Quanta Computer (2382.TT), the largest notebook OEM, with almost all top 10 notebook brands as major customers, has indicated that it expects to ship less notebooks in 3Q than in 2Q.  While the drop is expected to be a single digit decline q/q, the notebook market has seen strong shipments since 2Q 2020, a result of the necessity for both students and professionals to stay at home during the height of the COVID-19 pandemic.  The basis for the drop, according to Quanta, is weaker Chrome book shipments, a segment that has also been in demand given the lower price of Chromebooks relative to laptops and larger notebooks. 
On a more general basis, while revenue could still see some improvement in 3Q for notebook OEMs in general, those gains will come from mix and pricing, despite the typically seasonally strong 3Q as some of the global notebook acquisition programs in the education space come to an end or begin to tail off.  As we noted in our 7/14/21 note, global notebook shipments were up almost 20% last year, against a more typical 3% to 4%, with expectations for another 15% shipment growth again this year, which would imply 2H shipments of 115m, down ~18% from 1H, which seems a bit aggressive to us given the weakening shipment expectations for Chromebooks, which represented ~17.2% of total notebook shipments in 2Q ’21, up from 12.1% in 2Q ’20. 
Based on what seems to be the tone of a number of notebook OEMs and brands, we would expect the 2nd half shipment growth to be revised downward as demand weakens.  The one positive factor that could come into play is that as demand weakens it could put less pressure on component manufacturers, particularly semiconductor foundries, where capacity contention with other application segments has led to shortages or extended lead times.  As demand from Chromebook or notebook producers slows, the shortages relating to those products could lessen or abate, allowing lead times to be pulled in.  Whether that is a good thing against slower notebook/Chromebook demand remains to be seen, but it could lead to some shipment timelines being pulled in.  Unfortunately that also begs the question of whether those orders will remain as originally given as notebook and Chromebook brand targets could be in jeopardy of being lowered as3Q develops.
Looking a bit further down the supply chain, the last thing panel producers want to see in 2H is weakening demand for IT products (notebooks, Chromebooks, Monitors, Tablets) as they have shifted production capacity away from TV panel production toward what have been more profitable IT products.  Lower utilization would be the result if IT product targets are reduced, and while we expect a more optimistic view will be carried by most panel producers, we worry that there is little alternative to slowing production in such a case.  Those same utilization reductions will also signal considerably more difficulty for panel producers when it comes to panel prices, and while IT panel pricing increases have slowed a bit, they are still in positive territory.  TV panel prices, which have turned negative, have flattened panel producer revenue expectations, but with the additional leverage associated with IT products at most panel producers, the impact could be greater on the industry. 
These are still suppositions on our part, but changes have been occurring in CE product demand on an application by application basis as the pandemic (new cases) slows in much of the world.  Unfortunately that is not the case in the US both on a raw number and ‘per 100k’ basis (see Figs 5 & 6), but that does not seem to have made much of an impact on CE demand, as the educational market has siphoned off much of the stay-at-home demand last year or earlier this year, and with Federal, state, and local governments all pushing for students to return to classrooms, we expect relatively little incremental demand for notebooks and Chromebooks going forward.

​Last week we mentioned that a group of 14 US House of Representatives Republicans sent a letter to the Department of Commerce requesting that Honor (pvt), a spin-off from Huawei, be included in the DOC’s ‘entity’ list of companies with whom suppliers must petition the US government to receive a license to trade, which in most cases is not granted.  According to a financial institution in Hong Kong, Honor sent a letter to its core dealers indicating that it may be listed in the near future and those dealers can purchase original shares.  According to the source, the subscription ranges from 5m yuan ($772,300 US) to 50m yuan $7.72m US) depending on the location of the dealer and the timing of the decision, as some regions require an almost immediate answer while others do not.  The top 10 dealers in each province have received the notice and are eligible to purchase shares.
While we are not quite sure how listing might change the status of Honor with the US government, some of the distributors stated that “We believe that the main purpose of the listing is to avoid US suppression.  If Honor has private shares after its listing, it will not be easy to suppress,” which does little to answer that question, but a recent comment from the President of Honor stated that while he does not exclude future listings, there is no plan to go public in the near future. “Glory (Honor) independence has only been eight or nine months, and we have never pursued overnight wealth.  Honor is thinking about how to compete with Apple (AAPL) in mobile phones and full-scenario products, and even surpass Apple.”
We believe the Honor brand sold between 6.7 and 8.4m units in 2Q ’21, against Apple’s ~44.3m units globally and Apple’s 7.9m to 8.6m units in China, so Honor can make a case for direct competition on the Mainland, but while Apple is certainly a presence in China (~8.4% share in 2Q), Vivo (pvt), the top smartphone brand in China, along with Oppo (pvt) and Xiaomi (1810.HK) have a combined share of over 40%, with Vivo alone at 16.7%, so Honor has a way to go in its home turf before it takes on other smartphone contenders.  Perhaps the company is expecting to raise capital to better compete, but we doubt it will change the minds of those intent on pushing the Huawei spin-off onto the DOC list and choking off their component supplier list.

