Good morning. Today, Corning is very happy to be here. It's my pleasure to welcome you to Corning's investor meeting. I'd also like to welcome those investors who are joining by conference call or videocast. Before I begin our formal presentations, I'd like to remind you that today's remarks contain forward-looking statements that fall within the meaning of the Private Securities Litigation Reform Act of 1995. These remarks involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially. These factors are detailed in Corning's financial reports. You should also note that we'll be discussing our results using core performance measures, unless we specifically indicate that our comments relate to GAAP data. Our core performance measures are non-GAAP measures used by management to analyze the business.
You can find the reconciliation of core results to comparable GAAP values on the investor relations section of our website. Your printed agenda includes a link to reference materials, as well as details for accessing our wireless network and the Poll Everywhere app that we have for Q&A. We have a parting gift for those that are in attendance. To receive it, simply hand in your badge at the registration desk on your way out. Finally, please turn your cell phones to vibrate. We have a great agenda today. Wendell Weeks will kick off the meeting with an overview of our accomplishments under the strategy and capital allocation framework, and he will introduce our leadership priorities for the next four years.
Our business leaders will discuss how we're leveraging our focused portfolio to extend our leadership and capture growth opportunities in Optical Communications, Life Sciences, Display, mobile consumer electronics, and automotive. Jeff Evenson and Tony Tripeny will provide strategic and financial perspectives on how we create value. Wendell will do a quick wrap-up, of course, we'll finish with Q&A. We're really excited to have you here with us. With that, I'll turn the podium over to Wendell.
Thank you, Ann. Good morning, everyone.
Good morning.
It's my pleasure to welcome you to Corning's investor meeting. In October of 2015, we introduced the strategy and capital allocation framework, which defined our leadership priorities through 2019. Under the framework, Corning has delivered significant returns to our shareholders, and our successful execution positions us to deliver growth far into the future. Today, I'm excited to review our accomplishments and show you how our plans for the next four years reflect a new growth era that together we have been investing to create. First, I'd like to review who Corning is, not just for the sake of our new investors, but because I believe it provides important context for understanding our decisions, evaluating our performance, and assessing our future. Corning is one of the world's leading innovators in material science.
We combine our unparalleled expertise in glass science, ceramic science, and optical physics with our proprietary manufacturing and engineering platforms to create revolutionary products for five major markets, Optical Communications, mobile consumer electronics, Display, Automotive, and Life Sciences. Put more simply, we transform basic raw materials into precision technologies that solve tough challenges and move the world forward. I think it's always better to show than to tell. Here's a look at what we do. We take this and turn it into this. We start with sand and minerals and create the world's most pristine flat glass, which we produce in sheets twice as large as a king-size bed, as thin as a business card, and with a thickness variation of less than 20 microns. This glass enables high-performance displays that you rely on every day in your TV, your laptop, and your smartphone.
We take this and turn it into this. We start with liquids and gases, the world's most optically pure material is created with our unique processes, which we draw into hair-thin fibers that transmit massive amounts of data at the speed of light. Our technology literally carries the information age into your home and puts it in the palm of your hand. We take this and turn it into this. We start with talc and clay and create a honeycomb substrate that resists thermal shock and packs the surface area of a football field into a product the size of a soda can. Our emission control products have prevented billions of tons of pollutants from entering the air and helped extend millions of lives around the globe.
Now, these transformations may look like modern-day alchemy, but they are, of course, the result of highly specialized science and engineering, and some of the most precise, tightly controlled processes of any kind, anywhere. Doing what we do the way we do it isn't easy, and it takes time. It requires deep expertise, proprietary equipment, large-scale manufacturing, and ongoing investment. We believe the results are worth it. Our inventions transform industries and make a real difference in people's lives. Our products clean the air we all breathe, connect people to information and each other, provide the window through which we access information and entertainment, and help facilitate the discovery and delivery of new medicines. We also create vibrant franchises that generate strong cash flow, outperform our competitors in sales and profits, and lead their industries for decades.
With that background as context, let's review our achievements over the past four years and look where we're going in the next four years. In 2015, we said we would focus our portfolio and leverage our financial strength to grow, extend our leadership, and reward our shareholders. How did we do? The short answer is extremely well. We have done exactly what we said we were going to do and then some. Our opportunities and execution allowed us to increase both our investments and shareholder returns beyond our initial targets. Despite the uncertain economy and geopolitical landscape in 2019, we are confident that we will meet or exceed all of the four-year goals we defined in the framework. We focused our portfolio through disciplined project selection and the strategic realignment of Dow Corning.
As of today, we have returned over $12.5 billion to shareholders, which is more than 60% of our 2015 market cap. We have also invested more than $10 billion to grow and extend our leadership through significant new products, capacity expansions, and strategic acquisitions. We told you we expected growth as the framework progressed. We delivered. Over the last two years, our sales increased 21%, EPS increased 24%, and our return on invested capital expanded 150 basis points. We have invested strategically and executed well. With only six months of 2019 to go, we are confident in declaring victory. I'd like to thank our people for their focus, energy, and execution. I'd also like to thank all of you for being with us on this journey, particularly those who believed in us and invested. We appreciate your confidence, and we're glad you're seeing the fruits of your investments.
Going forward, our core leadership philosophy remains consistent. We are committed to operating our businesses exceptionally well. We will invest to capture profitable growth opportunities that align closely with our focused portfolio. We will de-risk our investments through customer commitments, and we will distribute significant cash to shareholders, all while living our values. Our new strategy and growth framework defines our leadership priorities through 2023. It's our original framework evolved for a new growth era. We will continue to focus our portfolio and utilize our financial strength. The big difference today is growth. From 2020 to 2023, we expect to deliver 6%-8% compound annual sales growth and 12%-15% compound annual earnings growth. We also expect to expand operating margin and return on invested capital. We'll continue to use our cash to grow, extend our leadership, and reward shareholders.
We plan to invest between $10 and $12 billion with a focus on organic growth. Finally, we intend to return eight to $10 billion to shareholders through a combination of dividend increases and opportunistic share repurchases. Why am I so confident in our ability to deliver this growth? First, our value creation model is working. Second, as we'll demonstrate throughout the day, our capabilities are becoming increasingly vital to diverse industries. Together, these factors are making us stronger and more resilient than at any time in Corning's history. You'll hear more from our business leaders about the key trends and growth drivers across our markets. I'd like to share my perspective on our value creation model, which we apply, repeat, and continually strengthen in all of our businesses. Everything starts with our focused and cohesive portfolio.
Corning is best in the world in three core technologies, four manufacturing and engineering platforms, and five market access platforms. Our probability of success increases as we apply more of our world-class capabilities, and our cost of innovation declines as we reapply talent and repurpose our existing assets. Few competitors can match our expertise in any one of our core capabilities. When we combine them, we create breakthrough products with significant and sustainable competitive advantages. Consequently, we focus 80% of our resources on significant opportunities that use capabilities from at least two of these three categories. Once we've made project choices, we move into create mode. We create breakthrough products and processes by leveraging the synergies among our core capabilities, capitalizing on insights we gain through close collaboration with our customers, and taking advantage of existing plants and pilot facilities for early-stage production.
For example, since introducing the framework, we have created products including tougher Gorilla Glasses, AutoGrade glass, revolutionary drug packaging, and an optical cable that provides twice the fiber in the same diameter and enables 30% faster network installation. We're not just creators. We're also builders. We do the manufacturing ourselves using processes that we invent and proprietary equipment that we design and build. When growth opportunities arise and demand exceeds our existing capacity, we build state-of-the-art plants to manufacture products at scale in close proximity to our customers. We de-risk these investments by requiring meaningful commitments, often including funding before beginning construction. In the past four years, we built the world's first gen 10.5 display glass plant and secured three-fourths of the necessary funding from customers and other stakeholders, along with 10-year supply agreements. We secured investments from Apple to support state-of-the-art glass production in Harrodsburg, Kentucky.
After we've successfully commercialized and scaled a breakthrough product, we're still not done. We extend our leadership by continually improving our processes, upgrading our manufacturing fleets, and lowering our costs. For example, since 2015, we extended our leadership by deploying the latest technology in our display fleet, co-innovating with our customers to deliver solutions for 5G and hyperscale networks, and increasing our heavy-duty diesel filter offerings to meet the needs of customers in emerging geographies.
These kinds of improvements unlock more co-innovation opportunities to solve new challenges and make our customers more successful. Those are the steps we repeat continuously throughout all of our businesses, but the process is by no means linear. As we deepen our relationships with customers and identify more opportunities, we start the cycle all over again. Because we're constantly improving our productivity and capabilities, we can often extend our leadership and drive revenue growth without building new facilities. We actually spend most of our time in this inner loop. We keep creating and extending until we're so successful that demand exceeds our capacity. At that point, assuming customer commitments, we move to the outer loop and build new plants. Later today, Jeff Evenson will talk about this build cycle in more detail and discuss its implications for our growth from a strategic perspective.
For now, I want to emphasize that this model creates value beyond any earnings cycle or even any four-year plan. As we reapply our insights and repurpose our assets, our best-in-the-world capabilities just keep getting better. Every time we pursue an adjacent opportunity, we explore new combinations of capabilities, we push boundaries in areas where we already lead, and we cross-train our people in deep and important ways. In other words, we've created a positive feedback loop that expands our knowledge, increases the relevance of our capabilities, and enhances our value to customers. This model is why we have led in optical communications for five decades. It's why our cover glass has been featured on more than seven billion mobile devices worldwide since the launch of Gorilla Glass. It's why we've steadily increased our competitive advantage in display glass over the last 35 years.
It's how we're extending 50 years of automotive leadership to keep winning in the newest category of emissions control. It's why top pharmaceutical and biotech companies are turning to us for their production and protection needs. We have not only maintained our competitive advantage over decades, we've increased it. We believe we will continue to do so. I'll conclude by summarizing the three themes that will emerge from today's presentations. First, we expect strong, resilient growth. Multiple trends are driving growth across multiple businesses in multiple geographies. We plan to ramp significant capacity over the next four years. Customer commitments increase our confidence in Corning's growth outlook. Second, we plan to expand margins and increase ROIC. We continue to outperform our competitors on sales and profit growth in all our segments. We expect to leverage that growth into operating margin expansion.
We also expect current build projects to deliver returns above the corporate average. Third, we remain committed to delivering attractive shareholder returns. Dividends will grow at least 10% annually. We will continue to repurchase shares strategically. As we go through our presentations, I believe you will also get a sense of our enthusiasm for the opportunities in front of us and our commitment to bringing them to life. Now, it's my pleasure to turn the podium over to Clark Kinlin. Thank you.
Thanks, Wendell. Wendell described Corning's value creation model. I would now like to show you how that works in optical communications. Today, Corning Optical Communications is the most fully evolved example of Corning's focused portfolio, utilizing all three of our core technologies and four of our manufacturing and engineering platforms. You'll hear later about how we're creating the first products to use Display's Fusion platform to serve the optical market. 5 years ago, we shared our belief that we could double the size of Corning Optical Communications by growing to $5 billion by 2020, much faster than the growth rates of our competitors, faster than the communications CapEx, and about twice the passive optical market growth rate. I'm pleased to tell you we are within striking distance of our goal. We promised growth, we delivered growth. This long-term growth path will continue. A few observations.
