Corning Incorporated (GLW) Earnings Call Transcript & Summary

I think we'll get started. Good morning, everyone. I'm Stacy Rasgon. I'm Bernstein's senior research analyst. I cover U.S. semiconductors and semiconductor capital equipment. And I cannot express what an honor it is to have our guests, plural, here today, Wendell Weeks, the Chairman, President and CEO of Corning; as well as Edward Schlesinger, the CFO; and Jeff Evenson, the Chief Strategy Officer. Before I start, I want to mention if you have questions that you'd like to ask or have asked, you will see shortly a QR code up on the screen that you can scan and that will bring you to our pigeonhole form where you can type in questions, and we'll have some time for Q&A at the end. Now I think I can count on the number of public companies that are still going strong after 170 years on one hand, probably on one finger. I think that finger would probably be pointed at Corning. This company has built a storied history and a variety of inventions over the years, mostly focused on glass in all sort of shapes and forms. And today, I mean, their products are ubiquitous. I'm sure in your daily life, even if you probably don't know it, you are touching their products every day probably right now. To tell us all about that, it gives me a great pleasure to welcome the Corning team and especially Wendell. Wendell, so much -- thank you so much for being with us today. Appreciate it.

Well, hello, everybody. Thanks for the introduction and calling me old, I really appreciate that. And thanks for that.

You're not 170.

