How Smartphones Are Lifting Fortunes of an Old-Economy Gorilla

Back when the fiber boom was at its peak, a company that became the darling of Wall Street was decidedly old-school — an industrial-era company that specialized in making glass — Corning (s GLW). It made the actual fiber that was in high demand and leveraged that to become a big component supplier to the optics industry. Now there’s another boom in the making — the smartphone boom — and Corning is getting rich off it, thanks to a product it has developed called Gorilla glass that it started making two years ago.

What is Gorilla glass? It’s basically a super-strong LCD glass which is produced much like LCD, then is given a boost by soaking in a potassium nitrate solution. This process is essentially how soda lime glass is made. The Gorilla® glass marries the hardness and scratch-resistant nature of old glass milk bottles with thin and light LCD glass. Those two qualities — tough and light — make it perfect for the smartphone market.

Gorilla glass has proven to be such a hit that there’s a line of handset makers waiting for this product. Samsung Ultra Touch, Nexus One (s goog), Motorola’s Droid (s mot) and others use this glass. But one of the biggest users of Gorilla glass is Apple’s iPhone (s aapl). According to some estimates, Gorilla glass helped cut the iPhone 3G’s weight by 15 percent. The new iPhone 4 also uses the same glass — both on the front and the back cover.

Gorilla glass was first sold by Corning in 2008. A year later, company management hoped it could become a business generating $300 million by 2012. In April 2010, surprised perhaps by the strong demand from the smartphone makers, the company upped its estimates, and said that Gorilla glass will become a billion-dollar business in 2012.

Today, the company indicated that it might race past the $1 billion mark in the next year, as more than 200 mobile phones are using this speciality glass, and another 100 phones are looking to use it. In other words, nearly 60 percent of the world’s phones are going to use Gorilla glass, according to Corning.

In fact, it’s become such a strong business that the company is being forced to ramp up its production capabilities. Corning is spending $180 million to expand its factory in Harrodsburg, Ky. that makes the glass. From its news release this morning:

“Growing demand for Gorilla glass is quickly consuming our available capacity,” James P. Clappin, president, Corning’s Precision Glass businesses, said. “We are on track to reach sales in excess of $250 million this year and sales could approach the $1 billion mark in 2011. We are making Gorilla glass manufacturing and technology investments today to meet the growing market need of the future.

Corning’s Harrodsburg facility is currently undergoing its third major product transformation since opening in 1952. The facility originally manufactured various ophthalmic products, including photochromic glass. In the mid-1980s, the plant became the focus of its nascent LCD glass business, continuing to produce small-generation substrates until recently shifting into Gorilla and photovoltaic glass production.

Well, I gotta say this — for someone who always enjoyed writing about Corning and its cool technologies, it is great to see them come up with a product that is quickly becoming indispensable to the new mobile society.

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