Corning Display Financials– Quick Look
May 21, 2018
Corning reported Q118 2018 results of $2.5b (GAAP) and EPS of $-0.72, with non-GAAP sales of $2.513b and Core EPS of $0.31. Revenue was in-line with consensus ($2.5b) and slightly ahead of EPS consensus ($0.30). Corning expects LCD glass volume to grow ~5% in 2018 and expects that the expansion of Corning’s glass supply project for BOE’s Gen 10.5 LCD fab in Hefei to allow the company to grow LCD glass volumes faster than the market. The Gen 10.5 glass used at the BOE facility is ~80% larger than a typical Gen 8.5 LCD fab and ~257% larger than a typical Gen 6 OLED fab format, which means for every sheet that BOE runs on this fab, it would equal almost two sheets on a Gen 8.5 fab.
Glass pricing remain contained, with Q118 declines the lowest since 2010. The company expects display glass price declines to continue, reaching mid-single digit percentage for the full year. Specialty Materials (Gorilla Glass) is expected to grow Y/Y but will be dependent on customer adoption rates, with the next iteration of Gorilla Glass due in 2H. There have been 5 popular smartphones released this year that use cover glass on both the front and back, which is an incremental positive for GLW’s specialty materials business. Corning expects the display and specialty materials businesses to experience relatively modest growth in the 1sthalf and accelerated growth in 2H, based on the increasing average size of TV screens, despite the overall drop in unit volume.
Corning will be working with customers concerning flexible/foldable OLED displays. They mentioned that the use of glass in the production of flexible OLEDs is slightly greater than what it was for LCD, which represents the use of carrier glass as an interim substrate attached to the flexible substrate. Further, they indicated that a truly flexible device would have to have a very high bending ratio, which, using current materials, would lead to an unreliable product, essentially one that did not last long. They indicated that some CE companies might release such a product, but they did not see the release of a truly bendable smartphone in the near future.
It is not clear how a single piece of carrier glass in a flexible OLED, which replaces 2 glass substrates in a rigid OLED or LCD panel can use a comparable amount of glass.