Corning at Susquehanna Conference Notes

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Ann Nicholson

Feel good about channel inventory

Yes. Our view of inventory is that it’s going to be healthy coming into the year. So, we look at panel marker, set market, retail in total, entering this year in a healthy position and as we go through this year, exiting relatively at the same range as expressed in forward-looking weeks. Obviously in the second and third quarters, the supply chain builds inventory to get ready for the fourth quarter holiday season drawdown of that inventory. And predominantly the panel marker inventory which is where we have the best line of sight has been pretty consistent. They’ve been running high utilizations and have maintained the same level of inventory now for quite a while. So, I think we feel good about supply chain inventory assuming that retail demand does what we expect this year in total which is up mid-single digits.

End market demand overview

“Yes, so our view of TVs this year is very similar to last year. We expect unit sales to be consistent. So, no unit growth year over year. Maybe a little bit of unit growth. We do expect average screen size to increase by an inch and a half at least, and then that totals to giving you high single digit area growth for TV. Then you click down to the IT market, IT handheld market, pretty much net flat year-over-year. So, some screen size growth, we think tablets shrink a little bit this year, and that gives you a net zero. So, in total, that’s how we get to mid-single digit growth as measured in square feet at retail for the year.”

Try to manage supply tight to demand

“Yes, so Corning manages supply to demand very prudently. You’ve heard us say before that tanks have a long life. So, when you start up a tank, you want to keep it running. It’s a high fixed cost, high variable margin business. So, you really want to have that be a 100% spoken for in terms of demand. So, that’s where we are very prudent. So, we take a long-term view of what demand is going to be. We look out 12 months. We do our estimation of end market expectations.”

OLED vs. LCD in TV

“Yes, so for OLED television today it’s a small market. So, the cut right to the chase. We just don’t see OLED televisions gaining mainstream adoption in the television market. So, OLED you go back to eight years ago, when I first joined IR, OLED television’s promise was richer color gamut, thinner form factor, thinner bezels, low power consumption.

If you fast-forward to today, its proven difficult, yeah, the last one was lower bill of materials costs, if you fast-forward to today it’s been technically difficult to manufacture OLED. So, they have not been able to realize the lower cost. Still very much a premium price over LCD televisions, but in the meantime LCD televisions have improved their color gamut, improved the picture quality, thinner bezels, thinner form factor and for television consumption, people don’t really care about power consumption.

So, you could see why OLED makes sense in the small form factor. Their cost challenges are not as great right. So, they’re more cost competitive with LCD and people do care about the battery life of their device. So, OLED make sense in that small form factor.

But we believe that its difficult because LCDs continue to improve. They continue to reduce cost. They’re getting cheaper every year and to your point, quantum dot definitely expands the color gamut for LCD and we feel like it pretty much can put LCD on par with that picture quality that you find in OLED.

Some people will prefer and OLED picture over LCDs in the television space and so we’ll probably continue to see sales of OLED, but we don’t think it becomes mainstream.”

Gorilla glass in cars

“So I think if you think about it as one chunk of the pie, if you believe that is going to happen, then you say okay well what are the advantages of Gorilla glass in cars? It is definitely reducing weight? It’s reducing weight in the top half of the car. So, reducing weight, making no other changes gives you better miles per gallon. That lighter weight also gets you better performance. So, you go from 0 to 60 faster. I don’t think that Ford Mustang or Supercar GT was interested in improving the miles per gallon. I think they were interested in that car’s performance, right. You’re reducing glass in the top half of the car. You’re lowering the center of gravity. You’re improving its safety and/or improving its performance.”