Markets ripe for Colorado MicroDisplay

BOULDER – From the perspective of Boulder-based Colorado MicroDisplay Inc. (CMD), the next big thing is relatively small: an SVGA display with a diagonal measurement of one-half of an inch.

After closing a $5 million round of financing from Intel Corp. and 3i in mid-December – bringing CMD’s total capital to $29 million – the company now has set its sights on mass production via partnerships with several manufacturers, the names of which the company declined to reveal.

“I think certainly the money allows us to spend more time with our manufacturing partners and bring them up to speed manufacturing our products,´ said Andrew Evans, CMD chief financial officer, of the investment. The company’s business model is “fabless,” meaning that they will look externally for all manufacturing needs and integrate their products into those of other manufacturers.

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Microdisplays can be integrated into a variety of products, including mobile computing headsets, cellular phones and portable entertainment devices such as DVD players, noted the company’s director of product marketing, Rainer Kuhn. CMD is aiming to supply displays to all of the applicable markets. “We don’t want to be a one-trick pony,” Kuhn explained. “Each one of these markets is large. We predict that it will be around a $4 billion (total) market in the 2003 time-frame.” He predicted exponential annual growth beginning in 2001.

Currently the most mature market for CMD’s products is that of the mobile computing headset display. “Headsets is a market that is just ripe, just beginning to bear fruit,” Kuhn noted. “We think we’re in the right place to be there.”

Headsets incorporating CMD’s technology will debut on the retail market during the first quarter of 2000; Japan is projected to be among the most lucrative geographic markets.

Boulder-based venture capital firm Sequel Venture Partners is CMD’s largest backer, with a total of $4.4 million invested, including $1.2 million in the September round. Rick Patch, a partner in Sequel, touted CMD’s work.

“If you look at computing over the past 20 years, the one thing that hasn’t changed is the monitor, the display,” he observed. “(CMD’s) technology is just fantastic. It can revolutionize the entire display industry.”

Efficient power consumption is among the technology’s primary benefits, according to Patch.

CMD’s proprietary technology, Dynamic Nematic Liquid Crystal on Silicon (DNLCOS), is the backbone of every one of the company’s planned products. “Think of it as a display on top of an IC (integrated circuit),” explained industry observer Chris Chinock, publisher of the Norwalk, Connecticut-based Microdisplay Report. “Because it starts with a silicone wafer … you start to leverage the advances of the semiconductor industry and the advances of the LCD industry. It’s a hybrid.”

Chinock stated that about 40 companies worldwide are developing similar products as CMD; many such entities are in a similar developmental stage. “This is kind of a critical period right now,” he said of the microdisplay industry. “(Microdisplay companies) are trying to move from a lower-yield process to a higher-yield process.” Chinock noted that the successful implementation of mass production is especially crucial to start-ups like CMD. “Investors want results. They want to see you hit your milestones,” he said. “There’s already been some roadkill in the microdisplay industry.”

Despite the competition, CMD management is steadfastly optimistic. CFO Evans, citing “encouraging growth in the past six months” and commitments from manufacturers, noted that the winter and spring of 2000 are key seasons for the company, as the technology will be “road-tested” by manufacturers and the end user. “In the next six months, we’ll see consumer reactions,” he said.

Initially microdisplay technology likely will be adopted by businesses looking for improved workplace productivity, Evans noted, hypothesizing about “your U S West maintenance man … fixing a phone box.”

Microdisplay technology, he said, can provide such a worker easier access to information. “If he can download the schematics to a mobile PC, he’ll be that much more efficient,” Evans explained. The likely first use of microdisplay technology by the broader consumer market likely will be portable entertainment devices, Evans predicted, such as a Walkmanlike DVD player.

CMD’s most daunting obstacle is realizing the diverse potential of their technology.

“The primary challenge for us as a company is going to be serving the broad variety of markets interested in our product,” Kuhn said – markets that could eventually include that of next-generation TVs (such as HDTVs and PCTVs) in addition to portable computers and other wireless Internet products.