The signals emanating from the Society for Information Display (SID) 2005 International Symposium, Seminar and Exhibition in Boston last week indicate that the display industry is undergoing a significant realignment due to the expansion of TFT LCD technology. Announcements, demonstrations and other indications seen at SID 2005 underscore a few key trends.
First, the incredible level of capital spending being ploughed into large-size TFT LCD panel production for the TV market indicates that now, more than ever, the key to competition in the LCD industry is investment in manufacturing capacity. The headlong rush to build capacity makes it clear that large-size TFT LCD manufacturing is a commodity business in which success is dictated by the raw capacity a company possesses.
Second, this investment is placing pressure on competing technologies as never before, and also is opening up new production capacity for smaller-size displays, a market where there is a much higher degree of differentiation. However, there remains a real need to improve TFT LCD performance – and to drastically reduce its price – in order for the investments to pay off in the form of significant penetration into the TV market.
Manufacturing capacity rules…
Leading the charge in the dual trends of investment and standardization of TFT LCD production are the industry leaders Samsung Electronics and LG.Philips LCD. S.W. Lee, president and ECO of Samsung’s LCD business, announced at SID that Samsung will build a ninth-generation (9G) fab, which will use glass substrates measuring 2.4 by 2.8 meters.
It is worthwhile to reflect on the scale of such a manufacturing facility. A 9G fab effectively will be building semiconductors on a substrate that is 3,700 millimeters in diameter, compared to 300 millimeters for state-of-the-art chip factories. While TFT LCD does not require anywhere near the line widths now used in semiconductor manufacturing, the handling equipment and vacuum chambers will be nothing short of gargantuan.
In order to construct current-generation fabs, which are now moving into their 7Gs and 8Gs, leading firms are making annual CAPEX (capital expenditures) on the order of US$5 billion. This pattern likely will thin the ranks of top-tier suppliers to less than a handful. While there has never been a strong pattern of standardization in substrate sizes, suppliers already are moving toward standardization in panel sizes for TV, similar to the situation in PC applications.
Does standardization lead to more commoditization?
Rather than the 1-inch step increases in notebook display sizes, or the 2-inch jumps in monitors, it appears that panel makers are looking at 5-inch gradations for TV, with 26- /27-, 32-, 37-, and 40- /42-inch diagonal screens emerging as the key sizes for 6G and 7G, followed by 47, 52, and 57 inches.
For LCDs, it’s TV or bust...
This standardization will enable the industry to focus on the dramatic cost reductions that are anticipated – and required – for large-size LCD TV panels, as common tools and processes can be more effectively developed. However, the present assumption is that materials, already the largest portion of manufacturing costs, will be driven down rapidly. Given the fact that there are significant raw materials and energy costs required to produce LCD materials, it seems that panel makers are relying on materials suppliers to surrender at least some of their profit margins in the future.
Similarly, the LCD panel makers are banking on the fact that TV retailers will move away from the relatively high profit margins they traditionally have enjoyed for consumer electronics products such as TVs, and toward the types of margins supported in the IT channel. This will enable further cuts in the pricing of LCD TVs.
If the materials and manufacturing costs and the selling margins cannot be reduced significantly, LCDs will have considerable difficulty penetrating the TV market. This is due to the presence of low-cost CRT TVs widely available at sizes less than 30 inches, as well as plasma and rear-projection sets available with screens larger than 40 inches. Given that all new LCD investments will be justified by success in the TV market, this is something the panel makers will be pushing very hard.
But plasma wants its share, too
Meanwhile, plasma display panel (PDP) manufacturers are not standing still, with Matsushita Electric Industrial (Panasonic being the brand name) unveiling plans for its next-generation PDP plant in Japan. The PDP makers are emphasizing the significantly lower capital cost for PDP factories, which are a fraction of those for TFT LCD fabs. They also are promoting the favorable manufacturing economics for PDP at larger screen sizes.
The PDP business already has initiated a fierce price war for the 42-inch screen size, with retail prices falling to less than US$1,500 at the low end.
The competition between LCD and PDP display technologies in the 40-inch and larger segment broke out into the open at SID, with numerous debates about the competitive standing of the two technologies. Much of the debate centers on assumptions regarding the importance of “true” high-definition (HD) TV performance, defined as the capability to show the highest level of HD format, which requires 1,080 lines of display pixels.
Since nearly all LCD TVs have this capability, LCD makers are emphasizing the importance of HDTV. This comparison is crucial, because most PDP panels now made have 480 lines, suitable only for enhanced definition (ED) – also known as standard definition – or HD content that has been down-converted.
LCD manufacturers are banking on their capability to produce 40- and 42-inch panels at a cost that is competitive with that of 42-inch HDTV PDP panels. While prices for the 42-inch ED PDP sets have been falling rapidly, HD PDP sets are significantly more expensive to manufacture, and, for 42-inch panels, are limited to 768 lines, which can only support 720 progressive (720i) content, not 1080 interlaced (1080i).
