INVESTMENT ENVIRONMENT

The first active matrix products were introduced in 1980 by Seiko-Epson. These were very small portable personal television sets. The first was a "Dick Tracy" wristwatch monochrome, which was later followed by a 1.5-inch diagonal color TV. These gadgets were quite expensive and did not generate very large sales volumes; but they did point the way to future potential opportunities for larger sizes and lower costs. Although these products seemed to indicate a classic thrust of a non-television manufacturer into new markets (watches to television), it was recognized by the television producers as an opportunity, and they began major R&D efforts into active matrix technologies and announced pilot start- up plans. Not surprisingly, other non-television manufacturers became interested and entered the race. The chronology of these efforts is summarized in Table 5.1.

For perhaps a number of causes, the early-entry personal television products grew rapidly to about 1 million units per year and slowed. Prices were high for the active matrix products, and functionality was not commensurately high. The major producers were Seiko, Sharp, Matsushita, and Casio. Additionally, during this period the United States levied a dumping duty on TVs, and the major manufacturers stopped exporting TVs to the United States.

Table 5.1
Chronology of Efforts

Although significant advances were made in passive matrix displays, it was soon widely recognized that the laptop computer display market could be best served by active matrix LCDs. This recognition and the steady advances in the technology drove even higher investments into production facilities to serve the new markets for larger area displays. These investments and production capacities are shown in Table 5.2.

Today, Japan has established a technical environment that drives the current business environment for display technologies. The Japanese companies are making major efforts to bring up the yields in their amorphous silicon factories so as to realize as soon as possible the benefits of these major investments. Indeed, the manufacturers we visited clearly implied (and sometimes stated) that research in next-generation technologies such as low-temperature polysilicon was not being pursued as aggressively as it should be because the preponderance of the company's technical resources was immersed in the amorphous silicon production start-up.

Table 5.2
Business Strategies of Leaders

As an example, Hitachi has concluded on economic grounds that major innovations in technology are required and that currently the market entry point for TFT Liquid Crystal Modules (LCMs) is in the high-performance high-price workstation rather than in moderate-performance personal computers (PCs). On our visit Hitachi personnel specifically indicated the need for polysilicon technology as a key but admitted that the company has only limited resources to advance this technology.

Hitachi indicated that they believe that revolutionary technology of the type being researched by the Giant Technology Corporation (GTC) is necessary for the growth of the flat-display industry, but that Japan has inadequate technical resources available. Hitachi representatives called for international cooperation and expressed the view that the application of innovative technologies developed by technologists from other than flat-display areas (such as the printing industry) would be the way to advance the technology. Hitachi pointed to the need for new technology to achieve the projections and potential of flat displays by drawing an analogy with production of cathode-ray tubes (CRTs) and other major technologies. The major thesis was that if flat displays are to compete with CRTs, the economic metrics of the flat-display production will have to be closer to those achieved by CRTs today.

Hitachi presented a sequence of 11 figures that capture the essential elements of the thesis:

Figure 5.3 shows the progress of displays in Japan. The key point was that they view 1995 as a turning point in the takeoff of the TFT LCD display technologies. However, as Figure 5.4 shows, key economic production metrics need significant improvement in flat displays. Specifically, (a) the ratio of facilities and R&D investment to sales is much too high at present when compared with the semiconductor industry, and (b) the investment efficiency or ratio of annual sales increase to investment increase for flat displays is much too low for flat displays versus CRTs, although it is comparable to semiconductors.

These issues are combined and incorporated in the historical perspective of price elasticity shown in Figure 5.5. The key point to be made here is that, if TFT LCMs are to compete, they must follow a similar elasticity curve, which will require dramatic improvements over the current state of the art. Figure 5.6 shows the projected volumes of Color Display Tubes (CDTs), Color Picture Tubes (CPTs), LCMs, and TFT LCMs up to the year 2000.


Figure 5.3. Progress of Displays in Japan


Figure 5.4. Production and Investment Efficiency - Comparing Semiconductors & Displays


Figure 5.5. Price Elasticity of Color Kinescopes and Liquid Crystals


Figure 5.6. World Demand for Color Kinescopes - Liquid Crystal Modules

Figure 5.7 makes an interesting comparison of total lifetime power consumption for CRT and LCM displays. It indicates that, although the TFT LCM consumes less power than a CRT in operation, it requires much more power to produce, resulting in no substantive total lifetime power savings. Indeed, the shaded box and the arrows suggest that the power required to produce TFT LCMs is a significant impediment to the projected growth in production volume.

These arguments are further driven home by Figures 5.8, 5.9, 5.10, 5.11, 5.12 and 5.13. Figure 5.8 shows again the growth of the color television and personal computer workstation markets up to the year 2000. Figure 5.9 shows monthly growth in production of and revenue from TFT LCMs versus time, clearly showing the growth takeoff that must occur by 1995 if the predicted markets are to be achieved by the year 2000.

Figure 5.10 shows how significant penetration into the PC and workstation markets requires that the increased costs of TFT LCMs cannot be dramatically higher than color kinescopes (except for the high- performance, high-price markets, which are therefore Hitachi's current strategic interest). Figure 5.11 shows the learning curve improvements necessary to make the significant cost reductions and compares these learning curves with the historical learning curves of the CRT, making again the point that major technical innovations are necessary. Figures 5.12 and 5.13 summarize these requirements and their impact on the technology.


Figure 5.7. Power Consumption Reduction in Displays


Figure 5.8. CTV - PC - WS Market


Figure 5.9. Probability of Adoption of TFT Liquid Crystals by the PC/WS Market


Figure 5.10. Probability of Adoption of TFT Liquid Crystals by the 1995 PC/WS Market


Figure 5.11. Adoption Probability of TFT Liquid Crystals by PC/WS Market


Figure 5.12. Cost Comparison of Color Kinescopes and Liquid Crystal (Indirect Cost)


Figure 5.13. Display of the 21st Century


Published: June 1992; WTEC Hyper- Librarian