LIQUID CRYSTAL DISPLAY MATERIALS AND RELATED TECHNOLOGIES

Patricia E. Cladis

WHY EVALUATE LIQUID CRYSTAL DISPLAY TECHNOLOGIES IN THE FSU?

Issues of U.S. competitiveness in a number of world markets are tied to flat panel displays, a strategic component for computers, an increasing variety of electronic products for consumers, and multimedia telecommunications. These issues were underscored by implementation in 1991 of an antidumping tariff on active matrix liquid crystal flat panel displays (a nonemissive display technology) when imported as a component but not in a finished product.

This tariff was removed in 1993 because two facts emerged:

In October 1991, the JTEC flat panel evaluation trip to Japan helped raise U.S. awareness of these issues (Tannas and Glenn 1992). Probably the biggest surprise the JTEC panelists brought back was that Japan was investing so heavily in the active matrix liquid crystal display technology, TFT LCD, and that this is a technology based on semiconductor manufacturing expertise that has been steadily advancing in Japan, and, less steadily, in the United States. (For details of LCD technologies, particularly the active matrix technologies, see Liquid Crystal and Other Nonemissive Displays)

While Japan is as much subject to the profit picture as is the United States, much of its industries' profits are a result of the country's skill in mass production for the consumer market. Thus "Japan, Inc." is obliged to take the long-term approach for returns on its investments compared to the short- term approach of "U.S. Inc." U.S. corporations, even those that mass produce, have to answer to stockholders on a quarterly basis. Thus industries that have short-term profits to show tend to flourish in the United States, and those that do not tend not to survive.

In Japan, stockholders take a longer-range view; therefore, Japanese companies that tend to survive and flourish, sometimes even beyond their own expectations, are precisely those that survived the pressure of taking a long-term outlook.

As a result, in Japanese business, a larger fraction of company profits are reinvested into the company to build factories and to invent new products (Footnote 1). Strategic "know-how" (undocumented business, management, and technical talents that reside in people, not patents or scientific and business journals, and tend to be acquired from experience rather than books) of each business is recognized and preserved through a system of life-time employment, keiretsus, and government challenges -- not crutches dispensed to prolong the agony of ailing businesses.

There is also skillful use of shorter term subcontracting from many smaller companies that act as shock absorbers for larger companies during the extremes of a business cycle, nurturing technologies and products to maturity so that they all end up benefiting in the long run (Sakai 1990).

This was even more evidence for the "enduring logic of industrial success" (Chandler 1990). As was nicely phrased by Hayek (Swiss):

We must build where we live. When a country loses the know-how and expertise to manufacture things, it loses its capacity to create wealth -- its financial independence. When it loses its financial independence, it starts to lose political sovereignty. (Taylor 1993)

A basic premise of Hayek's statement is that whatever is built at least meets, and strives to set, world standards. However, even if initial efforts are not up to world standards, building, and the evolution in know-how that this entails, starts a dynamic process that has a track record of leading to economic growth through global competition and paradigm shifts (Footnote 2). Indeed, is there any other way?

Furthermore, Japan is a country the United States has had free exchange of information with since the end of World War II! What more surprises existed in countries with which the United States did not have free information exchange over this same period? Were there as yet unheard of technologies and business strategies, or, even better, implementation and adaptation of business strategies and technologies invented in the United States, now existing in the FSU from which U.S. industry could learn?

The charge of the World Technology Evaluation Center panel was to address this question in the context of flat panel display technologies in Russia, Ukraine, and Belarus, now separate countries. How many "Sonys" would panelists find?

The short answer is none -- yet. However, the game has only started. The booming black market economy attests to the emergence of well-honed entrepreneurial instincts for short-term profits (Footnote 3).

But these are more ambitious countries only now undergoing their particular industrial revolutions, each in its own way. Some FSU countries are already a force to be reckoned with on the world commodities market (Footnote 4). While this gives those FSU countries with both an educated workforce and financial holdout the potential to become key players in industries that require a long-range view, it also mitigates the urgency for them to do so. Some FSU countries do not have both. A measure of their commitment to the "enduring logic of industrial success" is the speed with which they succeed in incorporating mass production into their arsenal of national strengths.

So WTEC panelists were indeed very impressed to learn that Dr. Sadichikhin, president of Rosich, said that he wants to create a Russian "Sony" (Rosich and Co., Ltd.)! He probably can. But Sony did not become Sony by selling expensive prototypes in big boxes to a few customers. Sony became Sony by delivering to the world market, at affordable prices, new and original products that are technically of the highest quality and beautifully designed. The main driving force behind Sony's success was, of course, the sense of urgency in Japan to dig its way out of the ashes of World War II. The company's main earth- moving tool was its skill in mass production, used to democratize services enabled by technology to improve the quality of life for the largest number of people.

