White House OKs $1 billion plan for U.S.-made computer screens

April 27, 1994|By New York Times News Service

WASHINGTON -- In potentially the biggest government intervention in private industry since an effort to assist computer chip makers began seven years ago, the White House has approved a proposal to spend up to $1 billion to help U.S. companies compete with Japan in making advanced flat-panel computer display screens.

The Defense Department has scheduled a news conference for tomorrow to discuss flat-panel displays, and the initiative is expected to be unveiled then.

The thin computer screens, which are mainly found in laptop computers and other portable devices, are increasingly used in military equipment acquired by the Pentagon.

A handful of tiny U.S. companies currently hold less than 3 percent of the world market in such screens, while several big Japanese corporations, led by Sharp Corp., control the rest and have been reluctant to sell to the Pentagon. The administration's plan calls for heavy Defense Department spending to build up domestic suppliers instead.

The strategy to help develop the U.S. industry goes far beyond the government-industry consortium known as Sematech, which was set up in 1987 to bolster the computer chip industry.

Sematech limits itself to developing and sharing production techniques but does not sell chips. For flat-panel displays, the White House wants to help not only with research and development but also with the construction of commercial factories and even marketing.

The proposal would provide matching federal grants to companies that invest in flat-panel display research and production. The planbuilds on current research efforts paid for by the departments of Defense and Energy, for which Congress has already authorized $100 million. Further spending will be included in future administration budgets.

The plan, which is summarized in an interagency report, represents an effort to back a U.S. industry that seems to be particularly promising and to short-circuit market forces by subsidizing it.

This is an approach that Japan has followed, often -- although not always -- with considerable success in developing important industries.

The administration justifies pursuing such an approach -- which some call industrial policy -- as necessary for the nation's economic security. If the program to help the flat-panel display industry is a success, the report said, similar Defense Department spending programs may be undertaken to increase the nation's self-reliance in other industries.

The feature of the plan most likely to cause controversy is its call for the federal government to pay part of the cost for U.S. companies to build four giant factories that would supply a one-sixth of the $4 billion world market for flat-panel displays.

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