technology Corp. (Japan)

HDS High Definition Systems program

(ARPA, DOD)

HDTEC High Definition Television

Engineering Corp. (Japan)

HDTV high definition television

HMD helmet/head mounted display; also

Helmet Mounted Display program

(ARPA, DOD)

HRS High Resolution Systems program

(ARPA, DOD)

IC integrated circuit

ITA International Trade Administration

(DOC)

ITC International Trade Commission

JKTC Japan Key Technologies Center

LC liquid crystal

LCD Liquid crystal display

LCU Lightweight Computer Unit

program (U.S. Army, DOD)

LED light emitting diode

LETI Laboratoire d’Electronique, de

Technologie et d’Instrumentation

(a research laboratory of the

French atomic energy agency)

MIM metal–insulator–metal

MITI Ministry of International Trade

and Industry (Japan)

MPT Ministry of Posts and

Telecommunications (Japan)

NASA National Aeronautics and Space

Administration

NCAICM National Center for Advanced

Information Components

Manufacturing

NCAP nematic curvilinear aligned phase

NFPDI National Flat Panel Display

Initiative

NHK Nippon Hoso Kyokai (Japan’s

national broadcasting company)

NIST National Institute of Standards and

Technology (DOC)

NORAD North American Air Defense

(Strategic Air Command, DOD)

NSF National Science Foundation

NTT Nippon Telephone and Telegraph

(Japan)

OEM original equipment manufacturer

OIS Optical Imaging Systems

PALC plasma–addressed liquid crystal

display

PDA personal digital assistant

PDP plasma display panel

PDLC polymer dispersed liquid crystal

PMLCD passive matrix liquid crystal

display

p:Si polycrystalline silicon

PTCOE Phosphor Technology Center of

Excellence

R&D research and development

SAGEM Societe d’Applications Generales

d’Electricite et de Mechanique

(France)

SAIC Science Applications International

Corp.

SID Society for Information Display

STN supertwisted nematic

SVGA super video graphics adapter

TAB tape automated bonding

TDS Tactical Display Systems program

(ARPA, DOD)

TFEL thin film electroluminescent

display

TFT thin film transistor

TI Texas Instruments

TN twisted nematic

TRP Technology Reinvestment Project

(DOD)

USDC U.S. Display Consortium

VCR video cassette recorder

VTR video tape recorder

VFD vacuum fluorescent display

VGA video graphics adapter

x:Si single crystal silicon

XGA extended graphics array