Last updated on July 2nd, 2019 at 09:11 pm
New York-based Corning Inc. will build two Gen 10.5 glass plants in China with at least three-quarters of the investment in each coming from customers or other stakeholders, the company announced Monday.
Gen 10.5 plants produce glass optimized for 65- and 75-inch display screens and need to be co-located with screen fabrication facilities because of the size of the glass. One of the new plants will be in Guangzhou and the other will be in Wuhan.
Corning did not discuss the customers for the plants, but the Guangzhou plant will supply a Foxconn factory and the Wuhan plant will supply a BOE facility, according to industry analyst firm Display Supply Chain Consultants.
Why do the investments matter in Wisconsin?
When Foxconn Technology Group originally announced plans in 2017 to invest $10 billion in Wisconsin, the company said it would build a Gen 10.5 plant. Project supporters were quick to point out the project would also require a $1 billion investment and 400 jobs at a Corning glass plant on the same site.
Those plans were complicated when Corning chairman and CEO Wendell Weeks said two of every three dollars for any new display capacity investment would need to come from other sources. Wisconsin leaders – having approved a $3 billion incentive for the Foxconn plant—balked at the idea of providing additional subsidies for the project.
Foxconn opted to move forward with a Gen 6 facility that would use smaller glass and allow for more product flexibility. The shift also meant glass could be shipped from a Corning facility in Kentucky instead of being made on site.
Among the reasons Foxconn cited for the shift last year were an oversupply of Gen 10.5 displays and global economic uncertainty.
John Zhang, senior vice president and general manager of Corning Display Technologies, said in a video at Corning’s investor day that the market could support the addition of one Gen 10.5 fab per year. Display panel makers have announced four factories total.
Zhang said at least three-quarters of the funding for the new plants would come from customers or other stakeholders, more than the two out of three dollar benchmark laid out by Weeks last year when he was asked about a Wisconsin plant.
“This third-party funding reduces our cash outlays and provides attractive financial returns to our shareholders,” Zhang said.
The company also secured 10-year supply agreements with its customers for the new facilities.
Corning officials said they expect growth in the display market to be driven by larger format screens produced by Gen 10.5 facilities. James Clappin, executive vice president of Corning Glass Technologies, said the average screen size will grow by 1.5 inches annually, reaching 51 inches by 2022.
“The growth in display is indeed happening in China, predominately because that’s where the money is and where the investment is occurring,” he said.
Weeks noted that 3% to 5% growth annually in television diagonal size translates to 6% to 10% glass volume growth without any increase in the number of television units sold.
“With our Gen. 10.5 manufacturing investments, we are well positioned to capture the majority of display glass growth and give our customers the best economics for their largest screen sizes,” Weeks said. “We’re not counting on more TVs, we’re putting more Corning in those TVs.”