iFire Technology moving quickly to enter consumer market for flat panel displays

IFire Technology Inc, a subsidiary of Westaim Corp formed to take its flat panel display technology to market, has received a major cash injection from the federal government to bolster its strategy of penetrating the highly competitive business segment of large-screen flat panel televisions. The $30-million investment by Technology Partnerships Canada (TPC) represents 28.4% of a $106 investment iFire plans to make in the technology and its production processes by April, 2003.

According to iFire’s most recent quarterly financial statements, the firm is committed to pay TPC 1.065% “of eventual sales of the technology under development” and TPC has also received warrants to purchase common shares worth $6.3 million when exercised and representing 0.5% of outstanding shares as of March 31/01.

iFire is currently spending $30 million annually to develop its flat panel display modules, which is based on electroluminescent technology that relies on thick film processes. In contrast to other competing flat panel display technologies, the iFire system does not use any gasses, liquids or moving parts. The Toronto-based firm has already produced a 17-inch prototype screen but has been searching for a financial partner to share the costs as it moves to the next level — the commercial release by 2004 of branded display modules for use in affordable, wall-hung televisions with screen sizes between 25 and 50 inches.

TPC funding will also go towards designing and refining production techniques for the modules. Canadian-based production is one of the conditions of the federal funding, although iFire’s strategy is to strike alliances with offshore manufacturers of televisions. One of the overriding factors in the decision to take on the world market of consumer televisions is the cost advantage of the iFire technology. The firms says its manufacturing process uses a simple screen-printing technique used in the capacitor and printed circuit board industry. Since it is less sensitive to contaminants, there are fewer process steps and higher yields allowing for lower-cost production equipment and facilities.

“This is the largest research operation of its type in the world and we’re trying to move this technology fairly quickly. We’re using three R&D shifts a day to shorten the R&D cycle,” says iFire president Michael Goldstein. “iFire has brought it closer to commercialization but what we needed was a bridge between basic research and development work to get it ready for commercialization.” Goldstein says the firm chose TPC as a partner because “it’s a great deal” and TPC was looking for share risk by investing in technologies that could be developed into entire industries.

“If this becomes successful, Canada can become a player in a large global market which means job creation and economic stimulus,” he says. “The next big technology breakthrough is further advancement in colour and it will be completed in the next month. The next step is engineering work. R&D spending will go up as a result of getting closer to commercialization.”

To those who allege that TPC’s investment is another example of unnecessary business subsidization, Goldstein points out that other governments are also investing heavily in competing technologies. He says the Korean government is spending $400 million annually to advance flat panel display technology in that country, and the governments of Taiwan and Japan are also investing heavily. Even the US is investing in a display consortium through its Defense Advanced Research Projects Agency (DARPA), the central R&D organization for the US Department of Defense. It funds military-oriented applied research and technology projects with high risk and payoff.

The iFire investment also represents a prime example of defence conversion, given the military origins of the technology and that fact that iFire occupies a facility formerly owned by Litton Systems Canada Ltd. In fact, Litton was financially supported by TPC’s predecessor, the Defence Industry Productivity Program (DIPP) when it was developing technology for liquid crystal displays for defence applications.

“iFire is using a core capacity developed in Canada and assisted by DIPP, and TPC is leveraging that previous investment. Defence conversion is part of our mandate,” says John Brunet TPC’s deputy executive director and director aerospace and defence. “It’s a high risk venture but if it succeeds it will re-establish a capacity that’s been lost in North America in the past 10 or 20 years, which is the manufacturing of televisions and associated electronics.”

TPC’s investment is the latest in a long series of public investments in Westaim’s advanced industrial materials (AIM) technologies that date back to 1990 and a five-year, $140-million commitment by the federal and Alberta governments. The final payments under that scheme were made in 1996 to former Westaim parent Sherritt Inc in 1996. Since that time, Westaim has spun off other AIM ventures including, Westaim Biomedical Corp and Surface Engineered Products Corporation and Westaim Ambeon.

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