July 24, 2004
Corning Inc., in its third major liquid crystal display (LCD) capital expansion in the past 12 months, has initiated a capital expenditure plan of
USD 750 million for the further expansion of its LCD glass substrates manufacturing capacity. The greater part of this investment will be put towards the first phase of the new Corning plant in the Central Taiwan Science Park in Taichung. This first phase of the Taichung facility will add glass melting and finishing capacity capable of producing Generation 5.5 and Generation 6 large-size LCD glass substrates, which will be supplied to LCD display makers in Taiwan.
Corning expects to begin initial manufacturing in Taichung during the third quarter of 2005. The glass maker has also approved additional funding for preparation for a second phase of construction at the Taichung facility, which would begin in 2005 and would double the facility's large-generation production.
A critical element of this expansion plan is the signing of a supply agreement between Corning and Taiwan's Chi Mei Optoelectronics Corp. which will guarantee the long-term supply of Generation 5.5 glass to Chi Mei’s new LCD fabrication facility in Tainan beginning in 2005. Under this agreement, Chi Mei will prepay
USD 510 million to Corning in several installments this year and next year. Chi Mei will be able to use the prepayments in the form of credits against glass purchases over the life of the contract. Corning says that this agreement benefits both parties because it guarantees a long-term supply for Chi Mei while allowing Corning to share investment risks.
Chi Mei's Generation 5.5 plant is the only one in the world, and thus it is especially dependent upon Corning for its glass supplies due to the plant's unique specifications and requirements. Other domestic panel makers that have signed long-term supply contracts with Corning include AU Optronics and HannStar Display. Corning is AU Optronics largest supplier, while HannStar currently relies on Corning for 100% of its glass supplies. There are concerns that those plants which have not signed long-term supply contracts with Corning might face difficulties ordering supplies if supplies are limited.
Corning is the world's largest supplier of LCD glass substrates, accounting for over 50% of global supplies. It believes total worldwide flat panel glass demand could triple in the coming four years if LCD monitor penetration continues and LCD television emerges. Corning expects growth in the annual LCD glass market to range from 30% to 50% over the next several years, with growth this year reaching the high end of this range. Corning says LCD glass growth will be driven increasingly by LCD television penetration, and predicts that the total number of LCD televisions sold this year will be double the 4.5 million sets sold in 2003. With LCD television prices forecast to continue coming down, Corning predicts worldwide LCD television penetration could reach 16% of the total television market in 2006.
(Economic Daily News, Wafer News, Electronic News)
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