The trend is strongly positive. It results from photons replacing electrons in network after network. Yet, it's not always a smooth line. As one network or segment upgrades to optics, there can be a pause before the next one begins. Because of our unique capabilities, our co-innovation model, we are growing, and we will continue to grow faster than the market. We're confident in our ability to outperform and deliver long-term growth because, like fiber to the home and private data centers before, there are significant new 5G and hyperscale data center opportunities emerging for passive optical solutions. We are the unquestioned technology and market leader. Our value creation model is thriving in optical communications. We are constantly creating new products and extending our lead by delivering solutions that help our customers realize their network visions faster, better, and cheaper.
Simultaneously, we're driving significant productivity improvements to provide capacity and to lower our cost. Importantly, that virtuous cycle includes unique co-innovation relationships with industry leaders around the world, which has resulted in the creation of around 100 new products, new Corning products, each and every year. When demand for new products outstrips productivity gains, we get customers fully committed, that's when we move to a build cycle. You saw us announce that with Verizon 2 years ago. We're working with them now on their 5G initiative to help them get ready for the glassification of their wireless networks, which you'll hear more about from Claudio Mazzali shortly. I'm happy to report that the fiber plant is up and running, as well as its companion cable plant. Both are approaching full utilization.
We're working with a small group of industry leaders to create solutions for 5G and the next iteration of hyperscale data centers. We've built the required initial capacity. We're back in the inner loop, the create-extend cycle. Hopefully, we will be successful enough that we'll need to build again. Until our customers fully commit, we'll continue to drive our productivity and process innovations while we create the next generation of products to get ready for coming network shifts. Fiber to the home is a great real-world example of this value creation model. We co-innovate with our customers to reduce installation time by a third and to drive deployment costs down 50%. Our customers provide network maps and build requirements. We work with them to design and lay out the entire network virtually, and that's what you're looking at here.
We then custom build all the optical links in our factories before drop shipping the finished passive network. This allows network owners to quickly assemble it in the field. From design software to installation, we deliver the complete solution. We are the only ones in the industry that can do that, and this is a great example of why we're a leader. This is how our customers experience us, and this is why we expect to continue growing about twice as fast as the passive optical market. Our value creation process has been core to our success, and we intend to keep utilizing it. Claudio Mazzali will now explain why our positive upward trend will continue. Kim Hartwell will share how we plan to continue to deliver the right product to the right customer at the right time. The opportunities are real.
We know exactly what we have to do, and our partners are counting on us. Here's why.
It's called wireless, but you'll be surprised how much cable there is in a wireless network. To roll out the nation's first and only 5G ultra wideband network, we're using enough cable to wrap the Earth, not once, but 500 times. All these cables will let us connect more 5G antennas to our network hubs. That's how we're building a network with not only more capacity than 4G, but 100 times more.
Thank you, Clark, and good morning. As Clark said, and as you saw in the video, some of our customers are already being very clear about the amount of optical fiber and connectivity that their next generation networks will require. It's important for us to understand the drivers behind this network evolution. Some of you may recall the electrical-to-optical divide, which is a primary driver of the upward trend that Clark described. It shows that when the product of bandwidth and distance grows beyond about 100 gigabit meters per second, optical wins on tech economics. More links crossing the E/O divide is the basic reason why the optical portion of networks have been capturing more and more of total communications CapEx. Something else is also happening, particularly with wireless and hyperscale data centers.
Service requirements for these two spaces are driving the optical signal closer to the edge. Consequently, the density of the supporting optical infrastructure must increase. Similar densification happened with cable TV nodes and even legacy Digital Subscriber Loop networks. Let's look at what is happening in 5G. I won't repeat the reasons and new services driving the need for a far more capable wireless infrastructure. What I will say is that true 5G must deliver, among other things, higher speeds, lower latency, and 100 times more bandwidth density. However, today's micro cell capacity and density are not adequate to meet these requirements. Network operators must use a combination of more spectrum, advanced modulation techniques, and high-density architectures to carry the optical signal deeper into the network, distributed more effectively through several smaller cells.
Although you tend to hear more about spectrum auctions and new transmission technologies, the models that we created together with our customers show that massive network densification is key for true 5G. Moreover, if past is prologue, densification historically has been about 60 times more impactful than the other network levers. As an example, in this city, the amount of fiber required to connect all expected 5G cells is almost 100 times greater than what was necessary to connect 3G and 4G micro cells. What's the impact to Corning? About 100 times more fiber than a 4G network. To put that in perspective, that's twice the amount of fiber required to deploy fiber to the home in the same area. Wireless will be transformed from a fiber-poor network to a really fiber-rich network, and Corning will be a key part of making this transformation happen.
Let's look at hyperscale data centers through the same lens. New services and algorithms create new compute requirements. As a result, hyperscale data centers are evolving to an integrated structure of compute, storage, and networking in which an optical fabric must provide fully non-blocking connectivity to enable fast, reliable, and low-latency connectivity among all servers. That network is changing. As you can see from this diagram, legacy data centers were built based on large clusters of servers. As needs evolve, big cluster switches create latency issues, make it slow and expensive to scale, and perhaps more importantly, reduce overall network robustness by creating a single point of failure. To solve these bottleneck issues, network architects are breaking the large clusters into smaller pods that can be repeated more effectively.
As Facebook published a few years ago, instead of the large devices and clusters, we broke the network up into small, identical units, server pods, and created uniform high-performance connectivity between all pods in the data center. The transition to scalable non-blocking architectures increases the connectivity needs from hundreds to several thousand links per megawatt installed, and all links between switches are optical. What's the impact to Corning in this case? Simply put, a lot more of our products. Here's an example. A large hyperscale customer deployment for a single campus require the same amount of fiber necessary for fiber to the home to be delivered to every home in the Dallas suburbs. There is another trend coming, which is the upcoming transition of fiber directly to the servers. This will once again move the optical signal deeper into the network, replacing more copper links.
It may not stop there. The industry is getting organized in multiple forums to bring the optical signal inside switches and servers by co-packaging optical transceivers with switch ASICs. This is likely to require not only directly fiber to chip connectivity, but perhaps even precision flat glass as a high-density waveguide and substrate platform for Co-Packaged Optics. If optical connectivity and Fusion glass converge on the same platform, Corning will be certainly well positioned, and our R&D investments are on track to capture the value of this potential new space. The architect revolution has begun. Whether it's in 5G next-generation wireless or the hyperscale-driven cloud, the trend is towards densification. For us, densification is not just a buzzword. It represents the glassification of the connectivity fabric and will have a significant impact on our growth.
Kim will now explain how we plan to leverage this insight to win and grow faster than the markets we serve. First, let's hear from AT&T about how optical fiber supports their network.
AT&T. 143+ years history building networks. I got to tell you that I'm convinced that this is the most exciting time, but the pace is unlike any we've seen before. By mid-2019, we'll have our fiber-based high-speed internet service actually pass 22 million residential and business locations, and those connections are possible because of our fiber deployment. Fiber's a critical element to those cutting-edge technologies, and as we build out our network, we need suppliers in the ecosystem, such as Corning, to deliver fast, reliable, dependable services so that we can meet the needs of our end user customers.
Good morning. As you heard from Clark and Claudio, and most importantly from Rachel in the video we just saw, there's a lot of excitement surrounding network deployments and optical fiber's role in delivering next-generation services to end customers.
5G networks and hyperscale data centers represent huge opportunities for us and will be a major focus for optical communication over the next four years. Our customers, including the world's leading network operators and data center operators, are once again looking to Corning for help in overcoming the architectural challenges created by the new network designs, applications, and service level requirements. We're in a unique position, and we can deliver what our competitors cannot because we're benefiting from our advantaged customer access and from a scale that allows us to deliver at speed. Our industry leadership and unmatched position as the only large-scale end-to-end manufacturer of optical solutions, combined with our many years of cultivating deep partnerships through the value chain, make us the preferred supplier when network providers are looking to solve their optical network challenges.
Insights gained through our advantage positions with customers are used to develop truly differentiated optical solutions. We bring our broad portfolio of engineering and technology platforms to co-innovate with customers and deliver integrated solutions that accelerate their deployments, improve the performance of their networks, and reduce their total cost of ownership. Let me give you some examples of how we're solving challenges and creating value for our customers. As you heard from Claudio, 5G wireless and hyperscale data centers have many similarities. Customers in each of these areas need low cost and scalability to enable affordable mass deployment, simple and fast installation to minimize their time to revenue generation, and they need high density networks to deliver connectivity to the rapidly growing number of devices. They demand the quality required to deliver flawless network performance and reliability for their mission-critical applications. They require exceptional service.
In fact, our scale and global footprint allows us to use service as a differentiator. An example is that we reduce lead time through in-region manufacturing and supply local sales support to assist customers with design, ordering, delivery, and even installation when it's required. Our customers also appreciate that Corning continues to lead the industry with innovative solutions to solve critical network pain points. To highlight this point, I'd like to share one of our customer's personal views on the importance of innovation and the partnership that he has with Corning.
Optical fiber and optical solutions is at the core of what we're focused on at Crown Castle for meeting our vision solutions for supporting 5G. Corning is playing two major roles in my mind. As one, as a supplier of fiber optics for us, high quality fiber optics for us, which we need to deploy for millions of feet of fiber that we're going to place over the next five, 10 years. It's also about innovation. One of the biggest challenges I had in my career was leading a team to try to rewire New York City from one end to the other with fiber optics. One challenge in particular that was solved with Corning's ultra bend-insensitive fiber was just trying to wire the last few feet of so many different types of apartment buildings. In deploying networks, there's three simple things that we focus on exclusively.
It's time, it's cost, and it's accomplishment. Time and time again, over the last few decades, Corning has helped myself and my teams solve these time, cost, and accomplish challenges for building networks.
It's a privilege to serve customers like Chris and Crown Castle. For nearly 50 years, Optical Communications has been meeting and exceeding the needs of our customers around the world. We are in a great position, what I'm most excited about is that our best work is ahead of us. This is our current 12-port multi-port, which helped deliver more than 50 million homes passed in fiber to the home networks across the globe. Look at its size and imagine how cumbersome it might be for one person to install it on the top of a telephone pole. This is our next generation miniaturized solution that enables 5G and access networks to be installed faster and reduces the total cost of ownership by 20%. We're excited to launch this solution in the second half of this year.
To develop the solution, we once again co-innovated with our customers and leveraged insights from our market-leading pre-connectorized solutions. This new solution is a quarter of the size of the original, it's just one example of the many innovations that I'm excited about and a really great example of how we extend our market leadership. In addition to our co-innovation model, bringing value to our investors in the form of higher growth, based on the fact that our solutions generate three times the revenue and nearly 10 percentage points more gross margin than the equivalent sale of component parts. As we extend our market leadership position, we also expand our margin. My job at Corning is all about delivering value to our customers. Helping them solve their greatest challenges is what motivates me and my more than 28,000 colleagues in Optical Communications.