​We have noted (08/02/21, 08/10/21) that Samsung Display (pvt) has been developing an alternative method for OLED material deposition that would allow the production of RGB OLED displays on Gen 8 production lines.  The Samsung project has been in partnership with Ulvac (6728.JP) in terms of the deposition tool itself, essentially the heart of the process, but other tool vendors have also been developing equipment that would become part of the Gen 8 RGB OLED process and Samsung Display is not alone in trying to develop a Gen 8 RGB process deposition tool.  LG Display (LPL) has also been working toward the same goal, working with Sunic Systems (171090.KS) to adapt the process to the larger substrate format, and Dai Nippon Printing (7912.JP), the largest supplier of the FMM (Fine Metal Masks) that are what patterns the OLED material, has been developing larger masks that can be used in the new process.
Typically FMMs are limited to Gen 6 fabs or smaller as the masks begin to sag when they are larger than Gen 6.  This makes it impossible to produce patterned RGB OLED display on fabs above Gen 6, which limits the efficiency of the process.  By changing the orientation of the deposition tool from horizontal, where gravity works against the FMM to vertical, the mask size can be increased without losing the precise material alignment that the masks provide.  Since using FMMs has been the basis for the RGB OLED process, this would allow the industry to become more cost efficient without relying on new processes such as ink-jet printing and would give Samsung Display a way to directly compete with LG Display in the OLED TV space, without the compromise of using OLED materials and a color filter, which reduces brightness.
We have seen a number of other ‘vertical’ OLED process equipment but the most developed seems to be from OLEDON (pvt), a South Korean company that has been developing the technology along with a process that transfers the materials from a donor film that is pulled into the chamber via a belt.  However that process, while it allows for large substrates, is applicable to ‘open mask’ displays, such as LG Display’s OLED TVs and does not ‘pattern’ the material, which is SDC’s objective.
While we expect none of the OLED panel producers that are developing such process technology have fully committed to same, those decisions will likely be made after pilot lines are put into operation, likely next year.  If successful, product from the technology would likely become available 12 to 16 months later as production space is converted from existing or idle Gen 8 LCD production to V-OLED (Vertical OLED).  Again, if successful, this would have a significant impact on the large panel OLED space and would be a boon to the OLED industry as a whole, expanding large panel OLED production and making large panel OLED more price competitive against other existing or potential display technologies.

Overall mobile phone shipments in China in July increased 11.8% m/m and saw a y/y increase of 28.6%, the first y/y increase seen on the Mainland since March.  We do note that July of 2020 was a weak month last year, following a strong rebound in 2Q ’20, after the onset of COVID-19 in 1Q.  The overall trend (black dotted line in Fig.1) remains consistent with the past 2 ½ years.  On a YTD basis, total smartphone shipments in China have been 202.82m units, up 15.6% y/y, again noting that the YTD comparison includes the very weak 1Q 2020.  Looking at the last 4 months gives a better picture of the state of China’s mobile phone shipments really are, as it shows the YTD for April through July down 17.11% in terms of total mobile shipments.
5G shipments however continue to grow, up 15.4% m/m and 64.2% y/y, and represented 79.6% of total shipments in July, the highest share since we have been collecting data.  A relative small number of new 5G models were released in China in July (11, representing 42.3% of total new models), this comes off an unusually large number of new models last month (20), which puts the average around 17 new 5G models/month, but given that Chinese consumers have now been able to buy 5G phones for over two years, there seems to be ample models to choose from, putting the focus on total 5G unit shipments.
Seasonality in the Chinese smartphone market runs (5 year average) 47.8% in the 1st half and 52.2% in the 2nd half.  As expected, 2020 was a bit different, with 49.7% in the 1st half and 50.3% in the 2nd, but we would expect this year to be closer to the 5 year average.  That would imply 190.2m units for the 2nd half of this year for a total of 364.34m units for the year, up 18.3% y/y and would be the first up year for the China smartphone market since the data was published.  Assuming and 80% share of total shipments for 5G smartphones, implied 2H 5G shipments would be 152.16 units, or 279.96m 5G units for the 2021 year, up 88.3% y/y.  While the 5G average share of total shipments has been lower than 80% for the year to date (see Fig. 2), the trend has been just under that amount for much of this year and will likely continue to rise for the rest of the year.
We hesitate to forecast Chinese smartphone shipments using averages however, as the pandemic does not seem to have been brought under control as much as we expected, and component shortages could further limit smartphone shipments.  We note also that Huawei (pvt) will be a much smaller component of China’s smartphone shipments this year, which is another mitigating factor, however it seems that other domestic and foreign brands have made up the very weak Huawei smartphone shipments thus far this year.

