I am very tempted to simply shout out, “I told you so!” But, I won’t do that because I think Corning still doesn’t get it. Get this: “Corning said LCD TV sales remain strong in the U.S. as prices decline. But flat-panel electronics companies in Asia are cutting back on glass orders to work off surplus inventory.” So that would mean that the EU and the rest of the world is lagging behind the usual purchasing trends for LCD TVs. What is surprising to me is that LCD TV sales are strong in the US. For some reason, I highly doubt this.
I’ve said this enough times to seem like a broken record but consumers in the US are purchasing smaller and more affordable LCD TVs. If you’re looking at just units, sure sales might seem quite robust. But if you look at the size makeup, there is a broad shift toward smaller and cheaper models than before. I’ve said it before but Corning doesn’t have a clear picture of LCD TV sales in the US. Nobody does. You only get bits and pieces of the entire LCD TV market in the US. There are only two companies that provide US LCD TV sell-through information and DisplayBlog is one of them. DisplayBlog does not provide the entire picture, but enough to show some strong trends on a monthly and quarterly basis.
Corning’s display technology sales increased 33% Q/Q to US$809 million in Q2’08, but there was a manufacturing interruption that negatively impacted shipments to one of its customers. The impact was about US$24 million in revenues and US$16 million in profits in the same quarter. Another variable that is causing Corning to have a more cautious outlook is that some Taiwan-based LCD manufacturers decreased their procurement during the summer to reduce inventory that has built up. According to Wendell Weeks, CEO of Corning, “We believe that the set assembly portion of the supply chain built too much inventory in the first half of this year. As set assemblers have continued to hold back on orders, panel makers have lowered prices and reduced utilization rates to balance the supply chain. We think these utilization cutbacks will continue into September in Taiwan.”
This isn’t a surprise since AU Optronics (AUO), the largest LCD manufacturer in Taiwan, announced poor Q2’08 results. Chi Mei Optoelectronics (CMO)’s Q2’08 results weren’t as bad but it did announce that it will be reducing its LCD production by 10% back in mid-July.
Corning is expecting a 5% Q/Q decline in Q3’08 for its wholly-owned display glass business. This is quite a turn from the company’s previously overly optimistic flat to 5% Q/Q growth forecast for Q3’08. What this means is that Corning’s non-wholly-owned glass business, namely Samsung Corning Precision (SCP) is doing quite well. SCP supplies glass to Samsung’s LCD division that is also in bed with Sony in a joint venture called S-LCD. With Samsung and Sony being the strongest brands in the LCD TV business, this is not too surprising. I believe Samsung is doing quite well. I am not so sure about Sony.
[tags]Corning, LCD Glass, S-LCD, Samsung, Sony, Samsung Corning Precision, SCP, AUO, AU Optronics, LCD Manufacturer, Display Manufacturer, Chi Mei Optoelectronics, CMO[/tags]