Clinton Comes to Aid of U.S. Screen Makers : Technology: The flat panel displays used in laptop computers are considered vital to the nation’s competitive future.
Reversing previous government policies, the Clinton Administration is moving quickly to aid the small but growing number of U.S. companies making flat panel displays--the ultra-light, high-resolution screens that are as critical to America’s high-tech future as the semiconductor and microprocessor before them.
Earlier this week, the Commerce Department revoked the 63% import duty that had been in effect on high-end color displays since early 1991. The tariff had been widely criticized for driving laptop computer manufacturing overseas.
At the same time, the Administration is poised to increase federal grants for research into flat panel technology, marking yet another departure. Previous administrations had insisted that such aid be justified by military needs rather than purely civilian “industrial policy.”
By the end of this month, the Pentagon’s Advanced Research Projects Agency is expected to hand an initial $25 million to U.S. Display, a new consortium of 10 U.S. high-tech companies. Modeled after Sematech, the 5-year-old, government-aided consortium of computer chip makers, the new group hopes to develop the equipment and know-how for high-volume flat panel display factories.
What’s more, the Clinton Administration is poised to award as much as $75 million more in the months ahead for additional flat panel research. And the Pentagon is considering a special request for another $180 million from a group of companies, led by AT&T; and Xerox, to help build a prototype of a commercial factory.
Finally, at the request of Laura Tyson, chairman of President Clinton’s Council of Economic Advisers, the Pentagon is studying what else the government could and should do to boost the domestic industry.
Flat panel displays don’t sound sexy, but they’re important. They’ve already turned luggable computers the size of a microwave oven into gotta-have consumer products the size of a small book.
Soon, flat panels will be a key component of airplane and automobile instrument panels, video telephones, high-definition TVs, hand-held personal communicators and other electronic gear. Current global sales of $3.8 billion could reach nearly $10 billion by the end of the decade.
No wonder, then, that this technology--invented in the United States but now used almost exclusively by Japanese manufacturers, even for U.S. products--is getting unprecedented attention in Washington and among leading U.S. high-tech companies.
“This is the first technology with overwhelming commercial appeal that the government is targeting for potential special nurturing,” says Heidi Hoffman, a Commerce Department technology analyst specializing in the next-generation screens.
Rather than seeing the screens’ importance as merely military, Hoffman says, the government now views them as vital to U.S. economic security and is actively seeking ways to spur, and possibly underwrite, the development of a private industry in the field.
The new stance should cheer critics of America’s unwillingness to subsidize key technologies, but it’s unclear whether a few hundred million dollars from Uncle Sam and lots of catch-up play from U.S. industry can make up for the past.
Still, the new direction is an attempt to recover from a series of missteps. After flat panel technology was invented in the mid-1970s, the U.S. companies that created it declined to make the huge investments needed to exploit it commercially. Instead, they mostly sat on the sidelines while the Japanese plowed about $3 billion into high-volume manufacturing plants.
Later, as the Japanese took over the market, the few tiny U.S. manufacturers entering the field persuaded Washington to impose tariffs of 63% on imported high-end color screens. As a result, several major laptop computer makers opened factories abroad. Laptops are now the fastest-growing segment of the computer business, and these companies import the finished products duty-free.
Computer industry leaders said Wednesday that the Commerce Department’s decision to lift those tariffs is good news for companies that make portable computers--and for American workers.
Apple Computer Inc. said it will shift some portable-computer production from Ireland and Canada to a plant in Colorado as a result of the decision.
Toshiba America in Irvine, the U.S. subsidiary of Tokyo-based Toshiba Corp., previously shifted some production from Irvine to Japan. It said Wednesday that it might bring some production back to Irvine, possibly involving 100 jobs.
Despite the early blunders, there is evidence that the United States can overcome the huge Japanese head start--even without government aid. The screen technology in which the Japanese have invested heavily--liquid crystal display--is costly and difficult to manufacture. That could let American industry leapfrog with higher-performing systems, much the way lagging U.S. firms leaped ahead in high-definition television.
And with such giants as AT&T;, Xerox and Motorola awakening to the importance of this technology, analysts say they have ample motivation to make the necessary investments.
“I believe we can do some things that the Japanese didn’t get right the first time,” says Malcolm Thompson, director of the electronic and imaging laboratory at Xerox’s Palo Alto Research Center, a seminal institution in the personal computer revolution.
But Thompson argues that this is no reason for the government not to get involved. Rather, he says that the window of opportunity now facing U.S. manufacturers is tight, and that unless they move fast and forcefully, it will close.
Xerox has just unveiled a breakthrough in flat panel technology that increases by more than six times the tiny points of light--known as pixels--used to draw images on the screen. The company wants to team with AT&T; and Standish Industries, another screen maker, to build a $400-million factory, and has asked the Pentagon to fund $180 million of the cost.
* TARIFF DECISION: Computer makers will benefit from the end of duties on color screens. D3
Flat Panel Displays
In keeping with a promise to back technologies necessary to keep the nation’s economy healthy, the Clinton Administration is stepping up financial support for U.S. manufacturers of high-resolution flat panel screens.
Revenue anything but flat . . .
The flat panel display industry has proven already proven to be big business, with 1994 revenue expected to increase by 64% over 1991. Revenue in billions:
Year Revenue 1991 $2.5 1992 3.2 1993 3.7* 1994 4.1*
... And Japan Benefits
Japanese makers of flat panel displays have been the largest beneficiaries of the growth. Of the 60 companies worldwide making the product, there only three are in the United States. 1992 revenue for Japan’s Top 3, in billions:
Company Revenue Sharp $1.3 Seiko Epson .5 Optrex .35
* Estimates
Note: The largest of U.S. manufacturer of flat panel displays is Standish Industries in Lake Mills, Wis.
Source: Stanford Resources
Times staff writer Dean Takahashi contributed to this report.