On 11/11/20 we noted that reports out of China had indicated that Huawei (pvt) was planning to sell its Honor (pvt) smartphone brand to a consortium led by the Shenzhen government and Digital China (000034.CH), the largest IT service provider in China.  A few days later the actual deal was announced, with a newly formed company Shenzhen Zhixin New Information Technology Co (state) the ultimate owner.  That organization was formed by the Shenzhen Smart City Technology Development Group, the majority shareholder, which is wholly-owned by the Shenzhen government, and over 30 agents and dealers of the Honor brand along with a number of investment firms.  Digital China, a spin-off of Lenovo (992.HK) was rumored to be part of the consortium but was never disclosed, while China Telecom (601728.CH), which is owned by the state government is said to also have a small stake.
Huawei had developed the Honor brand to broaden its smartphone offerings by adding a new mid/low tier line that would allow Huawei to maintain its stature, and found that the brand was even more successful than it had planned, and represented between 30% and 40% of Huawei’s smartphone shipments in China, and higher percentages outside of the country.  As the US continued to tighten restrictions on Huawei’s ability to sell product, eventually extending those restrictions to all suppliers whose products use American made components or are produced using US software, subsidiary Honor found it also was tacitly being included in the ban on its parent, and would likely be unable to procure the components it needed to continue production.  Parent Huawei was large enough to withstand the US trade sanctions, albeit not quite as easily as anticipated, but the Honor brand organization saw the handwriting on the wall.
While the actual price of the Honor brand purchase was not disclosed, it was assumed to be ~$15b, which essentially went from the Shenzhen government to Huawei, who then disavowed any connection to the brand.  The transaction was meant to separate the Honor brand from Huawei’s inclusion on the US Entities list, and Honor was then able to sign its own deals with US suppliers. Since then Honor has seen its share of the Chinese smartphone market vary between ~5% and 14% and has continued to develop and release 14 new smartphone models this year, shipping ~12m units in the 1st half.
However that success might be nearing an end if a group of 14 House Republicans get their way.  The group has requested that the ‘End-User Review Committee” of the Department of Commerce should include the Honor Device Company in the DOC’s Entity list and restrict the flow of US technology and software to the company, as it has done with Huawei and many of its subsidiaries.  Citing a 3rd party interview of a former analyst at a Washington DC think tank which suggested that the spin-off was guided by the Chinese Communist Party and revealed “the extent to which nominally private entities, such as Honor, are deeply embedded within a PRC ecosystem that leverages interconnections among the CCP, state-owned banks, local governments, and venture capital for strategic objectives.”  The group is requesting a response within two weeks and is requesting a briefing with the committee to “ensure the Administration is moving with enough speed to counter CCP attempts at export control evasion.”
The CEO of Honor responded to the letter at an event launching the company’s first ‘flagship’ smartphone since the spin-off.  He emphasized that Honor is now an independent company that is no longer involved with Huawei and said, “We believe that if we keep on doing well in what we do that all these problems can be solved” (see Fig. 1).  The new phone is based on the Qualcomm (QCOM) Snapdragon 888 chipset, whose CEO made positive comments about the phone through a pre-recorded message at the event.
While we certainly are not going to pick a side in this heavily political debate, there seems to be little hiding the fact that the Chinese government, whether directed by the CCP or motivated by face-saving, structured the Honor deal to skirt the devastating effects of the US trade ban, but this is something that happens all the time in China.  We have seen display companies taken over by state owned entities when they looked like they were heading toward failure and more recently with semiconductor start-ups that faced a lack of experienced management. 
The Honor spin-off also had the obvious hope behind it that the economics involved with many US and foreign companies would supersede the fact that it allowed the Chinese government to both bail out Huawei and try to ‘slip one by’ the US.  What they did not consider was that politicians in the US love to hang their hats on scapegoats when things are not going their way, and while China is certainly not without its faults, it has become a representation of the antithesis of the American way of life and therefore is a perfect stooge for US political grandstanding. 
Should Honor be restricted?  If Huawei is then Honor should but that begs the question as to why Huawei was put on the list in the first place.  Ostensibly it was because the US suspected that backdoors in Huawei’s telecom equipment was allowing the Chinese government to monitor US government communication, and then mushroomed into a more ‘…we can’t let them win…’ in the semiconductor space.  As we have said in the past, rather than winning by doing as much damage to your competitor as possible, perhaps winning by being more creative and innovative than your competitor is a better strategy.  It works for Apple (AAPL), but maybe we are just drifting toward the unicorns and rainbows view.

