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LCDs: Is it deja vu all over again?

Posted: 07 Feb 2005 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? lcd? solid-state led? pc? notebook?

Big money is being spent in the flat-panel display industry, with capital investment having grown annually at a mammoth 70 percent per year over the past seven years, seven times the rate of the semiconductor industry.

The trend in LCD fabrication is toward larger and larger screens. The industry has spearheaded a roughly twentyfold increase over the past 10 years, leading to the state-of-the art screen of 74 x 86 inches--the result not of radical innovations in manufacturing technology, but the hard work needed to become more accurate and efficient.

LCDs differ from semiconductors in that the cost of bought-in materials is still very high, accounting for 60 percent of the manufacturing cost of the large panels. The bought-in costs come in the backlight unit, the color filters, the polarizers and the liquid-crystal material.

The larger displays have the same type of cold-cathode fluorescent tube as the smaller panels, but have more tubes, raising both the cost and the power consumption. There are cost-reduction developments in the pipeline to replace tubes and their associated light-guidance equipment with high-power solid-state LEDs.

Liquid-crystal displays are very much an Asian industry, generating fierce competition among the Japanese, South Korean and Taiwanese companies. About one-third of LCDs are currently made in Taiwan, and within 10 years the output of LCD panels could equal the value of semiconductors shipped, including the output of the world's largest silicon foundries.

Following the near-ubiquitous LCD use in the notebook and desktop PC industry, the key drivers for the new generation of color LCDs has now become the digital consumer. This market includes flat-panel TVs, digital cameras, portable DVD players, automotive instrumentation, up-market PDAs and smart phones, and game and entertainment consoles.

The high volumes generated by the PC, camera and mobile-phone LCD marketplace-along with the determination to produce low-priced, larger screens-will drive down costs so that the flat-panel TV comes within reach of the average consumer.

As if following the trends in the IC industry, the beginnings of a fabless LCD industry can now be seen, with companies such as Iridigm Display, Micro Display, SpatiaLight and Universal Display developing innovative LCD ideas and farming production out to LCD foundries.

In the future, the industry looks set to be dominated by a few big LCD integrated device manufacturers and foundries, with myriad fast-growing fabless LCD companies adding specialist intellectual-property value to make up the rest.

- Malcolm Penn

Future Horizons

Malcolm Penn is the chief executive officer of Future Horizons , an industry analysis firm in Sevenoaks, England.

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