Fri, Jul 23, 2004 - Page 10 News List

Corning, Chi Mei forge supply deal to fund plant

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Corning Inc, the world's largest maker of glass used in flat-panel displays for computers and TVs, said Chi Mei Optoelectronics Corp (奇美電子) agreed to pay US$510 million for products in advance to help it expand glass production.

Chi Mei will make payments this year and next and receive credits for purchases of liquid-crystal display (LCD) glass from next year, US-based Corning said in a statement.

The agreement will help fund Corning's plans to build a US$750 million LCD glass plant in Tai-chung, the company said.

Corning expects the volume of LCD glass it ships to rise 30 percent to 50 percent over each of the next several years as flat-panel TVs become more popular.

"Everything that we make is sold immediately," said Donald McNaughton, senior vice president in Corning's display unit.

Corning shares fell US$0.55 to US$12.14 in New York Stock Exchange composite trading on Tuesday. The shares have risen 16 percent this year.

The shares climbed 13 percent on Tuesday after the company said surging LCD glass sales lifted second-quarter revenue by 29 percent to US$971 million. Net income was US$108 million, or US$0.07 a share, compared with a net loss a year earlier.

In February, Corning said it would spend US$600 million over the next two years to expand its LCD glass plants in Shizuoka, Japan, and in Tainan, where Chi Mei is based.

The new plant in Taichung should begin making glass during next year's third quarter, the company said. The deal with Corning gives Chi Mei, the nation's second-largest maker of flat-panel displays used in computers and TVs, a guaranteed supply of glass, McNaughton said.

Worldwide sales of flat-panel TVs are expected to double this year to 4.5 million sets, the company said. By 2006, 16 percent of all TVs sold will have LCD screens, Corning predicted.

Corning accounts for more than half of all LCD glass production worldwide, chief financial officer Jim Flaws said on Tuesday. The company competes with Japanese LCD glassmakers NH Techno Glass, NEC Corp's Nippon Electric Glass Co and Asahi Glass Co.

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