Yes. Maybe I'd like to get there. We really always appreciate coming to this conference because it's just different. We appreciate the level of engagement. So before we get started, please remember that forward-looking statements represent expectations. Actual results may differ in a material way and also to avoid this all being boring, we report our results using core performance metrics as well. So I'm going to begin with a really quick update on our current performance. So we're off to an outstanding start in 2022. First quarter sales exceeded expectations with 15% year-over-year growth. I am -- we're making good progress to improve profitability in a pretty complex external operating environment. In the first quarter, both gross margin and operating margin expanded sequentially year-over-year. We're on track to meet the guidance we provided in April. To reiterate, sales of $3.7 billion to $3.9 billion with EPS of $0.54 to $0.59. And for the full year, we continue to expect to add about $1 billion in sales, exceeding $15 billion with growth at a high single digit percentage, and we expect EPS to grow up to a few percentage points faster than sales and gross margin to expand from the first quarter. So in total, we're successfully navigating the current macro challenges, and we remain very well positioned to deliver durable, multiyear profitable growth. Now we're guided by a strategy that enables us to sort of power through periods like the present, while maintaining an attractive long-term growth trajectory end point of view, which is where I'd just like to take a few moments and focus my talk today on. Stacy said, I'll start by noting that our company was founded in 1851. And I don't just share that as sort of an interesting aside, our longevity is based on how we invest, make decisions and evolve around secular trends. So for example, we've been leading in the automotive and life sciences markets for 100 years, display for 80 years, telecommunications for 50 years and mobile consumer electronics since the inception of smart devices. So we've been through World Wars, technology disruptions, depressions, natural disasters, and we consistently come out stronger on the other side. The average tenure of a company on the S&P 500 today is about 20 years. And as a company that's been thriving for 170 years, that's a relatively short time frame. So how do we manage sort of through the inevitable tough times and the industry transitions while ensuring that we grow profitably long term? Really, it comes down to in fact 3 highly connected elements. First, we invest to lead in vital capabilities, which provide a unique vantage point through which we look to see and anticipate technology node shifts very early, that will benefit from our very deep and very specific and distinctive expertise. In so doing, we achieve a deep relevance to profound market transformations. We cultivate advantage customer relationships and ultimately, our journey is to incorporate more and more of our content into those customers' products. Second, we apply financial discipline. We seek to provide consistent funding to reward our shareholders and make attractive return investments that advance our market leadership. Our current efforts to raise prices, an important recent example in our hedging program is an important longer-term example. And finally, our actions are based on a long-standing commitment to moving the world forward for the benefit of all of our stakeholders. Now I'm just going to jump into a little more detail on each. I'm sorry that my slides seem to have had a little heart attack. So it all really starts with our focused and cohesive portfolio. We invest in 3 core technologies, glass science, ceramic science and optical physics along with 4 proprietary, manufacturing and engineering platforms. Now we are the world leaders in each. Our competitors would say that, our customers would say that. We are the world's best at these things. And today, we apply those capabilities really focusing on 5 market access platforms. Now through a deep commitment to R&D, we anticipate and evolve around important trends. And we apply new combinations of our assets and our capabilities to advance innovations in industries where our contributions offer the greatest impact. And we do this profitably because we're able to amortize our investments in these capabilities and assets by reapplying and repurposing those assets and insights across multiple opportunities and markets. So we'll walk through some examples in a moment. And the more value we add in each market, the greater we multiply the relevance of our capabilities. So our investments in distinctive capabilities have placed us really at the center of secular trends touching many facets of daily life. Today, we're helping our customers move towards a world with nearly infinite and ubiquitous bandwidth, a world with large, lifelike displays, where cars are autonomous and connected and where medicines are individualized, effective and safe. And where the most powerful applications can be accessed really from the devices that you carry with you every day and at the touch of your fingertips. So beyond true leadership and distinctive capabilities, the key factor here is applying our earned insights to anticipate secular trends really long before they become evident and to start early on the relevant technology nodes. For us, success translates into vibrant business franchises to grow profitably for decades. And further, as we build deep trust-based relationships with the leaders in the industries we serve, we evolve with our markets, driving more of our solutions into our customers' products, along the way. This approach increases our own agency and generates profitable growth even in flat markets, relatively uncoupled from the broader macro environment. In other words, we -- the more we build our expertise and find new ways to provide value to society, the more content we drive into our markets. We call this our more Corning strategy. It expands our total addressable market and reduces our sensitivity to economic cycles. Opportunities for more Corning content are a natural consequence of our close partnership with customers and leadership and capabilities that matter. For example, we continue to advance the state-of-the-art with our leading cover materials for mobile consumer electronics, which have been deployed on more than 8 billion devices to date. And now we're entering new product categories that provide even more Corning content. Our smartphone customers are deploying more and increasingly sophisticated cameras. These features naturally increase the prominence of the land surface if you look at your phone, which, in turn, increases the likelihood of scratches and damage. In response, we've expanded our capabilities to offer superior lens protection. And even though the lens is just a fraction of the surface area we address with our cover materials, the value we add, the optical value we add is very high. So from a more Corning standpoint, we're capturing a very attractive opportunity to increase our revenue per device. The Samsung Galaxy S22 series is a prime example. Not only our best-in-class cover materials on the front and back of these devices, we're also on all 5 rear cameras on the Galaxy S22 Ultra. This more Corning mechanism has allowed us to outgrow the market in mobile consumer electronics. Sort of a great factoid on that is that since 2016, our Specialty Materials segment has added nearly $900 million on a base of $1.1 billion in a smartphone market that has been flat to down. And we're confident that we can keep going even without growth in the smartphone market. And our strategy allows us to build on this strength by reapplying our capabilities into an adjacent market, consider our recent entry into auto glass. When our foresight identified a new opportunity in cars, recognizing that many auto designers were beginning to view an auto interior really as a giant smartphone. So we appropriated some of our technology and insight from our work in consumer electronics space to invent a glass specifically designed for the automotive space. And then we also invented our ColdForm technique to provide shape more economically for customers. And we're now pursuing $100 per car opportunity in the automotive market and have an order book for technical glass that exceeds $1 billion. And recently, our collaborations on autonomous driving have led us to think of the car as a huge camera. All of the lenses and sensors necessary for autonomy need durable, optically optimized covers. And that's great news for precision glass and for Corning. So we're applying more Corning in all of our other