Corning Inc. says a slowdown in demand in the US for its LCD glass substrates is being offset by strong demand from Asia and other parts of the world and keeping supply tight.
“It is evident now that…
Corning Inc. says a slowdown in demand in the US for its LCD glass substrates is being offset by strong demand from Asia and other parts of the world and keeping supply tight. “It is evident now that glass supply is tight”, James Clappin, president of Corning Display Technologies, said in an interview with Dow Jones Newswires. “I don“t know if I would use the word shortage, but it is certainly tight”, Mr. Clappin said in Beijing, where the company opened a new glass-finishing factory on 28 March 2008. “Panel demand is stronger than historically it has been in quarter one, and it will be strong in quarter two, again stronger than it has historically been”. Corning is the world“s biggest producer of glass panels for LCD screens used in digital televisions and computer monitors. Including a joint venture with Samsung Electronics Co., Corning accounts for more than half of the world market, Mr. Clappin said, citing market research firm DisplaySearch. Corning sees global LCD glass demand rising 25% to 30% in 2008, down from around 40% in 2007. The lower rate of growth is from a significantly higher base, however, so it still demonstrates “continued strength in the marketplace”, Mr. Clappin said on 27 March 2008. Corning Chief Financial Officer Jim Flaws said in January 2008 that the company projects the balance between LCD glass supply and demand will remain tight throughout the year, unless demand is adversely affected by an economic downturn. The company now believes that the current economic slowdown in the US “is having an effect on US demand”, Mr. Clappin said 27 March 2008. “But what is then clear is that demand is being picked up by the rest of the world, like China, perhaps India, Russia, etc”. Mr. Clappin declined to forecast how long tight conditions would last, saying it depends on the further effects of a US slowdown and “it“s very hard to say”. In the tight conditions, Corning is able to supply glass to customers with which it has long-term supply agreements, “but somebody who is requesting something beyond that, or a customer who doesn“t have a long-term supply agreement, they may be experiencing some shortage”, he said. Consumer demand for televisions, rather than the largely business-led demand for computer monitors, is now the main driver of LCD panel demand, he said. He declined to give figures on the balance of sales to different regions, but said North America and Europe are the largest markets for televisions carrying its glass panels, followed by China. But North America and Europe are also showing the slowest growth, while China is racing ahead. John Bayne, president of Corning Display Technologies China, said the company forecasts that 105 million LCD TVs will be sold around the world in 2008 industrywide. Of that figure, an estimated 16 million will be sold in China, up from 9 million in 2007. “The other interesting thing about China is the average screen size for an LCD TV is the largest in the world, which is a little bit counterintuitive, but the Chinese view an LCD TV as a status symbol”, Mr. Bayne said. Corning“s new glass-finishing facility in Beijing will serve local LCD panel producers including BOE Technology Group Co. and SVA Group Co. The plant will carry out “back-end” processing of panels such as cutting and preparing them to the specifications of customers. Corning has often built factories close to its Asian customers such as Samsung Electronics Co. in South Korea, AU Optronics Corp. in Taiwan and Sharp Corp. in Japan. This helps secure their place in the supply chain by enabling them to build to specification, deliver on time and maintain relationships with the customers. Clappin said Corning has typically entered Asian markets first with a “back-end” finishing facility, and then moved on to a “front-end” glass substrate factory, where the glass is made. Corning may in the future build a front-end facility in China as that market matures, Mr. Clappin said. “This is pretty much a time-honored approach of how we“ve grown into regions”, he said.