Please welcome Ann Nicholson, Division Vice President, Investor Relations. Good morning. It's my pleasure to welcome you to Corning's Annual Investor Meeting. I'd also like to welcome those investors who are listening on the conference call and through the video cast on our website. Before I get started, I need to remind you that today's remarks and Q and A contain forward looking statements.
You should also note that these presentations contain a number of non GAAP measures. Reconciliation can be found in the back of the presentation as well as on our website. Now logistics. 1st, there's free wireless for use during this meeting and a website containing the slide presentation if you'd like to follow along at your table. The information that you need to access both is here in the program.
2nd, we do have a parting gift from Victor the gorilla for those in attendance. If you're interested, you stop by the registration desk on your way out, drop off your badge and you can receive it. And 3rd, if you haven't already, please turn your cell phones to vibrate. We have a full agenda today. Our Chairman and CEO, Wendell Weeks, will kick off with both a historical look at the company's accomplishments and a look forward into what we believe is an exciting future for Corning.
Our 3 business group leaders, Clark Kinlin, Mark Beck and Jim Clappen will update you on growth opportunities in our existing businesses. Our Chief Technology Officer, David Morse, will tell you how our approach to innovation keeps Corning relevant and sustainable in the long term and introduce you to some new technologies under development. Finally, CFO, Jim Floss, will pull together our outlook and detail our cash priorities. Then we'll move to Q and A. I hope you find the presentations this morning to be informative.
And with that, I'll turn the podium over to Wendell.
Thank you, Anne. Good morning all. It's my pleasure to welcome all of you to Corning's Annual Investor Meeting. And I'm delighted to be joined today by 5 of my colleagues on the leadership team. They've all delivered significant results and this is a great opportunity for you to see why I have so much confidence in them.
We'll spend most of our time discussing Corning's outlook, our near term growth opportunities over the next several years, and our ability to deliver sustainable growth in the future. But first, I want to step back and remind you of our focus for the past 2 years. As most of you know, Corning experienced a steep drop in profitability in 2011. Our mandate was clear. We had to form bottom and march up.
Last year, I told you we would reestablish positive momentum in display technologies by maintaining moderate price declines, advancing our efforts with next generation displays and creating advantaged relationships with customers. We would drive earnings growth by improving sales and profits in our other businesses as well as reducing costs across the company. And we would maintain strong cash flow, which would create the opportunity to return cash to shareholders. So how do we do? At this time last year, Corning had just reported its first quarter of year over year earnings per share growth in 2 years.
We were a long way from declaring victory, but I told you I was confident we would begin our march up in 2013. And I'm pleased to report, we did just that. 2 weeks ago, we reported our 5th consecutive quarter of year over year EPS improvement and we did it in a difficult external environment without much wind at our back. All of our businesses contributed. Display maintained moderate price declines for LCD glass and reduced manufacturing costs.
Optical Communications, Specialty Materials, Environmental and Life Sciences all improved operating performance and their aggregate net income improved 22% in 2013. So we're extremely pleased with our execution. We're also outperforming the competition. Despite a weak economy, our experienced leadership team is effectively managing Corning's assets to drive growth in a tough environment. Over the last 3 years, 3 out of 4 of Corning's divisions have grown sales faster than their closest competitors, and all of them have significantly outperformed their competitors on profitability.
As our performance improved, we honored our commitment to return cash to shareholders. In 2013, we increased the dividend 11%. We also launched a $2,000,000,000 share repurchase program, 75% of which was completed by year end. Then last October, we announced an additional $2,000,000,000 share repurchase in conjunction with our plans to acquire full ownership of Samsung Corning Precision Materials. So in just over 2 years, we have doubled the dividend and repurchased 13% of outstanding shares.
As our earnings improved so did Corning's stock price. Our stock was up 41% in 2013. And as you can see from this chart, investors really liked our SCP transaction. Now most of you have seen this slide before, so I won't go through it in detail, but this transaction delivers significant strategic and financial benefits to Corning. It increases our revenue, net income and cash balances, while creating a new long term source of cash flow.
It strengthens our LCD business. It broadens our collaboration with a global electronics leader. And we believe it provides outstanding returns to shareholders. So we've delivered on our promise to restore earnings growth. Now we need to create Corning's next growth surge.
Fortunately, this is familiar territory to us and we're armed with the right tools. Corning's history is characterized by periods of growth and transitions which are followed by the next growth surge. When we experience inevitable setbacks, we innovate our way out. So before I turn the podium over to my colleagues, I want to share some examples of how Corning has delivered game changing innovations throughout our 163 year history and how we're applying that same formula today to create our next wave of growth. 1st, you need to understand what really makes us tick.
At Corning, we are driven by our desire to create life changing innovation. We sincerely want to change the world and enhance people's lives with our unique capabilities. So how do we do it? We start with a really tough problem. We work closely with customers to understand their needs and their systems.
Then we apply our deep materials knowledge and process engineering expertise to develop high impact solutions that almost always involve both product and process innovations. Finally, we continue to innovate throughout the lifecycle of the product to enhance performance, add new attributes and reduce cost. The result is a stream of innovations that transform industries and create long term advantage for Corning. Let's look at some examples. In 18/79, Thomas Edison turned to Corning because he needed an enclosure for his carbon filament.
We made his electric light a reality by developing the first light bulbs. But electric lighting wasn't viable for the general population without an economical method for mass producing the bulbs. So in 1926 Corning solved that problem by inventing the ribbon machine, which made it possible to produce more than 1,000 bulbs a minute. Our innovations made electric light a feature of everyday life. Let's jump ahead to the 1950s.
Corning was undergoing a transition as demand for industrial materials slowed. While experimenting in the lab, Corning scientist Donald Stuckey developed a new glass ceramics material that made it possible to go from extreme cold to extreme heat while retaining its stability. Many of you know this material firsthand. It was marketed to consumers as Corningware and it sparked a revolution in the kitchen as well as a major growth surge for Corning. Now let's move to the late 1960s.
Telephone systems were being strained and carriers were looking for ways to increase capacity. Charles Cau theorized that optical technology could be used for high bandwidth communications if researchers could identify an effective way to transport laser generated light with minimal signal loss. Corning scientists made that theory a reality by inventing low loss optical fiber and we followed that by developing a manufacturing process that enabled widespread deployment. Corning's innovations have led to the installation of nearly 2,000,000,000 kilometers of optical fiber worldwide and a revolution in communication. Corning scored with another major innovation around that same time in 1970.
Congress passed the Clean Air Act which required a 90% reduction in auto emissions by the 1975 model year. That gave car companies only about 3 years to go from basic research to manufacturing. It was considered an almost impossible task until Corning invented a ceramic substrate for converting emissions into harmless compounds. It required a material that would withstand temperature surges of up to 2 1,000 degrees Fahrenheit and a revolutionary manufacturing process to turn a ceramic paste into a honeycomb structure with thousands of parallel channels. Thanks to the catalytic converter, today's cars emit 99% less pollutants than in 1970.
In the 1980s, Japanese display makers began introducing LCD technology. Among them was Sharp Electronics who vowed to make the CRT obsolete. They turned to Corning to help realize that goal. One of their most significant requests was for a glass composition that didn't require polishing. It was driven by their desire to lower production costs.
