Motorola sale of In Focus stock raises questions on display ICs

Electronic News, April 3, 1995 by Jim DeTar

SCHAUMBURG, ILL. - The Motif partnership between Motorola and Wilsonville, Ore.-based In Focus Systems to jointly develop and market active addressing integrated circuits (AAICs) for the flat panel display (FPD) market was jolted again last week as the partners disclosed Motorola's intention to sell its 20 percent share of In Focus.

Separately, Motif said it is pursuing various options to commercialize the technology - either licensing to a fourth party or an outright sale - but questions remain as to the viability of the technology, Its cost-effectiveness and its marketability, including whether Motorola will continue in its role as a manufacturer of the ICs.

Motif said in a statement that technology obstacles must be hurdled before the product is marketable: "To fully exploit the technology's commercial opportunities, extensions of the AAIC family will need to be developed." This came only one week after a public claim that Motif had successfully tested the first AAICs designed by In Focus and manufactured by Motorola and that Motif's FPD partners - Sanyo, Kyocera, Asahi-Optrex and Standish - are "beginning the process of evaluating the AAICs."

However, Motif OEM partners that Electronic News talked to said they had not received silicon samples yet, and had not begun the evaluation process.

In Focus has agreed to buy back from Motorola 1 million shares of its own stock for $18 per share, and Motorola expects to sell the remaining shares of In Focus stock in periodic sales on the open market. The companies said Motorola originally took the equity position to support a planned liquid crystal display (LCD) manufacturing operation and, with the decision last fall to shut down the LCD manufacturing portion of Motif (EN, Oct. 17, 1994), "Motorola's equity interest in In Focus is no longer considered to be a strategic investment."

Although Motorola is selling its In Focus equity position, the two companies will for now continue to be 50-50 partners in Motif and will split whatever profits they make if chips are brought to market. Additionally, Motorola will see a capital appreciation of about 44 percent on its investment in In Focus, according to In Focus CEO John V. Harker.

"In fact, Motorola has done well on the stock. They sold them (back to In Focus) at $18 a share, and they originally bought them at $10." Motorola originally purchased an equity position of approximately 2.2 million shares of In Focus stock - at that time about 20 percent of the company - in connection with the creation of Motif.

Mr. Harker said in an interview that these developments signify a change in strategy for Motif. "In the past, Motif had worked with Motorola to design the ASICs. Now Motorola and In Focus are working with others to make this technology available to our partners."

It is possible that one of Motif's four FPD partners, who are considering use of the AAICs to build LCDs, may buy all or part of the venture. "Yes, that's very possible," Mr. Harker said, also not ruling out the possibility that one of the partners could buy the technology and manufacture the AAICs itself, rather than using Motorola as a foundry. "That could be. Several of the partners have rather extensive capabilities to make them." When asked whether Motorola would continue to make the ICs in that case, Mr. Harker said he could not comment.

A Motorola spokeswoman said the sale of the stock does not indicate the dissolution of the partnership but she did not know whether the company would make the AAICs in the future. "The purchase of shares in In Focus was done at a time when it was believed to be strategic. In October (1994), the decision was made not to manufacture displays, but Motorola and In Focus are still joint venture partners in Motif. Motif is still looking at expanding one or more relationships with the flat panel display manufacturer," the spokeswoman noted.

Mr. Harker said that Motorola and In Focus are currently working to put together a proposition with which to approach the company's partners. The proposition could involve elements of manufacturing, joint development or simply be a sale of technology. "It could be any or all of those. The elements in Motif that are valuable are the scientists and their minds. Another unique thing would be the intellectual property rights. And there is the two-year expertise that Motorola has developed in developing silicon that drives this active addressing," Mr. Harker noted. "The objective is to get this to market."

Motif's active addressing technology is designed to deliver video speeds to passive matrix (PM) LCDs and is said by Motif to now include the first multiple line addressing technology to be successfully implemented in silicon. Motif's technology reportedly drives the pixels constantly and simultaneously, similar to active matrix (AM) process but without using transistors behind each pixel, and at a cost lower than the PM technique.

Market observers said Motif's active addressing can be better than current PM dualscan technology and close to high-resolution AMLCDs. OEMs and end-users ostensibly would benefit greatly from a technology that could overcome some of PM's current limitations, but whether the Motorola/In Focus solution is working remains up in the air.