​Figure 1 - Rainbow Unicorns - Source: theunicornlife.com            Figure 2 - Trade War Cartoon - Source: Kevin Kallaugher

​New product rollouts for CE companies have changed over the last year or so as the big in-person events that had been used to highlight the nuances of new CE devices fell prey to COVID-19 concerns.  But such matters do not deter marketing folk and virtual events introducing everything from new smartphones to updated operating systems became the norm.  In the early days of the pandemic such virtual presentations were rather primitive (some still are) and were typically a person on a big stage with a large video screen behind them.  The patter was the same and while the videos were usually well put together, they lacked the more ‘fireside’ feel that makes investors feel like they are just sitting with management.
Skipping ahead to today, things have become far more sophisticated as we have become used to seeing everyone in their basement or living room and a bit more casually dressed.  Nvidia (NVDA) seems to have taken the idea of a more ‘folksy’ approach to product introductions and at the recent Nvidia GTC conference the keynote speaker and CEO of Nvidia stood in a kitchen while he showed off some of Nvidia’s recent accomplishments.

​As it turns out, the presentation, which showed some very detailed and realistic images of Nvidia equipment, was created on Nvidia’s new Omniverse platform that allows 3D artists to work together virtually on almost any existing modeling application, with the Nvidia software acting as a collaboration and imaging tool that can create realistic 3D video that takes models from other applications and brings them together in a consistent virtual world.  Gone are the days of Power Point presentations as such 3D images can be manipulated to show 3D detail while maintaining lighting and other characteristics across the entire presentation.
As it turns out not only was the kitchen a ‘virtual one, but for 14 seconds during the 1 hour and 48 minute presentation, the CEO was not real and a virtual CEO was substituted.  Of course, the discovery that a virtual CEO was used during the presentation caused considerable buzz on social media and Nvidia was pushed to respond with the admission that while the CEO led the conference for almost the entire time, his virtual self subbed in for 14 seconds.   If one delves into the presentation that was made at a recent conference about the Ominiverse software itself, there is a section on how they actually modeled their CEO virtual clone and considerably more on the ‘holodeck’ as they call the virtual kitchen, but most unnerving was that it was ‘virtually’ (sorry) impossible to tell the difference between the real CEO and the virtual one. 
While that is a good indication that the software works as intended and the users (Nvidia staff) are a talented bunch, it begs the question, “Is what I am watching real or not?”  We have noted that some news broadcasts in China are done by virtual anchors that either mimic the actual anchor or are created for that single purpose, and how relatively sophisticated software can manipulate the image of a face to make it fit any audio stream (see below). 
Deep fakes and the like are usually created to prove a point or for nefarious reasons, but just slipping in a few virtual seconds, maybe to see if anyone catches it, or to fill in a bit of missing copy, is where things seem to be going and as the software and processing availability become even more sophisticated, it seems to open the door for IR departments to be creating a different type of communication with investors.  If we can speak with Albert Einstein and get responses to our questions that look real, a generation or two from now will see a social media ‘friends list’ with lots of ‘virtual friends’ including film stars, musicians, politicians, and historic figures with which you have had many intimate conversations with, without leaving ‘the comfort of your couch’, which seems to be the goal of the current generation.  Don’t get us wrong, we love this stuff, but expect the virtualization of media to present a number of very complicated social issues, that will keep the next generation up at night, or will it just become the norm?
Albert Speaks:
https://www.youtube.com/watch?v=RiWB2o-9qMs
 

CTIA is a trade association so we point out that they might have a slight bias toward affording the wireless industry a bit of slack when it comes to marketing, but by and large their data corresponds with much other information on 5G that we gather.  The CTIA puts out an annual survey that tallies various segments of the wireless space, with this year’s survey highlights focused on the ‘5G Economy’ in the US.
Fig. 3 indicates the rising investment made by US carriers in 5G infrastructure, which has totaled $138.4b since 2016.  The CTIA adds that such investments have created ~4.5m jobs and generated $1.5t in GDP growth during that period, although we have seen other data that is said to reflect both job growth and GDP contribution from 5G, and believe some poetic license has been taken in considering what is included in those numbers, not only by CTIA but by other wireless trade organizations also.  While the US population is ~4.3% of the global total, the US investment indicated above represents 18% of the world’s total mobile investments according to CTIA, but to qualify, that is for all wireless, not just 5G.

