Sharp Bets Big on Ultra-thin, LCD TVs

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Until now the world's top TV makers have focused on selling consumers ever-larger sets. Only a handful of companies can do it profitably. They rely on state-of-the-art factories to crank out the massive, specialized panels that are each cut to make several big-screen flat TVs at a time. Brand-name makers such as Sharp, Panasonic (MC), Sony (SNE), and Samsung Electronics also cram in sophisticated chips and software to improve picture clarity and color. That's how those brands can command premiums of 20% or more for TVs larger than 46 inches, DisplaySearch says. In the smaller sizes, where upstarts have flooded the market with commodity sets, the premiums are closer to 10%.

OLEDs: The Next Frontier

The next battle looks likely to be over thinness. Exhibit A: Sony's 11-inch, high-definition TV made with an organic electroluminescent display, or OLED. Unlike LCDs, which use a backlight, and plasma displays, which have a space for chemical reactions, OLEDs use a carbon-based material that produces a picture with just an electric current so they can be made very slim. Sony's OLED, which hit stores in Japan this month, has a screen that's just one-tenth of an inch thick. Others such as Toshiba (TSBF), Hitachi (HIT), and Victor of Japan have their own thin TV prototypes for commercialization in 2008 and 2009.

Luckily for Sharp, OLEDs and another up-and-coming tech known as field-emission displays will remain a tiny fraction of the market for several years, says iSuppli analyst Riddhi Patel. Even so, Mizushima's crew will likely face a fierce PR war against all the newfangled technologies.

That suits Mizushima just fine. "We think consumers will recognize that our TVs are superior," he says. His confidence stems partly from honing the art of the well-timed pitch over nearly three decades at Sharp. In past projects, Mizushima has had to sway skeptical executives inside and outside the company that LCDs would work in video cameras, cell phones, and game machines. In the Nineties, his team landed an order to equip Nintendo's portable Game Boy console with a new type of color screen. The machines went on sell more than 115 million units worldwide.

Engineers who have worked for Mizushima give him high marks for his guile and mentoring. He'll need to draw on those skills in the coming months. While Sharp's new plant is going up, his team will be finalizing plans to mass-produce the very prototypes they took a month to build by hand. Eventually the plant will make as many as 36,000 giant panels, measuring 2.8 meters by 3 meters, each of which can be cut into 15 40-inch, five 50-inch, or six 60-inch sets. Mizushima says he expects the LCD technology to improve, which should keep rivals and copycats at bay. The extra time also lets him work on building a case to convince analysts and consumers.

Hall is BusinessWeek's technology correspondent in Tokyo .