Market report: Microdisplays are set to carve out niche markets

17 Jun 2002

In the rapidly developing field of displays, microdisplays have taken significant shares in a wide field of specialist applications and the trend is continuing. Phillip Hill reports.

From Opto & Laser Europe May 2001

The world market for microdisplays will grow from 12.6 million units valued at USD 692 million in 2000 at an annual rate of 12.3%, to 35.2 million units valued at USD 1.38 billion in 2006, according to market research company Stanford Resources.

Liquid-crystal displays (LCDs) continue to dominate the market in terms of both units and value. However, the prevalence of the LCD will diminish due to the stronger growth of liquid crystal on silicon (LCOS) and MEMS products, says Kimberley Allen, senior analyst at Stanford Resources.

Microdisplays are very small displays that are viewed through the use of optics. While no formal definition exists for their size, most in the industry agree on a diagonal measurement of 1 inch or less.

Microdisplays have the ability to display large numbers of pixels in a lightweight package that occupies a small space. Traditional display technologies tend to become larger, heavier and more expensive as image size and pixel count increase.

Microdisplay manufacturing also has the potential to be less expensive than other types of display manufacturing.

"The materials cost is low due to the use of thin layers on a small area, the incorporation of drivers on the display substrate, and the substitution of optics for large display area," said Kimberley Allen. "Those displays that use sequential colour enjoy the benefits of using inexpensive LEDs as the light source, requiring no colour filters and having only one-third as many pixels as are needed for a full-colour display not using sequential colour."

Displays with information content currently have several hundred thousand to more than 1 million pixels. Clearly a 1 inch display with such pixel counts must be coupled to an optical system to create reasonable viewing conditions.

There are two basic microdisplay systems: projection systems, which magnify a small real image onto a screen for viewing by one or more people; and near-eye systems which use an optical set-up to project a virtual image viewed by one person.

The focus of intense research and production efforts worldwide, microdisplays are already used in projectors and viewfinders and are moving into the realm of other near-eye applications, and TV.

In this growing market, projection applications account for roughly three-quarters of the value, while near-eye applications account for roughly three-quarters of the units, a ratio that will remain constant through 2006.

"This difference in the ratio is due to the consistently lower price of near-eye displays, roughly one-eighth that of projection displays when weighted by units and averaged over all applications," said Allen.

Most microdisplays are fabricated on silicon or quartz substrates rather than on glass, as in the production of direct-view flat-panel displays. This allows designers to integrate electronic components - such as row/column drivers and digital and video interface units - directly alongside the display.

Unit shipments of LCOS microdisplays will grow at an annual rate of 135% to overtake MEMS by 2002, achieving 23% of the unit market by 2006. MEMS units will grow at a rate of 33% over this interval. Although unit shipments of emissive technologies (where light is produced by the display itself) and scanning technologies (where images are written onto the retina) will grow most quickly at an annual rate of 248%, their low initial units will prevent them from taking a large percentage of the market by 2006.

The higher-priced MEMS will retain second place in value, reaching 27% of total market value in 2006. LCOS will increase in value at a rate of 51% (compared with MEMS at 20%) to achieve 15% of the market in 2006. Emissive and scanning technologies will again grow most rapidly at 116% in value.

One significant feature of the microdisplay industry is the possibility of developing flexible business models that closely resemble those of the semiconductor industry rather than the vertically integrated structures of display companies.

"The separation of backplane production, cell assembly and system integration in several microdisplay technologies (notably LCOS) allows for separate companies to specialize in each part of the process," explained Allen.

Microdisplays face the most formidable competition in projection applications. Direct-view and projection cathode-ray tubes, as well as plasma display panels (PDPs) and direct-view LCDs, have carved out market niches in recent years that microdisplays must challenge in order to penetrate the market. All of the above technologies continue to improve in technical quality and price, creating a moving target for microdisplay manufacturers.

In near-eye applications, microdisplays in many cases enable the products of which they are a part, and hence face less direct competition. The challenge in these applications is product design, centring on ergonomics, ease of use, and demonstration of utility to the user. Small, direct-view LCDs can be used in many personal viewer products. Although they have far smaller pixel counts (and hence lower information content) than that offered by a microdisplay, consumers may find them acceptable. Microdisplay manufacturers must show that there is significant added value from a microdisplay.

Despite the threat from other technologies and the challenges of creating new classes of product, the outlook for most segments of the microdisplay market is positive for the coming years, according to Stanford Resources. "However, questions remain," said Allen. "What effect will market forces have on the continued health of established microdisplay market segments, and when will the conditions be right for the blossoming of novel near-eye products? What sort of long-term patterns can be expected in this nascent market?"

In near-eye applications the present dominance of camcorder and camera viewfinders is clear. Viewfinders currently account for 97% of market value in near-eye applications.

Consumer headsets will make progress rising from 4% of the units and 6% of the value in 2006. Cell phones will make a later but rapid entry, growing to 4% of units and 7% of value by 2006. Head-mounted displays will account for 1% of near-eye units in 2006, but, due to their high price, 6% of market value.

Kimberley Allen believes that near-eye applications outside the already established viewfinder market will take two to three years to gain a foothold. "This is not surprising given the novel nature of many of these products: people will require time to integrate them into their home or office lives. There are issues of ergonomics as well as the usual technical and manufacturing concerns. However, once these products are accepted by buyers, the market is expected to grow rapidly."