But Corning delivered a fusion form glass that not only eliminated the need for polishing, it provided a surface quality way beyond their expectations. Thanks to Corning's invention, display makers were able to produce larger panels, improve attributes and sustain a rapid pace of innovation for many years. It worked out pretty well for Corning as well. My last example is a story that many of you are familiar with. When a major consumer electronics company came to us searching for a tough cover material for its new smartphone, We developed a new glass composition that was scratch and damage resistant, thin and lightweight and cooler to the touch than other materials.
And when the customer wanted that glass in a significantly larger volume than we expected, we adapted our fusion process and rapidly scaled up manufacturing taking Gorilla Glass from idea to mass production in 6 months. Gorilla Glass became one of the fastest growing products in Corning's history and continues to unlock new opportunities for us. Those are just a few examples of Corning innovations that have driven major growth surges. You can see that our products and markets have changed many times over the years, but our innovations share fundamental ingredients. A really tough problem, a combination of materials and process innovation, and a solution that makes a real difference in people's lives.
They also reflect a culture that is committed to research and development because we understand that our investments in innovation create Corning's future revenue drivers. We continue to apply that strategy and philosophy today. 3 years ago, we shared our vision for a world powered by specialty glass and we were amazed by the reaction. People were excited by the idea of living in that world. A world of ubiquitous displays, intuitive interfaces, seamless delivery of real time information and everyday surfaces with extraordinary capabilities.
Our stakeholders were also excited about the opportunities this world creates for Corning because it depends on highly engineered specialty glass and fiber optics. In 3 short years, we've made significant progress bringing this world to life. Our video portrayed an always on world with massive amounts of data that you can access anytime, anywhere under the toughest conditions. We're currently rolling out an all optical distributed antenna system called 1 Wireless. Our solution enables clear signals and maximum bandwidth even in really tough indoor environments like convention centers and sports stadiums.
And it's easier to install and much more flexible to upgrade than traditional DAS solutions. Out of approximately 5,000,000 commercial buildings in the United States, less than 10% currently have an indoor cellular network. So this is a huge opportunity for us. We showed you next generation displays that combine the flexibility of plastic with the superior transparency, stability and optical quality of glass. Since then, we've rolled out our ultra slim Willow glass which is thinner than a dollar bill.
And we've continued to improve its flexibility and reliability. You are looking at our latest composition. Did you ever think you'd see a glass that could do this? Global shipments of flexible displays are expected to reach almost 800,000,000 units by 2020 and we expect to participate in a big way. We also envision antimicrobial glass that kills bacteria and viruses on surfaces.
Last month, we launched the world's 1st antimicrobial cover glass, which combines all the benefits of Gorilla Glass with an antimicrobial agent that inhibits the growth of bacteria, mold and mildew. And we have a next generation glass in our labs that kills 99.99% of bacteria. I'm sure you can imagine the potential applications, but here's some food for thought. More than 1,000,000,000 touch devices were sold last year alone. The typical smartphone has around 25,000 bacteria per square inch and the average person touches their face 16 times an hour.
Now tell me what kind of glass do you want at your fingertips? And touch technology is really just the beginning. We also see enormous potential for our glass in places like hospitals that require cleaner surfaces. In the United States, 1 in 20 patients develops an infection in hospital that they did not have when they enter. Those infections contribute to nearly 100,000 deaths and cost the U.
S. $30,000,000,000 annually. So that's a problem we're excited to be attacking. We showed you electrochromic windows that go from transparent to opaque to increase our comfort and reduce energy consumption. Today, we're invested in and working with a company called VUE to develop dynamic architectural glass that can significantly lower energy costs.
Now what does Corning bring to the table? It's actually very similar to what we did for LCDs. The pristine surface quality and mechanical stability of our glass enables VUE's electrochromic capabilities, while increasing their yields and lowering production costs. The market opportunity for commercial windows is more than 25,000,000,000 square feet. And we think dynamic windows will capture a significant portion of that.
Finally, we showed you cars with smart surfaces and described how Gorilla Glass can reduce a car's weight and improve fuel economy. But automakers are also discovering the value of Gorilla for applications that we didn't anticipate. BMW is incorporating Gorilla Glass into an interior window of their i8 sports car to provide an acoustical barrier against unwanted noise. We're also working with several other major carmakers to incorporate Gorilla into different parts of the vehicle such as sunroofs and windshields. The auto glass market is 5,500,000,000 square feet and laminates account for 60%.
We have a strong value proposition for Gorilla Glass in this market. So we really like our hand. Now those are just a few of the new products that we're excited about. I don't have time today to show you all of them. And quite frankly, there are some I can't show you.
But you can see that we're not only continuing our track record of producing life changing innovation, we're capturing multiple opportunities in diverse industries. I hope this gives you a better understanding of why we're so confident in our ability to create Corning's next growth search and deliver value over than the individual products we develop or the businesses that we are currently in. Our products change. Our markets change and our businesses change. But what doesn't change is our capacity for innovation, our unique capability set and our ability to transform and lead markets.
We'll continue to solve tough problems. We'll continue to participate in important industries. Will continue to make things that matter. Here's what I'd like you to take away from my presentation this morning. We did what we said we were going to do.
We restored earnings growth and we're marching up. We are creating significant value for our shareholders. We have a set of core capabilities that are vital to today's most important industries and which remain vital no matter how much products and markets change. Finally, our commitment to life changing innovation and our ability to solve tough problems will continue to drive our growth. Thank you.
And now it's my pleasure to introduce Clark Kinlin, Executive Vice President of Optical Communications.
Good morning and thank you, Wendell. As always, I'm pleased to talk with you today about our business and our plan for pursuing continued optical growth across communication networks. My three key points for today are: 1st, that the relentless growth of bandwidth demand continues. And this demand, fundamentally driven by video, is creating huge amounts of data to store, process, transport and access. It is straining today's communication networks and data centers.
2nd, that network operators increasingly turn to optical based solutions to meet the required targets associated with cost, capacity and speed. And finally, the customers will increasingly turn to Corning to provide innovative solutions across a growing set of applications for wherever the conversion from legacy copper to optical based systems is being driven. As a result, we've renamed our segment Corning Optical Communications. It reflects both our deep optical expertise and our intent to pursue growth across a more broadly defined Communications segment. Let me now turn to my first point.
Relentless bandwidth demand remains a significant challenge for network operators. Cisco expects global IP traffic to grow 23% per year through 2017, nearly tripling over a 5 year period. But more impressive is the sheer scale of data involved increasingly in the form of richer content web pages, photographs and videos ultimately viewed on more capable high resolution displays. In aggregate, by 2017, global IP networks are expected to be transporting the gigabyte equivalent of all the movies ever made every 3 minutes. And this data increasingly crosses the path of data centers, which is one of the growth drivers for our business.
Global IP traffic transported to, from and inside data centers is expected to reach 7.7 zettabytes per year in 2017, a 25% growth rate for the next several years. Increasingly, this data is being processed in the cloud. Cloud traffic is expected to reach nearly 70% of total data center traffic within the next few years and these trends favor optical both inside the data center and across the network. Cloud computing drives the need for higher upload and download broadband speeds, the need for lower latencies across all portions of the network and the move to scalable architectures within data centers at longer distances and speeds migrating to 100 gigabits per second. Only optical, with its inherent advantages over copper, provide lower power consumption along with the higher capacity, speed and densities required across this broad range of applications, which leads me to my second point.