Our customers can speak better to the value that Corning provides than I can. Let's turn to another video.
Fundamentally, our whole business is built on a backbone and access edge of fiber. It goes back in history, the partnership that Corning and Verizon has. The latest one was when we were thinking about our whole one fiber concept and the idea of deploying much more fiber than we ever have in the past. We've put a tremendous amount of fiber in the ground over the last few years as a result of those conversations and partnership, and we're just frankly at the beginning of it. We've enjoyed a great partnership and relationship, over the years, and I do not use the term partnership lightly. There's many firms that we interact with that are frankly transactional. Corning is not one of them. Corning is a true partner in the truest sense of the word.
When we have ideas, we feel comfortable talking to our friends at Corning, and all the time, every single time, we figure out solutions. I truly, as one, appreciate the partnership that we have, and I hope it continues for a long time in the future.
Here's what I'd like you to take away from this morning. We're within striking distance of our goal of $5 billion by 2020. 5G hyperscale and data centers present tremendous opportunities for growth. We will continue to grow twice as fast as the markets we serve, and there will be more Corning solutions in every network that's built. Thank you for your time and attention and for joining us on our journey. Now it's my pleasure to introduce Richard Eglen.
Thanks, Kim. In Life Sciences vessels, we focus on using Corning's core glass and optical physics technologies, along with expertise in vapor deposition, precision forming, and extrusion. This allows us to continually create innovative solutions for drug discovery and production, extending our leadership in the life sciences market. To date, this strategy has been extremely successful, resulting in record sales performance. In 2018, revenues to the life sciences vessels market exceeded $1 billion for the first time, while growing at twice the market rate. In fact, we've been so successful that we're increasing our manufacturing capacity for several key products. Specifically, we're now moving into a build mode with both the expansion of HYPERStack production and the addition of a new facility for Valor Glass, which we're co-locating in Durham, North Carolina. We feel that life sciences is an exciting place to be right now.
I say that not just because we're achieving record performance, but also because of the tremendous opportunities we're seeing for even higher growth in the coming years. Where's this growth coming from? There are two key pharmaceutical drivers creating more and more demand for our products. The first is in the accelerating rates of growth in cell and gene therapy development. The second is in the increased need for safety and quality in the packaging of injectable drugs. I want to share with you now an inspiring video that vividly illustrates the impact of new cell and gene therapy treatments, provided courtesy of the Emily Whitehead Foundation.
Take one. Is it hard for you to say those words, "We're trying to cure cancer"?
That's a really good question, why it's hard to say we want to cure cancer. We do. I think sometimes it's hard actually to think that you might actually succeed.
Patients that we're treating on this clinical trial have absolutely no other options left for them. These are patients who are unfortunately destined to die of their disease and in a fairly short amount of time.
Emily Whitehead, 554.
Emma is incredibly matter of fact about all of this stuff. This was a child who had had her leukemia come back twice. The parents were looking for a miracle.
What we've learned how to do is train the immune system to recognize and then kill tumor cells.
It's a procedure where we collect their T cells, and they are infected with a virus that will genetically change them so that they will now see and react against their leukemia cells.
We actually use the HIV virus to do that.
You're taking the HIV virus and infecting healthy cells with it to help kill cancer?
Yes. The virus has been engineered so that it can't cause disease anymore, but it still retains the ability to reprogram the immune system so that it will now attack cancer cells. We call those modified immune cells serial killer cells. Each infused cell can kill more than a thousand different tumor cells.
The reality is the dramatic responses of cancer to new treatments are very unusual. We need to make it clear when we talk to a family that it may not work. Emma was given her T-cell treatment, and within a few days she was very sick. She had breathing difficulties. She had blood pressure difficulties. We knew that she could not have gotten any sicker without actually dying. A remarkable thing happened. The T cells were growing. They were starting to fight the cancer. Within hours, Emma's fever disappeared.
It was like the calm after the storm. The clouds went away, and she woke up, and there was no leukemia. When that child survived, it was, of course, an amazing event.
Unprecedented results. It's powerful stuff. Emma's life was saved using a revolutionary new cancer treatment called T-cell therapy. Her story is remarkable, as in 2012, she was the first child in the world to have this treatment. Today, she's seven years cancer-free and a living testament to the promise of cell and gene therapy. I am proud to say that Corning provided key products such as CellSTACK, such as HYPERStack, to the hospital that provided these life-saving treatments. What is the potential of cell and gene therapy, and why is it relevant to Corning's growth? Already 12% of drugs in the pipeline are cell and gene therapies, and this number is growing faster than all of the drug categories. In 2018, in the U.S. alone, there were four times as many clinical trials of cell and gene therapies as there were only three years previously.
Finally, the FDA is accelerating approvals and consequently is on track to approve 10-20 new cell and gene therapy products each year by 2025. As you can see, the opportunity is real. It's important to us because we're in a strong position to leverage this market trend and generate growth. As established cell culture experts and market leaders, we are right now in over 100,000 research laboratories around the world, providing significant access to cell and gene therapy facilities. Furthermore, cell and gene therapies require billions of cells for clinical trials and for final drug manufacturing. This in turn requires very large quantities of cell culture vessels, such as those manufactured by Corning. We're the market leaders with these products, and we've leveraged our knowledge to anticipate this new opportunity.
We use Corning's precision forming expertise to develop the HYPERStack cell culture vessel, a unique solution for scientists looking to grow large quantities of cells in a small footprint. As we were early to the market, this product has become the industry-leading solution, and it's now the reason why we are building new capacity to keep up with this demand. Corning is helping enable scientists to move forward with critical life-saving breakthroughs. Only three weeks ago, the FDA approved ZOLGENSMA, the first gene therapy for treating children with spinal muscular atrophy. Our products were used in the clinical testing of ZOLGENSMA and will be used in the production of this therapy in the future. We're very excited by the potential in the cell and gene therapy market. We estimate that the opportunity for Corning can be as much as several thousand dollars per therapy.
As I've discussed, we live in an age of revolutionary therapies, and the packaging of 21st-century drugs requires 21st-century technology. We're not the only ones who realize it's time for better glass packaging. In 2011, the FDA recognized the need for increased pharmaceutical packaging quality to protect patients. These quality improvements have the potential to reduce both drug recalls and to help prevent drug shortages, both of which are costly to manufacturers and can interrupt the supply of life-saving medicines. Corning's fundamental strengths are uniquely suited to solving glass quality issues that have plagued the industry for decades. We have risen to the challenge and have invented a solution specifically designed to meet the need for more robust and higher-quality pharmaceutical packaging, Valor Glass. Let's hear how Pfizer's retired head of global supply feels about Valor.
The Valor Glass has the potential to be a game changer from two aspects: the operational efficiency, because of what the vial does and how it runs, and its effect on quality. The hardness of the Valor Glass really pretty much guarantees you're not going to get cracked glass. As a matter of fact, the way Valor is designed, it won't just crack. If it's going to break, it will just break, so you know you have a problem. Valor Glass also has a coating on it. As it runs through the line, with the combination of the hardness and the coating, it runs very smoothly through the line. With Valor Glass, I think it's great to see that innovation in packaging is finally starting to catch up with innovation in drug development. I'm here talking about Valor Glass today because I believe in Valor Glass.
We continue to make progress by working with our development partners and the regulatory authorities. Right now, several customers are performing test runs of our Valor Glass vials on their lines. This purpose-built glass also improves manufacturing efficiency by increasing both throughput and capacity. Let's hear from another development partner, Merck.
Like Corning, Merck is an innovation-based company, and we were proud to team up with Corning to help develop this Valor Glass. What Valor Glass is it's a purpose-built glass. It's glass that was specifically designed and made for the challenges of parenterals in the biopharmaceutical industry, and it has features which make it extremely attractive. The fact that the chemistry of the glass does not allow for delamination or for through-cracks. Valor offers some really valid alternatives to the production manager of a sterile facility. In our manufacturing trials with Valor Glass, we can run our lines 30% faster because as the vials pass one another, the special coating on the vial doesn't allow for the friction that we see in typical borosilicate glass.
We've had a fruitful session with the FDA regarding our conversion of our first product to Valor Glass, we look forward to, in the very near future, filing for that product.
You've just heard from two of the world's largest pharmaceutical companies. They share our excitement about this opportunity and believe in the potential of Valor Glass. The pharma glass container market represents $4 billion today, and with billions more spent annually to ensure safe drug packaging. Given this opportunity, I'm sure you understand why it's important that we build to meet this demand. Taken together, what we do in Corning Life Sciences Vessels matters. It matters to our customers. It matters to our customers who are inventing manufacturing breakthrough medicines. It matters to doctors who want effective treatments, and it matters to the patients whose lives depend on it. It matters to the growth of Corning, now and in the future. We're looking forward to playing our role in making people's lives better, and in some cases, in the most important way of all.
If, as we anticipate, the adoption of cell and gene therapies continues to accelerate, we believe that Life Sciences Vessels will continue to grow at more than twice the industry rate. In addition, as Valor Glass becomes the new industry standard, we believe it will be a multibillion-dollar franchise to contribute to Corning's growth for the next decade and beyond. We're excited about these opportunities, and we hope you are, too. Thank you. I'd now like to introduce Jim Clappin.
Thank you, Richard, good morning, everyone. Our culture of innovation forms the background of our remarkable display glass business. By leveraging all three of our core technologies, evolving our Fusion platform, we continue to enable larger, higher resolution, thinner, and even flexible displays. We have been first to market with all glass generations up to and including the recent Gen 10.5. What you see behind me are the actual dimensions. Our legacy of innovation and execution has paid off. We have strong and enduring relationships with industry leaders and a large business with more than $3 billion in sales, where we enjoy an overwhelming advantage over our competitors in revenue, cost, and profits. Last year, we were more than twice the sales and more than nine times as profitable versus our nearest competitor. Now let's turn to the market situation.
LCD is by far the dominant TV technology, as OLED accounted for only 1% of TV sell-through units in 2018. We expect both technologies to improve in cost and performance in the upcoming years, but LCD will maintain its dominant position. As the TV industry moves toward 8K resolution, the higher pixel density decreases aperture ratio, and therefore light transmission. We believe this trend favors LCD, which can more easily increase set brightness because its LED light source is inherently brighter, lower cost, and more reliable than OLED. We think most consumers who don't watch their TVs in dark rooms will prefer the brighter LCD sets. Therefore, combined with the high retail price premium, we expect OLED TVs to remain a small fraction of total TV unit sales. The real story of the display market is that very large size TVs win.
We expect average TV screen size to grow at a pace of 1.5 inches per year, reaching 51 inches by 2022. This results in an over 25% increase in screen area in this timeframe. This level of TV screen size growth, supplemented by both unit and screen size growth of other applications such as public information displays, will continue to drive the display glass market volume up mid-single-digit percentages annually going forward. Now let's turn to our strategy. In 2016, we told investors that we would leverage our competitive advantage to stabilize returns in display. Our strategy boiled down to a simple equation. Lowest cost plus stable share, plus supply-demand balance equals stable returns. We continue to be the lowest cost producer of display glass, which makes us significantly more profitable than our competitors. Our superior products, innovation capabilities, and deep customer relationships enable us to maintain stable share.
