LCD Panel Price Declines Ease with LCD TV Sales Having Risen in November

LCD panel price declines eased, as U.S. LCD TVs in November posted the first year-over-year monthly retail sales increase since April, Corning Corporate Controller Tony Tripeny said at the Barclay’s conference in San Francisco.

Retail sales of LCD TVs rose 3 percent in November, halting a slide that began with a 7 percent drop in May and peaked with an 11 percent decrease in August, Tripeny said. The sales gain was fueled by “very aggressive” retail promotions that began in early November, well in advance of Black Friday, Tripeny said. The price for 32-inch LCD panels fell to $150 early this month from $160 in the second half of October, but the percentage drop declined to 2 percent from 3 percent, Tripeny said. In 46-inch, the panel price slipped to $340 from $360 during the same period, returning to a 1 percent decline after nearly a 3 percent drop in November, he said.

The slowdown in price declines has been coupled with LCD manufacturers lowering production rates. Samsung and LG Display, which had been running plants at 90 percent of capacity for much of Q3, have since dropped below that level, Corning officials said. Taiwanese LCD panel makers cut production, in some cases, to 50 percent of capacity in September from percentages in the mid-80s in July and August (CED Nov 2 p4). LCD panel inventory is expected to hit 16 to 16.5 weeks by year-end, down from 17 weeks in Q3, Tripeny said.

Production is showing signs of increasing, analysts said. Corning, which previously forecast a flat to slight decline in LCD glass volume in Q4, is projecting a 10 percent increase at its own plants, Tripeny said. At the Samsung Corning Precision (SCP) LCD glass joint venture, volume will decline 5-10 percent in Q4, he said. The decline in Corning’s glass prices, expected to be 4-5 percent in Q4, will “moderate” in Q1 to more “normalized” 2-3 percent decreases, Tripeny said.

Corning is continuing to forecast doubling capital spending to $2 billion in 2011 as it increases production capacity for its scratch-resistant Gorilla LCD glass. Corning initially produced Gorilla glass on a fourth-generation LCD panel line in Harrodsburg, Ky., but it’s moving some manufacturing to a 6G line in a former Sharp factory in Japan. The glass has gained 290 design wins with 27 brands, up from 240 and 24 in late September, Tripeny said. Among the devices using Gorilla glass is Apple’s iPad tablet PC. Gorilla glass sales are projected to increase to $1 billion in 2011 from $450 million this year. In July, Corning had forecast 2010 Gorilla glass sales of $250 million (CED July 29 p1).

Profit margins for Gorilla glass remain “significantly below” the corporate average, which in Q3 was 43 percent. The manufacturing cost of Gorilla glass, which including coatings and screen printing, has been higher than Corning expected, Tripeny said. But Corning hasn’t “spent a lot of time on cost reduction” in focusing on production, Vice Chairman James Flaws said. “Opportunities for cost reduction are once we get past the first phase,” he said. Corning’s first TV customer for Gorilla glass is expected to ship product in 2011. The company recently embarked on a print advertising campaign for Gorilla glass that includes ads in Wired and Rolling Stone magazines, but “we not spending a fortune on this,” Flaws said. The ad depict a gorilla and the LCD glass with the tag lines “tough yet beautiful” and “tough yet brilliant,” Tripeny said.

Gorilla glass will be marketed for automotive and major appliance applications in addition to CE products, Flaws said. Corning won’t get any revenue from automotive for “the next year or so,” but could garner some in second half 2011 from refrigerators in international markets, he said.

"We have a quite a large range in how this will roll out, and we don’t look for as much margin from this in the first year,” Flaws said. “We'll have good idea of how the consumer likes these things” by Memorial Day.

Meanwhile, Corning will take a $17 million write-off against Q4 earnings to shut down its 60-milliwatt frequency-doubled green laser business (CED Nov 2 p2). Corning, which supplied 530-nanometer green lasers for Microvision ShowWX micro-projector, struggled with yield issues. Corning also received a $1.2 billion one-time cash dividend Nov. 12, including $859 million from its investment in SCP, Tripeny said. It also got $175 million in insurance payments stemming from a magnitude-6.5 earthquake that shut down a plant in Shizuoka, Japan (CED Aug 13/09 p4) and a power outage in Taichung, Taiwan (CED Oct 23/09 p5), company officials said.