At the core of our business, Corning is a global leader in optical components with leading technical positions in the intellectual property to match with nearly 1900 granted patents. Our work began over 40 years ago with the invention of the very first low loss optical fiber and it continues to the present day with ongoing innovation across optical fiber, cable, connectors, hardware and more recently active components. Recent innovations include SMF-twenty 8 Ultra Fiber, our latest single mode fiber, which combines industry leading attenuation and bend performance Fast access cable technology, which makes cable installation faster and safer by eliminating the need for sharp tools to remove cables jackets. In our recently launched fiber management hardware for local area networks, designed after thousands of hours of customer feedback, this hardware offers more than 2 dozen new features for easier fiber management and termination. We expect continued growth across these products.
They are the fundamental building blocks of optical networks and when they are integrated into optical solutions, they are even more valuable. For customers, they solve network challenges around deployment speed, flexibility and reliability, while lowering total cost. For Corning, they double our revenue and margin dollar opportunity at or slightly above our standard margins when compared to selling individual components. Built on the solid foundation of the optical components we just discussed, we have pursued and delivered an increasing number of integrated optical solutions for a variety of network applications including fiber to the home where we have innovated high density pre connectorized solutions from the central office to individual homes to enable major carrier deployments across the globe. And for multi dwelling units where our RPD Pass solutions provide extremely quick to install pre connectorized solutions that keep building owners happy while eliminating the time and cost of splicing.
In data centers, where our Pretium Edge solution received the 2013 Data Center Facility Product of the Year Award. In switching centers such as central offices and head ends where our new SentriX platform provides a balance of high density fiber management with innovative jumper routing and in wireless networks, where our distributed antenna system provides ubiquitous wireless coverage and capacity to a growing list of high profile venues, including 12 NFL Football Stadiums and 7 Major League Baseball Parks. In aggregate, these solutions have driven the double digit sales and profit growth we have experienced over the past 3 years, allowing us to outpace our competitors and telecom industry CapEx growth. And the good news is that we have no shortage of optical solutions to innovate and commercialize. Here's what's coming up.
More than in any other time, we have a strong pipeline of optical based solutions that will add to our sales growth this year. Our one wireless platform has a growing sales pipeline and provides the nearly unlimited bandwidth carrying capacity of fiber all the way to your antenna. Compared to alternatives, it costs no more today and half as much for future upgrades such as 3 and 4 band cellular, MIMO and Ethernet applications. We also continue to extend our Pretium Edge solutions. Our recent work with Intel to support its silicon photonics technology program has led to the launch of new multimode fiber and multi fiber connector designs capable of sending massive amounts of data up to 1.6 terabits per second at lengths up to 300 meters to help speed the industry's transition to cloud computing, big data and rack scale architectures.
We've also released advanced optics components that provide easy upgrade paths for migration to 40 and ultimately 100 gs systems. We're also ramping sales of our optical cables by Corning that enable real time high speed downloads between computers and external displays, video cameras and hard drives as well. These cables are available in many distribution channels, including Apple's website and are also being used to run all of the multimedia here at today's event. The net result is that for 2014, we expect our sales and profit growth to be at least twice the telecom industry CapEx rate. I thank you for your attention, and it's now my pleasure to introduce my colleague, Mark Beck, to share with you his views on Corning's environmental and science products businesses.
Thank you, Clark, and good morning, everyone. I'll be discussing 2 businesses that may seem quite unrelated, but in fact they share common goals. That is to enable healthier lives worldwide and to generate attractive returns for our shareholders. I'd like to get started with environmental technologies. So our substrates and filters have been improving air quality ever since we invented this technology 40 years ago.
Our products can now be found cleaning emissions from all sizes of gasoline and diesel powered vehicles as well as found in power generation plants. We like the environmental business for several reasons. First, this technology is one of our most important life changing innovations. It has improved the air quality for every one of us here and for billions of people around the world. 2nd, because clean air is a universal need, there are significant growth opportunities in emerging economies and third, because regulators the world over continue to raise the bar, we have opportunities to continue to innovate and to deliver more advanced materials and ever higher levels of performance.
I'd like to detail for you just 3 promising growth opportunities. First, new heavy duty regulations in Europe became mandatory just last month and new regulations in China took effect last July. While full compliance in China may take time, we're already seeing enforcement intensify this year. We also expect to see those regulations tighten in the future, requiring even more components to meet stricter emissions limits. We have a proven suite of advanced substrates and filters, specialized regional products and a capacity plan to meet this growing demand.
Order rates in both of these regions have already begun to ramp up. Regulators have raised the bar in California with LEV-three and the U. S. EPA has proposed a similar standard with their Tier 3 regulations. These rules require an additional 75 percent drop in tailpipe emissions beginning the model year 2017.
In gasoline engines, up to 70% of the total emissions can occur during the first 30 seconds after engine start. These cold start emissions are key to addressing these new tighter standards and we have a product designed just to do that. Our breakthrough material has significantly less thermal mass. This allows the entire system to heat up and start cleaning the air faster. The image on the left shows a screen capture of the heat up demonstration we featured in our exhibit this morning.
Our invention also improves fuel efficiency and can lower overall system costs by reducing precious metal use by our customers. This solution creates so much customer value that we expect to be able to secure premium pricing of up to double that of our standard products. We expect to win our 1st major OEM platform with this product in the first half of this year. Now drivers want both better fuel economy and higher engine performance. Many OEMs are planning to achieve this using gasoline direct injection or GDI engine technology.
And while GDI engines do enhance performance, they also tend to generate very high numbers of particulates. And a filter is needed to capture these particulates and prevent them from becoming part of the air that we breathe. We believe that starting in Europe, a market will emerge for these new filters. And we're convinced that we have the right product to meet our customers' needs. By working closely with leading OEMs, we have developed and tested our new filter solutions extensively and expect to begin winning OEM platforms in the second half of this year.
Meanwhile, our relentless focus on manufacturing improvements and other cost efficiencies is working. In fact, gross margin has improved more than 900 basis points since 2010 and we have additional cost reduction programs underway now. We expect these programs to continue delivering very attractive incremental margins, allowing us to produce double digit earnings growth. So in summary, we like our hand in environmental. While over the past 2 years, sales were impacted by the European recession and a decline in heavy duty builds in North America, we are beginning to see early signs of improvements in both of these markets.
As a long standing leader in global clean air solutions, we're ready to provide the technology and products for the next generation of emissions control. And we continue to focus on operational efficiencies. So as our markets improve and new opportunities emerge, environmental will be in a strong position to deliver double digit profit growth. I'd now like to turn our attention to Life Sciences. We have been a global supplier of Life Science tools for more than 95 years.
We believe that our technologies help advance the industry's goal of more affordable and effective medicines. And as that growth is realized, we'll continue to generate solid returns for Corning. We like the Life Sciences industry for several reasons. First, our base business can deliver reliable growth, and we have been growing faster than our competition. 2nd, capital intensity is low and R and D spending is moderate.
