January 8, 2004 10:35 AM PST

Intel throws down the TV gauntlet

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LAS VEGAS--Intel is making an integral component for expensive televisions, but analysts say it could be a tough uphill climb.

At the Consumer Electronics Show here on Tuesday, the chipmaking giant formally unveiled Cayley, a complex semiconductor designed to produce images for projection televisions and displays measuring 35 inches or more across. The chip is expected to be released in the second half of the year.

Although relatively small now, the market for these displays could hit 21 million to 45 million units by 2007, according to various estimates. Because these types of chips now sell for $150 to $300 apiece, the endeavor could become an attractive sideline for Intel. It's already a $500 million market, according to iSuppli/Stanford Resources. And Dell, Hewlett-Packard and other traditional Intel allies are just getting into televisions.

"This will change large-screen television economics," said Intel President Paul Otellini in a speech, adding that Cayley-based TVs will sell for under $1,800 by the end of next year.

The underlying technology for Cayley, called liquid crystal on silicon (LCOS), has been around for about five years. But no one with Intel's manufacturing muscle has tried it yet, a factor that could spur adoption.

"I think the impact will be huge," said Bob O'Donnell, an analyst at IDC. "LCOS has a long history of people unable to manufacture in large quantities...The real bottom line here is cost and reliability" of supply.

On the other hand, Texas Instruments and others are already making chips for large-projection televisions, which means that price competition and pressure on companies to get design wins. Intel has shown that entering a new market and dominating it are two different things.

"If they thought communications was cutthroat, the TV market is even worse," said Peter Glaskowsky, editor in chief of the Microprocessor Report.

The digital TV
LCOS chips can be thought of as an intelligent mirror. On one side, a layer of liquid crystal silicon sits atop a reflective, pixilated surface, said David Mentley, an analyst at Stanford Resources. The underside consists of transistors.

In a projection television with an LCOS chip, a light source shoots light toward the reflective surface. The light passes through the liquid crystal layer, and on the way back out, the liquid crystal layer polarizes, or bends, the light to create specific images. The underlying transistors then control polarization. The image on the LCOS chip, which is less than an inch in diameter, is then magnified by lenses several times to fill a large screen, the same way slide and movie projectors work.

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Right now, large-screen televisions use a variety of projection-imaging technologies. Some are direct-view displays, meaning that the image is not magnified and projected but really is one big image, Mentley said. Expanding the size of these displays, however, is not easy.

As a result, projection techniques are gaining favor. Many depend on small, internal CRT (cathode ray tube) displays or tiny LCD (liquid crystal display) panels to craft images for projection, Mentley said. Others rely on Digital Micromirror Devices, the underlying technology in Texas Instruments' Digital Light Processors (DLPs). In DLPs, there is no liquid silicon layer. Instead, the reflective surface is rotated to create polarization.

Few rely on LCOS. Currently, LCOS-based screens are mostly seen in high-end, complex devices, such as the large displays in airports that can measure 30 feet across, said Kevin Cornelius, general manager of display technology operations at Intel. JVC is one of the principal manufacturers of these.

LCOS, though, has the advantage of Moore's Law, which dictates that faster, smaller transistors can be added to a chip at a relentless pace, Cornelius said. Adding more transistors means that more pixels can be added to an LCOS chip, and it can operate at a much faster rate. In the end, that could lead to crisper images and smoother gradations between colors. Mentley said LCOS chips hold the potential to hit higher resolutions before competing technologies.

"You can add pixels or cut them out," Cornelius said. "I've never seen anyone turn pixels down."

As an added bonus, the LCOS-based chips, unlike DLPs, have no moving parts. Typically, moving parts cause most problems in computing systems.

Although Intel isn't particularly known for its expertise in optics, the company has an advantage in manufacturing, Cornelius said. The Santa Clara, Calif.-based company is the largest chipmaker in the world and can typically make products for less than--and enhance them faster than--competitors.

"Under the entire display is a silicon chip that needs to be made to strict tolerances," Cornelius said. "The challenge is manufacturing. It requires a lot of strict process controls."

Although LCOS chips will be made in the same plants as other Intel products, they differ substantially. For one thing, microprocessors don't have a shiny, reflective surface. LCOS chips also are fairly large, measuring 0.8 inch to 0.9 inch in diameter. The technology was developed at Intel and didn't come from an acquisition, Cornelius said.

IDC's O'Donnell pointed out that LCOS-based chips could be fairly interchangeable with DLPs.

"If LCOS is cheaper than DLP, and if you are using a DLP, you can tweak your design and use the LCOS imager," he said.

Best laid plans
That all looks good, but it's still on paper.

"This has been the promise of LCOS for the past five years," Mentley noted. TI has worked hard to ensure against DLP failure, but few problems are reported, he said.

Price competition is also inevitable. Three or four years ago, these types of imagers sold for $600. Now, they sell for $150 to $300, and more erosion will likely occur.

"There's not a market for 45 million units a year at $150 to $300," Glaskowsky said. "To get to millions of units, you are talking about tens of dollars."

Then there are plasma TVs. These large-screen televisions are coming down rapidly in price and are thinner than projection-style TVs. LCOS-based televisions now measure 12 inches to 18 inches thick, but plasma TVs are a few inches. With consumers already forking over a few thousand for large-screen televisions, Intel may have to ask customers to sacrifice style for price.

"TVs are furniture. It is the one thing people don't want to talk about," O'Donnell said. "It is a huge part of the deal."

Intel currently has samples of the chip. Televisions containing an Intel LCOS may appear in late 2004 or early 2005.

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Intel LCoS TV chip
Genoa Color Technologies in Israel will produce a six-primary color projector this year. Will it be married to the Intel LCoS Rear Projection TVs due in 2004/2005? Would the Genoa product solve the liquid crystal problems of an inkier black and sharper contrast than current LCDs?
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