Our flexible Fusion manufacturing platform allows us to match operating capacity with demand. These elements have not changed. Meanwhile, the emergence of Gen 10.5 has given us a unique opportunity. The Gen 10.5 glass substrate measures about 3 meters by 3 meters and is optimized to make 65 and 75-inch screens. Let's hear from John Zhang, Senior Vice President and General Manager of Corning Display Technologies. John became GM in 2015 and has made significant progress towards display's goal of stabilizing returns, and he has championed our Gen 10.5 program.
Thank you, Jim, and good morning. 60-inch and larger screens are expected to account for most of the display glass market growth through 2022. We believe that Gen 10.5 fabs will supply this growth, and one additional such fab a year is required on average. Thus far, panel makers have committed to build four Gen 10.5 panel fabs. Corning will support three of these four fabs. We opened the world's first Gen 10.5 glass plant in Hefei more than a year ago, and we are almost running at capacity. We're pleased to announce today that we will bring additional plants online in Guangzhou and Wuhan later in 2019 and 2020 as well. Gen 10.5 glass is too large to be transported economically over long distances, so each panel fab requires a dedicated glass plant for 100% of its supply. Corning's glass plants are directly connected to our customers' fabs.
This eliminates packaging, maintains the glass quality, and reduces costs. It also makes us an irreplaceable part of our customers' operations. Because of our unique experience as the only glass maker in the world having mass-produced over 1.5 billion square feet of these very large substrates for more than 10 years, we secured long-term customer contractual purchase commitments, as well as more than three out of four dollars of required investment funding from our customers and other stakeholders. This third-party funding reduces our cash outlays and provides attractive financial returns for our shareholders. We're excited about what is yet to come in the display business and by Corning's role in driving this industry ahead.
This is a great example of our disciplined approach to the build portion of our value creation cycle. As John said, we are building new plants after we secured long-term customer contractual purchase commitments. We secured more than three out of four dollars of required investment funding from our customers and other stakeholders. These enable us to build at attractive returns with reduced risk. Our strategy to stabilize returns is working. This can be clearly seen in our pricing environment. As you have heard Tony say many times in our earnings calls, we expect the favorable pricing environment to continue due to three factors. First, we expect glass supply to continue to be balanced to demand or even tight. Second, our competitors continue to face profitability challenges at current pricing levels. Third, display glass manufacturing requires periodic investments in existing capacity to maintain operations.
Absolute glass price needs to support acceptable returns on those investments. Our annual price declines have moderated every year since 2015. In our last IR day in 2017, we said annual price declines could moderate further toward mid-single digit %, and we were right on. We now expect annual price declines to improve further in 2019 to a mid-single digit % and better than 2018. We will deliver stable returns if annual price declines stay mid-single digits. Better performance is possible. If the trend line of our price declines in recent years continues, we may see low single-digit % annual price decline and growing returns. Needless to say, we are excited about this possibility. To recap, display market trends are favorable. Increasing TV screen size drives market growth and supports the investments in Gen 10.5. 8K resolution and other improvements ensure LCD remains the leading TV technology.
Glass pricing continues to trend in a positive direction. Finally, we have secured significant funding from our customers and other stakeholders for our Gen 10.5 investments. Our strategy is working. We are delivering stable returns for Corning. With that, let me pass the microphone to John Bayne, who will tell you more about our growth story in mobile consumer electronics. Thank you.
Thank you, Jim. Good morning, everyone. My focus today will be on Corning's mobile consumer electronics platform, we also call that MCE. I think we have a great story to tell. In a little over a decade, we created the industry category of strength in cover glass, and we raced to $1 billion in annual sales. We're the clear market leader, 10 times our nearest competitor. We have incredibly strong relationships with the world's leading consumer electronic brands. We've actually created our own iconic brand in Corning Gorilla Glass with not only strong consumer awareness, but strong consumer affinity. As Wendell mentioned, our glass has been used on over 7 billion devices worldwide. Think about it. At no other point in human history have more people carried the same object with them than the smartphone.
To think that in most cases, what people are counting on to protect their smartphone and what they're touching every day is glass created and made by Corning, is incredibly rewarding. Gorilla has been a growth story for Corning. We believe it will continue to be a growth story. Our goal is to double sales. Double sales, even as the smartphone market matures. Today, I'll explain how we do this. Our story is based on two things, our unique capabilities and our trusted customer relationships. On the capability side, MCE has activated all three of our core technologies. We've activated three of our four manufacturing and engineering platforms. We've been able to benefit from production efficiencies in our display business, which has freed up tank capacity, allowing us to save $1 billion in investment.
We've also been able to benefit by combining our capabilities in a way that our competitors simply cannot match. On the customer side, our product leadership has allowed us to develop deep technical relationships with the world's leading consumer electronic companies. They view Corning as much more than a supplier. They actually view us as a co-innovator. Now the core of our strategy to double sales is not to bet on more phones, laptops, and tablets. The core of our strategy is to capture more value on these devices through our innovations. The path to capturing more value is by addressing consumer pain points, pain points that I'm sure many of you have experienced. The first pain point, phones still break. This may cause you to ask, what exactly has Corning been doing for the last decade?
All this talk of damage-resistant glasses, yet all of us know someone who's broken a phone or maybe we've done it ourselves. This is a fair observation since Corning has consistently improved the damage resistance of each generation of Gorilla Glass. As you can see in this graph, our premium glass, Gorilla Glass 6, survives a face drop at five times the height of our earliest glasses. In this video, we're showing our premium glass in an actual drop test being dropped from 1.6 meters onto a rough surface. Now, smartphone makers have made full use of these improvements in glass, but in ways that may surprise you. Our innovations made it possible for phone makers to revolutionize the body of your phone. We have enabled phones to be made thinner. We've enabled phones to have 3D shapes.
We've enabled the phone bezel to be narrowed to increase the viewing area, and we've enabled glass on the back of the phone. Just take a look at your own phone, you'll see all these design elements. Here's where it gets interesting. These design improvements expose the glass to more damage, which requires even better-performing glasses. Basically, as fast as we've improved the glass, phone makers have found ways to use those improvements in the design space. As we look ahead, we expect further innovations in phone designs. For example, making the entire phone out of glass, removing the metal frame altogether. We will keep advancing our glasses to give the designers this and other options while improving durability for consumers.
Bottom line, phone makers aren't done innovating the design space, and even though we've improved our glass by a factor of five, we're far from done innovating in the glass space. The second pain point we're addressing is centered around optics. Have you ever been at the beach or a passenger in the car on a bright day, and you're trying to read a book on your tablet or watch "Game of Thrones," and you simply can't do it? What's causing your frustration is not the quality of the display or even the brightness of the display, it's the high reflection, high glare that are interfering with the display image. Well, we think we've solved this problem too, by creating Gorilla Glass DX and DX+ composite surfaces with low reflection and anti-glare.
Traditional anti-reflection coatings have the ability to deliver great optics, but they've always been inherently limited by poor scratch resistance. Our big innovation in this space was creating composite surfaces that not only deliver great optics, but also have scratch resistance better than glass, while maintaining the drop performance that Gorilla Glass is famous for. Customers are super excited about this tech. We're seeing early adoption of our most advanced surface, DX+, on a Samsung Galaxy Watch, and we also recently launched one of these products on a Garmin wearable as well. As we drive down the cost curve, we expect to see further adoption on accessories like screen protectors and on handhelds. The third pain point we're addressing is consumers' need for higher bandwidth and the ability to do wireless charging through induction.
Without overcomplicating things, the ideal cover material needs to be transparent to a range of electromagnetic wavelengths to enable wireless charging and support the high bandwidth RF transmission. Historically, metal was often used as a back cover material, but metal is not a great choice for electromagnetic transparency. In fact, it's a pretty bad choice. Glass, on the other hand, is an ideal material. Glass is highly transparent to the required electromagnetic wavelengths. This is the reason we're seeing close to 100% of premium phones with glass backs, an increasing number of intermediate phones, and even some value phones using glass in the back. Samsung clearly gets it, as you can see from this video, which was made possible by phones with glass backs.
Do you want to charge?
Yeah.
Thank you.
Thank you. Bye.
Now wireless charging, it's a nice feature to have, but we can all agree it's a want, it's not a must. 5G on the other hand, that is going to be a must. Peak data speeds, as Claudio referred to, 20 gigabits versus 0.5 gigabits per second. Latency 10 times faster than 4G. I think we would all be hard-pressed to find anyone who doesn't want to sign up for that type of speed and performance. Phone makers are certainly going to want a back material that enables that type of speed and performance. That's why we'll see increasing penetration of glass in the backs of phones. All these innovations I've talked about are big ideas, better glasses, better optics, more glass backs.
They're all available commercially today, and they're in various stages of adoption. Collectively, they are helping to move the needle on our financials in a material way. Don't just take my word for it. All you need to do is look at our Specialty Materials segment, where almost all of our MCE products reside. Since 2016, we're on track to add $400 million-$500 million in sales on a base of $1.1 billion. We've achieved 40% growth, while unit sales in the market have essentially been flat. Let's look at actual product examples that demonstrate how these innovations are driving growth. In 2016, we were selling into a handheld device that used a single piece of Corning Gorilla Glass 3. We sold that glass in sheet form to a finisher who made it into a part. On that phone, Corning was capturing about $0.50 of revenue.
This year, we sell to a phone maker that uses a piece of our premium glass, Corning Gorilla Glass 6, on the front, a second piece of Corning Gorilla Glass in the back, and for the glass in the front, we're making and decorating that part. On this phone, we're capturing $12 of revenue. From $0.50 to $12, a 24-fold increase. Today, we still sell Corning Gorilla Glass 3 in the market. We actually sell quite a bit of it, and sometimes it's just for the front cover. We're also selling more of our premium glasses, and often they end up on both the front and the back of the phone. Let's look at another example, IT. In 2016, we sold Corning Gorilla Glass to a finisher that once again processed the part, which ended up on the display side of the laptop. We captured about $3 of revenue on that laptop.
This year, we're using our surface technology to deliver improved optics on one of our premium glasses, Corning Gorilla Glass 5. This improves the readability of the laptop. We're also making this part ourselves. On this laptop, we're capturing $22 in revenue, more than a seven-fold increase. Finally, wearables. In 2016, we sold Corning Gorilla Glass 3 into the supply chain for a wearable model and captured about $0.10 for a wearable. Today, we're making a wearable part with Corning Gorilla Glass DX+ composite surface, offering that improved optics and improved scratch I talked about, and we're capturing $4 per wearable. Three market segments, handheld, IT, and wearables, and three clear examples of addressing consumer pain points to capture more value. These products are what help to deliver $400 million to $5 million of growth in three years in a flat market. You can see why we're so excited.