3rd, there are tough customer problems to solve in the area of large scale cell culture. You see, we were pioneers in the area of smaller scale in the laboratory cell culture known as research cell culture. And we're using that experience and that knowledge to enter into the faster growing larger scale area of production cell culture also known as biomanufacturing. The pharma industry is undergoing a major shift from chemically derived drugs to biologically derived drugs. We like this trend because more biologic drugs means a need for more cell culture.
And as I've said, we've been an innovator and a market leader in this area. And with the addition of Discovery Labware, our offering has grown even stronger. So we are now developing and launching products to serve the drug maker not only in research but also in biomanufacturing. Let's take a look at just a few of the products that we believe will make a difference. As biotech drugs take off, our customers need new ways to dramatically increase cell production.
Our Hyper series of breathable cell culture vessels enable customers to use their current incubator space to achieve much greater cell output. This helps drugmakers save on both capital and operating costs. Biomanufacturing vessels of this scale are still an emerging segment, but with expectations to grow to $200,000,000 Using our high density technology, we have already claimed a leading position in this growth area. Now another way to increase cell production is to move from attachment to free floating cell culture. In this approach, the cells are placed in a large vat of liquid and grown in solution.
This works well for some cell types, but many important cell lines cannot survive without a surface to grow on. We have developed micro carrier beads to address this issue. With these beads, customers can effectively grow large numbers of attachment cells in solution. We enhance the performance of our beads with unique coatings and surface treatments such as SynthaMax and Cellbind. Cells also require nutrients to grow.
These nutrients are provided by the cell growth surface and through the liquid media. When growing cells for research in a laboratory, it's common to use surface coatings and media which have been derived from animals. However, when cells or cell components are intended to be used as the drug, the risks associated with animal derived materials are a real concern. We have products to address this issue as well. Synthetic, animal free coatings and serum free media enable the move to animal free cell culture without compromising performance.
Now we are new to the media market, but with innovative products like this, along with our historic strength in cell culture vessels, we expect to grow our position in this $1,000,000,000 market. So you can see we like this business. With our focus on higher growth opportunities like biomanufacturing, along with our new innovations and selective acquisitions, our sales and profit growth will continue to outpace the industry we serve. Similar to the environmental business, we have manufacturing programs in place to lower costs and enhance gross margins. I believe this business will continue to deliver double digit profit growth.
So in summary, Environmental Technologies and Life Sciences are both attractive businesses with unique technologies and products. Both are leaders in markets that are growing and both have important opportunities to solve tough customer challenges. As a result, we expect to see both of these businesses grow sales and deliver double digit profit for Corning. Thank you. And now I would like to introduce my friend, Jim Clappin, who leads our Glass Technologies Group.
Thank you, Mark, and good morning, everyone. Today, I will be speaking to you about Corning Glass Technologies, our mission, our business performance, and our near term outlook. Before I get underway, here's a quick review of the businesses that make up Corning Glass Technologies. The Glass Group combines our display business, which concentrates on LCD glass and advanced substrates for high performance displays with the specialty materials business, which includes Gorilla Glass for handheld, IT and large screen applications. We're delighted to welcome to our family Corning Precision Materials, the new name of the former joint venture between Corning and Samsung, which we took full ownership of in January.
We believe that full ownership of these assets offers significant benefits to our business in 2014 and beyond. I'll provide more specifics later in my remarks. The Advanced Optics business under Specialty Materials, which provides optical solutions for a number of applications will not be covered today given the limited time. Let's get started. At last year's conference, I told you that Corning Glass Technology set out to accomplish 2 primary objectives, stabilize display leading to consistent profits and grow Gorilla Glass sales and profits.
Both outcomes will be driven by market growth, cost reduction, and increasing asset utilization. So how do we do? In display, I'm pleased to report that our performance did in fact stabilize in 2013. Here's what worked. We established agreements with key customers that stabilized our share at specified levels while maintaining a fixed relationship between Corning's price and competitive pricing, thus helping to moderate price declines in 2013.
They also helped us forecast our capacity needs, enabling us to maintain high levels of capacity utilization and tight control of inventory. In addition, we estimate that the glass market at retail for 2013 was almost 4,000,000,000 square feet, up about 10% on a year over year basis. The move to larger TVs was the driver behind this growth. And we continue to move the industry to thinner glass, allowing us to reduce our cost and to increase our manufacturing output from the existing asset base. Our output gains combined with aggressive cost reduction portfolio drove down our operating costs dramatically and better than our expectations.
Overall, we achieved our objective and stabilized our full year core net income versus 2012. In the Gorilla Glass business, it was a year of mixed results. Sales were down year over year as the industry worked through an inventory overbuild issue that actually occurred in the Q4 of 2012. But the negative effects of the overbuild persisted through much of last year. Overall, our revenues were down 13% last year compared to 2012.
Looking more closely, it's now apparent that several large branded manufacturers bought Gorilla Glass well ahead of demand late in 2012. When device level sales figures came in early last year, we began to understand the scope of the problem. We believe this excess Gorilla Glass inventory was consumed in 2013 and that we are ready to grow again. On the plus side, Gorilla Glass cost reduction results due largely to manufacturing efficiency improvements exceeded our expectations. So the overall impact to net income was largely minimized despite the sales decline.
If we remove the effects of the inventory overbuild, we see that the demand for Gorilla Glass in end devices actually grew year over year. So here are some basic messages to remember about 2013. We've stabilized displays performance. We've improved our Gorilla Glass cost performance and we have worked through the 2012 inventory overbuild. Finally, we announced the SCP acquisition late last year.
We're stable, steady, and poised to grow. Now here's how we build from last year and make it happen for Corning Glass Technologies in 2014. It's all about building momentum. I'll start with an overview of Display in just a moment and then spend some time going through the opportunities ahead for Gorilla Glass. I'll wrap up with perhaps the biggest news from 2013, the acquisition of SCP, now known as Corning Precision Materials and the full integration of that asset into our operating fleet.
Full control of CPM, as it is now known, gives us complete access to the lowest cost capacity in the industry, providing the opportunity to optimize our manufacturing footprint across both product platforms with options to extend into other non consumer electronic segments as well. I'll detail the profound strategic and operational advantages of this acquisition shortly. 1st, let's look more closely at display. I will address these topics in the slides to follow and let's begin with the LCD glass market. The LCD glass market continues to expand, driven primarily by larger TVs and TV replacement, with some help from the proliferation of tablets and small mobile devices.
Classic IT applications such as notebooks and desktop monitors are expected to remain relatively flat. All in all, we expect the LCD glass market to grow in the range of 6% to 8% annually. Clearly, the growth of the TV segment, particularly sizes 50 inches and above is the biggest driver of glass demand growth. Retail price and viewing experience are key factors fueling this growth. The average price of a 60 inches LCD TV has dropped rapidly over the last few years and today prices below $1,000 are common in the U.
S. LCD TV has advanced in so many ways over the last several years. Higher resolution, thinner devices, disappearing bezels, expanding color gamut, higher refresh rates and features like 3 d and Internet connectivity have all served to enhance the viewing experience. As we look forward, new features like 4 ks resolution highlighted at CES this year and quantum dots to push the color gamma to new levels will further drive demand for large TVs. This is an amazing time for amorphous silicon LCD TV, cementing this technology's leadership for years to come.