market access platforms as well. In Optical Communications, we recognize that 50% to 80% of network deployment costs can be in labor. And we're advancing solutions that reduce this expense and help customers in this very tight labor market. And further, by disintermediating labor, we expand our TAM. In display, we're leveraging our leadership in very large size glass to capture more sales per television. In Life Sciences, we commercialized a pharmaceutical packaging solution called Valor Glass with both exceptional strength and enhanced chemical stability relative to the incumbent for silicon vials. And now we're expanding the set of drugs we can address with our new Velocity Vials and our partnership with West Pharmaceutical for syringes. Additionally, we've extended Hemlock's lead in semiconductor to grow in solar and are looking to do more. We expect to expand our presence in renewable energy through long-term take-or-pay contracts for solar grade polysilicon, and we have also been developing other solar products by using more of our other 3 and 4 capability sets. So more Corning also reduces risk. First, it reduces adoption risk as customers collaborate with us on the development and integration of our solution into their offerings. Second, as I noted, it can make us less sensitive to economic down cycles because we aren't exclusively relying on people buying more stuff. We're driving more Corning content into the products they're already buying. So our more Corning strategy is especially important in moments like this, because it allows us to outperform our markets in both up and down environments. So if you compare our first quarter of 2022, with our first quarter of 2019, we've added approximately $900 million in quarterly sales. Out of that, organic growth was a bit more than $600 million. Market growth is responsible for only about 1/3 of that $600 million. The balance or 2/3 come from the success of our more Corning content strategy. So going forward, we expect the vast majority of our growth to be organic, supported by our capability leadership and the power of the trends we're addressing. And we expect our more Corning strategy to continue playing out favorably. So moving on to the second element intrinsic to our leadership in our markets is our commitment to financial discipline. Today, I'll highlight 3 aspects: improving capital efficiency, reducing risk through upfront commitments from others and rewarding our shareholders. We reduced the cost of innovation and improve our capital efficiency as we reapply talent and repurpose our existing assets. For instance, I earlier, I noted that we've been in mobile consumer electronics since the inception of the smartphone. Our success in that market was made possible by the fusion assets that we use to provide pristine flat glass for TVs and computers. By repurposing these assets from our display business to sell Gorilla Glass into the smartphone market, we've saved in aggregate more than $1 billion in capital expenditures so far and we're still saving as we go. And that's not the end of the story. We're now using those assets to help drive the important trends I described in automotive, which has been creating further pull for more of our technical glass. In addition to improving our efficiency, we take measures to reduce risk. When growth opportunities arise and demand exceeds our existing capacity, we build state-of-the-art plants to manufacture products at scale, and we locate these plants in close proximity to our customers, a strategy that is likely to continue to pay off in this post-pandemic world. We derisk these investments by requiring meaningful commitments from others, often including customer funding and long-term supply agreements before building new capacity. In recent years, we've received significant customer commitments from Apple, Verizon, AT&T, West Pharmaceutical, auto glass customers, semiconductor equipment customers, solar customers and for all of our recent capacity expansions in display. Finally, as we reapply our focused portfolio to profitable growth opportunities, we enhance our ability to reward shareholders. Our businesses generate very strong cash flow. As I said, they are decades long franchises. We utilize our cash to invest in organic growth that extends our leadership and we return excess cash to our shareholders through dividends and share repurchases. We've increased our dividend at a 13% compound annual growth rate from 2014 to 2022. And since the end of 2014, we have reduced our diluted share count by 39%. Now with all of this in mind, I'd like to quickly conclude with a brief look at the long-standing commitment to our stakeholders, which underscores the strategy I just described. Our identity is rooted in our earliest days when our founders issued basic plate and bottle glass making and focused on transformative technologies. Our track record speaks for itself from the invention of our glass bulb in manufacturing process that brought Thomas Edison's electric light into homes almost 150 years ago, to our revolutionary vials enabling drug makers to deliver more than 5.5 billion doses of the COVID-19 vaccines today. Our innovations have been central to moving the world forward. To continuously innovate at such a profound level, we require mutual support amongst our people, our partners, our communities, investors, society as well as future stakeholders. To demonstrate what mutual success for stakeholders looks like, let's just examine one aspect of this and what it means to truly focus on our people. For us, it has resulted in organizational flexibility that factors at a fundamental level into our track record of innovation. Not only have we established leadership and capabilities that are incredibly relevant, we've also built an organization to develop experts who can engage effectively in multiple markets and lead in all the things that we do. Many of our employees, frankly, most of our employees, especially those on the technical side join us for life. This is key to protecting and extending our intellectual advantage. When we hire a scientist, they're not hired, say, to be as an expert in mobile consumer electronics. They work in glass or ceramic science or optical physics. Our engineers can shift from improving performance in an established business to helping commercialize a brand-new innovation. They learned how to use our resources to push the boundaries of our materials. And they bring knowledge from success in one market to advance progress in another. Sort of the lifelong journey from apprentice to master is especially important because very little of what makes us distinctive technically can be found in books or through a Google search. And importantly, our leadership in proprietary science and engineering allows us to create products to benefit humanity at a global scale. Corning stands out amongst its peers and large companies as a percentage of revenue and capital. The percent of revenue between capital and R&D, we dedicate towards human progress. Our scientific and manufacturing expertise, boundless curiosity, commitment to purposeful invention, place us at the center of the way the world interacts, works, learns and lives. And part of our strategy always involves looking ahead as we work on exciting applications that will benefit our children and grandchildren from ultra thin, lightweight glass for next-generation solar panels to solid-state lithium batteries, which offer higher capacities and greater safety to electrolysis, cell components that support green hydrogen production to substrates for direct air capture of carbon. And that illustrates my final point. In this time of uncertainty, Corning's deep relevance to secular trends along with our ability to drive more content into our markets over time allows us to maintain our strength throughout economic downturns. Of course, we're not immune to the effects of a slowdown. But during challenging times, we outperformed our markets as our results net under react to external factors. Inflation is a new challenge, but we've increased price to share costs more appropriately, and we're confident in our ability to continue to do so. Overall, we're operating exceptionally well right now. And as we look to both the intermediate, future and longer term, we're confident that the combination of our values, investments in our focused and cohesive portfolio and financial discipline can help us drive durable multiyear profitable growth. We're building on a long track record of life-changing and life-saving inventions. And our innovation engine has never been stronger, and we believe our great contributions are yet to come. And with that, I turn it over to you.

