US Display Consortium (Interview)
Michael Ciesinski, CEO and President, and
M. Robert "Bob" Pinnel, Ph.D., CTO
with David W. Alvey, Executive Director and Editor - Diplomatic Planet

Introduction- An industry that is already a global behemoth is undergoing a dramatic shift in technology as the basic liquid crystal display (lcd) and the "led"-display (light emitting diode) are being replaced in several stalwart fields of their current applications and being ignored in favor of new technology for much of the growing segments for display application.

The competition for dominance is fierce - and the desire to avoid concentrating these new manufacturing and assembly industries in one region of the globe as occurred with the Asian dominance in semi-conductor manufacturing - has a nationalistic / regional focus. European and North American electronic firms see these new technologies as strategic to their survival - even while bringing in global partners to insure global market access for their products.

"The USDC is an industry-led public/private partnership providing a common forum for flat panel display manufacturers and developers, FPD users and the supplier base. Headquartered in San Jose, CA, the consortium's primary mission is to manage supply-chain projects and share the results with USDC member companies. The USDC also provides a communication channel among industry, government and the financial communities for display issues, sponsors workshops to broaden the impact of technological developments and educates consumers on the importance of displays in providing access to information technology."

DPlanet: What are the key objectives and the activities of USDC?

Mr. Ciesinski:
We are often confused with organizations that are more interested in building displays. We are not about the display industry, but we are focused on the tools, materials and components that will make up a display.

We receive funding from the Defense Advanced Research Projects Agency (DARPA) which is the R&D arm of the Defense Department. Our member companies contribute dues and income obligations as they help manage the technical programs. Also, the companies that we work with, our development contractors and development partners, contribute both cash as well as internal resources to develop new tools and materials to be used to develop displays.

USDC was founded to address the desire to have a display industry based in the US that was capable of meeting defense requirements for displays as the commercial world, the military world and the consumer world all move to a digital environment. This digital environment requires newer types of approaches, because at the end of the day, it really matters how you display that data so that a user can interact with the data.

Obviously, displays are important for DOD purposes - they are looking at ways to build displays that display more information, that are lighter, that consume less power, that are technically a better type of display than we have today.

DPlanet: Why the consortium effort as an organization structure?

Mr. Ciesinski:
Consortiums, like USDC, began in the US in the mid 1980's when Congress passed enabling legislation allowing consortiums to form to do some pre competitive development, - and out of that legislation several did form - SEMATECH, MCC (micro electronics), and the National Center for Manufacturing Sciences are a few examples. If you want to encourage technology development that is really pre competitive, it makes sense to have companies become engaged and work together in those areas. Generally, a prime field for this type of cooperation is in basic manufacturing technology. Where companies do tend to compete is in differentiating their products, defining their products, marketing and placing their products. In the display industry, through USDC, small to medium size firms can work together on the early stages of basic tools and materials development. They will see results - components, materials and equipment - earlier than they would without the Consortium effort.

Dr. Pinnel:
The underlying thought there is the synergistic effect of allowing people to work for the common good and the practical aspect of conserving resources and dollars. The public aspect of a legislatively created structure removes any issues about violating anti trust laws. This development becomes a very open activity.

DPlanet: Are there other company groupings or countries that have formed similar type of structures, collaborative research programs, that are also focused on display technology?

Mr. Ciesinski:
A couple of these come to mind. LIREC is the Liquid Crystal Research organization in Japan compromised of companies which are in the LCD business in Japan and they are pooling some basic research and manufacturing data on the Liquid Crystal Display industry.

The Electronic Display Industrial Research Association of Korea (EDIRAK) is a similar organization, with companies working together, with which USDC has worked. I am sure this has been done selectively in Taiwan, and we have heard of some organizations that may be taking shape in Europe that would include UK, German, French and Dutch firms that will also focus on the Display industry.

DPlanet: What are the market segments as related to the technology?