And Corning has and will continue to have the right glass to bring these technologies to market. So let's take a closer look at Ultra HD TV, so prominently displayed at this year's Consumer Electronics Show. The terms Ultra HD, UHD, 4 ks2 ks and just 4 ks all mean basically the same thing. An image with twice the horizontal and vertical resolution of the current 1080p technology resulting in 4 times as many pixels in a display and delivering an amazing viewing experience. We can all recall the rise of 1080p resolution several years ago and the skeptics who said the lack of content and transmission bottlenecks would inhibit its adoption.
In fact, the industry shifted quite rapidly to 1080p sets. And these sets in people's living rooms encouraged new ways of delivering higher resolution content. Furthermore, that transition happened before the widespread adoption of streaming video to smart TV devices. With streaming technology, we are observing that content providers are even more proactive in implementing 4 ks solutions. In the meantime, even upscaling today's native resolution results in improved picture quality versus 1080p.
4 ks resolution increases the effective size of a room leading to larger TVs in the available space and as cost improves and prices come down a growth opportunity for all players in the industry. We started talking about the installed base and the TV replacement cycle a few years ago in this forum. And as you can see in these charts, our main theme has not changed. First, the worldwide installed base continues to grow and we have quite a ways to go before reaching full LCD TV penetration. Our annual consumer research continues to confirm that the replacement cycle for flat panel television is averaging 6 to 8 years, a faster rate than observed in the CRT era.
That cycle is and will continue to be driven by innovations in the TV space and the ever improving value delivered to the consumer. Let's turn now to display pricing. As most of you know, we reported in our quarter 4 earnings release that quarter 1 price declines would be higher than previous quarters. We believe that this is related to a one time regional adjustment one of our competitors that will not repeat in future quarters. Actually, we believe price declines will return to moderate levels from quarter 2 and here's why.
1st, our stable share agreements remain in force in 2014 and will assist as in the past in moderating price declines. Next, glass supply and demand is expected to be balanced throughout the year. 3rd, we believe that if prices were continued to decline like they have in quarter 1, our competition would soon be incurring losses. Publicly available information shows that our competitors are already operating their business on thin margins. Prices can only go down so much before these competitors will be at or below breakeven.
Our analysis shows that our cost is lower than our competitors by a substantial percentage And we anticipate that this cost advantage will only get bigger as we integrate the manufacturing assets of CPM. Many technologies occur first in small sized devices in a category we call high performance display. These are often higher resolution, thinner and consume less power than conventional displays. These displays whether metal oxide or polysilicon technology require a glass that can withstand higher processing temperatures and more precise manufacturing techniques. This segment of the glass market is growing rapidly driven by smartphones with higher resolution and larger screen size and by the increasing penetration into larger applications.
All in, we expect this segment, this market segment to grow at an average of 35% over the next several years. Our Corning Lotus Glass is the advantaged product in this space. It's developed specifically for these advanced backplane technologies. As recent industry news indicates, we're aligned with several leaders in the HPD segment and we'll continue working closely with them to capture growth opportunities in this rapidly expanding market. And speaking of markets, we believe a real opportunity has arrived for Willow Glass.
Let me start by giving you some perspective. In your typical cell phone today, there are 2 pieces of display glass. These pieces are sold to our customers at a thickness of 400 to 500 microns and processed into panels. Then after the panels are made, they are put through a nasty chemical etching process employing powerful acids to remove up to 60% of the glass to get down to a thickness of 200 microns. Then the panels are assembled into a device.
The market desires even thinner glass down to 100 microns, roughly the thickness of a dollar bill. But that has proven to be quite difficult with the current thinning technique. Some device makers have pursued plastic as a path to achieve thinner displays, but use of plastic as a backplane substrate presents other challenges and trade offs. Plastic substrates use a glass carrier to run through the panel making process and with the current technology, the carrier is lost after debonding. Our solution to this opportunity is Corning Willow Glass.
At native 100 micron thickness, Willow glass provides all the properties of our best display glass and requires no secondary thinning. We make it right the first time. Bonded to a reusable carrier Willow glass can be processed using current panel manufacturing techniques. Once the backplane and color filter have been built on the Willow glass surface and joined together, The cell is then debonded from the carriers and carriers can be returned for reuse. We have developed an advantage bonding technology for this purpose and we believe this process can deliver ultra thin displays at a lower cost with better performance and with fewer environmental concerns compared to any other method.
We expect to sell Willow Glass for this purpose in 2014. Now let's turn our focus to Corning Gorilla Glass, where we are extending our global leadership position by bringing even more advantaged products to market. Again, the key word here is momentum. With last year's inventory overhang in the rearview mirror, we're ready to grow again. These are the topics I will cover in this section, starting with device demand.
Corning created the cover glass category and we've earned our position as the acknowledged global leader. Today Gorilla Glass is on more than 2,400 product models, 2,400,000,000 devices and 33 major brands. Demand for cover glass will continue to be powered by the smartphone segment driven by increasing units and larger screen size. In area terms, we expect the total cover glass market to almost double in the next few years. Smartphone growth over the next several years will be powered by demand in emerging markets in the sub $200 category.
Higher growth in this price sensitive segment presents us with a unique challenge. The emerging market environment is quite different from where we traditionally play with the high end global brands where growth rates have actually slowed. In the sub-two hundred dollars segment, the supply chain is more fragmented with many suppliers and handset producers participating in the market. It is more challenging to operate effectively in this supply chain. Additionally, profit margins were quite small, leading supply chain participants to be exceptionally price sensitive.
Device reliability is often sacrificed for lower cost and lower performing cover glass solutions. The good news is that no matter where in the world you live or how much your cell phone costs, you care about the reliability of that device. A cracked screen is a catastrophe for any user at any price point and in any language. Just the swear words change. In 2014, we will leverage our significant China organization to market Gorilla Glass to this fragmented supply chain and we will launch an optimized solution which addresses the most price sensitive segments.
In the touch on notebook category, most of the volume growth is in the lower price clamshell segment. We've been quite successful in the high performance laptop segment with Gorilla Glass NBT, but we haven't done as well in this low price segment, which has been typically using soda lime glass. While soda lime glass is substantially inferior to Gorilla Glass NBT, OEMs are willing to take the performance risk given the razor thin margins and a willingness to live within certain design constraints. We understand the market dynamics and appreciate that we need a more innovative approach to generate traction in this price sensitive clamshell category, while still maintaining our margins. You can expect to hear more about this in the coming months.
We're proud of the progress we've made in setting the standard for strength in cover glass. We have a well documented history of improving the performance of thin glass in this space. When we launched Gorilla Glass 1, our glass was twice as tough and half as thick as the legacy soda lime glass. Gorilla Glass 2 was 20% thinner and Gorilla Glass 3 was 40% better for scratch performance. As a result of our continuously improved performance, customers have reduced cover glass thickness by 30%.
