The company hopes to have products available by 2005 using the advanced circuitry, perhaps even a "display card" that could store data and be carried around for use with various gadgets from games machines to mobile phones to car navigation systems.
"This could be something the size of a business card, perhaps with a wireless function and touch-screen input," Mikio Katayama, head of Sharp's mobile display division, told reporters after a news conference. "We still have to work out the specifics."
The new screens use Sharp's continuous grain silicon technology, which is already moving into mass production in displays containing built-in driver circuits.
Display drivers, which help turn a screen's pixels on and off, usually reside in separate microchips.
Sharp is betting heavily on CGS technology, which permits on-screen circuitry that can save space, cut production costs and produce ultra-fine resolutions for showing maps or photos.
A quick advance to next-generation technology has taken on added urgency for Sharp as South Korean and Taiwanese rivals, often armed with substantial cost advantages, are moving aggressively into the LCD market.
A surge in production by Asian competitors has driven down prices for flat-panel computer screens and severely crimped profits at Japan's display makers.
The screen unveiled on Tuesday is the latest in a series of advances in CGS that Sharp hopes will keep it ahead not just of its Asian competitors but of a rival technology, low-temperature polysilicon, used in LCDs by Japanese peers such as Toshiba Corp. and Sanyo Electric Co.
Sharp's Katayama said CGS, with its greater uniformity of silicon grains, achieved three times the rate of electron transfer as low-temperature polysilicon, making it much better suited for on-screen circuitry.
But he cautioned that it would be some time before the screens were smart enough to replace the PC, while glass poses no serious threat yet to silicon as the preferred material for everyday semiconductors.
The prototype display incorporated a 25-year-old PC processor and, with 13,000 transistors, was a far cry from the 55 million in one of Intel Corp.'s Pentium 4 processors.
Sharp executives also said the latest advance had not compelled them to increase their target of 300 billion yen ($2.40 billion) in annual revenues from CGS screens by the 2005-06 financial year.
Shumpei Yamazaki, president of unlisted Semiconductor Energy Laboratory Ltd., Sharp's partner in the project, compared the challenge of putting processor circuitry on glass to "building a skyscraper on rubber."
But he said glass offered several advantages over silicon, including lower temperatures for production, so that faster metal gates could be used for its transistors.
Sharp senior executive vice president Shigeo Misaka said the companies wanted to keep the technology to themselves as much as possible, although they may eventually have to license it to a second manufacturer to reassure customers about supplies.
The news had little impact on Sharp's share price, which ended Wednesday trade 3.22 percent lower at 1,053 yen, in line with weakness across the Japanese electronics sector.
The Tokyo Stock Exchange's electrical machinery index IELEC fell 3.67 percent.