Direct and Spillover Effects of ATP-Funded Photonics Technologies

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Nevertheless, employees have increased from roughly 25 at the time of the 1994 proposal, to35 in 1996, 58 in 1997, 89 in 1998, 100 in 1999, 150 in 2000, and then falling to 50 after2002 following a series of cutbacks.Given various other income sources, including multiple other federal contracts, and thesubsequent $100 million in venture capital invested, it is impossible to allocate the fraction ofthis employment ramp-up exclusively to the $1.75 million ATP award. However, since theother contracts were largely product-driven (e.g., specific NASA or Pentagon applications),not manufacturing processes or materials reliability, the ATP award was the most criticalearly enabler for mass commercialization. Second, it also was critical for attracting theventure capital, which significantly increased Displaytech’s scale and likelihood ofcommercial success.How to value this? Based on our analysis of Displaytech and the technology sector downturnin 2000, we believe that Displaytech would not exist today without the ATP. The technologydevelopment might have continued through an acquisition by another display or liquidcrystal firm, but Displaytech and the existing jobs would have disappeared. Attributing all ofthe value of Displaytech today to ATP is extreme, but provides a useful upper-boundassumption for estimating value created, which can then be scaled according to anyalternative assumed fraction attributable to ATP.Figure 6 shows Displaytech’s actual employment trend over time, and also a non-ATPcounterfactual estimated employment trend based on a two-year delay in commercialization,which is the lead time that Displaytech believes it gained from ATP funding. After 2000, ouralternative estimated employment falls to zero under the assumption that without theaccelerated ramp-up, Displaytech would have been a victim of the technology-sectordownturn. The difference between the white and shaded bars represents an upper-boundestimate of the direct employment effect from ATP.It is an upper bound, but probably not too much of an overestimate if we look only withinthe microdisplay sector. If Displaytech did not exist, a significant fraction of the increaseshown in Figure 6 for employment in U.S.-based high-technology jobs would not exist either.Foreign firms, because they dominate microdisplay markets, would likely have made up thebulk of sales now displaced by Displaytech. U.S.-based Kopin in particular, as an existingJVC camcorder supplier, and perhaps Three-Five Systems, would likely pick up some of thebusiness in their existing product lines. Because of the contract manufacturing alliance withMiyota, Displaytech’s main manufacturing employment is overseas, so few U.S.manufacturing jobs would be lost. However, the management, engineering, and research jobs,the majority of U.S. employment at Displaytech, would likely be lost altogether from U.S.microdisplay sector employment. Kopin’s and Three-Five Systems’ R&D and engineeringactivities would not expand much, but their sales of existing microdisplays would. In ourinterviews with management at Three-Five Systems, for example, they estimated that,without Displaytech, their microdisplay sales, currently small to begin with, might expandonly about 5 percent. On the other hand, the manufacturing output at the two likely wouldexpand by several million dollars per year if Displaytech did not exist. These jobs would be26 DIRECT AND SPILLOVER EFFECTS OF ATP-FUNDED PHOTONICS TECHNOLOGIES
