Through a Lens, Brightly

A tour through Epson's LCD fab fascinates, but underscores some significant projector challenges in the home theater market. 7/07/2008 6:44 AM Eastern

Through a Lens, Brightly

A tour through Epson's LCD fab fascinates, but underscores some significant projector challenges in the home theater market.

EPSON IS THE MARKET LEADER IN LCD PROJECTION. Last May, several journalists got a first-hand look at how it got there. The company invited me and eight other journalists to visit the Epson Suwa Menami LCD panel manufacturing facility in Japan, which opened in 1985 and now spits out 550,000 LCD panels a year for use in business and home theater projectors. While many people have used an LCD projector, only a handful have seen the panel fabrication process. The tour, and a 3LCD jaunt that preceded it in April, were the first organized press tours Epson has ever staged for its LCD projector business unit.

I had toured TI's DLP fab in Dallas several years ago as part of a visit arranged by InFocus. Back then, we had to suit up in special outfits to enter the Class 10,000 clean-room environment where we watched DMD wafers zip by on overhead tracks, carrying silicon to and from the photolithography, etching, washing, and mounting machinery.


Things weren't much different in the Suwa Menami facility. We again dressed up in contamination-free suits and walked in groups to see individual chambers that enclosed the automated machinery used to apply photoresist to raw silicon wafers, etch those wafers, clean them, fill the liquid-crystalline compound, separate the individual panels (in this case, 0.7-inch 1920 x 1080p high-temperature polysilicon), mount them, and attach wiremold connectors for eventual installation in projectors.

There are 300 different steps to forming an LCD wafer, and the process takes about 30 days from start to finish. Three such panels are needed for the optical engine in each projector, so the annual output from Suwa Menami is enough to build about 183,000 projectors. The actual wafers measure 8 inches in diameter and resemble futuristic waffles before the individual panels are cut apart.

In 2007, Epson also opened a new LCD fab in Chitose on the island of Hokkaido, Japan, which we were unable to visit. This fab, which will primarily build panels for business projectors, employs 250 workers, uses larger wafers (12 inches), and has greater capacity for annual production, although no specific figure was given in our meetings.

The bulk of production from Suwa Menami is for home theater projectors and revolves around a D7-series panel. This panel has higher contrast and a larger aperture ratio than previous designs, passing more light from an equivalent lamp. The actual improvement in aperture ratio is currently specified at 54 percent, a 20 percent improvement over the company's D3 panels of five years ago.

Our next stop was Epson's large Shimauchi plant in nearby Matsumoto, part of the Nagano region of central Japan that is dominated by snow-capped peaks. This facility manufactures a variety of products, conducts research and development, and employs about 6,000 people.

Epson builds just about every component used in a projector, from panels to polarizers, optical compensators, ballast and power supplies—even lamps. Its exclusive E-TORL (Epson Twin Optimized Reflective Lamp) design provides increased illumination at lower power levels and is considered to be a “green” projection lamp technology.


We wrapped things up with presentations on the overall projector business. According to Rajeev Mishra, Epson's director of new ventures, projector sales are forecast to hit 5.8 million units worldwide in 2008. Of that number, 5.2 million will be business projectors, and the remainder (about 600,000) will be home theater designs.

At present, 57 percent of all projectors sold use 3LCD technology, and Epson's share of the overall market amounts to about 21 percent, putting them in first place by a substantial margin. Breaking down the numbers further, 46 percent of all home theater projectors sold in 2007 were 720p models, with 1080p capturing 23 percent of the business and 480p taking about 21 percent, according to Pacific Media Associates of Menlo Park, Calif.

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Through a Lens, Brightly

A tour through Epson's LCD fab fascinates, but underscores some significant projector challenges in the home theater market.

All of these stats sound great until you take a dose of reality and realize front projection currently makes up a paltry 2 percent of the total home theater display market.

What's in first? You guessed it—flat-panel LCD HDTVs, which command 69.1 percent of all sales. The number two slot is occupied by plasma technology, far behind with 20 percent of all sales, while microdisplay rear-projection HDTVs account for 8.8 percent of the home theater business.

Given current market trends, flat-panel LCDs' share of the business isn't going to erode, and will likely increase as the rear-projection segment continues to shrink while plasma continues to hold its own for a while. So the challenge for Epson (and every other home theater projector manufacturer) is to figure out a way to grow that 2 percent.

During one of the question-and-answer sessions, I ventured that the market share for home theater projectors would always be small compared to direct view display technologies. There are a few reasons why, one of which is the widespread availability of larger flat-panel screens with lower prices. (You can now buy 50-inch plasma HDTVs for $1,500 and 52-inch LCD sets for $2,300 at wholesale clubs.) Another reason is the need for a two-piece system in a darkened room when projecting, as opposed to an all-in-one display that works just like a regular television under any ambient lighting conditions.

Epson's $6,999 Ensemble home theater system was evidently designed to overcome some of those obstacles. Ensemble combines Atlantic Technology speakers into a 100-inch, matte-finish motorized projection screen for the front three channels in a Dolby Digital 5.1 system, with the rear surrounds built into the 1080p projector housing. A switcher/scaler/control box with DVD player completes the package. (The Ensemble Web site says that there is lower cost system available with a 720p projector for $4,999.)

Will Ensemble be successful in expanding projector sales? It's too early to tell, but my guess is that (Ensemble or not) it will be a difficult task for Epson to grow the market for home theater projectors much past 4 percent—double what it is now, but still small compared to sales of flat-panel products.

Even so, the Epson roadmap for the high-temperature polysilicon (HTPS) LCDs that we saw calls for 4K and ultimately 8K LCD panels by 2025, which would make for one heckuva home theater system.

If PRO AV and I are both still around 13 years from now, I'll check it out for you.

Contributing editor Pete Putman is president of ROAM Consulting in Doylestown, Pa. He can be reached at

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