A U.S. government agency has pledged $10 million in funding for the United States Display Consortium (USDC), part of a continuing effort to establish a domestic manufacturing base for flat panel displays based on more efficient production techniques than those currently practiced in Asia.
To date, the Defense Advanced Research Projects Agency (DARPA) has contributed over $52 million in funds to the USDC, a hybrid public-private entity that was chartered in 1993 to advance the flat panel production capabilities of American companies.
The burgeoning industry has been dominated by Japanese and Korean LCD (liquid crystal display) manufacturers, but the United States has been trying to start up an industry based on novel flat panel technologies such as "thin CRTs." A CRT, or cathode ray tube, is the standard desktop monitor.
The USDC says it has funded over 35 programs related to factory management and materials and component technology that will aid development of manufacturing capability in the United States.
However, global economic conditions have hamstrung these efforts, according to industry observers. On a worldwide basis, oversupply of flat displays continues to be a vexing problem, observed Dave Mentley, vice president of Stanford Resources.
While U.S. companies have been ahead of the curve in terms of display technology, Mentley said, it has been hard to build up production capacity because there is so much excess manufacturing capacity.
Starting in the late 1980s, Japanese manufacturers such as Sharp, NEC, and Toshiba took the lead in LCD production. IBM, the only significant U.S. player, does all of its LCD production in Japan via a joint venture with Toshiba.
Moreover, in 1995 South Korea's Samsung and Hyundai entered the market, which increased supply and consequently lowered prices to the point where plans for a number of new manufacturing plants are being put on hold. The planned entrance of Taiwanese manufacturers would only exacerbate the problems with excess capacity.
Nonetheless, at least one U.S. company appears ready to join the crowded field. Candescent Technologies, a governing member of the USDC, recently said it has raised $125 million for design and construction of a high-volume flat panel display facility in California.
Other efforts to build a manufacturing infrastructure have been less successful because of market conditions. MRS Technology, a supplier of manufacturing equipment to the display industry, had been awarded a $4.5 million contract from the USDC to design new equipment capable of inexpensively producing large, high-resolution displays. But as a result of a MRS' recent decision to focus its efforts on the more profitable market for high density chip packaging, work on the contract has been deferred indefinitely.
Originally, the USDC estimated that $70 million a year for five years was the amount necessary to build up the flat panel industry in the United States. Currently, the organization's total budget is around $44 million, said Stewart Hough, marketing manager for Candescent, which is short of the amount originally proposed to sustain a manufacturing infrastructure. "But for what they have received, they have done very well," he added.
"Korea and Japan manufacture 95 percent of the world's flat panel displays. We would like to change that," noted Hough, conceding that it will take much more work and money. The USDC has "indirectly has been of use to us, since a cheaper source of tools for manufacturing and process development is important for a manufacturer to be successful."
The current plan is for Candescent's plant to go online by the fourth quarter (assuming that the company rounds up approximately $250 million more in financing), which falls in the time frame in which Stanford's Mentley predicts supply and demand should even out. Hough said that Candescent has a technology different than LCDs called "thin CRT" which will help them sell to "premium markets" and "stay out of commodity markets."