What is the difference between DLP and LCD projectors?

Hang on to your hats, because this answer is a doozy! 

The short answer is that DLP projectors tend to be much more expensive than LCD because they are a much more sophisticated technology. Here is a more detailed description for the technologically savvy:

LCD (liquid crystal display) projectors usually contain three separate LCD glass panels, one each for red, green and blue components of the image signal being fed into the projector. As light passes through the LCD panels, individual pixels ("picture elements") can be opened to allow light to pass or closed to block the light, as if each little pixel were fitted with a Venetian blind. This activity modulates the light and produces the image that is projected onto the screen.

DLP ("Digital Light Processing") is a proprietary technology developed by Texas Instruments. It works quite differently than LCD. Instead of having glass panels through which light is passed, the DLP chip is a reflective surface made up of thousands of tiny mirrors. Each mirror represents a single pixel.

In a DLP projector, light from the projector's lamp is directed onto the surface of the DLP chip. The mirrors wobble back and forth, directing light either into the lens path to turn the pixel on, or away from the lens path to turn it off.

In very expensive DLP projectors, there are three separate DLP chips, one each for the red, green, and blue channels. However, in DLP projectors under $20,000, there is only one chip. In order to define color, there is a color wheel that consists of red, green, blue, and sometimes white (clear) filters. This wheel spins between the lamp and the DLP chip and alternates the color of the light hitting the chip from red to green to blue. The mirrors tilt away from or into the lens path based upon how much of each color is required for each pixel at any given moment in time. This activity modulates the light and produces the image that is projected onto the screen.

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