Corning Increases World LCD TV Sales Forecast to 177 Million Units

The sharp rise in LCD glass demand also caused Corning to raise its estimate for global PC monitor and notebook PC sales to 184 million and 209 million units, from 176 million and 207 million, Vice Chairman James Flaws said. Monitor and notebook sales were up 21 and 46 percent for January-February.

TV sales were up 85 percent in China in the same period to 8 million units, Flaws said. Corning had projected sales of 7 million units, he said. While there were reports of excess TV inventory in China of 1 million units, Corning hasn’t seen evidence of oversupply, Flaws said. In Japan, where unit sales were up 90 percent, growth in the 40-inch and up TV category was three times that a year earlier, he said. U.S. LCD TV unit sales declined 19 percent in January but rose 14 percent in February and 19 percent in March, and they were up 12 percent the first two weeks of April, Flaws said. Because of improved sales, Corning increased its estimate for industry growth in LCD glass to 2.9-3.1 billion square feet from 2.8-3 billion square feet, Flaws said.

To meet increased demand, Corning resumed plans for expanding production at its LCD glass plant in Taichung, Taiwan, with a goal of increasing capacity late this year, Flaws said. Corning postponed expansion at the Taichung factory in late 2008, at the height of the global economic crisis. Corning also is retrofitting its former 6th-generation glass plant in Shizuoka, Japan, to make its scratch-resistant Gorilla glass starting in Q3, CEO Wendell Weeks said. Corning will produce Gorilla TV cover glass at the Shizuoka facility, using space previously dedicated to 6G glass production. Corning halted 6G glass production in part of the factory in 2008 but continues to make 8G there, analysts said. It’s near an agreement with a “major” customer for Gorilla glass. Gorilla TV glass will generate a “minor” amount of revenue in Q4 and produce “significant volume” in 2011, Weeks said. While the gross profit margins for the Gorilla technology will be less than for the glass itself, Corning will make up the difference with the coatings, special surface and anti-smudge features required for TV panels, Weeks said.

Gorilla glass is being produced at Corning’s Harrodsburg, Ky., plant using 6G glass for cellphones, digital audio players and notebook PCs. The Kentucky plant is running at maximum capacity for Gorilla glass, a Corning spokesman said. It has been deployed in 80 products from 17 brands, Corning officials said. By Q2, Gorilla glass is expected to be approaching $200 million in revenue on an annualized basis, Weeks said.

While Corning’s costs from the start-up last fall of its 10G LCD glass plant in Japan have been a drag on earnings, the situation will change as Sharp increases production this year at its LCD panel plant, Flaws said. Sharp has said its global TV sales will increase this year to 15 million units from 10 million.

With the plans for expanding production, Corning boosted projected capital spending this year to $1 billion from $600-$700 million, Flaws said. Corning also expects to make a decision by Q4 on building two glass plants in China, Weeks said. The factories, which will join a finishing facility that Corning has in Beijing, won’t start adding “significant” capacity to Corning’s production until 2012, Flaws said. Many of Corning’s customers, including LG Display and AU Optronics, have unveiled plans for panel manufacturing in China. Samsung also will make panels there, likely using glass from the Samsung Corning Precision joint venture, Corning officials said.

Corning’s Q1 net income soared to $816 million from $740 million due partly to the company’s repatriating $1 billion of current-year earnings from foreign subsidiaries. The move allows Corning to record the benefit of excess foreign tax credits, cutting its Q1 tax rate to 2 percent from 10 percent. Net sales rose to $1.55 billion from $993 million a year earlier as display sales soared to $782 million from $359 million. In specialty materials, which includes Gorilla glass, revenue rose to $96 million from $60 million, while those from telecommunications slipped to $364 million from $385 million. The increase in Gorilla glass offset a 13 percent decline in advanced optics sales, Corning said. The company’s fiber and cable sales declined to $190 million from $192 million, while those from hardware and equipment dropped to $174 million from $193 million. Corning’s telecommunications business suffered in Q1 from “soft” demand for fiber-to-the-premises cable, Corning officials said. Corning’s Q1 equity earnings from its stake in SCP jumped to $469 million from $195 million as the joint venture’s LCD sales increased to $1.1 billion, Corning officials said. The industry had 825 million square feet of glass, about 17 weeks’ worth of inventory, at the end of Q1, representing a “comfortable” supply, Flaws said. Corning aims for 15-20 weeks’ supply, he said. The industry had 630 million square feet -- 12 weeks’ worth -- at the start of Q1, Flaws said.