Our strategy is working. What's next? We'll continue to see more Corning content on mobile devices going forward. The innovations I described will follow penetration curves which can be hard to predict. We believe we're clearly on a path to double in size and grow to $2 billion in sales by 2023. This growth to $2 billion in sales is driven primarily by the penetration of the existing innovations I just mentioned. You know we're not going to stand still. We'll be bringing more innovations to market. Innovations, for example, that will allow denser packaging of microelectronics with RF filters and memory chips, innovations in the augmented reality space, and innovations that we believe can help to solve some of the technology challenges facing the first generation of foldable products. A valid question is, could we grow even more?
Well, if all the tech I described in my talk hits all at once, we could be looking at multiple billion dollars worth of growth. For now, we're feeling good about doubling revenue and hitting that $2 billion mark. That is why I started my talk today by saying I think we have a great story to tell. Over the past 12 years, Corning's been the market leader for cover material on mobile consumer electronic devices. Through relentless innovation, we've not only built an iconic franchise, we've actually extended our franchise, and we're steadily increasing value capture per device. We've grown 40% in three years in an essentially flat market, and we're not done. Not by a long shot. We're going to continue to address consumer pain points, we're going to continue to create new possibilities in mobile consumer electronics, and we're definitely going to continue to grow.
Now it's my pleasure to introduce Eric Musser.
Thanks, John. Cars are becoming cleaner, connected, autonomous, shared, electrified. In fact, we expect the auto industry to undergo more change in the next 10 years than it has in the last 50. For a century, from lighting up the road to helping automakers comply with emissions regulations, Corning has consistently helped drive the industry forward, and we're poised to do it again. Next-generation cars offer tremendous opportunities for Corning to establish significant new franchises by utilizing all of our core technologies and manufacturing platforms. Together, these core competencies will enable the experiences and the environments in the vehicles of tomorrow. Let's take a look at our vision for the future. Impressive. I know I want to drive that car. Let me expand a bit on this vision for enabling new automotive trends, and let's start with autonomy, which relies on optics.
We're working with established OEMs and startups to create durable, optically tuned glass that protects sensors and cameras. We're also collaborating on advanced optical systems that use our specialty fiber and precision glass mirrors. It's still early, and our efforts focus on the create phase of the model that Wendell described. We also expect to make multiple contributions for connected cars. Consumers want auto interiors with the design and intuitive interface of a flagship smartphone. Technical glass and optical solutions will be essential to delivering these use cases. Our AutoGrade Corning Gorilla Glass and ColdForm technology are breakthrough inventions. We've won commercial commitments from multiple car brands, and we're now building the required capacity.
You'll hear more about Corning's role in transforming the auto industry, today, we'll focus on two opportunities that together will allow us to double sales to the automotive market by 2023, up from $1.3 billion in 2018. First, you'll hear from Hal Nelson, who leads our Environmental Technologies business, about how we're extending our industry-leading position in light-duty substrates to meet new air quality challenges with gasoline particulate filters, or GPFs. He'll also explain our vital role in hybrid vehicles, which we believe will be a primary path to electrification. We have more content in a hybrid car than a purely gas car, which will help double sales. In addition, opportunities in emerging geographies will continue to grow.
You'll hear from Mike Kunigonis, who leads our Automotive Glass Solutions business, on how we're leveraging our unique capabilities to help auto designers achieve their vision for next-gen car interiors with more glass, more form, and more function. The opportunities are large, both businesses are building facilities to expand their footprints and meet demand for their products. Adoption of gasoline particulate filters and auto-grade interior glass solutions is already underway. This will help double our sales to the automotive market by 2023, we also see significant growth beyond that goal. Strategically, we're in a great position. Corning has a long history of delivering what automakers need, our capabilities are deeply relevant to the transitions happening now. We also provide a unique bridge to the communications, consumer electronics, and display ecosystems which automakers see as increasingly essential. In sum, I like our position a lot.
Please welcome Hal Nelson.
Thanks, Eric. We've been dedicated to making cleaner air possible for almost 50 years, we've made a huge difference. Our products have helped billions of people around the world breathe easier. At the same time, we built a business with more than $1 billion in sales and a return on invested capital in the mid-teens. Today, our opportunities have never been greater. With almost every region across the globe making healthier air a priority, our customers need Corning's technologies to help make their vehicles cleaner than ever before. The clean vehicle challenge provides significant growth for us. New regulations in Europe and China address fine particulate pollution, driving the widespread use of a new type of filter, GPFs, on gas and hybrid cars. Fine particulates contribute to poor air quality and are directly linked to a range of health concerns.
A typical gasoline engine emits trillions of these microscopic particulates every single mile. Corning's filters efficiently trap these fine particulates. This helps automakers to reduce harmful emissions, meet new regulations, and produce some of the cleanest gasoline vehicles available today. Demand for GPFs is growing faster than we expected, especially in China, where we are investing in local capacity to meet new customer commitments. With a market-leading product, we continue to win the majority of platforms awarded to date. The addition of GPFs increases our potential content per car by $30, three to four times the value that we see today. As you heard in the last earnings call, we now expect GPF sales will exceed $150 million this year and exceed $500 million once regulations are fully implemented in Europe and China in 2023.
We see additional growth as the U.S. and other regions look to join Europe and China in adopting GPFs to address particulate emissions. Longer term, that would put GPFs on the majority of new gas and hybrid cars globally. Additionally, there is still much work to be done on particulate pollution from heavy-duty diesel trucks and machinery in emerging geographies. We have the right diesel filter products to meet this opportunity as well. As you consider the long-term outlook for our Corning Environmental Technologies business, some of you may wonder about electrification. We see an opportunity on the path to electrification as automakers introduce more hybrids. Cost, range anxiety, and limited charging infrastructure are the top three consumer concerns for full electric vehicles. Hybrids address all three. Consequently, industry forecasts project that two to three hybrids will be sold for each battery electric vehicle.
Hybrids are a great opportunity for Corning because they require more emission control content than a regular gas car to meet new emissions standards. When hybrids activate their gasoline engines, emissions spike. Additional content helps control these spikes. This requires some of our most advanced substrate products. In addition, a filter will be needed to meet particulate regulations. This creates a bigger sales opportunity for us. Particulate regulations and the move toward electrification with hybrids triples our opportunity per car from $15 to $45. Needless to say, we're excited about this. We are proud of the profound impact that our products have on air quality in cities and communities around the world, all while continuing to grow a large, profitable business.
With that, I'd like to pass it over to Mike, who is leading the charge on our other primary path to doubling sales to the automotive market by 2023.
Thanks, Hal. As Eric and Hal noted, Corning already has a strong position in the automotive ecosystem, and you know about our decades of glass and optics expertise. I am here to tell you about our new Automotive Glass Solutions business and how it combines our scientific expertise with this ecosystem to make Corning's position in the automotive industry even stronger. We've created new products to meet emerging needs as car designs shift towards more in-vehicle connectivity and immersive environments. As you can see from these images, integrated and interactive car displays have become a seamless part of the automotive cabin and user experience. The display itself has evolved from simple to interactive, from small to large, from low to high resolution, and from flat to curved. What does this mean for us? More glass, more form, and more function.
An automotive specific use case for displays and interfaces has emerged. It requires a type of glass developed to withstand rigorous automotive industry standards while delivering smartphone sophistication. The trend towards more glass is most evident in the center stack display. Here, glass brings its inherent authenticity and sleek feel to the user experience. It can't just be authentic, beautiful, and responsive. It needs to meet the auto use case. Take a moment and imagine a car accident where the driver or passenger propels forward, and upon impact, risks hitting their head on the dashboard. With this scenario in mind, the auto industry developed regulatory requirements with a very specific mandate. Surfaces in the dash should not break in a way that can harm the occupant. They call this the Headform Impact Test, or HIT for short.
For this rigorous test, the industry takes a 15-pound headform and drops it from six feet. It's about as tall as I am, and it hits the center stack display at 15 miles per hour. Our objective, based on feedback from customers, is that the glass should not break. Let's do the test on Corning's newest glass. Here's a display module, and we're going to drop the headform right on. Take a little closer look. As you can see, clearly, our glass does not break. The frame and the display, they did. No worries. No glass breakage means we passed the test. Our AutoGrade Gorilla Glass, the industry's first, meets the challenging HIT standard, and our innovation provides up to 20% system cost savings versus conventional solutions.
In addition to more glass, designers want to introduce more form by bringing shape to the only area in the car without it, the flat infotainment systems common in cars today. We've created economical shape solutions with our patented 3D ColdForm innovation and a second AutoGrade Gorilla Glass optimized for curves. Our innovations enable glass to be bent to the shape at room temperature, precisely covering curved display surfaces without compromising reliability or optics. Our 3D solutions enable superior product performance and up to a 40% bill of material savings. More glass also brings more function. Larger, more exposed, and higher-resolution displays in the cars must maintain readability in a wide range of lighting conditions. We're creating new optical surface treatments to optimize display readability. Our optical innovations provide advantage anti-glare and anti-reflective performance, deliver highly durable optical surfaces, and maximize options for advanced decorative solutions.
Our AutoGrade solutions are resonating with customers today. In a few short weeks, we'll begin servicing customer orders from our new high-volume manufacturing facility in Hefei, China. This investment enables the delivery of our AutoGrade products with the best performance, the best service, and the best economics. Today, Corning is delivering glass parts for more than 25 car models. I'm excited to announce our first 3D ColdForm win, validating the value of our patented innovation. Altogether, we're ramping capacity to service a growing pipeline of projects, awards that are worth hundreds of millions of dollars, and we're bidding on more than $1 billion in new business. We're on a path to a breakout, our success will enable an auto interior per-car sales opportunity of $25, with a focus on the center stack display. At Corning, you know we never stop innovating.
Our scientists and engineers are now working on future innovations that have the potential to grow our auto opportunity by an incremental $30 per car. We're making progress on our auto exterior business while creating technical glass solutions for head-up displays, instrument cluster displays, autonomous sensors, and exterior lighting. In summary, Corning has been helping the auto industry for more than 100 years, today, our materials are more relevant than ever, allowing us to double sales to the automotive market by 2023. 2023 is only a mile marker on our journey to transform the auto industry. Our material innovations are creating value. Customer pull is real, and we are only debating the adoption speed and penetration. In aggregate, more Corning content has the potential to enable our per-car sales opportunity to grow from $15 to $100, nearly a 7X increase.
After today's formal remarks, Hal and I look forward to sharing more details on our material innovations and our excitement about the growth potential of our businesses. I would now like to welcome Jeff Evenson.
Thanks, Mike. I'd like to pull things together from a strategy perspective, then Tony will take a look at a financial perspective. As Chief Strategy Officer, I think of our competitive advantages collectively as strategic equity. Corning strategic equity derives from leadership in three core technologies, four manufacturing and engineering platforms, and five market access platforms. Very little of what we do can be found in books, almost none of our manufacturing and testing equipment can be purchased off the shelf. Consequently, intellectual assets are an important component of our strategic equity. We grow these assets by attracting and developing top scientist engineers and by continuously leveraging our accumulated knowledge. Customer relationships are also a primary component of our strategic equity. Over many years, we've developed trust-based relationships by helping global innovators with some of their toughest technology challenges and by doing the right things commercially.
