An imminent shortage of liquid-crystal-display modules could allow competing technologies to gain a foothold in the enormous PC flat-panel market, according to one would-be commodity display maker.
The shortage, which could last as long as 18 months, is expected to put the brakes on a year-long LCD pricing skid and firm up the bottom line for battle-weary vendors. But dwindling capacity could also lure new entrants into a market that has long been dominated by Japanese and South Korean display suppliers.
Having watched its competitors lose their strength through a costly war for market share, Candescent Technologies Corp. will begin its run at the volume display segment next year in a bid to become the first U.S.-based supplier to crack the multi-billion-dollar market.
Armed with the manufacturing clout of a new 340,000-sq.-ft. motherglass fab near its headquarters in San Jose, Candescent is pitching its ThinCRT field emission displays (FEDs) as having a wider viewing angle, brighter images, and lower power than LCDs used in notebook- and desktop-PC applications.
And its timing couldn't be better, according to industry observers. While rivals in Japan and South Korea have captured the lion's share of the worldwide display market, their victory has been a Pyrrhic one. In their haste to win the production race, Asia's flat-panel manufacturers have driven the price of popular 12.1-in. LCD modules as low as $220, about $30 less than they cost to make, according to DisplaySearch, an Austin, Texas-based flat-panel research firm.
The resulting margins are too low to sustain key capital investments and are forcing the entire LCD industry to postpone capacity expansions for several quarters, said DisplaySearch analyst Ross Young.
"It's unlikely that any [new] Japanese fabs will start volume production in 2000," Young said. "Fourth-generation equipment is not available, and Gen 3.5 has problems. The Japanese are waiting on new investments."
While Taiwan's emerging flat-panel manufacturing machine could partially offset the shortage, Candescent's volume-production ramp is set to coincide with the peak of the industry's capacity crunch, according to Harry A. Marshall, the company's chairman, president, and chief executive.
"One of the things you can't ignore is the time frame," he said. "You can't just flip a switch and turn on capacity."
Candescent broke ground on its new facility earlier this month. The finished fab will cost $400 million and will make about a million 14.1-in.-panel equivalents annually by the end of 2001, according to Marshall. The facility will move Candescent's ThinCRT production from a 320 ?? 340-mm development line to 590 ?? 670-mm third-generation lines able to make four 14.1- or 15-in. panels per substrate.
With substantial industry backing, including investments from Hewlett-Packard Co. and a $100 million joint-development partnership with Sony Corp., Candescent will push its ThinCRTs through a range of markets on its way to commodity vendor status.
"Our intent is to drive yields and technology development with small displays, but the entire purpose of Candescent is to make 14- and 15-in. notebook and desktop displays," Marshall said. "We need to go after the mainstream [market], and we need to do it in 2000 and 2001."
In addition to the lack of LCD production capacity, emerging applications are placing new demands on flat-panel technology that could upset the market's balance of power, according to observers. While LCDs have satisfied notebook-PC requirements for years-and are the technology of choice for desktop monitors-non-PC applications are not necessarily as well served by a liquid-crystal structure.
Alternative color gas-plasma displays, for instance, are being sold into the wall-mount wide-screen television market, while liquid-crystal-on-silicon devices are being positioned in the miniature-display arena for head-mounted and projection displays.
The upshot of such technological diversity is that U.S. manufacturers, long locked out of the volume PC market, can now vie for a slew of new applications, according to the U.S. Display Consortium, a government- sponsored industry advocacy group in San Jose.
A recent study commissioned by the USDC revealed that the domestic FPD industry will experience compound annual growth of nearly 25% from 1994 to 2001, while the global market will expand by only about 16%. U.S. vendors, which will account for less than 10% of the total FPD market for the foreseeable future, will capture close to half the worldwide sales for non-liquid-crystal displays.
"I think there are going to be new technologies developed for new applications," said Michael F. Ciesinski, president and chief executive of the USDC.
For example, Candescent believes its FED screens-5.3-in. versions of which will sample at customer sites in the first quarter-will initially target camcorder and portable DVD applications.
"[At Sharp], we spent a lot of time trying to overcome the limitations of the LCD in non-PC applications," said Robert A. Ritter, Candescent's senior vice president of marketing and a former Sharp Corp. marketing executive. "The exciting thing about Candescent is that the field emission display overcomes these limitations ... and the cost structure of FEDs is competitive."