Fantastic. Thank you so much, Wendell.

In this environment, I don't like typically to focus on short-term stuff. It's hard to avoid it.

No problem.

Maybe just like one question. Just what are you seeing? And you talked a lot about your resiliency in potential slowdowns. You talked about some of the pricing actions you take. But in general, what are you seeing right now both on the supply as well as the demand situation across your businesses? How are shortages impacting you? What are you seeing in terms of COVID lockdowns in China? And just broadly on the demand question, investors are worried. TVs at retail and everything aren't so great. And how are you seeing the broader environment across both supply and demand? And then I promise we'll get on to some of the more interesting stuff.

So on supply, we've done a great job of making sure we can deliver for our customers. It has been chaotic for our supply chain folks, but they have done enviably well. And in demand, in most of our products, demand continues to be very robust. In display, things are progressing sort of exactly as we thought they would. Basically, televisions went down last year, and panel making went up, right? And so it's not rocket science to figure out that those 2 things would come into balance in this coming year, and we planned appropriately for it. To meet the demand last year, we had to run our operations a little to no inventory because demand was so strong, and we had to stretch our assets beyond their normal life. And so what we're hoping to do here is take the sort of positive refreshes and get our latest technology packages on some of these extended tanks and we'll always manage supply to be in balance with demand.

Got it. And maybe just a good segue into display. So it's sort of funny, you talked about what the panel guys have done, you guys don't do panel manufacturing in glass. But I always think of panel manufacturing is sort of a horrible cyclical business and your display business is your highest margin business. It's growing very well, and it does not share the same cyclicality seemingly as the panel. Can you talk a little bit about why that is? Like what are the dynamics within your own display business that make it -- again, you're -- from a margin standpoint, your most attractive business in relatively limited cyclicality relative to what that end market typically does?

