Wants display, computer makers to join forces

WARRING FACTIONS IN ELECTRONICS ASKED TO MEET JAPANESE CHALLENGE U.S.

March 30, 1992|By Valerie Rice | Valerie Rice,Knight-Ridder News Service

WASHINGTON -- In an unprecedented step, the Commerce Department is trying to unite two warring factions of the electronics industry in a consortium that could boost competition against Japan.

If this first-of-its-kind government effort works, it could save the struggling U.S. computer display business and allow the U.S. computer industry to stop depending on Japan for virtually all its portable computer screens.

But to get this idea off the ground, the Commerce Department must convince two mortal enemies -- computer and display companies -- to work together and accept joint government-industry funding.

The response from the computer industry: No thanks.

"We'd give this very serious consideration, but I'm sure that our decision would be that we've already made an investment in this area [with Toshiba] and that we wouldn't want to duplicate it," said Michael Dutton, a spokesman for IBM Corp., which several years ago established a joint venture to build flat panel display screens with Toshiba Corp. of Japan.

This idea is the latest government effort to help the United States establish a beachhead in the so-called active matrix flat panel display industry -- an area that a number of recent studies have deemed critical for the electronics industry's future competitiveness.

An active matrix screen is a liquid crystal display that uses an array of transistors to provide a picture with a sharp contrast and full-motion video, making it suitable for color.

Japanese companies currently supply all the active matrix screens in the world for notebooks and laptops from companies like Apple Computer Inc. If U.S. companies were to enter the market today, they'd need $500 million or more in manufacturing and research investment, experts said.

To solve this problem, industry and government must act soon, says Robert White, the Commerce Department's undersecretary for science and technology. He hopes to tap the resources of universities and national laboratories to give the industry a boost.

But he stressed that the plan was only in the talking stages, and there was no consensus on what should be done.

The rift between the display and computer industries began in the summer of 1990. Eleven struggling screen-makers filed a dumping complaint against some of the largest Japanese electronics firms, claiming they were selling flat panel displays in the United States for below their cost. The dumping case polarized the electronics industry, with U.S. computer companies siding with their Japanese screen suppliers against the U.S. display makers.

The Commerce Department found evidence of dumping, but the final ruling did not levy a duty on active matrix screens and did little to alleviate the pressure U.S. display makers were feeling from Japanese competitors. The case is under appeal.

"This is a great idea, but how much money should come from the government and how much from the private sector is still unanswered," said Paul Rosenthal, the Washington attorney for American Display Manufacturers Association. "We want to help the government answer the questions they are asking, but they aren't very far along in the process yet."

Mr. Rosenthal also blasted the computer industry for not supporting an industry in its backyard, and others agreed.

"Depending on Japan alone for technology is dangerous, and American firms are opening themselves up to problems of technology withholding when they do it," said Kevin Kearns, a senior fellow with the Economic Strategy Institute in Washington. "But the fact is the computer industry doesn't care. I think that an alliance of entities with similar interests [as the government is proposing] might prove worthwhile for everyone," he said.

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