We benefit from these relationships by capturing new insights and by getting at the first shot at opportunities to attack the next round of technology challenges. Physical assets are the third important component of our strategic equity. To deliver our proprietary processes and equipment, we operate about 100 plants globally. We build near customers to facilitate co-innovation and to deliver the high service levels that win business and strengthen relationships. Scale and proximity matter. As Corning's leadership team, it's our responsibility to grow and monetize our strategic equity. Our primary approach is to pursue opportunities that benefit from combinations of capabilities within our focus portfolio. Wendell noted that we focus 80% of resources on significant opportunities that use capabilities from at least two categories of our three, four, five portfolio. We create superior products and processes by constantly repurposing and reapplying our capabilities.
When we can satisfy commercialization requirements by repurposing existing assets, we use our existing footprint to extend our leadership. We refer to these inner loop investments as extend capital, as opposed to maintenance capital, because the investment not only keeps our assets up to date, it enhances our products and improves our cost leadership. The resulting capacity increase is then implied to increase our output and to start the focus create part of the cycle over again. By the end of this year, we will complete the deployment of about $4 billion in extend capital under the framework introduced in October 2015. At the same time, we've successfully captured customer commitments beyond our existing capacity. Consequently, we invested $3 billion to build. Build capital increases our scale in existing businesses and supports commercialization for new opportunities. Build projects respond to customer needs and commitment.
We call the customer needs we're addressing with our current builds. Verizon and other telecom carriers need more fiber to densify their networks for 5G. BOE needs glass for its Gen 10.5 fab. Car companies need GPFs to meet new regulations. Biotech companies need HYPERStack vessels to support gene therapy, and mobile consumer electronics devices will rely on the capability and capacity we're building in Harrodsburg and around the world. As a company that transforms raw materials and emphasizes organic growth over acquisitions, build capital or the outer loop, is a prominent feature of what we do during our growth era. The magnitude of our recent build investments reflects the number and size of attractive growth opportunities we see in front of us. We are delighted for these significant and attractive opportunities to deploy capital because build investments offer great returns.
They are some of the lowest risk investments that we make because customers commit to long-term supply agreements and often provide funding. The five builds that I just mentioned, which include our three largest builds since 2010, will all deliver return on invested capital above 20%. In total, our board has approved 28 build investments since 2010. 17 of the 28 projects are at or near full utilization, and 16 of the 17 are delivering double-digit ROIC, including eight above 20%. The remaining 11 of 28 builds are not yet in full production, and we expect all of them to return 20% plus. While we love these investments, opportunities are not always available, and they do take time. 70% of build investments take two or three years to reach full operation.
Sales are typically the first financial benefit we see from a build project, and typically occur about two years after groundbreaking. Positive cash flow is next, followed by positive ROIC. We are now seeing significant benefits from build projects initiated several years ago, and we expect even more significant benefits as current early-stage builds reach full operation. Especially since about twice as much new capacity will come online under the new framework as came online under the existing framework. 2018 provides a good example, because it includes both the benefits from recently completed builds and the impact of early-stage builds that will generate future benefits. From the second half of 2017 to the second half of 2018, we grew significantly. The sales run rate increased from $10.5 billion to $12 billion, and the majority of the $1.5 billion increase resulted from build projects approaching full utilization.
At the same time, we increased EPS by 28%, and we improved return on invested capital by 130 basis points. While these results are strong, they don't tell the whole story, because we also invested over $1 billion in facilities that won't reach full operation until late 2019 or later. Excluding these early-stage build projects, 2018 CapEx would've been less than depreciation, free cash flow conversion would've been greater than 100%, and return on invested capital would've been better by another 150 basis points, for a total expansion of 280 year-over-year. In summary, build investments and the associated customer commitments support growth, provide good visibility, and expand our opportunities. The sales, earnings, and cash flow benefits last for decades. The temporary drag on our financials during the early stages of opening a plant is well worth it.
The cycles that I've described are having a positive impact on our performance. As Wendell mentioned in his opening, each time we apply a combination of our capabilities to an adjacent opportunity, we get a little bit better. I'll add, each time we build, we increase our scale and enhance the opportunity to extend and create. Because we repurpose and reapply, we create the agility to capitalize on the highest value opportunities. In other words, the cycles provide a positive feedback loop that increases our knowledge, enhances our value to customers, and grows our strategic equity. That's the heart of our value creation engine, and that's what's driving us into a new growth era. Here's Tony with a financial perspective.
Thank you, Jeff. Good morning, everyone. Now that you've heard about key industry trends, the rich set of opportunities across our market access platforms, and how our value creation model fuels sustainable growth, I'd like to provide additional financial insight on how this benefits Corning and our shareholders. I'll start with the strategy and capital allocation framework that we introduced in October of 2015. Then cover the new strategy and growth framework that we are introducing today. Under both frameworks, my role centers on ensuring that Corning continues to be a good steward of capital. I take that responsibility very seriously. We created significant value under the current framework. As Wendell described, we committed to generate more than $26 billion in cash, return more than $12.5 billion to our shareholders through repurchases and dividends. Invest $10 billion to extend our leadership and deliver growth.
Almost four years later, I am proud to confirm that we have done exactly what we said we would do. Let's get into the details of our capital allocation plan. Our cumulative operating cash flow will exceed $13 billion. We completed a transaction that unlocked $4.8 billion in cash, and we increased the efficiency of our balance sheet. Combined, our total sources of funds will exceed our $26 billion goal, even though we will only borrow half of our original target. This gives us great financial flexibility as we enter our strategy and growth framework. Total investments will be about $11 billion. That's towards the high end of our range, which reflects the progress and customer traction we've achieved over the past four years. Through these investments, we created significant new products, expanded the scale and capabilities of our manufacturing assets, and increased our commercial reach.
As of today, we have already returned more than $12.5 billion to shareholders. That's more than 60% of our 2015 market cap. We created this value for shareholders through a combination of increasing dividends per share by 67% and reducing outstanding shares by greater than 37%. Overall, this strong execution has created a much bigger and stronger Corning. We grew sales from $9 billion in 2015 to what we expect to be more than $12 billion this year. Our EPS has grown by more than 50%, and we've improved ROIC by about three percentage points. Most importantly to me, we built a strong foundation for significant additional growth. We are confident in our growth prospects and excited to introduce our new targets. The new strategy and growth framework sets our leadership priorities for 2020 to 2023.
We will focus our portfolio and utilize our financial strength to grow and increase our returns. We expect to deliver compound annual sales growth of 6%-8%. The investments we made to meet committed customer demand and the opportunities you just heard about in our market access platforms drive these expectations. In Optical Communications, we expect to grow about two times faster than the passive optical market. 5G and next-gen hyperscale are the next big drivers. We expect to double sales to the automotive market by 2023, driven by growth in GPFs and our new Automotive Glass Solutions business. In mobile consumer electronics, we expect sales growth to continue on a path to doubling by capturing more value per device and winning in new device categories with Corning Gorilla Glass and other innovations. In life sciences vessels, we expect to grow sales at least double the industry.
The next growth drivers are cell and gene therapy. We are also launching Valor Glass, which has the potential to be a multi-billion-dollar franchise on its own, with timing dependent upon customer and regulatory adoption. Finally, we expect Display to be stable. Our next Gen 10.5 plants will come online, and price declines are expected to remain moderate. We expect to deliver compound annual EPS growth of 12%-15%. We plan to expand operating margins as we scale up in existing businesses and bring new capacity online. We expect this improved profitability, along with continued share repurchases, to result in double-digit EPS growth that accelerates through the planning horizon as our new capacity reaches full production. In addition, we plan to improve operating margin and ROIC through new products, process improvements, and completion of additional new capacity to meet committed demand.
As Jeff mentioned, the 11 plants we plan to ramp over the next few years offer returns significantly above the corporate average. The success of our value creation model and the opportunities you've seen in each market access platform gives us confidence in this outlook. Let's turn to how we will allocate our capital. Our fundamental approach remains the same. We will focus our portfolio and utilize our financial strength to invest in growth, extend our leadership, and return cash to shareholders. Our capital allocation plan describes the sources and uses of cash from 2020 to 2023. Let's start with our sources. Based on strong business performance that we expect to deliver from our 2020 to 2023 plan, we will cumulatively generate $16 billion-$18 billion in operating cash flow.
This is up significantly from the $13 billion cumulative in our 2016 to 2019 plan and is primarily driven by our previous growth investments. Importantly, the operating cash flow will be both higher and more diverse. Financial strength remains a priority for us, and our approach to capital structure remains the same. We will maintain an efficient balance sheet that also provides appropriate strength and flexibility. Strong financial metrics and an investment-grade rating are very important to us. We focus on a debt maturity profile that can be easily supported by our operating cash flow. We have ample cash, a clear debt runway, and no meaningful near-term debt maturities.
Over the past four years, we have carefully added U.S. debt with maturities of 30, 40, and even 50 years, extending the weighted average maturity of our debt by more than six years to 18.7 years. Among the longest in the S&P 500. We have a limited amount of debt due through the end of 2023, and we have prudently managed maturities in any given year to allow for a continued strong financial profile for generations to come. In addition, we have taken advantage of the Japanese yen market by issuing bonds to give us both a natural hedge and lower borrowing cost. Let's take a detailed look at how we will use our cash. Our priority is organic growth. We will invest $10 billion-$12 billion to extend our leadership and grow. First, we plan to invest approximately $3 billion after tax in RD&E.
This investment is central to growing sales and extending our cost leadership. We plan to invest $6 billion-$8 billion in capital. We're dedicating approximately $4 billion to extend or inner loop capital. As was the case over the last four years, this capital spend will be well below depreciation. Importantly, this extend capital is for much more than maintenance. This is at the center of our create and productivity efforts. The remaining $2 billion-$4 billion will go towards building new facilities. We already have committed demand and a strong return profile associated with the first $2 billion of this investment. You've heard about all of our significant build projects in today's presentations. The second $2 billion will be invested only when we have an advantage product, a manufacturing process with a leading cost position, and committed demand from customers.
We expect to invest about $1 billion in strategic M&A to expand market access, strengthen our product portfolio, and supplement our organic growth. We do not anticipate any transformative transactions. Let's move to returns to shareholders. We plan to deliver $8 billion to $10 billion over the next four years. We plan to increase the dividend by at least 10% every year as our earnings grow. This is a demonstration of our confidence in the future. We also plan to return cash to shareholders through share repurchases, which are a central component of our capital allocation process. Our approach is straightforward. We start with strong operating cash flow, which is both higher and more diverse than the last four years. We maintain an efficient balance sheet that also provides appropriate strength and flexibility.
From there, we invest in a robust portfolio of opportunities that will continue to drive top and bottom-line growth. We consistently increase our dividend every year. We provide returns to shareholders through opportunistic share repurchases. For the next four years, we expect repurchases to be between $5 billion and $7 billion. In total, we plan to invest $10 billion to $12 billion and return $8 billion to $10 billion. Where we fall in the range depends significantly on our progress and traction on new opportunities to increase profitable growth beyond 2023. The good news is that shareholders stand to benefit from either increased growth or higher shareholder returns. Before I close, I'd like to briefly address a topic that is likely top of mind for many of you. The current geopolitical and economic environment, particularly global trade and tariff uncertainty in the China economy, warrants close attention.