Cell sites are the heart of the wireless network in the US and the number of sites has grown rapidly (64.85% over the last ten years, but not as much for 5G as for Federal reforms that eased restrictions on small cell deployments, which the FCC believes would allow faster deployment of 5G.  The theory that the deployment of such small cell sites (the size of a backpack according to the FCC) were being hampered by outmoded rules relating to the large tower installations that were used for 3G and 4G.  By ‘innovating’ the rules, such small cell sites could be fast tracked, and led to the increase in cell sites in 2019 -2020. 
5G was mentioned often in the discussion surrounding those changes with the caveat that not changing the rules would place an obstacle in the way of the US leadership in 5G, which stretched the truth a bit, as most early 5G sites were just additions to 4G sites, and the 5G signal path used that same 4G network.  Once again the political battle between the US and China had much to do with the legislation, as the US fought against the rapid 5G deployments on the Mainland.  That said, given the distance limitations that 5G networks face, it will be quite important to keep 5G cell site restrictions to a minimum or the technology will face limited coverage, but expecting the sites to be almost invisible is a bit far-fetched as there will be far more of them, although ‘microcells’ hanging on street lamps or on top of telephone poles, despite their number, will be far less obtrusive than the massive 4G towers that seem to pop up on every hill.

​Where we have a problem is CTIA’s coverage maps that compares US coverage two years after initial technology deployment.  The 4G map indicates that coverage was very spotty, particularly across rural America, while 5G covers a vast amount of the continental US and much of Hawaii.   Coverage maps however tend to be based on what is theoretically possible rather than what is actually available and just a quick check on carrier sites of ‘5G availability in your neighborhood’ proves the point that states like New York, that look to be almost completely covered, have to be looked at on a subscriber level, rather than on the macro-level that the maps depict.  Here in Westchester, New York the wide area map indicates that 5G availability covers the entire county but sites like speedtest break down the coverage even further showing where actual 5G sites are located.  Taking it even one step further, carriers have their own pages where you can put in a street address to find out if 5G is available to your home, and those results are far different than even the granular speedtest maps.  In fact we have been unable to find an address in our town that has 5G availability, despite the coverage maps, which we expect will be the case in many other locations

​All in, the CTIA survey was just a reinforcement of what we had seen before, but it validated much of the previous data.  Unfortunately, and this is the case with almost all data we see surrounding 5G, the vested interests of many parties are attached to that data and tend to paint a picture that looks real but does not truly represent reality.  5G is growing and at a more rapid pace than previous wireless deployments, but while carriers spend and calculate the return path of those investments, users see a completely different picture when they wish to apply the technology, even for such simplistic tasks as sending a short video to a friend.  It’s the real world that counts.