And what is it, Buffett says, you don't pay for the castle, you pay for the moat. So what we -- we have huge competitive advantages in what we do. So therefore, our cost is tremendously lower than all of our competition, and we can uniquely do certain products which makes our customers lock in with us because we're the only ones who can enable it. So the competitive intensity in glass is relatively low compared with the panel making where they buy equipment from others and -- we are -- all of our stuff is bespoke, we design it, we build it, we own it. And it is that ability that enables us not to have to go where panel prices go, we don't have to go, and we have less volatility. Of course, we'll feel the volume, but we won't see the same type of dynamics in terms of price or share volatility. And what makes panel-making so hard is, the volume is one thing, but the volume is actually not that dramatic, right? It's that -- the volume moves get exacerbated by dramatic price moves, right, and dramatic share moves like one direction or the other and that's not what we do. We choose not to play.

How do you guys like earn money there in general? But is it like just is it per area? Or like do you get like more dollars per area for bigger pieces? Like does it scale up? Like what does that economics look like?

We make more profits, the greater or relative degree of competitive advantages. And at this moment, our competitive advantage is broadest at the hardest things to do, it is true in most of our products. So that would be like Gen 10.5, that is, I don't know, 110 square feet, the thickness of a business card, right, directly connected to our customers' factories. It's too big to like ship around. Like that's hard.

Oh, interesting. So you have the glass manufacturing right on site effectively.

Right on site.

Okay.

I mean we usually -- and one of these sites is if you put -- we're connected to our customer sites. And like one of them is like 5 kilometers around. And we run 5,000 races around it. I mean they're big and they're connected and they have to be. Because once you get the glass clean, you want to keep it clean, you make it through tunnels. So it looks more like the semiconductor stuff that you're used to, not quite that extreme but more like that.

It's interesting. Like in semis, obviously, you have the advantages of Moore's Law, you are shrinking you are getting more better, display doesn't quite work that way, right?

Yes. it's a big -- it's an oxymoron, it's a big chip.

I guess it's not so much from your end about cost reduction than necessarily. It's about bringing value. I don't know whether it's bigger sizes or coatings or?

Yes, for us, what makes our technology relevant is, as you go large since we don't have to finish anything, we never touch it after we make it, doesn't cut it and clean it, is our advantage increases the larger you tend to go. For our customers their economics, when you go big, you can make more big TVs on one litho step basically, and that drives their economics. A panel maker and a Gen 10.5 probably has 30% lower cost than the previous Gen. So our super strong position in large size means that we get to participate in screen size growth and makes us sort of the last one to fall out.

Got it. Got it. Some of the pricing actions that you talked about earlier were those across your businesses, like?

Yes.

Okay. Can you talk a little bit about like what you're seeing in terms of, I guess, input cost increases and correspondingly offsets on prices and how sustainable that is?

Yes. Through the pandemic, we prioritized 2 things, protect our people, deliver for our customers. And we just did what it took to do that. As a result, our costs went up. And...

You're not the only ones.

Yes. And -- but to protect our ability to continue to invest for our customers, we had to go to our customers and say, we just got to share these costs more appropriately or we won't be able to invest. We're so important to them that they went okay, and they opened up long-term agreements because we derisk our big assets by having them sign up to long-term contracts that have in it long-term pricing. And so they had to voluntarily reopen all those contracts, and they did. And so -- is it sustainable? Like it's going to be sustainable through the year? We have -- we continue to make it all the way through. And if we can successfully increase our gross margin, which I think we will, and profitability this year with it. Ask me more at the end of the year, and I'll tell you. I'm going to do it next year.

I mean that gross margin improvement, is that just -- is it -- it doesn't sound like it's just a matter of simple revenue scale. It really is like all the blocking and tackling underneath?

Yes. But in this case, what we're talking about is it's price going up, which I personally find is the most enjoyable way to make revenue go up.

It usually is that's sort of true.

