Flat Panel Displays in Perspective
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Flat Panel Displays in Perspective September 1995 OTA-ITC-631 GPO stock #052-003-01438-6 Cover Photo Credit: Plasmaco, Inc. Recommended Citation: U.S. Congress, Office of Technology Assessment, Flat Panel Displays in Perspective, OTA-ITC-631 (Washington, DC: U.S. Government Printing Office, September 1995). oreword lat panel displays (FPDs) are increasingly important in this informa- tion-intensive era. Compared with the cathode ray tube used in televi- sions, FPDs are thin, lightweight, and power efficient. These displays have enabled the development of portable computers and commu- nication devices. Applications in automobiles and offices will increase, and FPDs may eventually result in the fabled television-on-the-wall. FPDs repre- sent a large and rapidly growing industry worldwide, and are expanding into an increasingly diverse set of systems. American companies and researchers have made many of the key innovations in FPDs, but U.S. firms hold a very small share of the world market. Some observers have called for government intervention to strengthen the U.S. industry. One area of concern—access to displays for military use—has driven recent federal support for FPDs. Flat Panel Displays in Perspective examines the potential benefits of a do- mestic, high-volume, FPD industry for the nation, and evaluates the role of government policies in developing it. The report concludes that such an in- dustry would provide both economic and national security benefits. The ex- tent of these benefits is difficult to determine, however, largely because trends in technology development and industry structure are resulting in more displays at declining prices. The barriers to establishing a high-volume FPD industry are formidable, and government tools to address them are lim- ited. However, government funding can play a role by helping to build do- mestic sources for some displays, such as those used in military systems. An additional finding is that the Department of Defense already uses some for- eign displays, but it could take better advantage of FPD sources worldwide. This report was requested by the Senate Armed Services Committee. It was produced under the auspices of the Assessment on Innovation and Com- mercialization of Emerging Technologies, requested by the House Science Committee (formerly the Science, Space, and Technology Committee) and the Senate Commerce, Science, and Transportation Committee. OTA would like to acknowledge the review comments and inputs from members of the Innovation and Commercialization of Emerging Technolo- gies Advisory Panel, as well as experts from government, academia, and the FPD industry. However, the content of the report is the responsibility of OTA. ROGER C. HERDMAN Director iii dvisory Panel Avtar S. Oberai Charles E. Harris Michael A. Rappa Chairman Chairman and CEO Associate Professor Consultant Harris & Harris Group, Inc. Sloan School of Management Massachusetts Institute of Paul Brickmeier Maryellen R. Kelley Technology Vice President of Advanced Visiting Professor Development Industrial Performance Center Richard S. Rosenbloom SVG Lithography Systems, Inc. Massachusetts Institute of David Sarnoff Professor of Technology Business Administration Linda A. Capuano Harvard Business School Vice President Ken Kennedy Conductus, Inc. Director Maxine L. Savitz Center for Research in Parallel Garrett Processing Division Sidney C. Chao Computation Allied-Signal Aerospace Hughes Environmental Systems, Rice University Inc. Louis Tornatzky William G. Morin Director, Southern Technology Director, Technology Policy Robert Cook-Deegan Council National Association of Director, Division of Behavorial Southern Growth Policies Board Sciences and Mental Disorders Manufacturers Institute of Medicine National Academy of Sciences Mark Myers Stephen Turner Senior Vice President CEO/President Oncor Inc. Mark Cunningham Xerox Corp. Oppenheimer and Co. Walter H. Plosila Les Vadasz Mark Eaton Executive Director Senior Vice President President North Carolina Allicance for Intel Corp. JMC Ventures Competitive Technologies Robert T. Fraley John T. Preston Group Vice President and General Director of Technology Manager Development New Products Division Massachusetts Institute of Monsanto Co. Technology Note: OTA appreciates the valuable assistance and thoughtful comments provided by the advisory panelists. The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for the report and the accuracy of its contents. iv roject Staff Peter D. Blair PRINCIPAL STAFF ADMINISTRATIVE STAFF Assistant Director, OTA Paul D. Semenza Liz Emanuel Industry, Commerce, and Analyst Office Administrator International Security Division David J. Eichberg Karry Fornshill Audrey B. Buyrn Research Analyst Secretary Program Director1 Jean E. Smith Diane Jackson Andrew W. Wyckoff Editor Secretary Program Director Industry, Telecommunications, and Commerce Program OTA CONTRIBUTORS Karolyn St. Clair PC Specialist Jerry Sheehan Julie Fox Gorte Jack Nunn Project Director2 PUBLISHING STAFF James W. Curlin Mary Lou Higgs Gerald Epstein Robert C. Weissler Manager, Publishing Services Project Director Innovation and Commercialization Chip Moore of Emerging Technologies Production Editor Project Christine Onrubia Graphic Designer Bonnie Sparks Electronic Publishing Specialist ________________ 1Until August 1994. 