U.S. to Ante $50 Million for Flat-Panel Project

In what promises to be the first major test of the Clinton Administration’s much-touted “industrial policy,” the Pentagon announced Friday that it will cover half the cost of a $100-million project to manufacture flat-panel display screens.

AT&T; Corp. and Xerox Corp., two of America’s leading multinationals, and Standish Industries, a small Lake Mills, Wis.-based manufacturer of the displays, will get the money to manufacture high-resolution color screens developed at Xerox’s Palo Alto Research Center.

The pilot plant will supply the Pentagon with displays for such military needs as electronic battlefield maps. But the Pentagon’s primary objective is to assure America a share of a $5-billion industry that is now 95%-controlled by Japanese behemoths such as Sharp and NEC.

Flat-panel displays, which are lightweight and use little energy, are being incorporated into the design of everything from laptop computers and personal digital assistants to airplane cockpits.

“This project should substantially reduce the major technical and manufacturing uncertainties which have been obstacles to the establishment of display manufacturing capabilities which meet national security needs,” Ken Flamm, principal deputy assistant secretary of defense, said in a statement. Flamm announced in April the Clinton Administration’s intention to pump $580 million into the display business over the next five years.

Xerox rejected complaints that the project involves subsidies to large companies that are perfectly capable of financing the technology themselves.

“For the U.S. to get into very high-volume manufacturing, it takes very large companies with very large resources,” said Malcolm Thompson, chief technologist at the Palo Alto Research Center.

Thompson said the Pentagon money will help the three companies move much more quickly toward developing the advanced machinery required to build sophisticated displays, which sometimes contain as many as 6 million transistors on a single screen. The company hopes to be ready to invest in a larger plant capable of volume manufacturing in about two years.

“It’s a display that has a better image quality than a printed page,” Thompson said.

“You won’t have to print everything up; you will be comfortable reading off the screen,” he said.

Standish and Xerox have been working together to develop the screen for several years, and they will focus on the manufacturing process needed to build them. AT&T; will contribute chip packaging technology and assemble the final products.

Xerox will not use its polysilicon technology, a radically different approach to building screens that some observers believe has the best potential for cutting manufacturing costs. Instead, it will use conventional “amorphous” technology already highly developed by Japanese companies.

David Mentley, a flat-panel expert at San Jose-based Stamford Resources Inc., said he is skeptical that the project will do much to slow Japan’s flat-panel juggernaut.