So much hard of making and inventing things.

How long are the long-term contracts that you've signed, like? And I guess, like a broader is like, again, in semis, we're seeing some of this -- well, semis are a little bit different, but I always wonder it's like noncancelable -- I wonder how noncancelable they will actually be like if things like roll over? Like how sustainable are those contracts that you have? And how long term are they?

Well, there a mix. But like one of the primary things we do is we ask the customers for the money to actually fund the capital. Like in semicon, for instance, we do all of the optics. We invented the UV optics that you need. That's our invention, and we have a very large share of it. And with a variety of those key customers in that very small chain, right, we have very strong commitments and they've had to co-invest in certain areas to get access to our tech. Because if you're going to build one of those pieces of equipment, that's not going around.

Okay. Got it. Would you talk about maybe like your optical communications business. So I tend to think of fiber deployment and that sort of thing is lumpy and not much long-term growth, but maybe I'm wrong. Like is this a growth market? How do you think about this?

Well, lumpy and growth are not opposites, right? So is it lumpy? Yes. It's a capital good and different people deploy it at different times, and it doesn't go obsolete. Is it growth without that? And like I could put a chart up there that makes you wonder, like over the long term, this is like the easiest thing to predict in the world. For some reason, it gets very confusing in the short term but over the long term, it pays because you just have an ascendant technology because it's -- once you get to a certain bandwidth over a certain distance, fiber optics just wins from a technoeconomic standpoint. And so we're -- like most of the wires that surround you today, they're not fiber. We've got forever to go. I'll give you a fun example. We have now deployed enough fiber in the planet, and we probably made about half of it since we invented it to go back and forth to the sun 17x, 17x. And in this country, 40% of people don't even have a broadband connection let alone connection to something like fiber so...

So where has it all gone then?

So what tends to happen is like much in life it is all Pareto is so the way capitalism tends to work is where the information is the most valuable, tends to be the most less and those places where it's most valuable, we'll get thicker and thicker and thicker deployment. Our costs go down. I want to use more of it. A hyperscale data center, for instance, cloud, hyperscale data center, which is not that big, it's not that big. That has more glass in it than if we connected fiber to every single home in the whole suburbs of the Dallas-Fort Worth area and it's one campus. Why? Because it has enormous value and is the amount of connections. So there's plenty and plenty of runway. Wireless didn't use to have fiber in it, right, 4G or the any 5G. When it actually performs like 5G is supposed to at standard in a city like this, you'll need a small cell every 1,000 feet or so, each served by multiple fibers. So now wireless becomes wireline.

Got it. Got it. And I was kind of surprised like this is actually your lowest margin business, not bad margins, but it's lower. But why is that? I would have thought it might have been higher just given the nature of it?

I think it should be higher, and we're going to work on making it higher.

And within that business, there's a pretty wide range of margins, depending on the product that we sell. The higher-margin products tend to be solutions. The -- there's a lot of value in our solutions from performance, but the big one that is extremely compelling right now is the installation cost. That we basically disintermediate, as Wendell mentioned, the field labor needed by building the network in our factories. It's a greener solution. There's much less waste. And we're directly addressing a key customer pain point. And I think that as the labor market remains tight, our solutions business, the highest margin part of that business grows significantly. So I think that's a primary mechanism for us to expand those margins.

Got it. Got it. Maybe we switch over to Specialty Materials group, Gorilla Glass. I remember when Jeff was here at Bernstein, he did quite a bit of work and chemically strengthen glass, I think it was [ 12 ] years back then. Can you just talk a little bit more -- I thought it was really interesting how you've grown massively in a smartphone market that hasn't grown. So presumably, that's all content. Is it like -- is it more like content per piece of glass? Is it more pieces of glass, like is it share? Like talk a little bit about that content growth that we've seen in there?