Dr. Pinnel:
There are six or seven major technology options that are being pursued to satisfy the vast display market. In addition to the Liquid Crystals Display (LCD) there are Electro Luminescence (EL) Displays. The Plasma Display Panel (PDP) and the Field Emission Display (FED) are two of the newer technologies. The OLED Display, (Organic Light Emitting Diode) is a technology that is drawing a lot of attention. There are also the Micro Displays that are focused on the projection display market, rather than direct viewing.

All of these technology options are competing for a growing number of applications.

These market sectors are major - not just for the computing market, but in telecom, in transportation, both automotive and aero, in medical applications, instrumentation, home entertainment, business / industrial entertainment and conference activity. These are all emerging market places where these various technologies are applying their strengths and minimizing their weaknesses for particular applications.

DPlanet: Are there currently pairings of technology with uses - based on size, motion, brightness or other attributes that differentiates the types of technologies and the uses, or that forecasts uses for particular technologies ?

Dr. Pinnel:
Absolutely. Every display technology has evaluated strengths and weaknesses or key performance parameters that excites the customer. These parameters are matched very directly against the performance requirements for any given application.

As an example, plasma displays are not very effective in manufacturing cost performance until you get to very large display sizes, more than thirty or forty inches. Plasma display proponents would view their prime market space as part of the HDTV technology of the future - large screen TV on the wall -- but never applied down to the level of a desk top computer application or in your automobile.

By contrast, an automobile is a harsh environment in the sense of having very bright sunlight and very wide temperature extremes in which it may operate. That is not an effective market for a Liquid Crystal Display.

For size reasons, that is also not an effective market for a Plasma Display but, if the technology works out, the characteristics of a Field Emission Display (FED) work very well in that environment. FE would then target the automotive market as one of their applications.

The bottom line is that the display technologies have a wide enough variation in their relative strengths and weaknesses that there is no one display technology as the 'be all and the end all' for the broad set of market applications.

Each technology has a niche, generally a pretty big niche, in which it fits best as a technology and in which it fits the cost targets to be applied in that application.

DPlanet: Is there an end game or an exit strategy for USDC as far as developing the infrastructure or will that be an ongoing and continuing process independent of the source of funding. ?

Dr. Pinnel:
It is an ongoing and continuous process as long as we receive support from the Federal Government. They determine whether USDC is or is not a worthwhile activity to support.

That said, I don't see that USDC in displays will be an immediate copy of what SEMATECH has become in electronics. SEMATECH was able to deal with a large enough, high revenue level manufacturers that could afford to be self funding in the development areas that the Consortium normally fosters, and provide the levels of funding down the infrastructure chain that are required so that their suppliers will meet their needs.

In SEMATECH (circa 2001) you have companies like Intel, Motorola, Lucent Technologies, which are multi billion dollar companies. Even those companies recognized, when SEMATECH was first put together in 1986 - 1987, that federal support was necessary because electronics is a national security issue as well as an economic security issue. Fortunately, those companies were able to carry on the programs themselves.

DPlanet: Is there going to be a strict proprietary aspect to these processes ? Are there restrictions on technology transfer?

Mr. Ciesinski:
No. We have had the benefit of other consortiums going before us and we can draw several conclusions from their results.

First of all, the intellectual property most properly belongs to the company that is doing the work and developing the intellectual property. In the case of USDC, this property belongs to the supplier. They have the most to gain in terms of being successful in the market and we ought to give them every opportunity to be successful. What we require of our manufacturing partners is that they first provide a cost share element to the program. We won't fund entirely a program; we want 50% of the money to come from one of our development partners.

Second we try to adhere to a time table that is realistic - not rigid.

Third, we ask our partners - once the tool, material or component is developed - to give USDC the first samples and that the initial production quantities be made available to USDC members first. Once the company has met the needs of the USDC members, it is eligible to sell its products anywhere and everywhere in the open market - including overseas.

We are dealing with new technology which is untried, and the introduction of technology is a slow and laborious process requiring a number of years. If it really looks as though a particular technology will pan out, before anyone has achieved very high volumes, other players will enter the market.

If you just follow the historical example of the introduction of Liquid Crystal Displays, it started with a few major Japanese companies stepping in, and with Sharp taking a major market share. But, because the investment of capital to grow volume to satisfy market demand was so extensive, nobody could afford to keep making that investment and supply all of the need.

