Corning (GLW) CFO James Flaws Tuesday morning said in a statement that second-quarter glass demand “is much stronger than we anticipated even a few weeks ago.” He says the company now sees Q2 sequential volume up about 100% in its wholly owned business. That is up from an original forecast of 50% growth, which had been revised up to more than 75% at the end of May.
Flaws noted that the company met much of the improved demand by drawing down inventory, but that has it also has begun shipping glass from melting tanks restarted earlier in the quarter.
Flaws added that Samsung Corning Precision Glass expects about a 50% sequential increase in volume, up from the 40% forecast on May 28, and an original prediction of more than 25% growth.
Flaws second quarter prices were “moderate,” with smaller price declines than in Q1. He says Q2 supply chain inventory is about even with the start of the year, which he says is a positive sign.
Driving demand is continued strong demand for LCD televisions. He notes that April LCD TV sales were up 22% in Europe and 77% in China. In May, he says, LCD TV sales were up 48% in Japan. In the U.S., growth slowed in April, but he says “reports that we have received indicate a significant upward spike in domestic LCD TV sales in late May and the first three weeks of June.”
Corning is not changing its forecast that the for global LCD glass this year will be between 2.1 billion and 2.2 billion square feet, but Flaws added that given continued strong demand for LCD TVs, especially in China, there could be upside to the forecast.
For Q3, Flaws says LCD shipments will be consistent with the improved Q2 forecast. He expects the company to be capacity constrained, with demand “higher than our ability to manufacture.” Corning is prioritizing glass allocation to long-term supply agreement customers, he says.
The company’s original forecast was for Q3 to show moderate sequential growth; they now see flat shipments on much higher Q2 levels. Corning expects third-quarter glass pricing at its wholly owned business and SCP to be approximately flat versus the second quarter.
Looking ahead to Q4, Flaws added that “if retail demand for LCD TVs continues to be stronger than forecasted, we could see a more muted seasonal decline for LCD glass demand.”
GLW in early trading is up 16 cents, at $16.43.