“We decided to go ahead with the announcement now that we have a solid technical basis for winning the price competition with display panels like LCD and PDP,” said Shun’ichi Uzawa, director and group executive, SED Development Headquarters, Canon Inc of Japan.
Canon and Toshiba Corp of Japan announced that they will begin small-lot production of surface-conduction electron-emitter display (SED) panels in August 2005, shifting to full-scale production in 2007. According to the business plan released by their joint-venture firm, SED Inc of Japan, which will handle development, manufacture and sales, the 2010 shipment volume will have reached 3 million panels with a revenue of 200 billion (Fig 1). The average per-panel shipment value will be about 67,000. And considering that its budget shows the firm making a profit that year, the per-panel cost must be even lower.
The main battlefield for SED panels is expected to be the large-screen TV market, in the 40- and 50-inch range, where already liquid crystal display (LCD) TVs are challenging the established position of plasma display panel (PDP) models. Prices are steadily dropping, with TVs in the 40-inch class expected to hit about 5,000/inch by around 2010. In contrast, Canon and Toshiba believe that a volume production stance cutting SED cost to significantly under 70,000 by 2010 will make it possible for them to compete with LCD panels and PDPs on an equal price footing.
Image Fidelity, Price
Display engineers are extremely interested in SED panels because they use the same basic principle of red (R), green (G) and blue (B) electron guns firing electrons at phosphors as conventional cathode ray tubes (CRT), and basically offer the same image fidelity as the CRT but in a thinner package.
Canon and Toshiba, of course, stress how much better the image quality of the SED is compared to LCD panels or PDPs (Fig 2). As Canon’s Uzawa pointed out, “There are images that can only be properly expressed by self-emitting displays, like SED panels. We think many consumers feel that CRT image quality is the ideal. LCD and PDP televisions are selling because they are the only choice right now… in other words, consumers are being almost forced to buy them.”
Canon and Toshiba, however, seem to have decided that by directly reflecting the standard of image fidelity in the TV price — in the panel cost, to be exact — they will not win the large market they seek. Over the five years since the firms began joint development, there have been no announcements concerning SED panels, leading many engineers on the outside to suspect difficulties in moving the technology into the practical realm. It appears now, though, that the firms were laying the foundation to win out in an increasingly tough cost competition. “It took time to develop production technology capable of successfully competing with other display types,” explained Fujio Mitarai, president of Canon.
Best from LCD, PDP
The first reason why Canon and Toshiba believe they can become cost-competitive by 2010 — when they predict the SED business will start earning a profit — is the relatively low weight of materials expense within total panel cost (Fig 3).
In general materials expense tends to drop as production volume increases, but not to a significant extent. There is major opportunity for reduced cost in fixed expenses, however, such as depreciation in manufacturing equipment. Katsumi Komiyama, senior general manager, SEC Process Development Center, SEC Development Headquarters at Canon said, “The fact that the ratio of materials expense is low means that there is the potential for a dramatic reduction in cost in the future, once we assure market share. And that’s why we’re so interested in SED panels.”
Display materials expense can be broadly divided into panel materials and drive circuit materials. LCD panels and PDPs, now battling furiously for the market, have their own advantages and disadvantages when it comes to materials expense. LCD panels require backlights, raising panel materials expense so that for a 32-inch set, for example, the panel can account for about US$450 of the total US$800 cost. PDPs, meanwhile, have expensive drive circuits, costing 2 to 2.5x the panel expense, according to a business planner at one PDP manufacturer. At present they demand relatively high drive voltages of several dozen volts, making it necessary to use drive ICs capable of withstanding the voltage, while peripheral circuits need large-capacity capacitors.
Materials expense for SED panels, on the other hand, is about the same as that for PDPs when it comes to panels, and about the same as LCDs for drive circuits, combining the best of both worlds, according to Toshiba and Canon. The structure of the SED panel is extremely simple, similar to that of the PDP, and it has a drive voltage of only about 10V, which makes it possible to use drive circuit technology (driver ICs, capacitors, etc) similar to that used in LCDs. It uses the cheapest parts from both PDP and LCD designs to, in the words of Canon’s Uzawa, “keep materials expense below that of either PDP or LCD”.
Given that the ratio of materials expense within the total cost is low, the key target for Canon and Toshiba in SED manufacturing will be keeping fixed expenses down. There are basically three approaches they can take: use equipment with the small number of manufacturing processes, reduce the cost of the equipment itself, or boost production scale to accelerate depreciation. Another possibility is to increase the size of the group manufacturing SED panels by licensing.
These approaches make it possible to fully enjoy the benefits of in-house development. Canon and Toshiba will be making about half of the panel manufacturing equipment themselves, because general-purpose equipment designed to handle the special processes needed to make SED panels just doesnft exist. Each firm has its own equipment technology expertise, such as Canon’s knowledge of equipment for exposure and precision fabrication, and Toshiba’s experience in CRT manufacturing and semiconductor manufacturing equipment. The manufacturing equipment used for SED panels will make use of technologies from both firms.
The crucial point in reducing fixed expenses was choosing the manufacturing method with the lowest number of manufacturing processes. The firms tapped all of their equipment and manufacturing technologies and expertise to review the manufacturing method, slashing the number of processes to the bone. The lower the number of processes the higher the production capacity becomes, thereby reducing the per-panel fixed cost.