It wasn't hard for IBM, Toshiba, Hitachi, Fujitsu and others to make comparable investments, to jump in to the ball game and very quickly have a reasonable market share. Five years after all of that happened, the Koreans made the decision that they wanted to get into the game. Samsung and Hyundai made major investments and in a year and a half were able to pull away between 15% and 20% market share.

Now that the industry has achieved a little stability, the Taiwanese are about ready to come on and do the same thing as a third player. The fact that Sharp was the number one entry is forgotten as you now have, in just five or six years, fifteen companies competing and all doing very well in terms of getting market share.

I don't see that being first in this area - Pioneer using Eastman Kodak technology and being the first to commercialize it - as precluding in any way others from stepping in, once the technology is well proven, and being big players in the field.

DPlanet: Is there a competitive list today of the targets for these technologies. Are there already the top five "killer apps" that people are looking at to roll out early or target in order to gain market recognition, if not market dominance?

Mr. Ciesinski:
To paraphrase one of our Board members, 'there is one market that has been dominated by one technology in its early history and that has been in the portable PC market the Liquid Crystal Display technology'. LCD is still the dominant technology for that application, even so much that the LCD makers are trying to penetrate the desk top market - companies like Compaq and Dell are now offering flat panel displays as a feature that can be shipped with their desk top systems. However, this is what makes the display business so exciting.

That is a very good market -- in portable PCs (lap tops) alone it accounts for $3 - 4 Billion in business for LCDs.

Where we see an equally interesting emerging market is in transportation where the dashboard could be revolutionized, or in home entertainment - Bob was talking earlier about the size of the display typically used for HDTV and that is a very important component for the home entertainment system or for the boardroom - we see important applications for that type of display with 40 inch diagonal screens for viewing.

We also think pretty highly of what are being called 'internet appliances' - or thin appliances where people want information where they are and they want to access it remotely. It is pretty hard to lug a computer screen, a CRT computer screen. Not many people do that. Today, you want a small portable device that you can use to access the information, a cell phone and the Palm Pilot are early examples.

All of those displays are going to be improved and enhanced over the next two - five years, and beyond. We will see a lot of these emerging applications for display technology.

Dr. Pinnel:
Just think of any place where there is portability of the input / output device. You need that data, that information, to be in a visual format.

DPlanet: Twenty years ago we might have defined this industry as a zero sum competitive landscape - but that doesn't seem to be the case now, does it?

Dr. Pinnel:
Not at all. It is technology that is enabling opportunities that hadn't even been thought of before. Many of these first approaches are looking at replacements for CRT. But the flat panel display, particularly the new technologies, are offering so many performance opportunities that it will enable completely new markets. Clearly, it is not a zero sum game but one that will continue to grow by several billion dollars or more per year.

One of the advantages that the US industry faces now is that it is really the cost of entry that has the big impact on which companies are willing to enter these markets and how much they are willing to spend. For the display manufacturing industry and semiconductors, the important factor in LCD production is building the factories with high capacities. Each factory involves about $500 Million minimum investment (half a Billion dollars) and a newer fab can be $1 Billion each. That is a major corporate commitment. The difference now is that some of these new display technologies, like Micro Displays or OLED, change that manufacturing paradigm drastically .

In Micro Displays, they can use the existing silicon foundries in the US, and for investments in the neighborhood of $25 million, initiate a meaningful business.

OLED is not a semiconductor type of process but one that is pretty much a chemistry based process. Companies that have been in the photographic film business, for example, face a minimal capital investment to become engaged in OLED production. That lower level of investment requirement is why the US interest has turned so strongly, particularly among the small start up companies, taking advantage of these technology opportunities.

USDC has taken very seriously the need to define a roadmap and to identify each of the technologies and applications gaps. We make that roadmap known globally. In Korea and Japan there are similar studies. We need to recognize where the common gaps are and make that knowledge available to potential industry participants. In fact, that is the basis for our selection of the technical programs we choose to pursue with government funding.

