CORNING, N.Y., July 22 -- Corning Inc. announced this week that its board of directors has approved a capital expenditure plan of $750 million to further expand its liquid crystal display (LCD) glass substrates manufacturing capacity. The company said most of the investment will be used to fund the first phase of a new Corning facility in Taichung, Taiwan. Corning announced in April that its board had approved preliminary funding to develop plans for the facility.
The first phase of the Taichung facility will add glass melting and finishing capacity capable of producing Generation 5.5 and Generation 6 glass substrates. Corning said it expects to begin initial manufacturing in Taichung during the third quarter of 2005, with additional capacity continuing to come online through 2006.
"Total worldwide flat-panel glass demand could triple over the next four years if LCD monitor penetration continues and LCD television emerges as we expect," said Wendell P. Weeks, president and COO. "We are increasing capacity to provide our customers with state-of-the-market large-size LCD glass substrates toward which the industry is quickly moving. We are closely monitoring consumer demand for LCD television, as well as supply chain inventory levels, and we will pace our manufacturing expansions accordingly."
As part of this capital expenditure plan, Corning's board also approved preliminary funding for two additional expansion projects: preparation for a second phase of construction at the Taichung facility, which would begin in 2005 and would double the facility's large-generation production; and preliminary funding for the expansion of the company's Shizuoka, Japan, LCD glass facility. Corning said this will add significant capacity for producing Generation 5.5, Generation 6 and larger glass substrates.
The announcement is Corning's third major LCD capital expansion in the past 12 months. The 2004 portion of this plan is included in Corning's previously announced capital spending forecast of $950 million to $1 billion for this year. Ongoing capacity expansions are also underway at Samsung Corning Precision Glass Co. Ltd., Corning's equity affiliate in South Korea, but are not part of this week's announcement.
Corning also announced this week it has entered into a long-term LCD glass supply agreement with Chi Mei Optoelectronics Corp. of Taiwan to provide Generation 5.5 LCD glass substrates. As part of the agreement, Chi Mei will prepay $510 million to Corning in several installments in 2004 and 2005 for a portion of the contracted purchases. Chi Mei will be able to use the prepayments in the form of credits against glass purchases over the life of the contract.
James B. Flaws, Corning's vice chairman and chief financial officer, said, "The prepayment feature of the contract helps Corning, as we are constructing substantial additional capacity to meet the growing industry demand. At the same time, it provides Chi Mei with an assured supply of larger size glass for their new LCD fabrication facility."
For more information, visit: www.corning.com