Corning is taking action in the fourth quarter to reduce glass capacity at both its wholly-owned business and the Korea-based joint-venture Samsung Corning Precision (SCP), said Corning senior vice president and corporate controller Tony Tripeny.
Corning still expects worldwide glass demand to increase sequentially in the fourth quarter, but there will be excess glass capacity, Tripeny told investors at the Credit Suisse Annual Technology Conference on Tuesday.
At its wholly owned business the reductions will include delaying the start up of new glass melting tanks, as well as postponing the relighting of tanks that are down for repair, he said, adding that SCP plans to shut down several glass melting tanks.
The combined actions at both Corning´s wholly owned business and SCP will reduce the company´s total worldwide capacity by about 25% by the end of the fourth quarter, Tripeny said.
The company´s combined LCD glass volume, which includes both its wholly owned business and SCP, is now expected to be up slightly sequentially versus previous guidance of up more than 10%, he said. LCD glass price declines are expected to be more significant in the fourth quarter and as a result, consolidated equity earnings are expected to be down 30% versus original guidance of down 5%, he added.
Corning in its third-quarter earnings call said that it expected to regain lost market share in South Korea in the fourth quarter and it significantly reduced LCD glass pricing during the quarter to compress its pricing premium, in light of the current state of glass oversupply in the industry, Tripeny said.
But a cut in orders by a major customer in Korea will now result in lower-than-expected shipments from SCP, Tripeny said, adding that Corning expects SCP´s LCD glass volume to be up 5% to 10% sequentially versus original guidance of more than 20% volume growth.
The company will also be lowering its Gorilla Glass sales forecast for the fourth quarter to a 25% sequential decline, compared to its original forecast of a 15% sequential decline. The revision is due to lower worldwide demand for cover glass for tablet computers, Tripeny said.