We want to target the funding to technical programs specifically directed at those process steps and the various technologies where these major gaps continue to exist. Essentially, USDC becomes a marriage broker between two or three companies. We present these opportunities to the industry, review their best ideas and then, based on the technical expertise that exists within our management community, make the call as to which of those ideas appears likely to succeed.

We then help support that development through both government funding and by maintaining interaction with the eventual manufacturer who will be their customer base. Our goals at that point are to assist their management team, keep their program focused and on a realistic schedule, and then to evaluate the product they produce.

DPlanet: Does this technology allow the manufacturing to be more distributed, or disseminated to smaller economically or less technically enabled countries?

Dr. Pinnel:
Not necessarily. I do not see any significance difference between these opportunities and the semiconductor manufacturing industry, or with most other parts of the electronics industry where you require a major capital investment. People can do that capital investment anywhere.

The limitation is often in the skilled and trained resources that manage and operate a high technology factory. That can be a limitation in moving these operations into under developed countries which can better provide the much more manual based end-assembly operations.

We do find, however, that as companies globalize and establish offshore manufacturing, they generally grow that capability from the back end forward starting with the labor intensive or menial tasks. That process does allow the country's human resource assets to gain skills and to evolve to a level where they can move into the more sophisticated production processes.

Naturally, each country will want to attract investments, to buy technology and operate new businesses. I don't think there is any question that electronics is the widest global industry that exists today. I don't see anything on the horizon to displace it.

DPlanet: What is your essential summary statement?

Mr. Ciesinski:
At the end of the day - The Display is The Product. What we typically say at the end of each of our presentations is that the display is the face of the new digital economy. Every place where you collect data, generally speaking you want to understand that data, move that data, manipulate that data, and transform that data. Each of those steps requires a visual interface. We have just scratched the surface of the needs and uses, and we will continue to develop these visual interfaces through organizations like USDC and its member companies. We are very much a major component and one of the driving forces in the telecommunications revolution.

Dr. Pinnel:
Look at the Internet, without the display at the end, how can you see all of that information and make use of it?

At the end of the day, we are firm believers in the future of the Display Industry and that Displays will truly revolutionize our lives. I tell people that everyone wants data and they want it where they are. They do not want to have to go get it from somewhere else. If you want to accomplish that, you have to have a better display.

The keys are: it is digital, it is visual and it is portable. It is bit streams now. The eyeball is the only sense in the human body that is able to comprehend that scope of data at the rate that it is being transmitted. Your ears and the telephone do not do it anymore. Nor do your fingers and the keyboard do it anymore. Those natural visual aspects, plus the fact that we are highly mobile, requires one or more display instruments that are going to work whether we are home, in the automobile, in the air or in the office.

These evolving needs will dictate the types of display technology on which USDC and its members will focus.

DPlanet: Thank you (DWA).


The Viewing Revolution
Universal Display Corporation (NASDAQ: PANL)

Diplomatic Planet looked at the Display Revolution in 1999 with a focus on Universal Display Corporation, Inc. and its OLED (Organic Light Emiting Diodes). The technology was advanced but the markets were to be developed as the "mobile" world of anywhere, anytime communication and data access was more talk than reality.

Today - the prognosis on Universal Display would read, generally, about the same as it did almost ten years ago. Great Technology. Great Partners and Licensees. Still Waiting to be a Break-Out Company. The addition to that progrnosis is what ten years of effort has delivered:  Major advancements in the technology, proven in-market products, and markets development.

The company is not cash flow positive. Its balance sheet is, at more than USD$80 million, liquid. As a teenager, it is facing issues with a market still more focused on plasma screens and LCD (Liquid Crystal Display) rather than on the OLED. Its current market cap is around USD$550 million (May, 2008).

But the future is getting closer day by day..

OLED is still an eye-brightening technology primarily due to the flexibility it offers for displays - scotch tape flexibility.

