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Subject: U.S., Firms Plan High-Tech Screen Venture; Consortium to Challenge Japan's
Date: Tue, 17 Nov 92 04:36:11 EST
Message-ID: <23.1992Nov17.043611@AmeriCast.com>

U.S., Firms Plan High-Tech Screen Venture; Consortium to Chal-
lenge Japan's Flat-Panel Lead<By Daniel Southerland<Washington
Post Staff Writer=

 AUSTIN, Tex. - The United States is preparing to rejoin a major
technological battle with Japan that many thought it had lost.

 Early next year, more than a dozen U.S. companies plan to pro-
pose a partnership with the Defense Department to overtake
Japan's lead in the manufacture of the thin electronic screens
that will be a crucial component in the multibillion-dollar mark-
et for future laptop computers, weapons systems and high-
definition television sets, industry sources said.

 The companies, which include such giants as Xerox Corp. and AT&T
along with smaller firms, plan to submit a proposal by Jan. 15 to
the Defense Advanced Research Projects Agency (DARPA), five days
before President-elect Clinton's inauguration.

 DARPA is planning to contribute $12 million as seed money for
the first year to the proposed High-Definition Display Manufac-
turing Consortium (HDDMC). Industry sources said Defense Depart-
ment funding is expected to increase substantially once the pro-
ject gets underway.

 If the United States does succeed in becoming a player in the
mass manufacture of "flat panel" display screens, it will be a
surprising turn in a story that many have cited as a striking ex-
ample of the U.S. failure to exploit its own technological break-
throughs.

 Several American companies invented the screens more than three
decades ago. But Japanese companies took the lead in manufactur-
ing them for laptop computers and other products, and many Ameri-
can firms closed their doors in the face of the competition.

 Last year, the U.S. government ruled that Japanese companies had
"dumped" the screens in the United States at prices sharply below
what it cost to make them, and levied duties to remove the advan-
tage. But some observers argue the action came too late to pro-
vide much help to most struggling U.S. firms producing the
displays.

 Two of the remaining U.S. display makers, Standish Industries
Inc. of Lake Mills, Wis., and Optical Imaging Systems (OIS) Inc.
of Troy, Mich., will be members of the "core group" in the pro-
posed consortium, industry sources said. OIS is the nation's only
commercial manufacturer of "active-matrix" displays, one of the
main technologies, and most of its sales are to the military.

 If Congress approves the use of taxpayers' money, the consortium
would be an example of heightened interest in government backing
for an industry viewed as important to U.S. economic competitive-
ness.  President-elect Clinton and some of those around him have
repeatedly indicated that they support stronger government action
to protecting and nurturing key technologies.

  U.S. computer makers such as Apple Inc. have bemoaned the lack
of a U.S. display industry, which has forced them to rely mainly
on imported screens.



The lack of a U.S. industry also has potential national security
implications. The screens are used in Navy ships, armored vehi-
cles, fighter plane cockpits, training programs and command-and-
control centers.  They will also be used in wall-mounted televi-
sions, videophones and space vehicles - nearly everywhere that
information is electronically displayed.  But American companies
currently account for less than 5 percent of a $3.5 billion in-
dustry that is expected to swell to $7.5 billion by 1995.

 In late September, DARPA called for proposals for a manufactur-
ing consortium that would develop the expertise and infrastruc-
ture needed to jump-start the flat-panel-display industry. DARPA
already has provided grants over the past three years amounting
to more than $110 million to more than two dozen firms and
universities to promote work on "high-resolution" displays.

 On Nov. 4 and Nov. 10, representatives of a number of companies
met in Dallas to discuss a draft proposal for the consortium,
which also would be backed with corporate funds.

 A Defense Department official who asked not to be identified
said that within the last few weeks companies discussing a possi-
ble consortium have "reached the critical mass" needed to move
ahead with the project.

 Industry sources said there were several reasons why American
companies have decided to band together to form a partnership
with the Defense Department, including a sense of urgency over
Japan's continuing efforts to develop a new generation of
displays. Some industry officials cited a new competitive threat
from South Korea, which recently entered the flat-panel-display
race, and a need to have an independent American capability in
this field.

 "This industry has the potential to be the kind of technology
driver for the electronics industry that semiconductors were in
the 1970s and 1980s," said Peter H. Mills, an industry consultant
in Austin who chaired the two meetings in Dallas.

 "To rely on foreign sources for a technology as critical as this
one is something that concerns all of us," added Mills, who said
that users - such as computer companies - would be part of the
consortium.

 Some industry sources estimate that the Japanese are outspending
the United States more than 20 to 1 on flat-panel research, with
the lead Japanese company, Sharp Corp., having committed close to
$1 billion for research and development between 1991 and 1993.

Malcolm Thompson, manager of the electronic imaging laboratory at
Xerox Corp.'s Palo Alto, Calif., Research Center, said, "We real-
ize we can't work on this independently, because one company can-
not support an entire infrastructure." Xerox has spent more than
any American company on research and development in this field,
but does not yet manufacture displays for sale.  Victoria Had-
field, government relations manager for Semiconductor Equipment
and Materials International, a trade association based in Moun-
tain View, Calif., said that "one problem that has hampered Amer-
ican industry is the sense that we're behind."

 "Now there's a sense that with government providing a push, the
game's not over yet," Hadfield said.

02:17 11-17C9999-----

Copyright 1992, The Washington Post.  This story is from the
Washington Post's Capitol Edition On-Line and is not to be ar-
chived or redistributed.

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poration (usa@AmeriCast.COM)