Japan thin-film displays dim despite $500M try

Electronic News, June 8, 1992 by Brooke Crothers

TOKYO--Despite a collective investment estimated in excess of $500 million by Japanese manufacturers to produce thin-film transistor (TFT) active matrix (AM) liquid crystal display (LCD) flat panels, pixel defects and other production problems have stifled meaningful output.

Most of the nearly dozen Japanese suppliers in the business are still scrambling to get output up to competitive levels to meet demands from computer makers here and around the world. Potential customers are seeking yield and delivery assurances as well as lower prices before making large commitments to the technology.

The slow start of this much publicized market isn't openly discussed here, although the Nomura Research Institute has cautioned that wildly-enthusiastic TFT LCD projections are yet to be borne out.

Display Technology Inc. (DTI), the AMLCD joint manufacturing venture of IBM and Toshiba, would not comment, but sources said panel yields are below 30 percent, about the same as the other Japanese production-harried firms.

Toshiba, however, has just elected to launch its own production plant to make color AMLCD panels, although the firm was slated to share the DTI output on a 50-50 basis with IBM. Meanwhile, Toshiba is buying TFT active matrix displays for its portable computers from rival Sharp. Fujitsu, according to sources at that company, also is acquiring its AMLCD displays from Sharp.

"This is a difficult time to evaluate the prospects for TFT displays," said Norihiko Nanao, chief research engineer at Nomura Research Institute in Yokohama who has just completed an extensive study of the LCD industry covering demand, materials and manufacturing process technologies. "The outlook for the quick success of TFT technology made by some industry observers (over the last few years) was certainly too optimistic," he added.

"All these manufacturers now have all this (TFT) production capacity up and going. You can't simply stop it. TFT has the momentum."

The incentive to overcome problems in production for TFT manufacturers remains a prospective market pegged at $4 billion by 1995 and at more than $12 billion by the year 2000, according to Nomura Research Institute.

Even as NEC disclosed large cutbacks in plant and production investment for 1992, the company indicated that it would boost funding for its active-matrix TFT operations 50 percent this fiscal year to $90 million.

Among the rivals trying to grab a major hold in the AMLCD market, NEC is believed to be one of the most successful producers so far, with some estimates that the yields on its 9-inch-class displays are as high as 40 percent to 50 percent.

"We are still dealing with equipment that only processes a few displays at a time. This aspect certainly needs to be improved," said Tomihiro Matsumura, a senior executive vice president at NEC. Yo Takasaki, manager of the color LCD development division for NEC, recently discussed the myriad problems NEC faces in a short technical paper outlining obstacles to improved output and yields.

Getting yields and production levels to the point where a company can crank out 10-inch displays for pricing at below $500 is the ultimate target, Mr. Takasaki said, but this requires solutions to some very fundamental and thorny problems. A typical target date for achieving this level of production is 1995.

NEC is believed to be relatively successful in producing 8.9-inch displays, and may be fast approaching a position where it is profitable in this class of display. The company is also producing a 10.4-inch display and has developed a 12.9-inch display. According to NEC, the total production rate for all its TFTs right now is about 10,000 units per month.

Sharp may be the de facto leader in the market due to its history and clientele. In addition to such companies as Toshiba and Fujitsu, Sharp supplies Compaq's high-end portable displays and is slated to become a major supplier for Compaq's future TFT color notebook computer.

Although Sharp will not release production figures, the company says in 1991 27 percent of its LCD sales were accounted for by TFT displays, with an expected jump to 99 percent in 1992.

DTI, nevertheless, now has a production line for 10.4-inch TFT displays and IBM is using this display on a notebook-class color PC it is marketing in both Japan and the U.S. The display used by IBM, however, is thicker than the main CPU unit, adding substantial weight. Toshiba also uses the display for a laptop-class computer.

As with other companies, DTI has been struggling with production problems but some industry observers say its yields now could be up to about 30 percent. Industry analysts have stated DTI may have missed the mark with its larger 10.4-inch displays, since the largest market for color TFT displays is in the more compact eight- and nine-inch class. This fact has been borne out to a certain extent by Toshiba's decision to go to an outside maker for its recently announced i486-based TFT color notebook.

Toshiba's own operations (separate from DTI) make smaller TFT displays. At Himeji -- the same location as DTI -- the Toshiba facility produces 4-inch and 5.9-inch TFT displays. The company also manufacturers 5.9-inch displays at another location. A Toshiba spokesman said most of these displays are going into TV and car navigation system applications. Some reports are circulating here that Toshiba may also make computer-class displays that compete with DTI products at the separate Toshiba-run facilities using different production techniques.