As we've noted in our recent earnings calls, any direct cost impact from enacted China tariffs has been manageable for us and will not have a material impact on Corning. As we've all seen over the last couple of weeks, the environment surrounding tariffs and trade can shift rapidly. We will continue to assess the potential impact of future tariffs and other geopolitical and economic challenges, and we'll update you as more information becomes available. Stepping back from the constant breaking news cycle related to geopolitical issues and looking ahead to the next four years, here are the main points I'd like to leave you with. We're closing out the final months of our current framework, achieving or surpassing all that we set out to do, all while rewarding shareholders. Corning is in great shape, bigger and stronger than ever before. Our balance sheet is strong.
Our operating cash flow is robust and diverse, and we have built a strong foundation for additional growth from our rich set of market access platform opportunities that you heard about today. With this strength, we will both invest for growth and deliver meaningful shareholder returns. As CFO, I am proud of these achievements, confident in the strength of this outstanding company, and very excited about our bright future. I look forward to updating you over the next four years. Now I'd like to turn the podium over to Wendell for closing remarks.
Thanks, Tony. Today, you heard about our success achieving the goals of our strategy and capital allocation framework that we presented 4 years ago. You've also heard about our proven model for creating value, the opportunities we're pursuing, and our targets under the new strategy and growth framework. We shared a lot of information, but there are three key things we'd like you to take away. First, we expect strong, resilient growth. We're capturing opportunities and generating significant top and bottom-line growth in multiple businesses. Our relationships with industry-leading customers are creating new opportunities for collaboration, and our strategic investments are paying off. Second, our competitive position and value creation model support margin expansion and increasing ROIC. We expect to leverage our growth and process improvements into operating margin expansion. We also expect the strategic builds underway to raise our overall returns.
Third, we remain committed to delivering attractive shareholder returns. We're confident in our ability to deliver sustained performance under the strategy and growth framework that we outlined today. I hope we've earned your confidence with our execution and our results to date. As always, we will update you regularly on our progress. We know that part of your jobs and mine is to anticipate risk and uncertainties. As Tony noted, we're certainly living in uncertain times. We see it in the headlines about trade disputes, political unrest in China's economy. Amid this uncertainty, you may be wondering why we are so confident that we will grow. It's fundamentally because we're not just counting on everybody buying more stuff. Instead, we're putting more Corning into the products that people already buy. Recall the video that opened today's meeting.
You saw how vital and ubiquitous our products already are. That's the core of what we've been investing in, a world where there is more Corning wherever you turn, and we're just getting started. Let me illustrate by recapping a few examples that you saw today. In automotive, we expect to double our sales by 2023. Together, Gasoline Particulate Filters and auto-grade interior solutions increase our opportunity per car to $70, up almost a factor of five versus 2017. Additional products will take that higher. We're not counting on more cars being sold. We're driving more Corning into each car. It's a similar story in display. Average TV diagonal size continues to grow 3%-5% annually. This means the television glass volume is growing at 6%-10%, even with flat unit growth.
With our Gen 10.5 manufacturing investments, we are well-positioned to capture the majority of display glass growth and give our customers the best economics for their larger screen sizes. We're not counting on more TVs. We're putting more Corning in those TVs. Turning to Optical Communications. Recall the sample fiber build-out you saw earlier. The area you see here required less than 1,000 km of fiber to support a 4G network. For that same area, a 5G network requires about 100 times more fiber, and the pattern repeats for hyperscale data centers. We're not talking about more networks. We're talking network densification, which means glassification, which means more Corning. In life science vessels, cell culture is moving out of the lab and into production. This shift plays to our strengths, and we expect to grow at least twice as fast as our industry.
We're also breaking into a new market with Valor Glass pharmaceutical packaging. That is a $4 billion market today, with billions more spent annually to ensure glass quality and patient safety. If we're right, and Valor fulfills the potential that we see, we are building a new long-term, multi-billion-dollar franchise that could power Corning's growth for the next decade and beyond. We're not counting on more healthcare spending. We're putting more Corning products into the hands of people who help extend and save lives. Turning to mobile consumer electronics, our goal remains to double sales over the next several years, despite a maturing smartphone market. We started here on the front of phones. Now we're here, and we're adding more innovations to make images brighter, extend battery life, and improve readability. We recently showed up here, soon we'll be here.
I know, I'm starting to sound like the video, but you get the picture. We're not betting on more smartphones or notebooks or wearables. We're adding more Corning to each device. While all companies can benefit from strong consumer demand, we also create growth by capturing more opportunities in existing products. In other words, a big part of Corning's story over the next four years is a content story. We're capturing significant technology substitutions, we have revenue drivers beyond end market growth. That makes our growth more reliable and allows us to outperform the industries that we serve. I'm not saying that we're immune to economic downturns, or trade disputes, or other geopolitical upsets, but I am saying that we are more resilient than at any other time in our history. We're not only building a bigger company, we're building a stronger one.
I'd now like to invite Jeff and Tony back to the stage so we can take your questions, I will also be engaging a number of the speakers that you heard today. Tony and Jeff. While they're coming up, they were telling me that we are having mic difficulties, with my line. Did you guys hear anything?
Yeah.
It was okay?
Yeah.
While I was sitting there, I was thinking about an invention disclosure to replace these pesky electrons with photons. Don't worry, it's not going to take a new plant. This is just the create phase.
Great. We've got lots of questions. We'll start with James Faucette here in the middle. While we're getting a microphone over to him, we've got microphone handlers, raise your hand, and if you're too embarrassed to ask live, we've also got Poll Everywhere if you'd like to use the app.
Great. Thank you very much. I wanted to ask, as it relates to both your sales and earnings growth objectives over the next four years or so, how are you thinking about linearity of achieving those objectives? There are a lot of moving parts, obviously, new products coming on, new production facilities, as well as kind of the near-term concerns. I'm wondering if you can just talk about how we should think about progression on those catered targets. My second question is specifically as it relates to display and the competitive environment. Obviously, you're anticipating a relatively stable environment there, how do you look at the competition? Some investors have expressed concern that there may be additional competition coming online in the coming couple of years, especially at the larger sizes. Thank you.
Tony, do you want to start on the linearity?
I think the good news is that we're growing right now, and we expect to continue to grow. Certainly, as we bring on some of these investments, that will accelerate that growth. We're in a growth phase right now. We feel good about that, both from a sales, EPS, and operating cash flow standpoint.
Just my own opinion is that if you take a close look at what you heard from Dr. Evenson, is because of the operating leverage that's involved with our new plants, that the build cycle matters in the so-called linearity. I would expect our growth to accelerate as we get deeper into the next four-year plan.
What you saw trigger us in that back half of 2018, as you heard from Dr. Evenson, was some of the build plans that we started two years before, starting to come online. We're still in that cycle, I do think you're going to see it accelerate towards the end of that time period as opposed to the beginning, Tony's right. We're growing right now, and that should give you good confidence.
On the display question, you want Jim?
Oh, display. Mr. Clappin, please.
Thank you. The question was how do we view the competition situation, especially in very large size going forward? I'm going to answer that question from a Gen 10.5 perspective. What you saw here today is there are actually four Gen 10.5 fabs being built. We have three of them. When we did these deals, in addition to the $3 out of $4 coming from third parties, we also entered into 10-year supply agreements on all three of them. As John showed, we are directly connected into those fabs. From that standpoint, that volume, that demand, is very secure.
Okay. Thanks. Okay, Sarah?
Hi, this is Jeffrey Kvaal from Nomura Instinet. I think part of the growth targets that you're talking about also include shared gains from rivals, in addition to additional content, as you just mentioned. I'm wondering if you could help us a little bit talk about your visibility and confidence in how you're able to grow faster than the market, and that's obviously in the vessels, but particularly in Optical Communications, too.
Sure. The co-innovation model that we laid out is a big part of that. We are out working with our customers every day, thinking about their networks in Optical Communications, thinking about use patterns that they see in mobile consumer electronics, working with auto manufacturers on their next generation designs. In the process of that, they share their roadmaps. We go back and work on solutions in conjunction with them. As Wendell pointed out, we can often do the creations in our existing capacity. They make commitments that go on, and that makes us pretty confident in the growth that we see. I also think that when we use multiple capabilities from our three, four, five portfolio, that we're bringing to bear capabilities that few others have even one of those. When we put several of them together, it makes us truly distinctive.
Kim, do you want to add anything from the front line of Optical Communications?
Sure. Thanks, Wendell. I think specifically in Optical Communications, we benefit from having strong market share positions currently, and that puts us in a great position to help customers solve the next wave of problems. As Jeff said, we kind of get engaged in those conversations earlier than competitors, so we're well positioned to take a greater share of the next generation of needs as well.
Great. Okay, I saw Rod. Yep, thanks.
Thanks, Ann. Rod Hall with Goldman Sachs. I guess I had a couple of questions. One is, I wonder if you guys will give us any color on macro, what you're seeing globally. I know that may be difficult to comment on it here, but if you have any color you can give us, that'd be nice. In terms of capital intensity, a couple of intriguing things in there. It looks like your CapEx to sales average is dropping to just over 12% in the forward period, so you're reducing capital intensity, it looks to me like. I'd just like confirmation of that and maybe some color on why that might be happening. Also on ROIC on those projects, I think, Tony, I heard you say that ROIC has been improving for these capital projects as you think about them at maturity.
Jeff, you talked about this self-reinforcing cycle. Could you guys give us a little more color on what is happening with regards to returns? Do you expect ROIC on these projects to increase over time? Maybe just give us a little more color on why that might be happening, if it is happening. Thanks.
Why don't we start on the back two, and then I'll come back to the economy at the end.
Okay.
We'll share the ROIC question. I think that if you look over what we've done over the last four years, we've improved ROIC by about 300 basis points. The driver of that improvement, about half of it, is from the investments that we made in the efficiency improvements that we occurred. Now, while we had those improvements, of course, we continued to make some investments, and so that would have been a negative off the ROIC, at least from a short-term standpoint. From an overall standpoint, we got at least half of our improvement from these kind of investments. The other half was from our improvement in efficiency of the balance sheet. From a going forward basis, we'd expect those improvements to continue. That's why we're confident that our ROIC will accelerate and expand over the next four years.
Yeah, with respect to capital intensity, I mentioned that we love build opportunities, but they aren't always available. When our board approved the 28 projects since 2010, many more of them have been under the new strategy and capital allocation framework that we introduced in October 2015. We have a lot of opportunities available because of the relevance of our capabilities, the great work that our commercial and technical teams have done with our customers, and we're building some substantial facilities that we can continue ramping over time. I think will spell good things for us going forward. The important thing is we get those customer commitments, and when Tony Tripeny described our expected investment of 10 to 12, our expected returns of 8 to 10, that uncertainty depends on our technical progress and the level of customer commitments we get. That's the way we think about it.
