A New Era for Market Economies: The Rise and Fall of AMLCD Manufacturing
Cost-Effective AMLCD May Carry Unintended Drawbacks
For centuries, free market economies have thrived on competition, driven by the pursuit of greater profits. The aerospace and defense sector has been no exception, benefiting significantly from this competitive landscape. Now, we delve into the fascinating story of Active Matrix Liquid Crystal Displays (AMLCD), their rise, fall, and the impact on the industry to date.
AMLCD, initially developed in the US by Westinghouse Electric Corporation, had a journey marked by political debate and economic shifts. Despite initial efforts to secure technology and manufacturing capabilities domestically, the allure of lower costs in Japan prevailed. By 1994, Japan controlled 99% of global AMLCD production, relegating the US to the sidelines [1].
The concentration of expertise and manufacturing capabilities in Japan proved beneficial to all trade partners, following David Ricardo's economic theories. For the past 30 years, technological advancements in AMLCD, such as cell gap spacer improvement and high-temperature liquid crystal fluids, have led to a dramatic drop in costs and a massive expansion of the flat panel display market from $0.05b in 1993 [1] to $142b in 2021 [2].
However, just as the market by nature shifts, this trend too began to change. The need for capital-intensive factories capable of producing larger AMLCD screens led to the migration of expertise and manufacturing capabilities to lower-cost countries, first to South Korea, then Taiwan, and eventually China. This migration has resulted in more advanced and cost-effective AMLCD-based goods than ever before.
Supply Chain Concerns in a New Landscape
Fast forward to today, and the aerospace and defense sector finds itself grappling with growing supply chain concerns due to the concentration of AMLCD manufacturing capabilities in China and Taiwan. As with any industry, geopolitical risks and the global integrated circuit shortage pose a significant threat to the sector. With 100% of military aircraft worth flying and the digitalization of the battlefields, AMLCD displays are critical to aerospace and defense [3].
As largely predicted in earlier studies like Flat Panel Displays in Perspective published in 1995, the industry's low-cost benefits come at a potential risk of availability. While manufacturers like Kyocera remain in Japan, Japan Displays, formed in 2012, is in financial trouble and considering transferring more capabilities to mainland China [3].
The enrichment data highlights additional industry-wide concerns. Global supply chain disruptions, geopolitical pressures, and technological and regulatory changes are all posing challenges for the aerospace and defense industry [2][3][4][5]. Dependence on specific technologies like AMLCDs could make the industry vulnerable to technological disruptions or obsolescence. To mitigate these risks, it's crucial for the industry to embrace diversification, nearshoring, and technological adaptability.
The story of AMLCD serves as a powerful reminder that the modern market economy is always evolving, with technologies and industries constantly shifting in pursuit of profit and efficiency. As we look to the future, the aerospace and defense industry must be prepared to navigate these changes, ensuring resiliency and adaptability in the face of emerging challenges.
- The concentration of AMLCD manufacturing in China and Taiwan, coupled with geopolitical risks and global integrated circuit shortages, presents a significant threat to the aerospace and defense sector, where AMLCD displays are critical due to the digitalization of battlefields.
- The continuous evolution of the market economy, demonstrated by the AMLCD industry's shift from the US to Japan, South Korea, Taiwan, and eventually China, emphasizes the importance of diversification, nearshoring, and technological adaptability for the aerospace and defense industry to mitigate potential risks associated with dependence on specific technologies like AMLCDs.
