It’s not often that a report comes out that is not simply a farrago of guesstimates interspersed with on the one hand-on the other hands, so we were taken with a release about a report from O’Mara & Associates of Palo Alto, California on Strategies for the US Display Market, which is clearly opinionated, polemical and pulls no punches. The report says a partnership between a consortium of US corporations and an established Asian flat panel manufacturer has the highest likelihood of jump-starting the flagging US flat panel industry and its creation should be of the highest priority to the government. At least one major personal computer maker and one world class semiconductor company should be members. The report says the worldwide market for flat panels will be between $14,000m and $21,000m by the year 2000, depending on price reductions for active matrix liquid crystal displays and to be a significant player, the US needs to capture 10% to 15% of that, $1,500m to $3,000m. This requires world class production facilities capable of pumping out around 300,000 laptop-sized displays a month – about market leader Sharp Corp’s expected capacity for next year. World class capability and costs by 2000 will mean third generation manufacturing processes and equipment, a plant capable of processing a large glass substrate that will yield as many as nine laptop displays, say the analysts. Assuming the plant needs to come on stream in 1998 and an 18-month construction period, the investment decision needs to be taken in 1996.

Very risky option

While smaller second generation facilities are running $300m the investment in the US plant will probably be well over $750m. But a world class production plant in the US, staffed with Americans, would do more to create a display infrastructure than either of the government-funded pilot studies, neither of which will be operational until next year, making the commitment to a third generation facility a very risky option given the magnitude of the investment. So the researchers say the obvious strategy for the US to avoid this generation gap is to partner the facility with an Asian flat panel manufacturer. By 1996 when the investment needs to be funded there may well be several Asian producers tht will jump at an opportunity to partner a US facility with a consortium of local companies, especially if the team includes one or more laptop manufacturers so that there is a clear market for the output. It suggests that of five top four Asian companies Sharp Corp, NEC Corp, Display Technologies Inc and Goldstar Co and Samsung Electronics Co, Display Technologies would be the most logical partner, given IBM Corp’s 50% stake. The second tier manufacturers, however, may be even more anxious to participate in order to gain market share and assure their continued competitiveness. Potential partners include Hoshiden Inc, Hitachi Ltd, Fujitsu Ltd, Casio Computer Co and Sanyo Electric Co. Existing US government programmes aimed at developing infrastructure and alternative display technologies may eventually lead to significant sales after the turn of the century, says the report. The report points out that other countries are arranging partnerships of the type it suggests. Singapore has is close to a deal with Toshiba Corp to build a liquid crystal plant and Apple Computer Inc and Compaq Computer Corp might commit to long term supply agreements and potentially even invest in the partnership. The report urges the US get beyond what is politically correct and put a deal together or lose the enormous potential market. The writers reckon the US has no more than a year to act to exploit the buying power of user companies and the materials and processing capability of its chip industry. And it suggests that only the financial and political leverage of government defence spending can help forge such a partnership.