​Xiaomi (1810.HK) is an exceptional company, growing rapidly over the last few years to become the 2nd largest smartphone brand last quarter.  That is not an easy thing to do against the marketing power of Samsung and Apple (AAPL), but the company developed a very savvy on-line marketing program that essentially started the concept of ‘spot’ sales that drew significant attention to a product that would normally have been low on the list of consumers.  The company now has a very diverse smartphone line and a number of other CE oriented products, but has just expanded their TV line to include three new OLED versions that have set the price bar a bit lower than most are used to.  The obvious objective is to stimulate OLED TV sales and broaden the Xiaomi TV appeal to those who want what would be a higher quality set, but in typical fashion, Xiaomi has used low prices to attract attention rather than competing directly with other OLED brands for the premium buyer.
The sets are still expensive in Xiaomi terms, but are considerably lower priced than those produced by LG Display, Sony (SNE) and others.  Without going into a detailed comparison of the features, mostly because all of the data is not yet available, the company’s 55” OLED model will sell for $771 (US) which compares to ~$1,300 for a Sony or LG model, most of which are last year’s models.  The 65” Xiaomi OLED set will sell for ~$1,80 as compared to ~$1,800 similar sets from LG, and the Xiaomi 77” model will sell for ~$2,625 against prices between  $2,800 and $3,300 for similar sets from others.
Again we note that these are price comparisons and don’t relate to feature sets and model characteristics, but we note that the only supplier of OLED TV displays is LG Display, so the panel price for Xiaomi and competitors would be the same or more depending on the quantity.  If somehow Xiaomi is getting OLED TV panels from a Chinese supplier (not likely), the cost would likely be much higher given that LG Display’s yield, after years of production, would likely be far higher than a new producer.
Will Xiaomi’s entry into the OLED market begin to make the technology more popular in China?  Perhaps, but Chinese consumers have been lukewarm toward the technology to date, likely because of a lack of local brands, but Xiaomi could help to give OLED TV a bit more momentum on the Mainland with such aggressive pricing.  That said, the company has yet to revel whether these TVs will be released outside of China, and if so, at what price, so we expect relatively little impact on OLED TV brand share over the next year, but Chinese brands have a particular focus on share and a company like Xiaomi can withstand some losses in the OLED TV segment against it profitable mobile business and that could sustain such prices for some time.  If Xiaomi OLED TVs stay local, the impact would be light, but that’s just what was thought of their smartphones years ago….

​Samsung Electronics (005930.KS) held their latest ‘unpacked’ event today, releasing 4 new products, all of which have been talked about in the tech media ad nauseam.  They are…the Galaxy Z Fold 3 smartphone, the Galaxy Z Flip 3, the Galaxy Watch 4, and Galaxy Buds 2.  They are all currently available for pre-order and will become available on August 27th.  The Z Fold 3 5G (unlocked) sells for $1,799 and the Galaxy Z Flip 3 (unlocked) sells for $999, both exactly as expected.  The Galaxy Watch 4 comes in two sizes in either Bluetooth or LTE, with the former needing to be paired with a smartphone and the later cell enabled.  The prices range from $145 to $115 for the LTE versions and $95 to $65 for the Bluetooth versions.  There is also a ‘Classic’ version that sells for between $195 and $165.  The Galaxy Buds 2 sell for $150.  Since these devices have been leaked for months, rather than spend time going over the specs of each device, we have attached links to Samsung’s site where the specs are available. 

​The display glass business is an unusual one, with a small number of suppliers providing the bulk of the substrate material for major panel producers.  Corning (GLW) is the leading supplier, competing with Asahi (5201.JP) and NEG (5214.JP), while a number of smaller suppliers such as Schott (pvt), IRICO (600707.CH), Avanstrate (pvt), and Dongxu (000413.CH), fill in more specialized products.  Panel suppliers have established long=term relationships with primary display glass providers, with a number of glass production sites co-located with display panel fabs.  Corning has well-known relationships with Samsung Display, BOE (200725.CH) and a number of other producers, but the primary display glass supplier to LG Display (LPL), has been Paju Electric Glass (pvt), a joint venture between LG Display and NEG.
While we expect Corning has always supplied some glass product to LG Display, the NEG relationship has been a long one and gives LG Display a mechanism for matching new product production timelines to glass substrate production.  But as the display industry becomes more segmented and specialized, alternative suppliers have a chance at entering the display supply chain for major producers, and while they rarely are able to meet the volumes that top panel producers need for more generic products, they are certainly able to provide product for those more specialized display products. 
In LG Display’s case, they have been using two smaller display glass suppliers for their automotive displays, China’s Tunghsu Optoelectronics aka DongXu, and local firm, Tovis (051360.KS) and while we expect the automotive display business is a relatively small one compared to the TV, IT, and mobile display businesses, it carries high margins and is therefore a focus for panel producers who are always working against declining panel prices and tight margins.   According to Korean press, it seems that Corning has been able to insert itself into the LG Display automotive display supply chain and capture ~10% of the automotive display substrate business from the existing suppliers by offering pricing below that of the two smaller competitors.
This is significant in that it gives Corning another possible entry point toward establishing a larger relationship with LG Display, and while it is a small step, if LG Display grows its automotive display business, Corning has a backdoor to gaining some ground at LGD.  We don’t think this ‘incursion’ will lead to a change in LGD’s primary relationship with NEG, but it seems that Corning’s impact is being felt by Dongxu and Tovis, with the later already seeing a drop in sales to LGD’s parent LG Electronics (066570.KS) as they have recently shuttered their mobile phone division.  With Corning’s array of glass products it is hard to imagine that once the door is opened, they won’t push further in.