Corning, a supplier of Gorilla Glass to tech giants like Samsung and Apple, has revealed a 12 percent decline in sales during the fourth quarter of 2023, amounting to $2,994 million. The full-year revenue also experienced an 11 percent drop, settling at $12,588 million.
Despite these challenges, Corning remains optimistic about the future, with expectations of first-quarter core sales hovering around $3.1 billion. Corning CEO Wendell Weeks expressed confidence during a post-earnings call, stating, “We remain confident that the optical communications market will normalize… and from an order rate perspective, we are beginning to see green shoots in the hyperscale data center space.”
In the Optical Communications segment, fourth-quarter sales reached $903 million, marking a 2 percent sequential decrease. This decline primarily stemmed from a temporary reduction in demand from carrier customers drawing down inventory. Fourth-quarter net income also saw a 3 percent sequential dip, amounting to $88 million due to the lower volume. This sector, accounting for a third of total sales, grapples with sluggish demand for fiber cables from the telecom sector.
During the Q4 2023 results presentation, Corning’s CEO highlighted significant developments in the Optical Communications segment:
Customers are leveraging excess inventory for network deployment.
Anticipation that carriers will soon deplete excess inventory, paving the way for increased broadband deployment.
BEAD funding for network builds expected to commence in the second half of 2024, contributing to an extended addressable market for several years.
Projections indicate hyperscale sales growth supporting cloud computing, including artificial intelligence.
The CEO expressed confidence in sustaining a robust growth trend, aiming to outpace the market through continuous innovation under the “More Corning” initiative. The ascendancy of fiber optics technology, with expanding applications in wireless and cloud computing, including AI, remains a key focus. New product innovations are expected to enhance revenue per installed fiber, while government incentives are seen as instrumental in extending the long-term trendline.
Display Technologies faced a similar fate in Q4, with sales dropping 11 percent sequentially to $869 million. This decline reflected a sequential volume decrease aligned with market trends, offset partially by the impact of the company’s second-half price increases. Fourth-quarter net income in this segment decreased by 4 percent sequentially, reaching $232 million. Corning successfully implemented a double-digit price increase in the latter half of 2023.
In the Display Technologies segment, the CEO addressed challenges and outlined future expectations:
Panel makers reduced utilization in the fourth quarter, a trend expected to continue into the first quarter of 2024.
Anticipated decrease in the glass market and volume by a mid-single digit percentage sequentially in Q1 2024.
Despite near-term challenges, a mid-single digit growth in glass volume at retail is projected for the full year 2024.
Improvement in financial performance is expected from the first-quarter run rate.
Long-term growth in retail volume is anticipated, driven by larger TV screen sizes and improved unit demand as consumer behavior normalizes.
Successful execution of a double-digit price increase in the second half of 2023, with a favorable pricing environment expected to persist.
Specialty Materials experienced a 16 percent sequential sales drop in Q4, settling at $473 million. This followed robust third-quarter sales of smartphone cover materials for product launches. The net income for the fourth quarter saw a 19 percent sequential decrease, amounting to $58 million, reflecting lower volume.
In Environmental Technologies, Q4 sales were $429 million, down 4 percent sequentially, in line with normal seasonality. The net income for the fourth quarter remained consistent sequentially at $98 million.
Life Sciences witnessed a 5 percent sequential increase in fourth-quarter sales, totaling $242 million. The uptick is attributed to North American and European customers completing their inventory drawdowns. The fourth-quarter net income saw a significant 31 percent sequential increase, reaching $17 million, driven by higher volume and productivity improvements.
Hemlock and Emerging Growth Businesses reported fourth-quarter sales of $356 million, marking a 9 percent sequential increase, primarily due to higher semiconductor polysilicon volume.
Mobile Consumer Electronics:
In the Mobile Consumer Electronics segment, Corning highlighted its resilience and growth:
Despite a 21 percent decline in handhelds since 2016, Corning Gorilla Glass sales have increased by 41 percent.
Emphasis on a strong innovation portfolio, with ongoing efforts to introduce new products to enhance content per device.
The launch of Corning Gorilla Armor exemplifies the commitment to “More Corning.”
Positioned as a market leader for photomask and mirror materials for GPUs and other advanced semiconductors.