There is a market - Samsung SDI, a technology licensee-partner, is recognized as the biggest OLED maker in the world and is producing commercial volumes of a two-inch OLED screen. The customers include Toshiba, Sony Ericsson, Kyocera, Hitachi and Nokia which features the Samsung SDI screen on one of it newest handsets. Cellphone makers - as storage and computing power increases - are very much in need of higher picture quality and low power requirements from the display which are key attributes of the OLED based display technology.

Universal Display reports it has over 30 business agreements with leading manufacturers in Japan, Korea, Taiwan, China, Europe and the U.S. including with companies such as Chi Mei EL, DuPont Displays, Konica Minolta, LG.Philips LCD, Samsung SDI, Seiko Epson, Sony, Tohoku Pioneer and Toyota Industries.

There is also competition from Eastman Kodak and Cambridge Displays, a subsidiary of Sumitomo Chemical - as well as a Sony small-screen television using non-PANL OLED technology.

Universal Display continues its long-term research and sourcing contracts with DuPont, Sony and others as its patent portfolio is proving solid in the OLED field.

In a Press Release (May 13, 2008) the company states it is working "to develop lightweight, rugged, low power displays that can replace printed paper maps on pilots' knees and be rolled up for stowage when not in use. Rollability is also important for a variety of novel commercial applications, including the Company's concept Universal Communication Device."

"We are excited to continue the research and development of flexible and rollable OLED technology - an idea that is moving quickly from being a vision to becoming a reality," said Steven V. Abramson, President and Chief Executive Officer of Universal Display. "The U.S. Air Force as well as other branches of the U.S. Department of Defense have been strong supporters of our flexible OLED technology. Also offering thinness, light weight and ruggedness, rollable displays may revolutionize the way soldiers view information on the battlefield and in the cockpit. This program should also support our efforts to commercialize FOLED technology for a variety of novel consumer applications."

"Beyond current military concepts, flexible OLED displays are considered the next potential disruptive technology for several industrial, consumer and medical applications, such as in automobiles, cell phones and personal electronic devices. DisplaySearch, the worldwide leader in display market research and consulting, has projected that the worldwide market for flexible displays has the potential to grow to $4 billion in 2015. Companies like Universal Display are introducing key advances in OLED technology that will bring flexible displays closer to commercialization."

Liquid Crystal Displays (lcd) were invented in the US in the mid 1960's but were licensed, relatively inexpensively, to the Japanese electronic manufacturers which dominate the industry today.

OLED (Organic Light Emiting Diodes) is a US invention - with underlying patents in the names of Princeton University, the University of Southern California and the University of Michigan. PANL has exclusive license to these patents as well as to sole sublicensing rights for OLED patents from Motorola, Inc. Both Princeton and USC have become shareholders in PANL -- in fact this was the first time that Princeton had ever taken an equity stake in a company for which it was conducting research.

Technology prototypes will be appearing during 1999, with commercial prototypes being reviewed in 1999 and commercial products and applications in the marketplace in 2000. Emphasis is currently on products that utilize the technology's differentiations from liquid crystals - higher resolution, less power requirement and better color.

Liquid crystal technology is based on a sandwich of crystals between two glass polarized filter panels. As light enters and passes through each pixel sandwich, the liquid crystals twist the light ray 90-degrees so that the second filter panel also passes the light ray. By electrifying the liquid crystal, the twist of the light ray is negated and the second filter panel blocks the light. An electrified pixel is dark, an unelectrified pixel allows the light source to pass through. Each of these pixels requires a transistor to be turned on or off. To add color, a red, a green and a blue transistor are added.

The high-end displays have over 50,000 transistors and give fine tuned control so that thousands of colors can be produced , while low end displays, (calculators, cell phones) do not have transistors at every pixel and electrical charges are sent across the display -- causing ghosts and blurring, and creating a response time characteristic that defeats display of motion.

Liquid crystals do not generate light but act as light traffic controllers. Therefore a light source is required either behind the display, alongside the borders of the display with reflective material directing the light to the display pixels, or by using a mirror behind the display that reflects the available lighting from the environment in front of the display.

Technology's Next Generation
The key advantages that OLED technology has are its lower power requirements, its lighter weight and its lower cost components.