So yes. To us every piece of glass, and it is more glass and then it is us coming to new functions like camera lenses or 2D imaging or foldable or, so I think in a good way to think about what a designer would like to do and what you would probably like would be, if I basically just gave you a little slab of light, that's where this is going. Can you basically just hold light in your head? That is a good way to understand sort of what it is we're trying to do and shapes a long-term journey to be able to do that very hard thing which is reduction as to the ultimate piece will be an entire glass and closure if we could make it be damage-resistant enough that does optical features. It does tactile features, that does different colors, does different -- it's like everything in one. That would be an ideal device, and we're still held and gone from getting there. So we've got plenty of far to go.

Okay. What's the current penetration of Gorilla Glass like we ship, I don't know, 1.2 billion, 1.3 billion smartphones a year, give or take?

Well, now other people have followed us on chemical strength in glass. But I don't think there's anybody selling a smartphone today that doesn't have a chemical strength in glass on it. I think plastics pretty but I guess there will be some plastics on the fronts, but not a lot.

What does the competition in that market look like? I'm not aware of any other brand names for sure. What does the competitive environment there look like?

It's still relatively stable. We have some regional level players in China aiming at China brands, which is why -- actually with Chinese funding, we put a gorilla tank in China to have more local production because that is a goal. The Chinese view now that this is such an important component that they'd like us to make more. But there's no one sort of in our league technically, cost-wise, performance-wise, yes.

What is the opportunity for this kind of glass look like outside of smartphones, do they make notebook screens or?

Yes, we do already notebook screens, especially at the higher end. And the big value add there tends to be we've created all -- we've used our optical physics to do new vapor depositions, which take a piece of glass and turn it into like $10 to $15 worth of value because you're doing all the optics too. And then that's what we're doing when we go to cars for those displays like every Rivian parked out in front. Those are -- that is -- those displays that they have in there, have an optical surface in them to take care of reflection, to take care of glare, that's all our invention. And so that adds tremendous value to that piece of glass. So we're seeing this move sort of any time you're going to want to touch and interface, we're seeing it move into those spaces.

And when you talk about the $100 worth of automotive glass cut is that what it is, is it the displays? Or is it something broader than that?

It's broader than that? So displays is the easiest one for you to see right now because you can see that transformation of the cabin in front of you. Used to look one way, now you're going to have pillar-to-pillar displays, the curve around you. And you can tell it's different, right? And that's the one you'll see. Also in exteriors with EV, they're so quiet, it's not like your car, your industrial combustion engine. And because it's so quiet, now all of a sudden, you don't want outside noise coming in. So then you introduce laminate structures for the side windows, that's like in your -- like your windshield is a laminate to your panoramic roofs, to back in the passenger, to the rear one. And when you do that, that opens up a new opportunity for Gorilla Glass as sort of we can more inexpensively create that laminate with our ColdForm tech than anything else. And then all of that -- now it's turning into a camera, as I said, and so now you have all these sensing packages, all of which need optics and need highly durable transparent to some wavelength or another type of pieces. And I think we've got to be the only company in the world that invented sealed beam headlights for cars, all those years ago.

That was you?

And now -- yes, and now does the cover for LiDAR. I don't think there's anyone else like that.

Got it. You do other stuff in automotive, too, like a lot of the automotive, it's a ceramic filtration and like...

Yes. we do also a clean air tech and that also has been increasing in value because the Europeans and the Chinese have adopted a standard that is tighter than the U.S. Very fine particulate gets into your lungs and causes very significant problems and death. So what they've done is regulate that there's way less of that, and we've invented the technology that captures that and doesn't let it escape in the air. And hopefully, I'm engaged with the administration as we speak to try to get the U.S. to sort of value our children as much as they do in Europe and China and adopt that regulation. If so, that doubles our opportunity in ICE too in internal combustion.

To how much?

To today, it's like in the 20% to 30% so, right? So in that 15% doubles up to about 30%, depending on the mix, maybe it could get up to 40%.

Got it. And then finally, on Life Sciences, you mentioned a little bit about Valor glass. Like can you talk a little bit about that like I don't typically think about like the vial that the medicines are then coming to something that's like high-value add, but clearly, I'm wrong. So tell me...