But there's still more to do because even with all these innovations glass can still break. Consumer surveys confirm that glass breakage, not surface scratches, is the number one complaint of mobile phone users. That's why later this year, we expect to introduce the next generation Gorilla Glass designed to further improve device drop performance. For as long as the cover glass in a mobile phone can break, we will continue to innovate. We're excited for what lies ahead for Gorilla Glass.
We began the year by introducing the world's 1st EPA registered antimicrobial cover glass at CES. We've also introduced anti reflective cover glass and reached agreement to produce 3 d shapes with a partner in Asia. We'll extend the boundaries of what our Cover Glass can do as we take on challenges in price sensitive smartphone and the touch on notebook sectors later this year. Finally, there are new applications developing for Gorilla Glass. In some cases with advanced surfaces outside of the traditional consumer electronics market.
Doctor. David Morris, our next speaker will elaborate on these opportunities in his remarks. So we expect demand for Gorilla Glass to return to growth in 2014 as touch device growth continues and glass demand more closely matches end market demand. And with end market growth, it's really a simple equation. Device growth plus innovation and new markets leads to growth in net income.
Now, Now let's talk about Corning Precision Materials or CPM. We celebrated the day 1 deal close on January 16. Our integration efforts are well underway. The synergy savings are on target. When we announced the deal in October 2013, we said the deal would offer significant strategic and financial benefits to Corning improving the display and strengthen cover glass businesses, broadening our relationship with Samsung, while providing outstanding returns to shareholders.
All true. Let me take you a bit deeper and explain what it means to Corning Glass Technologies. Simply put, this deal is a strategic and operational win for Corning Glass Technologies. First, it is expected to deliver about $350,000,000 in incremental net profit after tax in 2014. Next, our combined organizations will meet customer requirements for the highest quality display and cover glass with the industry's largest and most flexible capacity.
This capacity can be used for any customer in any region for any fusion glass product. In addition, there is approximately $170,000,000 in cost savings, split between cost of goods sold and operating expense, another $350,000,000 in capital expenditure savings to be secured over the next 4 years. This was the right deal at the right time for Corning. It puts us in even a stronger position as the display industry matures. Corning remains the market leader with an even greater cost advantage over our nearest competitor.
CPM synergies improve our plan because as a combined business we are truly stronger than the sum of our parts. Negotiated as part of the deal, the 10 year supply agreement with Samsung Display greatly enhances our stable share objective. Our combined manufacturing assets will bring our costs down further and faster than we could have achieved separately. From a capital standpoint, our synergies will take spending down even lower than our previous combined plan. So in summary, this is what I want you to take away from this presentation today.
Display is stabilizing. We achieved our objective stabilizing core earnings in 2013 through moderate price declines, volume growth and significant cost reduction. While it is true that price declines in quarter 1 were greater than previous quarters, we expect price declines to return to moderate levels starting next quarter. We believe this because our stable share agreements remain in place, we expect glass supply and demand to be balanced, and our competitors are approaching breakeven profitability. And the display glass market continues to grow, driven by new and exciting technologies and by increasing value in the large TV segment.
Full integration of CPM's assets drives our costs lower and requires less capital on a combined basis, thus turbocharging our plan. Growing demand for touch enabled devices will continue to drive sales growth for Gorilla Glass. And finally, innovation is critical to what we do in our Gorilla Glass business. It cements our leadership in a market we've established. It creates new opportunities in the cover glass space.
And it opens the door to new markets such as strengthened glass for automotive and architectural applications. Our next speaker, Doctor. David Morse will tell you about these and other opportunities Corning is pursuing outside the consumer electronics space. Thank you. And now I'll turn the podium over to our Chief Technology Officer.
David?
Thank you, Jim. So to wrap up our Product Innovation segment, I'll spend a few minutes talking to you about how Corning approaches innovation, our capabilities, our processes and even our culture. How we innovate is an important part why we've been so successful, why we're confident in our future. I believe we've created real momentum in innovation. As you heard from Wendell, Clark, Mark and Jim, our current businesses and innovation investments are smacked in the middle of the biggest and most exciting markets in the world.
These markets are driven by giant trends that will shape the future and we plan to play a critical role. We're also making excellent progress in exciting new areas outside our existing businesses and I'll be pleased to share some great news with you today. I'm sure it's obvious from our presentations how proud we are that Corning is responsible for so many innovations that have changed the world and enhanced people's lives. Where would the world be without an inexpensive envelope for the light bulb or a viable way to make tubes for TV sets or an economical way to turn auto exhaust into harmless gas making every city in the developed world a lot cleaner and the people of the world a lot healthier. And can you even imagine life without the Internet?
Without Corning's optical fiber, the Internet would simply not exist as we know it. More recently, our Gorilla Glass has been essential to the proliferation of mobile devices. Without thin, tough cover glass, touch based smartphones might never have taken off. So what is it about Corning that makes us capable of delivering this steady stream of life changing innovations? To answer that question, I'd like to share a story.
Recently, the former CTO of Intel visited me in Corning. We're working with Intel on a program around fiber for very high speed communications between computer components. The program is called Silicon Photonics and it's an important breakthrough for applications like data centers. I took him on a tour of Sullivan Park, our research and development headquarters. He looked around and said, wow, where do you buy all this amazing equipment?
The question caught me by surprise. I replied, what do you mean by? We make all this equipment ourselves. He was stunned of course because in the semiconductor industry most of the processing equipment is standard and it's available to all manufacturers. At Corning, it's different.
Nothing is off the shelf. We devote a lot of effort and investment to developing unique and proprietary manufacturing processes. So behind the light bulb is the ribbon machine, which has produced countless billions of bulbs. Behind the kilometers, billions of kilometers of optical fiber is the fiber drop. Behind CellCore, backbone of catalytic converters is the cellular ceramic extrusion process.
Behind billions of LCD displays is the Fusion Drawout process and behind Gorilla are the Fusion and Ion Exchange Processes. It's the material and process combinations like these that are a critical reason for Corning's long lasting margins and strong market positions. Here you can see Sullivan Park, our central research and development complex, which is located in Corning, New York. We conduct about 3 quarters of our global technology effort inside this 2,000,000 square foot facility. Our strong centralized approach to R and D is a vital part of Corning's innovation model.
Developing processes and products like the ones Wendell and I shared requires a unique organization, capabilities and culture. That's why we our Sullivan Park R and D Center is so important and why we co locate so many of our key people there. To make an integrated process like Fusion or Fiber Draw, you need a whole host of competencies. It starts with materials and Corning is the absolute best in the world in glass. It also requires process control, measurement, metallurgy, equipment design, all working in collaboration.
So our secret is not one competency or capability, it's the
whole integrated
combination that powers Corning Innovation. Over the years, we have evolved a collaborative working style that is uniquely suited to this kind of multidisciplinary work and that yields extraordinary materials and processes producing excellent margins for decades. This integrated approach also allows us to continue to innovate over time in realms that are huge and rapidly expanding, and we do it with agility. To illustrate the value of our integrated approach, I'll share another story. Back in the 1970s, Corning scientists developed a crucial invention, low loss optical fiber.