Organic LED uses carbon based molecules ('organic' ) which can be synthesized and mass-produced, layer by layer of molecule. Because of their physical thinness, they can be manufactured on films that appear transparent, that are flexible and they are bright -- since the molecule itself is generating the light (stacks of molecules can generate light combinations) at the pixel.

You also obtain greater viewing angles for this type of pixel, since it is not a polarized tunnel of light, as in the liquid crystal technology. Because there is no broadcasting of the electrical charge to groups of pixels, there is no lag time and no ghosting effects which allow OLED to produce a full motion display.

To understand the basic re-orientation that OLED will bring to displays, consider this: The light bulb that Thomas Edison invented in the 19th Century was a heat generating device that was manipulated to give off a controlled amount of light. The OLED is a light generating device that gives off practically no heat.

Weigh the Impact !
How critical are the processors (hardware) ? How critical are the instructions (software) ? How do either of these manifest without a Display ?

A National Focus
Universal Display is a member of the United States Display Consortium, a government/industry effort which is developing the infrastructure for a North American flat panel display industry. Steven Abramson (CEO of PANL) is on the Board of the Consortium which includes Princeton, University of Southern California and Hughes Electronics. This industry's goal is to replace the current CRT and LCD technology with the OLED technology based on its benefits of brightness, higher resolution, more energy efficiency and its significant cost advantages.

The Department of Defense and the National Science Foundation have also funded PANL's development efforts.

Investment Approach to Research and Commercialization
The marinade of university research and commercial entrepreneurship represents should continue as a signal to investors, both as to the leading edge research and to the practical, commercial aspects that this technology encapsulates. The intellectual property base consists of nearly one hundred patents from the research partners, all of which are exclusively licensed (or sub-licensed) to Universal Display.

The keys that Universal Display holds are the abilities to make displays that use very little power, that become highly portable and which can effectively display movement in a high resolution manner. These OLEDs result in display devices that are 85% transparent, making the 'heads-up' display for automobiles or other applications very practical. The film on which the OLEDs can be imbedded can be very flexible, and very transparent, allowing displays to wrap contours and to be viewed from a full peripheral range rather than only from straight-on.

The possibilities for these Flexible OLEDs (FOLED) that can be built on flexible plastic and other unbreakable and/or formable surfaces include a rollable, durable newspaper that updates the news automatically via transmitted signals, keeps you abreast of the latest breaking stories, Stock Market prices, sports scores, etc., while still retaining the easy transport properties of a standard newspaper.

The development methodology of this industry has given Universal Display the added advantages of being the key center for this technology while the development of strategic partnerships and the dissemination of licenses is fully encouraged. This Consortium effort maximizes the exchange between research centers and profit-based companies each of which occupies a core area of competency and each of which is allied with the other strategic players for integration and leveragings of the basic technology.

Not only is there a 'born in the USA emphasis', but the retention of the core patents and the oversight of the development of this nascent industry is a marriage of government's recognition of the pivotal necessity for this technology -- with the academic research centers 'pure science' -- in an entrepreneurial, venture-capital-esque environment that focuses on bringing applications to market. This method is too simply described as 'core competency and strategic partners development.

That does not mean that the industry will be based only in the US. The expertise and impact that the Asian and particularly the Taiwanese manufacturers have in this market are fully recognized and partnerships and alliances for the development and the commercialization of the flat panel technology with these world class companies is well underway.

Corporate Outlook
Universal Display continues to look for its market to develop and its licensees and partners to bring it prosperity. The future is a lot closer than it was ten years ago. In fact, the addressable markets estimated then are mini when the current actual market is sized today.

Continue to watch for the announcements of the "Who's Who" list of companies that become licensees and partners. The display market is a large sand-box and the world's leading tech companies know that the OLED technology change is one of the biggest opportunities they will embrace in the near-term.

David W. Alvey, Editor - DiplomaticPlanet.net

Sources: Universal Display Corporation (www.universaldisplay.com) and the United States Display Consortium (www.USDC.org)

The original Diplomatic Planet Interview with Dr. Pinnel and Mr. Ciesinski appeared in 2001)