Computers

Micron Enters Market for Tiny Display Screens


Memory chipmaker Micron Technology is being buffeted by price swings in the low-margin computer memory market. So the company is turning to a healthier sector of the tech field for future growth—tiny projectors that may one day enlarge the text and graphics more users consume on ever-more sophisticated smartphones.

On May 20, Micron (MU) plans to announce that it has acquired DisplayTech, which makes small display screens used as viewfinders in digital cameras and other products, for an undisclosed amount. The deal would get Micron into the business of building miniature screens and tiny projectors that within a few years could begin showing up in wireless phones and other consumer electronics devices, the companies say. Micron closed the deal last week.

By acquiring DisplayTech's technology, Micron could create projectors so small that they could be built into a device like Apple's (AAPL) iPod or Research in Motion's (RIMM) BlackBerry. DisplayTech uses a technology called ferroelectric liquid crystal on silicon, or FLCOS, that takes in an image from a digital device and turns it into projected light. Micron plans to announce the acquisition as part of the launch of a new micro-display product.

Role of Smartphones May Shift

Micron's interest stems primarily from a new technology DisplayTech has been developing called "pico projection," which can produce crisp images from small devices. But Micron will compete with Texas Instruments (TXN) and others to sell the technology to device makers.

If Micron's road map for the technology unfolds as planned, the role of smartphones in society could begin to shift. By projecting videos or other images in high quality onto a wall, the devices could quickly change roles from informing or entertaining a single person to imparting information to all the people in a room. BlackBerry users could beam a business presentation without lugging a laptop and full-sized projector.

Micron, which makes chips used to temporarily store data in a computer's memory while it's waiting to be processed, has been trying to diversify for some time. The company is known primarily for building commodity DRAM memory used in computers. In 2006, Micron entered a joint venture with Intel (INTC) to build NAND flash memory chips used to store data on digital cameras and media players. It also spent $790 million that year to acquire Lexar Media, a maker of memory cards for cameras. And it's been building sensor chips for digital cameras for several years.

A Natural Technology Fit

The company could use a healthy new business. Hurt by steep drops in the price of computer memory, Micron has reported two years of losses, losing $1.6 billion in fiscal 2008. Sales of $5.8 billion last were virtually unchanged from the prior year.

In its most recent quarter ended Mar. 5, Micron reported a $751 million loss on sales of $993 million. Revenue from its main memory business was down 26%. By the end of the year the company plans to lay off as many as 2,000 employees in Boise and phase out some manufacturing there.

DisplayTech's technology is similar enough to Micron¹s traditional chipmaking technology that it's a natural fit for the companies to combine, says Abid Ahmad, director of Micron's silicon and systems group, who will oversee the DisplayTech unit. "Projectors are just another piece of the puzzle we can offer manufacturers," he says. "These products will also need both DRAM memory and NAND flash memory, too." Ahmad says DisplayTech's technology is especially useful in small products where preserving battery life is important.

DisplayTech is a small company based in Longmont, Colo., that employs 47 people. It has shipped 21 million small displays to companies including 3M (MMM) and Kodak (EK). "There is a great deal of interest in this technology among the manufacturers right now," says Chris Chinnock, president of Insight Media, an industry research firm that tracks the market for emerging display technologies. "Projectors could turn out to be an important new feature in consumer gadgets." It's a bet the embattled memory chipmaker is placing to revive its fortunes.

Hesseldahl is a reporter for BusinessWeek.com.


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