2Until April 1995. v eviewers Richard Archambault Daniel J. Devine Susan MacKnight Director, Computer Products Vice President, Technology Chief Economist Sourcing and Manufacturing Coloray Display Corp. Japan Economic Institute AT&T Kenneth Flamm1 Glenn McLaughlin Claude Barfield Principal Deputy Assistant Specialist Director, Science and Technology Secretary of Defense Congressional Research Service Policy Studies Department of Defense American Enterprise Institute David Mentley Roland Haitz Director Arpad A. Bergh Components Group Display Industry Research President Hewlett Packard Stanford Resources, Inc. Optoelectronics Industry Development Association Jeffrey Hart Richard Nunno Professor of Political Science Analyst Curtis Casey Indiana University Congressional Research Service Vice President Optical Imaging Systems, Inc. Mark Hartney Steven Pederson Advanced Research Projects Microelectronics and Computer Joseph Castellano Agency Technology Corp. President Department of Defense Stanford Resources, Inc. Roger Smith Heidi Hoffman Manager, Government Business Michael Ciesinski Director, Industry/ Government American Electronics Association Chief Executive Officer Relations United States Display Consortium United States Display Consortium Phil Spletter Microelectronics and Computer Steven Depp Darrel Hopper Technology Corporation Director, Subsystem Technologies Wright Laboratory and Applications Laboratory U.S. Air Force Curtis M. Stevens IBM Chief Financial Officer Joshua Lerner Planar Systems, Inc. Assistant Professor of Business Administration ________________ Harvard University 1Current Affiliation: Brookings Institution vi Rex Tapp Richard Van Atta Charles Wessner President & CEO Special Assistant for Dual Use Program Director of Technology Optical Imaging Systems, Inc. Technology and Competitiveness U.S. Department of Defense National Research Council Richard Thayer Director, Government Affairs Phillip Webre Robert A. Young AT&T Analyst Vice President, Product Congressional Budget Office Development Coloray Display Corp. vii ontents 1 Summary and Policy Issues 1 Industry Overview 3 The Domestic FPD Industry: Cause For Concern? 10 Strategies and Policies for a Domestic FPD Industry 18 2 The Domestic Flat Panel Display Industry: Cause for Concern? 25 Demand for Flat Panel Displays 26 Supply of Flat Panel Displays 31 Effects on Related Industries 42 National Security Requirements 50 3 Strategies and Policies for the Domestic Flat Panel Display Industry 61 Domestic Efforts to Domestic Efforts to Commercialize FPD Technology 62 Strategies for Market Entry 65 Government Activity 75 APPENDICES A Flat Panel Display Technologies and Domestic Firms 89 B List of Acronyms 105 ix Summary and Policy Issues lat panel displays (FPDs) are thin electronic devices that present images without the bulk of a picture tube. FPDs have enabled the development of products from digital wristwatches to notebook computers, have improved vi- deocameras and other consumer goods, and will be the heart of wide screen televisions that can hang on a wall. FPDs also present critical information to military forces; they are replacing older displays in aircraft, ships, and vehicles, and are allowing the de- velopment of new systems, such as head-mounted displays for in- dividual soldiers. FPD technology was largely developed in American laborato- ries, and much of the advanced research in new FPD technologies takes place in the United States. However, the United States has not had a significant capability to manufacture FPDs. Companies capable of manufacturing displays have either decided not to do so or, lacking the necessary financial resources, have been unable to persuade other organizations to fund their efforts. U.S. firms do not have an appreciable fraction of world market share. Over the past few years, the size and scope of activities and sales in the FPD industry have grown. As market demand for FPDs has grown and the industry has moved into a more mature phase, the role of capital expenditures and manufacturing knowl- edge has become preeminent. As investment costs have increased and competition has intensified,