No question, one of the most important innovations ever. Over the years, integrated teams have evolved that first breakthrough into whole new generations of products. You can think of it as a tree of innovation, single and multimode fiber, specialty fiber, optical semiconductor lasers, cabling systems, connectivity solutions and now the exciting Corning 1 wireless system that we're rolling out. That tree and the products on the right represent more than 40 years of innovation, leadership in optical communications, just in those technologies alone. Optical communications is just one of the huge realms that we'll participate in for a long time, and we intend to profit from it for a long time.
Let's talk about some others. Last year, the global consulting firm McKinsey conducted an analysis that identified the top 12 technology markets for future growth. McKinsey is forecasting 1,000,000,000,000 of dollars in economic impact in these markets. The top 4 mobile Internet, automation of knowledge work, the Internet of Things and cloud technology represent $15,000,000,000,000 in economic potential and Corning participates directly in all of them. We're one of the key problem solvers in these markets and we will be in other major growth realms as well.
You may recall that in July 2012, Corning appointed Marty Curran as Innovation Officer reporting to both Wendell and me. Marty, could you please stand up? Thank you. Marty is one of Corning's most successful General Managers having led both the fiber and the connectivity businesses. Because accelerating new products to market is so important, we've tapped him to lead our Emerging Innovation Group, focusing on new revenue streams in adjacent markets.
And our focus is paying off. We've made significant progress expanding Gorilla Glass into new applications. I'll highlight just a few. Let's start with automotive. We're extremely excited that BMW, a design leader in the auto industry is the 1st to put gorilla in an automobile.
As Wendell mentioned, it's going in their iconic BMW i8 where they are using several lightweighting materials such as carbon fiber and Gorilla Glass to maximize performance. BMW believes Gorilla is perfect for a new acoustic separation wall that shields rear engine sound. The BMW i8 is a specialty vehicle and a gorgeous one. In fact, I've already placed my order. True, but we are also collaborating with industry leading auto lasers like PGW in Pittsburgh where we will bring Gorilla Glass to more mainstream vehicles in much higher numbers.
We've also collaborated with companies that will bring Gorilla Glass to other transportation applications such as security, planes and trains. If you weren't already concerned about the bacteria on your smartphones, I'm sure you are now after hearing Wendell rattle off those statistics. Or maybe you just found out how contaminated your own cell phone is by testing it in our exhibit area. Corning developed antimicrobial Gorilla Glass to address this concern. It's the 1st EPA registered by antimicrobial cover glass and it was a big hit at the International Consumer Electronics Show last month.
Steelcase, an industry leader in workplace products, furnishings and services has announced that our antimicrobial glass will be used on their Room Wizard product, which features a touchscreen interface or electronic control of conference rooms. As people become more aware of bacteria on touch surfaces, we expect this opportunity to become even bigger. Royal Glass also offers exciting new options for interior architecture. Corning is collaborating with Elevecture and SnapCab, 2 leaders in modular wall systems. Because of Gorilla Glass' strength and lightweight, it's ideal for elevator walls, lobbies and conference rooms.
Modular wall systems featuring Gorilla Glass are simple to install and can be integrated with interactive displays. I hope you had a chance to see our elevator examples in the exhibit area. We're also very pleased with our traction in marker boards, Egan Visual, Moore Company and Crystal Glass Writing Boards now all carry products featuring Gorilla Glass. In appliances, we're focused on providing touch screens for many routine devices that you use in your home and office. I also want to discuss some significant progress on other innovation initiatives.
First is Willow, our ultra slim, lightweight and flexible glass. Jim described one market opportunity that we're really excited about. But we've actually identified 170 potential applications so far, including covers, barriers and substrates. Willow could be used for barrier applications, for example, that protect valuable components from moisture and oxygen. So stay tuned.
A project that we haven't talked much about is ultracapacitors. Ultracapacitors store electricity, but unlike batteries, they can be charged and discharged very quickly and can survive millions of cycles. They're used in wind turbines, hybrid buses, cars, industrial machinery, just about anywhere that bursts of energy are required. And the market for them is growing quickly. I'm pleased to announce today that we have signed a memorandum of understanding with a major ultracapacitor company, Maxwell Technologies, and we'll be collaborating with them to develop higher capacitance and higher voltage products.
I hope you saw our dynamic glass demonstration in the exhibit area. As Wendell mentioned, we recently announced a strategic collaboration with VUE to develop smart window glass that tints automatically based on weather and user preference, making buildings more comfortable and more energy efficient. In our advanced flow reactor business, sales are growing as more companies see evidence that flow reaction chemistry offers real advantages over traditional batch processing. In particular, we see continued strength with pharma and specialty chemical manufacturers in China and India. Finally, we're working with the world's top industrial product designers to incorporate corning materials and technologies into entirely new products and applications.
To bring these capabilities to light, we've been developing whole collaborator at Intel. We're making Gorilla Glass in 3 d form factors. It's actually a real engineering feat to maintain the super tight tolerances of a Gorilla within a 3 d shape. For Willow, we're developing new techniques for manufacturing, forming and handling glass to help make efficient roll to roll processing a reality. We're also developing coatings, anti reflective and anti glare to complement our new products in consumer electronics, architectural and automotive applications.
We're exploring new decorating techniques too. It turns out that Gorilla Glass is an excellent surface for high resolution graphics and printing. And of course, we continue to develop new glass compositions and ways to form them. So our deepest core competency is still paying big dividends for Corning. Between what you heard from the business leaders and what I've just shared, I hope you have a better sense of the richness and strength of Corning's innovation pipeline.
So what does this all mean for you? The life changing innovations that Wendell and I described are business game changers too. They can build exceptional profits and shareholder value. Remember, nothing about our technology is off the shelf. Our unique processes and our integrated approach to innovation means long product life cycles and multiple generations of products.
That's how a single generation inventions such as optical fiber can spawn generations, whole trees if you will, of important products and we are working hard to create whole new forests. Corning's innovation approach means that we'll remain in the middle of the action disrupting the technology status quo, transforming industry and enhancing people's lives, just like we've been doing for 163 years. Thank you. Now I'm pleased to introduce Corning's Vice Chairman and Chief Financial Officer, Mr. Jim Floss.
Thank you, David, and good morning. I'm going to wrap up the morning by pulling together what you've heard, adding some details on one of my favorite topics, cash, and finally closing out with a corporate summary of our goals for 2014. You've now heard from our business leaders about our outlook for each of our business segments, and I hope you learned something new from each one of them. And you've got a chance to hear details about how we innovate and why we think our unique capabilities matter to investors. I hope you're as energized as we are about Corning's promising future of innovation that David's highlighted.
There's another important component to Corning's earnings that we haven't talked about today, Dow Corning Corporation. So I'd like to begin there. For investors new to our story, Dow Corning is an equity venture that was established in 1943. It's a large business in its own right with almost $6,000,000,000 in sales with many diverse end markets. We at Corning segment the company into 2 large buckets: silicones and polysilicon.
And I'd like to spend a minute talking about each and our expectations for this year. Dow Corning is the leading provider of silicones across many markets. Silicones are used in everything from cosmetics to construction to car tires. You may recall from last year that the business began focusing on higher value opportunities and committed to innovate for advanced products in existing and new markets as well as to process technology improvements. However, 2013 was a tough year for the business.