Can consumers figure this all out?
This is a complex debate, relying on assumptions regarding the availability of HD content, the exact format of the content and the ability of consumers to sort it all out. Perhaps even more arcane is the debate over the relative performance of the two technologies, with much of the argument centered on contrast ratio. Defined as the difference between screen brightness when fully on and fully off, contrast ratio is an important metric for video performance.
In general, LCD TVs have much better contrast when viewed under conditions of bright ambient light, while PDPs have much better contrast under dim conditions. It turns out that the lighting in most retail environments is much brighter than in the typical living room. This means that, in terms of contrast ratio, LCD TVs look relatively better in the shop than they do in the home.
This issue is a source of contentious debate, with similar arguments over whether consumers will in fact be able to make informed decisions, and is only one of several such points of disagreement.
Innovating to improve LCD TV performance
Even with the trend toward commoditization of LCDs, the manufacturers realize that the video performance of large panels must improve. One key area of development is in backlighting. Given that LCDs are effectively light-modulating devices, the qualities of the backlight are very important to the overall system performance. As panel sizes increase, the dominant technology for backlighting – the cold cathode fluorescent lamp (CCFL) – is hard-pressed to meet the requirements.
In terms of color spectrum, temporal resolution, spatial uniformity and other metrics of performance, there is room for improvement in the standard CCFL backlights used in LCDs.
There was a tremendous amount of development in this area on display at SID. The use of LEDs for backlighting is viewed by many as the ultimate solution for large-size LCD TVs, with excellent performance demonstrated by Lumileds Lighting, Osram and others. However, improvements are required in power consumption, heat generation and particularly in price. While LEDs are on a steep performance curve, it may be some time before such backlights are used in mainstream products.
In the meantime, developers are working on several variations of CCFL technology. Philips Lighting at SID showed its “hot” cathode fluorescent technology, which enables elimination of some of the motion artifacts seen in LCD TVs. Through its joint venture with Corning, Samsung has been developing flat fluorescent lamp (FFL) technology, which eliminates the need for multiple tubes and light-diffusing elements. Osram has a similar technology. Other approaches include dynamic scanning of CCFL backlights, and even a hybrid CCFL/LED backlight, both demonstrated at SID by LG.Philips LCD.
As the big get bigger, the small get cheaper
With the LCD business increasingly focused on TV as a driver for new plant investment, the capability of the new plants to make large-size panels more efficiently means that older fabs will be freed up to make small- and medium-size panels, defined as 10 inches or less in diagonal. The combination of fabs that are typically fully depreciated and big enough to make hundreds of small-size displays on a single substrate enables a significant increase in worldwide capacity, which already has resulted in dramatic price declines.
These trends are seen most readily in displays for mobile handsets, a market where TFT LCDs are penetrating rapidly as many panel makers convert older-generation fabs. The panel makers also are focusing their efforts on making larger panels for mobile consumer devices, automotive and other applications that historically could not afford to adopt TFT LCD technology.
The concentration of effort also is causing the level of technological sophistication of the smaller displays to increase, with samples featuring more than a 300-pixel-per-inch resolution, integrated row driver, column driver and other circuitry on glass, plus further significant improvements.
Can any technology compete with TFT LCD?
The impressive show of market force by TFT LCD technology – moving from notebook and monitors to larger TV panels and smaller mobile displays – is only increasing the pressure on alternative technologies. Besides the impending battle with PDP at sizes larger than 40 inches, TFT LCD is driving cheaper passive-matrix (PM) LCDs out of mobile handsets. TFT LCD also is exerting great pressure on the emerging OLED (organic light-emitting diode) display technology to provide significant performance improvements and/or cost reductions relative to TFT LCD.
The somewhat reduced presence of OLED at the SID conference this year could be an indication of the struggle that OLED developers are undergoing to compete with TFT LCD. The same can be said of other large flat-panel display technologies, such as emerging emissive technologies, which also were not to be found on the show floor.
Perhaps the next wave of new technologies will either build on the strength of LCD or stay out of its way. There were examples of each of these approaches at SID.
Three-dimensional (3D) displays using LCDs as the display medium could be found in numerous booths, in implementations ranging from handset-use displays focusing on gaming applications to 42-inch public information displays. For examples of approaches that worked around the TFT LCD juggernaut, one could see several attractive examples of flexible displays, with the most prevalent current approach being electrophoretic technology, used by companies such as E Ink and Gyricon LLC.
Checking the alignment
Every segment of the display industry is undergoing significant realignment due to the continuing rise of TFT LCD technology. SID 2005 showcased how these changes are impacting each segment of the display industry.
Paul Semenza is vice president, display and consumer research at iSuppli. More information on the impact of TFT LCD on the display industry will be presented at iSuppli’s Flat Information Displays (FID) 2005 event in San Francisco at The Argent Hotel, held from Nov 7 through Nov 9.
Article edited by Carrie Yu
