Corning Inc. (GLW), the world's biggest supplier of glass used in flat-screen televisions, said it will invest about US$800 million to build an advanced liquid-crystal-display glass manufacturing facility in Beijing in response to rapidly increasing market demand for flat-screen televisions and computers.

The Corning, New York-based company said in a statement Wednesday the facility will have up to 8.5-generation glass-melting and finishing capabilities. Such a plant can churn out glass sheets used to make television panels bigger than 50 inches.

Corning said it will construct the new facility in Beijing's Digital TV Industry Park within the Economic Technological Development Area. The company plans to break ground on the facility in September, with production slated to begin in the first half of 2012.

Corning, which also makes fiber-optic equipment, said continued higher-than-expected retail demand for LCD televisions, laptops and other computers has resulted in an improved outlook for the products for the rest of the year, adding its annual LCD glass demand this year could be at the higher end of its forecast of 2.9 billion to 3.1 billion square feet.

As a result, Corning boosted its view for capital expenditure for the year to about US$1.2 billion from US$1 billion. As part of the expenditure, the company plans to boost capacity at its facility in Taichung, Taiwan.

"We continue to forecast strong growth for LCD glass for the next several years. This growth will be driven primarily by continued market penetration of LCD televisions, with significant gains in Asia and South America, and an accelerated technology replacement cycle in more mature global markets. Therefore, we are making the appropriate capacity investments to take advantage of this projected demand," said James Clappin, president of Corning Display Technologies, Asia, in a statement.

"China is quickly becoming a leader in LCD panel development, and Corning will be well positioned to grow with the China market through these capacity expansions," said Eric Musser, chief executive of Corning Greater China.

The new plant will allow Corning to be closer to its major customers including liquid crystal display makers Sharp Corp. (6502.TO) and LG Display Co. (LPL) that are moving to set up panel-manufacturing facilities on the mainland to tap strong demand for flat-panel televisions. Last year, both LG Display and Sharp announced that they will set up so-called eighth generation LCD manufacturing plants in China to make large-size panels used in televisions.

Corning has typically set up glass facilities next to its major customers' plants to make it easier for bigger panels to be transported. The move becomes more imperative as glass sizes increase. Last year, Corning opened a plant in Sakai, western Japan, timing its opening with Sharp's opening of its 10th generation facility, which uses glass sheets that can cut 70-inch panels for televisions.

The news comes after Clappin told Dow Jones Newswires in an interview in October that Corning was exploring the possibility of setting up an advanced glass manufacturing facility in China and has held preliminary talks with government officials and customers there.

-By Yun-Hee Kim and Lauren Pollock, Dow Jones Newswires; 852-2832-2330; yun-hee.kim@dowjones.com
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