What They Say
DSCC gave a comparison of the financial results in Q2 of three major display glass makers, Corning, NEG and AGC in the light of the weak demand for TV LCD panels. The article gives a deep dive into each but in summary:
- NEG said that sales were sluggish in the second quarter on customers’ inventory adjustments. Revenue in the business segment that includes displays was down 9% YOY. The firm expects the downturn to continue
- AGC display glass business saw reduced revenue and sharply reduced profit. The firm’s Electronics segment had profits of $9 million on revenues of $555 million with revenues down 5% on Q1, but up 2% on last year. From displays alone, revenues were down 7% QoQ and 2% YoY to $323 million
- DSCC had previously reported on Corning for its paying subscribers so didn’t included it in the blog, but we can report that the display business was down 8% QoQ and 6% YoY to $878 million and profit was down 8% YoY to $228 million. The Specialty Materials group which makes Gorilla Glass and Ceramic Shield (on the iPhone 13) were down by 2% QoQ and flat on an annual basis to $485 million. Corning is said to have raised all of its prices because of increasing energy, raw material and logistic costs.
Corning’s combined revenue captured 68% of total industry revenues in Q2’22, up 3% from both Q2 2021 and Q1’22. Corning’s share of operating profits increased from 70% in Q1 to 82% in Q2, while AGC’s share decreased from 9% to 1% and NEG’s share fell from 20% to 17%.
DSCC pointed out that while panels are usually priced in US dollars, glass is priced in Yen, so currency has a big effect on results.
Corning had commented in its earnings call that glass prices in Q3 2022 are expected to be flat sequentially. The reduced profitability of the two Japanese glassmakers, reinforced by comments about rising costs and higher material prices, suggest that they are not in a position to be aggressive on pricing.
DSCC estimates that glass prices increased by 6% during 2021 in terms of Japanese yen, but this represented a 3% decrease in prices when expressed in US dollars because the yen depreciated by 9% during 2021.
Even with stable prices (in yen), the display glass business looks headed for a sharp downturn in the second half of 2022. For the three big glassmakers who have all successfully nurtured non-display businesses the downturn is unfortunate but only a speed bump.
What We Think
There’s nobody that I have met in the display industry that has a better handle on the market dynamics of the glass industry than DSCC’s Bob O’Brien. (BR)
Glass Maker Revenues from Display Business Segments