Coming into the year, we had expected sales to be up slightly, but about midyear, the business saw significant pricing pressure in some regions for its core silicone products. After shifting their product focus and implementing cost controls in 2013, the silicone business grew NPAT slightly even though sales were down 4%. Silicones typically grows with GDP around the world, and we feel that economies will be stronger in 2014. So that should be favorable for Dow Corning's silicone sales. Their ability to grow sales and profits obviously depends on the pricing environment and also raw material prices.
Now Hemlock was established in 1961 and today manufactures polysilicon for both the semiconductor and solar markets. Many of you are familiar with the collapse of the solar market and the significant impact it had on Hemlock's volume and profitability. Hemlock restructured in late 2012 in the wake of the collapse in order to right size capacity equal to demand and also to quickly return to being cash flow neutral. In the back half of twenty thirteen, they saw some return to stability in the solar grade polysilicon market and expect to be profitable this year. We're very pleased with Hemlock's efforts to align costs and capacity with demand and their quick return to profitability.
What they and we continue to watch for is the final resolution of China's polysilicon dumping investigation and also Hemlock's ability to enforce their solar contracts. Recall Hemlock has multiyear take or pay contracts for their solar grade polysilicon. Customers that have the financial wherewithal are taking their volume commitments. So both Hemlock and Dow Corning's Silicones business expect sales growth in 2014. Silicone sales are expected to be up in the low- to mid single digits in line with the global economy.
Hemlock expects sales to be up approximately 20%, driven by improved solar market conditions and contract enforcements. Combined with the cost control measures implemented in 20122013, we at Corning expect to record Dow Corning's income at 20% to 30% growth in 2014. Now this morning, Wendell reminded you of the strategic and financial benefits of our series agreements with Samsung. Jim Clappin spoke to you specifically about the benefits of full ownership of what is now named Corning Precision Materials in Korea. I'd like to walk through the implications of the consolidation of CPM on our financials.
We expect approximately $2,000,000,000 sales in the Display segment this year and next from consolidating 100% of CPM LCD glass sales. You should calculate cost of goods sold based on their sales assumption, including depreciation to get to gross margin. I urge you to remember that CPM did have lower performance in the back half of twenty thirteen, so you need to think about that level of performance as you estimate this year. Obviously, you must add their operating expense to SG and A and R and D. You also need to make an estimate of the impact of synergies on cost of sales and S and A.
We believe the split between cost of goods sold and OpEx is roughly onethree, twothree, respectively. We're just completing the close in Q1, so the synergies in this quarter will be lower. We expect them to ramp up quickly in Q2 and continue throughout the year. Finally, please remember that CPM will not have the benefit of interest income anymore due to stripping SVP's cash via dividend. This gets you to net profit before tax for the Display segment.
Corning's taxes will now include the taxes paid by CPM in Korea. We record low U. S. Taxes on equity earnings and these dilute Corning's overall tax rates. Obviously, we had significant equity earnings from SEP that reduced our overall tax rate, as you can see in this chart for 2013.
Consolidating CPM changes our wholly owned tax rate slightly, but removing those equity earnings reduces this dilutive effect on our overall effective tax rate, as you can see in the 2013 pro form a chart. If SCP had been a consolidated entity in 2013, it would contribute 0 in equity earnings and their full net profit before tax of approximately $1,100,000,000 would have been added and taxed at the Korean tax rate in Corning's P and L. So for 2014, we expect our total effective tax rate to be approximately 22%. Now we'll also have some amortization of intangibles and goodwill from the acquisition. And as with our other deals, we record those outside of core earnings.
Another area that consolidation impacts is our balance sheet. These changes are pretty straightforward. You need to subtract SCP from our investment balance and then add the entity into assets and liabilities. On cash flow, Corning will no longer receive dividends and operating cash flow from CPM. 2nd, we will have CPM's capital spending.
But the overall net effect is we expect an additional $400,000,000 to $500,000,000 in free cash flow as a result of the CPM consolidation. Finally, please remember the $98,000,000 in preferred cash dividends to Samsung, which fall below free cash flow on our cash flow statement. We'll provide detailed pro form a GAAP financial statements in April for investors to update their models on this information. And of course, Anne and Stephen will be happy to answer any modeling questions you have as well. So now let's look at our expectations for cash and our thoughts on capital allocation for 2014.
Last year, I showed you this chart breaking out how we expected to distribute cash in 2013. Here's a version showing actual distributions over the last 2 years, 20122013. You can see the shift to distributing more cash to shareholders. Over the 2011-twenty 12 time frame, the split was 30seventy. 2012-twenty 13 split is now 57-forty 3 in favor of shareholders.
We've been migrating this ratio through dividend increases and share repurchases. Now for 2014, I want to fill in some of the boxes with the information that we know at this time. We expect to generate significant cash flow going forward. 2 weeks ago, we closed on the consolidation of CPM. We paid for those assets using preferred stock and of course some cash to minority shareholders.
The transaction unlocked cash from the venture's balance sheet and, as I already mentioned, adds significantly to operating cash flow annually. This chart shows how we expect to intend to allocate that cash. We expect our capital spending in 2014 to be $1,500,000,000 Our current forecast for 2015 is approximately $1,500,000,000 also. We plan to complete the remaining $500,000,000 of the share repurchase program as well as our new $2,000,000,000 program that Wendell described for a total of $2,500,000,000 in share repurchases this year, and we plan to buy back these shares at a relatively quick pace this year. We'll also continue to look for some acquisition opportunities in Life Sciences and Optical Communications.
Our strategy for acquisitions is to find businesses that add value to the product portfolio and or the geographic reach. They would be strategic additions. Investors have asked how we evaluate potential acquisitions. We have a due diligence process that ensures we pay both a fair price and get a good return. Our metrics include return on investment being greater than the weighted average cost of capital and measuring returns versus share repurchases.
Given our strong operating cash flow expectations, lower capital spending and our robust balance sheet, we believe we'll continue to have options for returning more cash to shareholders in the coming years beyond 2014. So let me summarize. Our plan for 2014 is fairly straightforward. We want to continue the positive momentum and display that Jim Clappin described. We're going to work very quickly to integrate CPM in order to realize the synergies, gain further cost advantages and increase our flexibility of glass supply.
Driven by the growth in their end markets and further operational improvement plans, Optical Communications, Specialty, Environmental and Life Sciences will grow their sales and profits this year. And finally, we will execute the €2,500,000,000 of share repurchases that are authorized. When you add that all up, we believe we'll get another year of earnings growth in 2014 and many beyond that. As you've heard from Wendell and David, we have a proven track record of innovating our way into new surges of growth. We're excited about the opportunities under development today and are confident we will deliver growth over long periods of time.
There may be setbacks, and global economies don't always go our way, but our management team, strategic framework and most importantly, our innovation formula help us weather tough times and create the new surges in growth. So to recap the entire morning, we delivered on our plan to investors. We have begun our march up in earnings growth. Our combination of increased earnings and cash to shareholders has delivered significant value to investors. Corning has over 160 year history of developing products that have created new industries and transformed people's lives.
We believe in our unique capabilities, collaborative culture and drive to make life changing innovations will lead to new growth surges and the sustainability of the company for the long term. Another 160 years is our goal. Thank you. Now I'd like to invite Wendell up on the stage for our Q and A session.