Earthquake Impact Production Bloomberg reported on August 11 that production at Corning‘s Shizuoka-based LCD glass plant was disrupted due to an earthquake off the coast of Japanâ€™s main island. It is not known when operations will resume. The earthquake was 6.5 magnitude and centered around 96 miles (115 km) southwest of Tokyo. Fortunately no employees were injured based on initial reports but 110 Tokyo residents were injured. Nuclear power reactors were automatically shutdown.
LCD Glass Volume to Drop About a 5 to 10 percent drop in LCD glass production based on volume is expected for the third quarter compared to the second quarter according to CFO James Flaws. The lower production will mean lower sales by about US$65 million according to Corning. Fourth quarter shipments will be impacted. The volume drop will impact LCD manufacturing plants located in Japan including Sharp and Panasonic.
LCD Glass Prices Might Rise I’m not sure I agree with Corning that there will be a direct causation between lower LCD glass substrate shipments and lower revenue in the third quarter. Certainly revenue will decrease but not to the extent that the company is estimating. Also there have been reports where stock prices of LG Display and AU Optronics (AUO) have increased, a result of rising LCD panel price expectations. Yes, LCD panel prices will certainly rise but…[private] so will the cost of making them. LG Display procures its LCD glass demand mostly from Samsung Corning Precision Glass (SCP) located in South Korea and other suppliers of glass in Japan. AU Optronics (AUO) is not served by Japan’s Shizuoka plant at all as local plants in Taiwan serve the LCD supplier’s needs. What will most likely happen is that LCD glass substrate prices will increase somewhat due to slightly lower supply. This has happened as LCD manufacturers are gearing up to serve LCD TV brands who in turn are busily building them, distributing them in order to have them ready at retailer shelves by mid-November. These LCD manufacturers especially Sharp and Panasonic who have already experienced some tightness in LCD glass will certainly pay a premium to secure a more limited supply. As to LCD panel price increases? There will be some but the increases will be offset somewhat by the increase in the price of LCD glass substrates.[/private]