FPD directive imminent; IBM making license bid

Electronic News, Jan 31, 1994 by Reinhardt Krause

WASHINGTON -- With the release imminent of a government study on possible direct investment in a U.S. commercial manufacturing plant to support the flat panel display (FPD) industry, IBM is pushing for an industry consortium to license the active-matrix LCD technology of Display Technologies, Inc., IBM's joint venture with Toshiba.

The so-called "Flamm Report" was commissioned by Laura Tyson, chairman of the Council of Economic Advisers; the study is meant to serve as a model for the Clinton Administration's industrial policy. The report, a joint effort of the departments of defense and commerce, is due out in February; it will recommend whether government support should go beyond the funding already committed.

The study is being headed by Ken Flamm, assistant undersecretary for dual use technology in the DOD.

The Advanced Projects Research Agency (ARPA) has committed to providing Optical Imaging Systems, Inc. (OIS) with up to $48 million over two years (EN, Aug. 30, 1993), to cover about half the cost of an active-matrix LCD plant. The OIS plant is primarily for military and avionics applications. In addition, ARPA has funded an industry group led by AT&T and Xerox, the United States Display Consortium (USDC), with $20 million to develop equipment and materials.

Separately, ARPA earlier this month awarded Xerox $21.4 million to improve its AM-LCD technology. ARPA and the Commerce Department's Advanced Technology Program have also doled out tens of millions in funding to several startup companies in the flat panel industry.

Still, there is no volume manufacturing capability in the country today by U.S-owned companies for commercial applications such as computers. Both IBM and the USDC have recommended to the study group that an initial manufacturing plant focus on active-matrix LCDs, although the USDC materials and equipment effort supports other flat panel technologies as well.

IBM would join the USDC, or some other consortium, if the active-matrix technology from DTI is licensed. Steven Depp, IBM's director of sub-systems technology, said IBM has made a proposal to allow a "suitable U.S. consortium" to license--for a fee--DTI's technology. "In our view, if the U.S. is going to put in dollars to get a manufacturing capability in the United States, it makes sense to look at the business case in which you take a proven manufacturing technology and get that going quickly as opposed to waiting and taking a go-it-alone strategy."

Japan's Sharp recently said it would invest $47 million in a new active-matrix LCD facility (EN, Jan. 17), which would add more capacity to its existing plants. Mr. Depp said that IBM believes there is still a window of opportunity to compete in active-matrix LCD technology, although the U.S. needs to move quickly. He said that if there is a long delay, U.S. companies would need to develop "a leapfrog technology" in order to compete.

IBM and Toshiba began cooperating in active-matrix displays in 1986 and first developed prototypes in 1988. The DTI manufacturing plant is located in Japan and supplies both IBM and Toshiba internally. However, its impact in the merchant market is more questionable, since IBM itself was short of displays for its ThinkPad notebook computer line last year.

Given the fact that the USDC includes companies that are supportive of other technologies as well, such as plasma or electroluminescent (EL), Mr. Depp suggested that another consortium more focused on manufacturing capability and active-matrix LCDs could emerge. Since DTI is a 50/50 joint venture between IBM and Toshiba, IBM would participate directly in any consortium, not DTI.

Still, several projects other than active-matrix LCDs are already under way. The Microelectronics and Computer Corporation (MCC) has launched a crash effort in field emission displays (FEDs)--along with several U.S. companies; Texas Instruments is also pursuing FED technology through a licensing deal with a French company. Motif, a joint venture of Motorola and In Focus, is building a $70 million plant based on a new kind of passive-matrix LCD technology.

According to Mr. Depp, Xerox's active-matrix technology, while similar to IBM's in using amorphous silicon TFTs, is not suitable currently for computer type applications. Although the Xerox active-matrix LCD technology achieves 6.3 million-pixel display, Mr. Depp said it does so by trading off gray scale and aperture ratio.

"They (Xerox) have chosen to have a higher number of pixels but each pixel can't do quite as much," he said. "They're optimizing for paper, for document applictions. As I understand it, (ARPA's latest $21.4 million award to Xerox) is a continuation to a development program ARPA has already funded and what it doesn't do is lead to manufacture."

At the USDC, CEO Peter Mills said that the consortium has not given the government a formal proposal, although it has been in regular contact. Ideally, Mr. Mills said a number of manufacturing efforts could be set up, but he conceded that initially only one kind of display--such as active-matrix LCD--could be supported.