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Corning to Supply Glass  for All Gen 10.5 Fabs Except CSoT
July 01, 2019
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Corning held its annual investor’s day last week and the following summarizes the display portion:
 
Total Glass

• Focus is on LCD – Obvious as LCD capacity is almost 12 times that of OLED presently and will still be almost 6 times by 2022.
• OLED only 1% of TV set sell-thru in units in 2018 – True, but much larger on a dollar basis which gets TV set maker’s attention. 
• Overall TV set size to expand 3% - 5%/yr., (~1.5”)  -- Expect 51” average in 2022 – certainly possible
• Expect glass volume to be up 5% each year – If based entirely on average TV size, possible.  If includes unit volume growth, less so.

 

Glass Pricing        

• Remains very favorable – Only risk is if display producers remain unprofitable for an extended period
• Glass supply balanced to tight – Has been and continues to be – Very rational behavior by competitors, primarily because GLW is so dominant in larger size (higher margin) glass
• More profitable than competition – Much narrower product focus based on profitability rather than share
• Expect pricing down mid-single digits this year – Should not be a problem as yearly negotiations have been completed and month to month pressure is not great currently. Better than last year
• Reliability is the key and panel producers consider price secondary to availability and quality.  Fab costs can be reduced, but not having glass when needed or yield issues facing low quality glass can be devastating to producers.

 
Display Capex

• Gen 10.5 Focus 
• Captured 3 of 4 new Gen 10.5 fabs – Only missing ChinaStar (ASG) 
• Will receive $3 of $4 (G10.5 fab) capex from customers – Certainly the ideal circumstance from a financial perspective
• Typically, sales start 2 years after commitment
• Customer capacity commitment for 10 yrs.

 
Gorilla Glass

• 10 times larger than nearest competitor
• GG3 to GG6 – GG3 (10/2012) still being used on a number of new lower-tier smartphones
• GG DX/+ - Low reflection, composite surface with high scratch resistance – on Galaxy Watch – New product
• Wireless Charging creates opportunity – Competes with plastic but glass the choice for high-end smartphones – Metal not suitable. Encourages glass on back
• Expect $2b in GG sales by 2023 – Possible

 
Gorilla Glass Revenue Examples

• Smartphone
  • 2016 – Single GG3/device – Sold to finisher – Generated $0.50
  • 2019 – GG6 on back and front – Decorated front – Generates $12
• Laptop
  • 2016 - $3.00
  • 2019 – GG5 with improved optics – produced internally – Generates $22
  • Wearables
    • 2016 – GG3 sold to supply chain – Generates $0.10
    • 2019 – If using DX+, generates $4.00
• Technical & optical glass
  • Building capacity – Hefei, China
  • Must meet automotive specs – Specific to industry – shatter related
  • Expect $2.6b by 2023 – Up from $1.3b in 2018 – Possible but less likely than expansion of Gorilla Glass generally
  • Focus on center stack – As do most companies – It’s the easiest target and the most visible
  • Bidding on >$1b in new projects – Usually long play-out contracts but nice to have that much opportunity
  • “Opportunity” for $25/car (center stack) – Want $30 (glass only) – Would be great but still early in automotive display cycle