You're not the only one. So the origin story of that is that -- so we invented borosilicate almost 100 years ago, and we did it for pie plates and it is an awesome pie plate glass.

Which is like Pyrex?

Yes. It's awesome pie plate glass. And it was good for the way in which medicines used to get made and the medicines of the time, big multiuse type of devices. But the whole industry has moved to the single-dose, tailored, entirely different chemistry. And so what happened is people were getting injected with little pieces of glass that were being injected with nonsterile solutions. They were being -- drugs -- drug making was -- the speed, which is done was all designed around this vial. And instead, we can dramatically increase the throughput. So we took a look at that and said we can increase patient safety and lower cost if we apply tech here. And it's been a journey because pharmaceutical industry is not a quick new technology adopter.

Is it being adopted now, is that where we are?

It's being adopted now. We turned our guns to making people safe for COVID. So we turned -- we made our bet on mRNA, which I think was a pretty good bet. And that is where we turned all of our efforts and then governments around the world funded us to build plants so that our shareholders get a free plant. And then now we are going to turn to getting broader adoption of this technology to other places.

Got it. We've got a couple of minutes left. So we go to the lightning round to some of the audience questions, let's see what people got. Some of this we've gone over. What's the nature of the discussions and the contracts involved with fiber deployment? How are the contracts are committed structured?

Super long term. We have an enviable spot of -- we are the supplier of preference.

Okay. What is it -- you talked a little bit about it, what is it specifically that Corning does that no one else can do across your 3 core technologies with its glass ceramics and I guess optics or physics?

We're absolute leaders in each of the individual ones, but the key for us is the way we combine them, and we keep them all in the same sites, campuses. So everything in innovation is always combinatorial these days. And that's what we do uniquely. No one else has that bundle.

Got it. How would you more broadly characterize your supply chain challenges and inventory levels today in the near term? And are there any specific constraints you're facing with getting products to customers with your own inventory? And I would actually broaden that are your customers seeing issues with like other things that they can't get that may be impacting you can sell?

Yes. So for ourselves, our inventories are too low. So we need to take the time to recover those so that we have lower logistics costs, and we're airfreighting things we shouldn't be airfreighting, right? So things are -- sorry, they're too tight right now. But most of that hasn't come from the inability to get things, it's come from demand being stronger than what we thought. However, you turn to something like automotive, their inability to get chips has taken and thrown a wrench into the amount of cars people actually want to buy, right? So we definitely experience other people's supply chain problems.

But they're clearly not stockpiling your parts in anticipation of that fixing because...

It is hard to generalize, but we watch it super carefully. We know wherever that is. And if you track the end and there's only one thing before us, and that tends to be sand. So you get a pretty -- you know where you s*** and you know what's going on and those don't match it somewhere and then you don't find it.

Got it. right. So we are almost out of time. I want to give you your soapbox. I've got a room of investors here, some may be familiar with Corning, some maybe not. But why should they buy Corning stock?

Well, I think the biggest reason would be that if you could see what I see in terms of our increasing relevance not for the next quarter and not for the next year, but over the next decades. And if you could experience the way our customers engage with us, they're deeper secrets to try to find a way to create something really cool. And you could see that relevance. You'd realize that I think we're sort of buy and sort of walk away and come back and we'll be thriving bigger, better in 20 years than we are today. And what I find is because we don't have any competition here, the good news is, is we have big have moats and we're really good. The bad news is it's hard for an investor to understand. Because if you invest in understanding us, you don't get 3 other companies along the way, you get us, right? And so we just turn into a story stock. Periodically, someone will figure out how important the number of innovations are and lighting. We're lighting company. We're a television company. We are an LCD company. We're a fiber company. We're the Gorilla company. We're the -- and like it's always fascinating to hear yourself told what you are through other people's eyes. It's educational, but that's actually not who we are.

In any case, here's to another 170 years. And I think we'll close it out there.

Okay. Thanks very much.

Thank you so much.

My pleasure.