"Because of the earthquake, Corning has suspended production at its glass manufacturing facility in Shizuoka, Japan," said Sweta Dash, senior director of LCD research for iSuppli. "This supply interruption will disrupt LCD production at Sharp. Corp.’s eighth-generation fab, which supplies panels for 32-inch and 40-inch as well as larger LCD-TVs. However, with glass suppliers increasing their output to meet rising demand for Christmas, the overall demand for this key raw material is expected to exceed demand by the start of the fourth quarter."

All other LCD glass facilities operated by Corning and other glass manufacturers worldwide continue to operate normally. Corning expects to restore its Shizuoka facility to full production within a few months.

LCD glass supply has been in a state of oversupply since the second half of 2008.

After suffering a supply glut of 13 percent in the fourth quarter of 2008, conditions shifted dramatically in the first quarter of 2009 as panel makers idled many of their production lines in order to adjust to reduced demand. This caused demand to exceed supply by 0.5 percent in the first quarter.

The undersupply rose to 1 percent in the second quarter primarily due to strong panel demand, especially from China’s television market. The shortage is expected to intensify in the third quarter to a 2 percent undersupply, before reversing to a 4 percent oversupply in the fourth quarter as panel demand cools following the holiday purchasing season.

While the glass shortage has contributed to tight availability of large-sized LCD panels, the major factor behind the short supply is strong demand.