Corning Gets New Rival: LG Chem Enters LCD Glass Biz

Corning (GLW) may be about to find itself with a formidable new rival in the LCD glass business.

LG Chem, South Korea’s largest chemical company, has signed a deal with Schott Solar, a unit of speciality glass maker Schott AG,  to license the German firm’s techniques for producing LCD glass, Reuters reports.

Tejinder Sandhu, an analyst with Daewoo Securities, points out in a research note that that there are now only three LCD glass makers of significant size: Corning, which has about 55% of global market share, plus Japan-based Asahi Glass and Nippon Electric Glass. “LCD glass has been a cozy club with muted price competition and operating margins in the 30%-50% range,” Sandhu notes.

Sandhu also notes that a related company, LG Display (LPL), buys 40% of its LCD glass from Samsung Corning Precision, which as the name implies is a JV between Samsung and Corning. He notes that this is “not a situation that causes smiles in the LG Group boardroom.” LG Display accounted for about 20% of 2008 global LCD glass revenues, Sandhu estimates.

Sandhu concludes that this is “definitely a negative” for Corning, Asahi and Nippon Electric Glass. “The onmly reason that LCD glass margins have been so high in history is the absence of a credible Korean or Taiwanese competitor,” he writes.

Corning on Monday rose 18 cents, or 1.5%, to $11.91.