As far as liquid crystal flat panel displays are concerned, there is considerably more LCD production and considerably less semiconductor device production in the FSU than in the United States. At this time, LCD technologies in production in Russia and Ukraine are not state of the art, but are those from before 1990 (see Appendix F), the year TFT LCDs took the world by storm with spectacular, full-color, high- resolution, fast displays that are also low-power consuming and portable (Dambrot 1990). In particular, WTEC panelists did not see any color STNs, but heard of novel ideas to bring color to STNs. So perhaps STN manufacture makes sense in the context of the current status of the industrial revolution now underway in Russia.

There is really no semiconductor "industrial" component to the Russian industrial-military complex; there are only increasingly smaller fragments from a crumbling military complex. Telecommunications services do not yet require the demands of multimedia communications for consumers. There is not yet a demand for car navigation systems. Outside of universities and research centers, there is probably not a large demand for laptop computers. There will be a big need for LCD indicators (alphanumeric displays) for gasoline pumps, for example, when gasoline pumps become as familiar a sight in the FSU as they are in the European Community.

Mass production of consumer goods is a novel concept in Russia. Therefore it makes sense to start with a technology that does not require huge amounts of money and sophisticated manufacturing know-how. As the standard of living rises and consumer demands increase, manufacturing and business know-how will follow, eventually leading to the creation of paradigm shifts and new world markets for products that people do not realize that they need until they see them.

The technical knowledge and materials expertise already exist in Russia, Ukraine, and Belarus for this to be a realistic projection. Mass production and business know-how for consumer products are in their infancy, but could just as easily grow gracefully as they did in Japan (Kurokawa 1992).

It is difficult to find arguments for why any FSU country should take on an expensive giant such as TFT LCDs immediately upon emerging from a past that was protected from global market forces, and with experience of doing business only in the military and world commodities market (Einhorn 1994). The FSU has an educated and inventive workforce that is very capable of recognizing opportunities offered by paradigm shifts. The FSU is only now starting down the free enterprise runway (Lawrence and Vlachoutsicos 1993a, 1993b). When mass production of desirable consumer goods comes up to speed, FSU countries will surely take off (Chandler 1990).

In Russia, there is mass production of LCDs to make displays for products such as watches, electronic games, avionics, and computers. In Ukraine, there is mass production of small (for games and calculators) and large (for public displays) alphanumeric displays. And in Belarus, there are MIM displays in a pre-mass production state.

The only price information that the panel obtained at this time was for liquid crystal chemicals at Niopik, Russia. (See site visit report for Niopik, Appendix C.)

With the removal of economic incentives for mutual cooperation, each of the three countries visited was now trying to establish its sovereignty by integrating existing structures entirely within its own country, Russia, Ukraine, or Belarus -- each one competing for hard-currency investments from outside the FSU. The new reorganization of the Commonwealth of Independent States bears certain similarities to that of a large company internally reorganizing itself into separate business units, each with its own currency.

In the former USSR, academic research had its highest concentration in the Moscow-Leningrad axis, with prototyping expertise in unmarked cities on a large geographic ring around this axis, including Zelenograd, Czernogalovka, Fryazino, and Dolgoprudny, and with manufacturing outside an even larger ring that included Saratov, Belarus, Ukraine, the former East Germany, Hungary, Czechoslovakia, Yugoslavia, and Siberia. The FSU is now without a major part of its industrial jewels as a result of its recent reorganization and downsizing.

After the recent changes, Belarus is now a separate country where there is vertical integration for MIM displays. (See Liquid Crystal and Other Nonemissive Displays) The Ukraine is now a separate country that has a CRT plant, extensive research in LCDs, and LC indicator manufacturing. In Russia, the third and largest but least dense country (Footnote 5), with business headquartered in Moscow, LCD materials are made and characterized at Niopik (Dolgoprudny), and LCD drivers are made at ELMA (Zelenograd) and Platan (Fryazino), each one at least an hour's drive from Moscow and from each other. STN panels and alphanumeric displays are manufactured in Saratov, an overnight train ride from Moscow. Panel members were told that there is more display activity in Siberia, Georgia, and Uzbekistan, which are considerably further away from Moscow than Saratov (Footnote 6).

Evidently, all three countries understand that they must build where they live.


Published: December 1994; WTEC Hyper-Librarian