Kodak, Sanyo go organic in screen venture

TOKYO--Sanyo Electric, Japan's third-largest consumer electronics maker, and photo film giant Eastman Kodak on Tuesday unveiled plans for the world's first mass production of ultrathin, next-generation displays.

A joint venture, targeted for total investment of $400 million, would expand cooperation between the two in organic light-emitting diode (OLED) displays and aims to get a head start on a slew of rivals in the hot new technology.

Japanese electronics makers hope to use the power-efficient, next-generation screens in cell phones, digital cameras and other handheld gadgets with size and battery-power constraints, and, as the technology improves, in television sets and home electronic devices as well.

The Sanyo-Kodak venture will launch volume output in February, aiming to boost sales to $560 million in 2005 from just a fraction of that in the first year. The companies also hope to capture a hefty 30 percent share of the global market.

"The technology has advanced enough to start operations, but to expand the market further we need new breakthroughs, so we will join hands even more broadly to strengthen our research and development," Sanyo chairman Sadao Kondo told a news conference.

Sanyo will take a 66 percent stake in the venture, while Kodak would hold the rest. The companies are aiming for the operation to be generating a profit by its third year.

Several other Japanese manufacturers also plan to pile into the market over the next year, including Toshiba; a joint effort between NEC and Samsung; and a venture between Tohoku Pioneer, a TDK affiliate and Sharp, Japan's largest maker of conventional liquid-crystal displays (LCDs).

Most of those will use technology patented by Kodak, but the U.S. company vowed to pursue a "statesmanlike" policy on licensing to other manufacturers even though it will soon start making screens itself via the venture.

"Somewhere between a monopolistic extreme that is either stupid or illegal, which we won't do, and the other extreme of licensing every Tom, Dick and Harry, there has to be a middle ground,'' said Leslie Polgar, president of Kodak Display Products.

He blamed overly lax licensing by LCD patent holders for the commoditization of products such as notebook PC screens, which triggered fierce price competition and pushed many Japanese companies' display operations into the red this year.

The Tokyo stock market showed only a brief reaction to the news, with Sanyo already having indicated it would start OLED screen production next spring.

The compounds used in OLED screens emit light when a current is passed through them, allowing thinner construction and using less power than LCDs, which require backlighting.

OLED technology--particularly the more complex active-matrix variety--also promises brighter contrasts and faster response times for moving pictures, so that images don't linger on the screen after the action has moved on.

With the technology still in its early stages, forecasts for market size vary widely. Market researcher Stanford Resources estimated the OLED display market would be worth $1.6 billion in 2007, although another company, DisplaySearch, has forecast $3.1 billion in 2005.

Although most manufacturers are now eying the technology for handheld devices, Sony, the world's largest maker of audio-visual electronics, in February unveiled a larger, 13-inch screen it aims to mass produce by 2003 for flat TVs.

Samsung SDI, South Korea's largest display maker, said in October it had developed a 15-inch OLED screen.

"The basic issue is how to make large screens," Sanyo's Kondo said. Longer-lasting materials and greater brightness would be needed before OLED is ready for prime time in consumers' living rooms, he added.

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