PHILIPS TO START LCOS PRODUCTION NEXT YEAR

Manufacturing of 1.3”, 1.18” and 0.88” panels culled from 8” wafers will be done on single production line at Philips Semiconductor plant in Bodlengen, he said. Philips internal production will supplement that being outsourced to Hanna Microdisplays in Twinsberg, O., and Varitronix in Hong Kong, Voltolina said. “Our idea is to have those 2 sites and our own running so we have flexibility because if you have only one line, you are very limited,” said Voltolina, who declined to disclose financial investment Philips is making in LCoS. “This is a strategic decision because some of the losses of the panels are due to the transportation of the wafer. If you fill the wafer with liquid crystal at the same site where it is manufactured, that risk is removed.”

Hanna and Varitronix have started production of 1.3” LCoS panels with 1280x720p resolution, 300 lumens and 400:1 contrast ratio that will be at heart of 55W rear-projection TV Philips will ship in U.S. in 2003 at sub-$5,000 price, Voltolina said. Philips also is developing LCoS-based 44W rear-projection set for European market, he said. Each LCoS manufacturing facility will be able to produce 1.3” panel and other sizes. Philips has shipped samples of 1.18” panel with 1280x720p resolution, 700:1 and 400 lumens and will start production of it in 2nd quarter 2003, Voltolina said. That will be followed in late 2003 by version of 1.18” with 1280x1080p resolution and 600:1 contrast ratio as well as 0.88” with 1280x720p and 300 lumens, he said. Philips is hoping to offset lower contrast ratio and brightness inherent in moving to higher resolution displays or smaller size by reducing arc gap in its UHP lamps to 0.8” or 0.9” from current 1”, Voltolina said. “HD polysilicon and DLP [Texas Instruments’ Digital Light Processing] won’t have a very economic solution for 1080p in the short term,” Voltolina said. “That’s a hole in the offering of those technologies that, if we fill it, will put us in a much more competitive position.”

Despite establishing own factory, Philips said it intended to keep partnerships with Hanna Microdisplay and Varitronix. Need for additional factories could arise if Philips succeeds in establishing viable internal and OEM businesses for LCoS displays. About 25-30% of LCoS display unit volume is likely to be consumed by Philips brands, with rest allocated to OEM business, Voltolina said. Philips’ lead OEM customer, Hyunwoo McPlus, will ship 52W rear-projection TV using 1.3” LCoS panel in first quarter in S. Korea and plans to develop OEM market, he said. Philips is making light engine for Hyunwoo. Philips also is in discussions with 3 unidentified companies in China, Japan and Korea to build light engines based on its reference design. Two of those 3 companies will be light engine suppliers for OEM customers, Voltolina said. Fourth potential customer -- unidentified Japanese company -- is developing own light engine design for Philips’ LCoS display and will sell package on OEM basis, he said. Chinese partner will use 1.18” panel with 1280x768 resolution for conventional rear-projection TV in China, he said.

Philips is maintaining LCoS business despite demise earlier this fall of components group that supervised LCoS operations. LCoS is operating as standalone business unit, but is likely to be “embedded” in another Philips technology group, Voltolina said. “The fact that Philips is putting more money into LCoS shows that internally we posted some good data,” he said: “The Philips board wants to make sure that we deliver what we are promising with the right internal support.”

Meanwhile, LCoS competitor Three-Five Systems said it had completed reference design for its Spitfire light engine. Manufactured quantities could be delivered within 4 months provided Three-Five lands customers for light engine that will be married to 0.5” LCoS microdisplay with 1024x768 resolution, Microdisplay Sales Vp Al Davis said. China Display and Optical Coating Labs (OCLI) are among those expected to build Spitfire at facilities in China and Malaysia, respectively, he said. Package of microdisplay and light engine is expected to carry sub-$1,000 cost, potentially yielding rear-projection TV with $2,500 retail price, Davis said. Most rear-projection TVs will have three 0.5” panels at $100 each with light engine accounting for remaining cost, sources said. Davis declined comment. Several customers are evaluating Three-Five’s 0.5” display, but no deals have been finalized, Davis said.

Separately, i-O Display Systems said it had started shipments of i-glasses HRV head-mounted personal display device ($699) that’s based on 0.47” microdisplays originally developed by Zight Technologies. Three-Five bought Zight assets including 0.47” display, which has 800x600 resolution, earlier this year. Device weighs 8 oz., has 120 Hz refresh rate and 24-bit color. Three-Five has forecast revenue of $1 million for its near-to-eye business in current fiscal year.