Canon and Toshiba seem quite confident of the manufacturing method they plan to use when volume producing SED panels. “If you could see the material we’ll be presenting at society meetings in 2005,” said Canon’s Uzawa, “you’d see just how we can manufacture at such a low cost.” Kazunori Fukuma, managing director, Display Devices & Components Control Center at Toshiba added, “It’s a pretty sensational manufacturing method. Display engineers are going to be astonished when they see what we’re doing.”
Cleared The firms only cleared the last of the obstacles and ensured cost competitiveness through the manufacturing technology review quite recently — the second half of 2004, in fact. “We solved the problems involved in cost competitiveness in 2003,” explained Uzawa. “The price reductions in LCD and PDP proceeded even faster than we had predicted, however, destroying our original scenario. We had to rebuild the whole price scenario by reviewing technology.”
The firm has been working on minimizing manufacturing processes for some time, of course. The device layer serving as the source for the emitted electrons, for example, was originally formed for each individual pixel using inkjet technology. Currently, the device layer is fabricated for multiple pixels at once, reducing the number of processes needed to fabricate a panel of a given number of pixels. Noticing that this process tweaking would not match the rapid cost drops being achieved with LCDs and PDPs, however, the firms decided to revamp the whole technology from the ground up.
Toshiba, which is developing the phosphor-side substrate (anode), for example, has been using technology based on its CRT manufacturing experience. In about June 2003, however, “We quit using CRT manufacturing methods and decided to make the anode substrates using a microfabrication process from semiconductor manufacturing,” revealed the firm’s Fukuma. A number of engineers from semiconductor manufacturing equipment fields were brought into SED panel development, improving the manufacturing method and the material required. The uniformity of phosphor particle diameter was improved, for example, to make it more compatible with the microfabrication process.
Canon, responsible for the electron-emitting substrate (cathode), accomplished much the same thing, although details have not been disclosed, by completely reviewing the technology.
In the review of the manufacturing method to be used for volume production, Canon and Toshiba first cut back the absolute amount of fixed expenses. To provide for a decrease in fixed expenses over time, the pair then adopted depreciation through expanding production scale, covering manufacturing equipment, innovation and cost reductions.
The firms claim that equipment costs can be reduced because they manufacture it in-house. “We can cut out unnecessary functions and improve the equipment as we need, so there’s plenty of room for cost reduction,” said Canon’s Uzawa. If the equipment is made and used only in-house, though, while it may be possible to drop costs, it is generally difficult to accelerate depreciation. The world market for 40-inch and larger TVs, which is what SED panels are targeting, is expected to grow significantly in the future. If a reasonably large share can be captured, figure Canon and Toshiba, it will mean sufficient production scale to drop equipment costs and accelerate depreciation. The shipment value of 3 million panels in 2010 announced by the firms assumes a 20% share of the 40-inch and larger TV market, and the leverage needed to capture this market is the image quality that SED panels deliver.
If fixed expenses can be reduced to the point that this production scale becomes possible, then Toshiba and Canon should be able to keep costs low enough to compete with other technologies.
Toshiba and Canon have adopted a strategy based on in-house manufacturing equipment, coupled with a vertical business deployment. The gains from the low materials expense will be applied to in-house manufacturing equipment, and as innovation gradually reduces costs the firms will accumulate manufacturing technology expertise.
This approach is quite different from the one chosen for LCD panels. In the LCD panel business, manufacturing equipment and materials have been standardized, and massive capital investment into larger glass substrate sizes and production volumes has driven cost reduction. With materials expense accounting for a relatively large percentage of total cost, the only way to restrain fixed expenditure, such as manufacturing equipment costs, was to share equipment expertise and adopt the horizontal development model. This method, however, has pretty much reached the point where further cost reduction seems difficult, because the cost benefits of increasing glass substrate size are reaching their limits (Fig 4). The Kameyama Plant opened by Sharp Corp of Japan in January 2004, a 6th-generation facility (1,500 x 1,800mm) and the 7th-generation facility (1,870 x 2,200mm) scheduled to begin operation in the second quarter of 2005 by S LCD Corp of Korea, a joint venture between Samsung Electronics Co, Ltd of Korea and Sony Corp of Japan, are generally considered to be the maximum sizes, and therefore the limits of cost reduction have been reached with this approach.
Ways to Lower Cost
The LCD panel industry is beginning to announce modifications to the approach. A source at Sharp commented, “We can’t expect any more improvements to profitability from just using larger substrates. The keys from now on will be manufacturing methods and processes. We have to escape current dependence on production expertise tied to specific manufacturing equipment, and establish proprietary manufacturing expertise.” The FutureVision group funded by Sharp and other Japanese LCD panel manufacturers is now developing manufacturing technologies promising major cost reductions. Some of this technology is already in use on production lines operated by Sharp and a joint venture between Hitachi Ltd of Japan, Toshiba and Matsushita Electric Industrial Co, Ltd of Japan. As far as the review of manufacturing technology is concerned, the situation is the same for PDP as well. Japanese PDP manufacturers are working together to develop new manufacturing methods for reduced cost.
The SED panel is a latecomer when it comes to TV displays, but Toshiba and Canon used that to their advantage and spent years perfecting manufacturing technology. The LCD and PDP markets continue to grow, but face a period of transition to new methods for cost reduction. The approach they have adopted may well prove an example as panel and TV manufacturers try to find ways to reduce costs through manufacturing methods rather than just investment scale.
by Takuya Otani
(January 2005 Issue, Nikkei Electronics Asia)