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LCD TVs Turn Corning Into Big-screen Star

As companies in the flat-screen television business struggle to maintain profit, Corning, the US company that supplies most of the specialist glass for these products, has looked on with satisfied detachment.

Corning shares have more than doubled in value over the past three years and outperformed the S&P 500 by 58 per cent, driven by investor interest in its near-60 per cent share of the market for supplying the high-tech glass that goes into liquid crystal display televisions ¨C the most popular type of flat-screen sets.

Corning??s stock market value is about $40bn, nearly eight times larger than its sales last year of $5.2bn, and double the figure in 2004.

Bulent Bulgurlu, chief executive of Koc, the Turkish industrial group that is a large maker of flat-screen televisions sold through its Arcelik subsidiary, said: ?°They [Corning] have probably got the best part of the [business in the flat-screen] industry. You can??t make LCD sets without this special glass.?±

The pressures on the companies that make flat-screen TV panels ¨C Corning??s main customers for this glass ¨C were last week highlighted by a wide-ranging alliance on areas such as technology sharing between Samsung and LG of South Korea, two of the biggest makers of these panels.

Prices for panels are falling rapidly, a result of sliding prices of flat-screen televisions, as well as fierce competition among the flat-panel makers, which include Sharp of Japan and Taiwans AU Optronics and Chi Mei Optoelectronics.

Jim Clappin, head of Corning??s display technology operations, expects flat-panel TV dimensions to continue to expand, a factor that automatically increases demand for his company??s material. In the past year, Japanese TV set makers have announced new 70-inch and even 108-inch LCD sets ¨C well above the largest selling sizes this year of 30-45 inches. ?°We see a particularly big demand in China, where consumers appear to want larger and larger TV sets,?± said Mr Clappin.

Corning expects total LCD glass demand will grow 35-40 per cent this year, above its estimates of a few months ago. It reckons 73m LCD TVs will be sold in 2007, after 44m last year.

Cornings LCD glass sells for about $35,000 a tonne, roughly 80 times more than glass used in windows.

It has to be made in special processes to exclude contaminants larger than a few micrometres [millionth of a metre]. Also, to provide the correct optical properties, the glass??s surface must not deviate up or down by more than 20 nanometres [billionths of a metre.

Of the $7bn global sales of this kind of glass in 2006, Corning??s share, including that of a joint venture with Samsung, is estimated at about 58 per cent.

The next biggest competitor is Asahi of Japan with a share of 20 per cent. The company bases its material on a tough form of glass that it inven­ted in 1962 for car windscreens.

It has invested several hundred million dollars in developing the glass, plus more than $2bn in plants in the US, Japan, Taiwan, South Korea and China.

In 2006, total world production of LCD glass came to 200,000 tonnes, roughly four times higher than 2003.

The total in 2008 looks likely to rise to more than 300,000 tonnes. In 2010, more than 100m LCD TVs are likely to be sold, according to industry experts.

Copyright The Financial Times Limited 2007
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