The vision behind using microdisplays in mobile phones is to allow users to surf the Net or view similarly detailed information that could not be delivered through a small direct-view display. However, there is a need for a high-pixel format. The advantage of the microdisplay, at least for surfing the Net, is lost if the image does not resemble a desktop computer. So the market is not expected to pick up significantly until 2004 to 2005, according to Allen, with the arrival of inexpensive, small, high-pixel format displays.

There is also competition from high-resolution direct-view displays. Direct-view LCDs using amorphous silicon and low-temperature poly-silicon displays have been demonstrated with pixel densities of 200 to 300 pixels per inch. A mobile phone employing this technology as a direct-view display could be an attractive product if the software were sufficiently developed to allow the user to see, for instance, a "thumbnail" image of a Web page, which could then be clicked to zoom in on certain regions. Nevertheless, Stanford Resources predicts that the market for cell phone microdisplays will grow to around 1 million units by 2006.

Projection systems fall into two main categories: front projection (from portable business projectors to large venue systems) and rear-projection TV. Most MEMS-based projectors use a single panel, but high-end systems use three. Nearly all poly-silicon LCD and LCOS front-projection systems use three panels. (While LCD projectors have been made with one panel, these systems are being phased out, and LCD and LCOS front-projection systems are considered to remain three-panel systems for the foreseeable future.)

Between 2001 and 2006, LCOS will increase its share of the front projection market from 4% to 7%. Over the same interval, the MEMS market share will increase from 26% to 29%.

In rear projection, MEMS-based televisions use one panel, while LCD systems use three. The twisted nematic liquid crystal used in poly-silicon systems does not switch fast enough to use sequential colour. However, LCOS TVs are shifting from three panels to one, a change that will occur until 2003, because they rely on vertically aligned nematic liquid crystal or on ferroelectric liquid crystal, both of which switch quickly.

There will be a strong shift towards higher pixel formats. In 2000, 60% of the rear-projection TV market consisted of VGA systems, but by 2006, 89% will be SXGA or higher format. LCDs are spread most broadly, covering all pixel formats, while MEMS and LCOS are concentrated in the higher formats. This is because high production costs for MEMS (due to complexity) and LCOS (due to current lack of volume manufacturing) prevents penetration in less-expensive (lower-pixel-format) systems.

The MEMS TV market will grow strongly from 1100 units in 2000 to 543,000 units (65%) in 2006. The value will increase from USD 353,000 to USD 139 million (84% of the market) over the same period (figure 6). Due to the shift from three panels to one, the value of LCOS will grow more modestly from USD 490,000 in 2000 to USD 16.2 million in 2006. In 2003, a single LCOS panel will become cheaper than three LCD panels, allowing LCOS to maintain solid growth.

"Whether microdisplays really take off, particularly in the consumer television market, depends on competition from three other technologies," said Allen. "The unmatchable low price and good picture quality of direct-view CRT televisions prevent projection TVs from competing in sizes below 40 inches diagonal. Even by 2006, CRTs will dominate the rear-projection market in all sizes and pixel formats."

The standard LCD competes with microdisplays in two size ranges: more than 20 inches and less than 5 inches. In 2001 the manufacturing cost of a 21 inch UXGA (1600 ¥ 1200 pixels) LCD is about USD 2500. However, LCDs have an established manufacturing infrastructure and these prices are expected to drop steadily. A 25 inch QSXGA (2560 ¥ 2048 pixels) LCD panel is expected to cost only USD 500 in 2010. "Microdisplay manufacturers must aim ahead of the falling LCD price curve," said Allen.

PDPs are much thinner and have wider viewing angles than rear-projection TVs. As with direct-view LCDs, the weakness of PDPs is price. In 2001 the cost to produce a 42 inch, 1280 ¥ 720 pixel PDP is about USD 4000. However, by 2005 the cost of making a 55 inch, 1920 ¥ 1080 pixel PDP panel will be little more than USD 2000 according to Stanford Resources. "This projected cost decline represents a threat to rear-projection systems as it erodes a key advantage," said Allen.

The worldwide microdisplay market This will double from USD 692 million in 2000 to USD 1.39 billion in 2006, a CAGR of 12%, with more than 35 million unit shipments.

Near-eye applications Unit shipments are dominated by near-eye applications, while market value arises mostly from projection applications, and this situation will continue. In 2006, near-eye applications will account for 74% of the units, while projection applications will account for 70% of the market value.

LCD microdisplays They will continue to lead in both shipments and value compared with other technology types. However, the LCD's prevalence will diminish from 97% of the units and 79% of the value in 2000 to 70% of the units and 57% of the value in 2006, primarily due to the stronger growth of MEMS and LCOS.

Poly-Si TFT-LCD-based projection systems These will continue to use three panels, while most MEMS systems will continue to use a single panel (three panels are used for very-high-brightness applications). Many LCOS rear-projection systems, however, are transitioning from three panels to one, a process that will take 2 to 3 years. This shift will affect the growth of LCOS during the transition period beause fewer panels per system will be sold.

Camcorder viewfinders LCOS microdisplays will account for 22.5% of this market by 2006. Among all LCOS applications, camcorder viewfinders will take the lead in units in 2002 and in market value in 2005, surpassing front projection in both cases.

Rear-projection television MEMS-based RPTVs will rapidly increase their market share, rising to account for 65% of units and 84% of value in 2006. LCOS-based systems will account for 16% of units and 10% of value.

Consumer headsets LCD will continue to dominate the lower pixel formats, while LCOS and emissive technologies will dominate higher formats. The boundary between the two will occur around XGA format. In 2006, 63% of headset panels will be SXGA or higher. A copy of "Microdisplays 2001" can be obtained from Stanford Resources.