FIGURE 6.Estimated ATP Employment Effect at Displaytech, 1995–2005160140120Actual Displaytech EmploymentEstimatedAlternative LagScenarioEmployees1008060402001995 1996 1997 1998 1999 2000 2001 2002 2002 2003 2003 2004 2004 2005 2005net gains for the United States, since both Kopin and Three-Five Systems were manufacturingat U.S. facilities, while Displaytech was using a Japanese contractor.So on net, how much were these Displaytech jobs worth? We make estimates under variousassumptions shown in Table 5. As a privately held firm, Displaytech does not make financialor wage information available, and we had no access to it. We can estimate, however, basedon industry norms. Average white-collar technical professional wages ranged from about$40,000–70,000 annually in the Boulder area in 2003. 20 Photonics industry employment inthe Boulder area was about 30,000, so the 50–150 working at Displaytech, even in regionaleconomy, had negligible impact on wage levels. So Displaytech’s 50 jobs after 2002represented a total wage bill of about $2–3 million annually, and the 150 in 2000 about$6–9 million.However, counting the entire differential wage bill between the two scenarios in Figure 6would overstate the economic impact because these extra employees were not free to theeconomy. They could have been doing other things—their opportunity cost—althoughperhaps less valuable things. The Boulder-Longmont region had an unemployment rate of20. U.S. Department of Labor (2003b).Displaytech 27
Page 1 and 2: NIST GCR 06-893Direct and Spillover
Page 5 and 6: AbstractTo evaluate the impact of t
Page 7: AcknowledgmentsThis research would
Page 10 and 11: This report presents the findings f
Page 12 and 13: 6. This case study suggests that ke
Page 14 and 15: 3. Comparison of Displaytech and Un
Page 17 and 18: 1. Introduction and BackgroundThe A
Page 19 and 20: the Department of Defense (DOD), Na
Page 21 and 22: Hence, we consider two additional s
Page 23 and 24: area because many photonics technol
Page 25 and 26: FIGURE 2Worldwide Photonics Compone
Page 27 and 28: TABLE 3.Matched Case Study Firms by
Page 29 and 30: 2. DisplaytechINTRODUCTIONIn June 1
Page 31 and 32: significant interest worldwide. The
Page 33 and 34: FIGURE 3Cross-Section of a Ferroele
Page 35 and 36: TABLE 4.Crowded Display Competition
Page 37 and 38: FIGURE 4.Competing Electronic Displ
Page 39 and 40: wafer. For FLC-on-silicon microdisp
Page 41: FIGURE 5.Within-Market Increase in
Page 45 and 46: subtracted the opportunity value of
Page 47 and 48: FIGURE 8.Historic Display Price-Qua
Page 49 and 50: TABLE 6.Estimated Consumer Surplus
Page 51 and 52: TABLE 7.Organizations and Groups Mo
Page 53 and 54: FIGURE 12.Patent Citations to Displ
Page 55 and 56: ColorLink’s pi-cell color switche
Page 57 and 58: FIGURE 14.Geographic Distribution o
Page 59 and 60: competitors, were added by patent e
Page 61 and 62: FIGURE 16.Citations to Displaytech
Page 63 and 64: TABLE 9.Top Organizations and Indiv
Page 65 and 66: FIGURE 19.Corporate Citations to Di
Page 67 and 68: TABLE 10.Corporations Citing Post-1
Page 69 and 70: 3. Comparison ofDisplaytech and Uni
Page 71 and 72: acklights of LCDs; and they are bri
Page 73 and 74: which was to give DuPont access to
Page 75 and 76: FIGURE 20.Timing of Displaytech and
Page 77 and 78: Table 11. Organizations and Groups
Page 79 and 80: FIGURE 23.Patent Citations to Uniax
Page 81 and 82: In summary, together with Uniax ear
Page 83 and 84: TABLE 12.OLS Regression Results on
Page 85 and 86: FIGURE 26.Corporate Citations to Un
Page 87 and 88: TABLE 13.ContinuedTop 25 Individual
Page 89 and 90: FIGURE 28.Corporate Citations to Un
Page 91 and 92: 4. Findings and ObservationsFINDING
Page 93 and 94:
microdisplays. We cannot fully dise
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TABLE 15.Publication and Citation R
Page 97 and 98:
social ties, distance in the sense
Page 99 and 100:
FIGURE 30.Flowchart of ATP Technolo
Page 101:
government policies, which establis
Page 104 and 105:
• ATP goals inherently involve se
Page 106 and 107:
iv. Suppliers. Three or four on who
Page 108 and 109:
Business Journal of Phoenix, The (2
Page 110 and 111:
Paul, J. (2000), A Brief History of
Page 113:
ABOUT THE AUTHORSTodd A. Watkins is
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Direct and Spillover Effects of ATP-Funded Photonics Technologies

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