A Touching Story at CES

The Apple iPhone's impact was widely evident at the Consumer Electronics Show, as new touch-screen devices could be found everywhere

Andreas Rentz/Getty Images

by Catherine Holahan

The consumer electronics industry came unbuttoned in Las Vegas this week. At the annual Consumer Electronics Show, which kicked off Jan. 7, companies from around the world unveiled myriad devices boasting touch-sensitive technology, rather than traditional push-button controls.

Motorola (MOT), Sony (SNE), and LG Electronics all showed off touch-screen phones this week. Microsoft (MSFT) Chairman Bill Gates touted a touch-screen computer, the Surface, akin to a flat panel TV for a tabletop. Even camera makers, such as Kodak (EK), included touch-screen LCDs in their devices. Touch-screen tech has been in use for years, but the impetus to develop and weave it into consumer electronics gathered steam with the June introduction of Apple's (AAPL) iPhone. "The touch-screen industry is really getting hot," says Jennifer Colegrove, a senior analyst at iSuppli. "Since the iPhone came out, there are a lot of companies that did not have a relationship with touch screens before that decided, 'O.K., I want to make a touch screen, too.'"

Rapidly Expanding Market

The touch-screen tech ecosystem now includes more than 100 companies specializing in everything from smudge-proof screens to sensors capable of detecting fingers before they even contact the screen. Sales of leading touch-screen technologies, such as those used in mobile phones and navigation devices, are expected to rise to $4.4 billion in 2012, up from $2.4 billion in 2006, according to iSuppli estimates.

Some of the companies were barely known outside their home countries before their association with touch-screen tech thrust them into the spotlight. Balda (BADG.DE), the German outfit creating the iPhone's touch screens (BusinessWeek.com, 4/16/07), was recognized mainly as a maker of cell-phone cases until it landed the Apple contract. Since being identified as an iPhone supplier (BusinessWeek.com, 7/2/07) by firms that take apart and analyze devices, Balda has secured a contract to provide between 6 million and 8 million screens for a leading mobile manufacturer. Production is scheduled to begin in April, 2008.

Tyco Electronics' (TEL) ELO TouchSystems division, 3M's (MMM) Touch Systems division, and China's GeneralTouch Technology are also among the leading companies that develop touch-screen displays and related technologies.

Also riding the touch-screen wave are chip manufacturers that create the capacitive sensors that detect fingers and interpret their gestures. Among them is Cypress Semiconductor (CY), which supplies the technology that powers Apple's iPod click wheel. Through its Programmable System on Chip (PSoC) segment, Cypress creates chips that can be coded to detect fingers from a few feet away and then translate their motions to device commands. "We supply the brains that attach to the film (touch screen) and interpret the signals and gestures," says Norm Taffe, executive vice-president of the division that creates the PSoC chips.