To your first part, Rod Hall, you've heard me say a number of times, the macro environment today is quite fascinating. Sort of the tails on the distribution have just gotten fatter. There's opportunities for some really good things. There's some opportunities for some really bad things. For the economies overall, trade negotiations, geopolitical stuff, it's just a very interesting profile. It's very difficult to sort of say with any great confidence, this is what's going to happen or that's what's going to happen. Mainly because we don't seem to be dealing with the sort of macro forces you can easily break down into quantitative analysis.
That being said, actually, I got help from some of the investors that are with us today on how to think about that environment, what they reminded me of, it really struck home with me, is what it is that they're looking for us to do is always be able to do very well from a relative performance standpoint. To make sure that we're building a ship that does well when the wind's in our face or when the wind's in our back. That really struck home with me and is really the core, I think, of what you heard today, is what we believe we can do is relative performance-wise, certainly be a lot more resilient than we've ever been in our history, and also relative to our industries, do really well.
That's what we're aiming at. I think our timing's probably pretty good, because we have a pretty high degree of unpredictability in the macro world right now.
Alexis. Yep, Tejas.
Tejas Venkatesh from UBS. Thank you for taking the question. First, what are the levers you have to improve margins? Second question on optical. You aren't putting out a specific sales target like the $5 billion number last time, and we haven't seen carriers outside of Verizon be as vocal about network densification. I was curious if there are catalysts that you're thinking about that could take the others down the same path. Thank you.
From a margin leverage standpoint, there's a lot of things that we can do to improve margin. Certainly, a lot of our expend capital, and our whole research and development process is focused on being able to do things better. Then as we grow, we have the ability to leverage our three, four, five portfolio from an operating expense standpoint to a much greater extent than we've done in the past. We're confident in our ability to expand the operating margin and also our return on invested capital over the next four years.
On the opto question, perhaps back to the front. Clark, do you want to address that question?
Sure. Relative to the growth of opto, a couple of things I would say. One is, you know the historic run rate for us over the last five or six years is about twice the rate of the industry we serve. I mentioned today that our goal is to continue that as we go forward in the chain. I would contend that, while Verizon is a great example of densification, there are others out there that are in the market today that are real and portend this kind of growth. For example, all of our carrier partners around the world are densifying their cable structures, fiber counts in cables. That's why we added capital in our fiber business a few years ago, and why we expect that just growth in the basic tool of optical communications, fiber and cable, is going to be very interesting.
As fiber counts grow, sheath counts won't grow, but the net amount of fiber is going to grow. The second thing is, Claudio talked about the impact of densification inside the data center regime. I think the quote he had was that one data center complex in Dallas is consuming more fiber than the entire city is for their fiber-to-the-home network. That segment of the market, both private and hyperscale data centers, is growing at a rapid rate, and we believe that the architectures are going to require even more fiber as we go forward. You know that when we get to appliance space at the end of the network where we're backhauling antennas, most of those antennas are being driven by four to eight fibers at the end of the network.
What we really believe is that within the mix of capital in the communications infrastructure area, more of that spending is going to occur in opto than it is in other materials, and more of the opto spending is going to be intensified
environments, which is why we think we can keep those growth rates going over time. Although, as I think Wendell mentioned in his opening, this is looking kind of forward in an industry that's characterized by technology waves. The question's going to be not whether we see that growth, but how it unfolds over the next couple years.
Yeah, no, I think that last point he makes is good. That's what makes it such a good question, and I think something for especially someone in your position to sort of think about and do some analysis on. Actually, Claudio and I, who you heard speak today, did our original white paper together on what did we think 5G would mean to us. When we took the position that we did, that we believe this would end up with very significant densification and glassification of the network, we were pretty early in that conclusion, and there were plenty of people debating with us. I think as each sort of passing month has gone by, we're getting more confident that our network architecture concepts are right. We're getting that all reinforced. That's really important to be right about where the architecture's going.
Timing on when do they do it, that's a little tougher. On this, I don't think we're ready to make a call. I think where we're seeing behavior from different carriers is they're all putting their toe in the water in different ways, that's all about what's their quickest path to revenue. You have some people focused on the Internet of Things and automotive to try to get that revenue switch. You got some people focused on enterprise, right? Because they want to increase their penetration there. You have other folks that want their business case to work on 4G densification and increasing their wireline presence and sort of pick up 5G enablement sort of for free.
All those different ways to play this technology are emerging, I can't tell you ahead of time which one of those paths is going to be the most likely, we are feeling pretty darn confident that we got the technology right, the rest is going to be about when the world catches up to it.
Great. Gabriel?
Steven Fox with Cross Research. Two questions. Just getting back to the operating margins for a second, Tony. Can you decompose those a little bit in terms of your expectations for gross margins over the new timeframe? Within that also, where do you get the biggest bang for your buck in terms of operating margin leverage by segment? Secondly, Wendell, if I did my math right, you're talking about $500 million-$600 million of auto glass interior business as you go out to 2023. Is that in the ballpark, and sort of what are the big drivers there? Thanks.
On the operating margin and gross margin, we're not here to give detailed level guidance for the next 4 years so I'm not going to go into any more details than what I've given, which is we're very confident in our growth, compounded annual growth rate of 6%-8%. We're going to get operating margin improvement from that, and when you combine that with our return to shareholders of our stock buybacks, we expect our EPS to be up in the 12%-15% range. In terms of how the specifics go, we just have to get to the years and talk about guidance when we get further out.
On auto glass, we've given you now macro sort of for the first time on a segment that we're going to be doubling over this next time period, and I just don't feel comfortable trying to slice and dice that any further. I totally admire your desire to have us do so.
Okay. Yep, Shera?
Thank you. Wamsi Mohan, Bank of America Merrill Lynch. First I would say congratulations on sort of the tremendous amount of diversification that you've brought to the business over the last 10, 15 years. That's been very impressive. My question is: as you think about the panel market, there's been a tremendous amount of investment in China, and you've had capacity globally, but seems like you're doubling down really on your investments, in China in particular, as it relates to capacity. If you think about the Chinese taking, at a panel level, incremental market share from Korea, from Taiwan, from Japan, does this also mean that structurally, Corning can achieve a much higher share level in glass than it has achieved in the past? Second question for Tony is really around yen hedge levels. We didn't hear an update on that.
I'm sort of curious if you can share an update on the next four or five years, how you're hedged for the yen. Thank you.
Why don't you start on hedge for the yen, and then I'll go to Mr. Clappin on display.
Yeah, that'd be great. The good news is that we're hedged out all the way through to 2023. Now we're not 100% hedged out to that period of time, but what we like to do is be hedged out three or four years, and then we opportunistically, as rates move around, and rates have moved around a lot, we try to take advantage of those rate movements when we can. We actually feel great about our hedge portfolio and feel very confident in our ability to protect our earning streams with the hedges, which is what we've done up to now.
Mr. Clappin?
The growth in Display is indeed happening in China, predominantly because that's where the money is and where the investment is occurring. We have, as I mentioned, 4 Gen 10.5 fabs being built. We've secured agreements for three of those fabs, with long-term supply agreements and funding, as I said. Of course, as a result of that, we are growing faster than the market. In fact, we are taking most of the market growth because of that fact. I won't comment directly on our market share, but I think the statement speaks for itself.
Yeah, I think somebody ought to take advantage of later, because many of the investors who get to see me always hear me say I would base my investment philosophy in Corning on Display aging gracefully, but that my operating leaders believe they can do better than that. Here is a great example of one of those operating leaders who believes that. If you want a more optimistic view than my aging gracefully thing, you should track him down.
Asiya.
Hey, great. Thank you. Asiya from Citi Research. Quickly, on the cadence of CapEx investments, I know you have build, which is probably something that you guys are doing, but extend investments, how much flexibility is that to dial up or dial down as we head into a macro environment? There's multiple tails, like you talked about, Wendell. Then also with an Optical, I know you don't want to give some guidance on segment profitability, but think that's one of the questions, could we be in an environment where Optical margins see significant uptake as that's one of your fastest-growing segments? Thank you.
I think from a capital spending standpoint, we spent $4 billion over the last four years in the inner loop or the extend cycle. We expect to spend about $4 billion over the next four years. Of course, if the economy slows down, we can slow that down a little bit. If the economy speeds up, we can speed that up a little bit. I think the way to think about that is, over a four-year period, we spend about $4 billion. I think that's the right way to think about that part. Yeah. I'm sorry. That's the inner loop on the extend investments. The build investments are completely tied to customer commitments, so we don't start those investments until we have the customer commitments. The customer commitments change, and we certainly would change that build cycle of that.
Even over the next four years, we expect to spend at least $2 billion on the build cycle because it's the build cycle that we've gotten customer commitments from. The other $2 billion will only be spent if we get additional commitments, and if we don't get those commitments, then they'll be returned to shareholders through more share repurchases.
What you see in that range, I'd want to build on something Tony's saying. You would've heard from Dr. Evensen, is sort of in that range, that capital sort of sits those various ways we can think about how the economy works. That's from the balance sheet standpoint and the way our opportunities work from the balance sheet standpoint. From the P&L standpoint, really, it's all about once we turn the factories on, how quickly that utilization works. As far as margin expansion for opto, a lot depends which period of time you're looking at and the mix of our system sales to component sales that you're seeing. You saw a lot of that from Kim and her example, which I thought was very good.
There are time periods when our mix of system sales can be very high, and the leverage on that, and from a margin standpoint, as you saw from her, is quite high. There can be periods when it's a little less. Once again, in opto, everything will tend to follow our customers' different network decisions in that timing. Fundamentally, over time, you see us make steady progress with our productivity and our pricing and value creation opportunities. We feel pretty good about our margin model.
Great. Next up. Yep.
Peter O'Keefe Stevens Advisory from Rochester, N.Y. First, just wanted to make a comment on, and maybe you could even comment on it as well. As a company, it's absolutely amazing of how well you've had joint ventures over the years, going back to your time with Edison and the light bulb to so many things. You look at other corporations, and you see the absolute disaster and self-servingness very often in joint ventures that ultimately blow up, and the longevity of those relationships is absolutely amazing. The other issue I wanted to talk to today is there seems to be a terrific opportunity in windshields with the use of Gorilla Glass. You had your website, but you didn't talk too much about that today.
I was wondering, is that still something that's high on your horizon, and what kind of opportunity do we have with that? Thank you.
I'll start, and then maybe I'll turn it over to Mr. Kunigonis. He runs Corning Automotive Glass Solutions. I think our short version is we, like you, see tremendous opportunities in what we call the exteriors, and you saw some of that in Mike's presentation. It's just that when you're doing innovation, you've got to double down on your positive surprises. We were positively surprised with auto interiors, and that's what's getting the lion's share of our focus. We will ultimately get around to revolutionizing the way in which automotive exteriors work. Our primary focus at this time is on interiors. For someone who's actually making these innovations work, let me turn it over to Mike.
Yeah. Thanks, Wendell. Wendell's absolutely correct. He's making sure I spend a tremendous amount of time on the interior business.
Yeah, I was mainly managing him right there.
Time management, that's right, because there is a very strong opportunity in the interior space. It doesn't mean there is not also a opportunity in exteriors. There very much is. We continue to see pull for the value prop. The value prop, just for those in the audience, is we're replacing the inner piece of glass and laminate for a car window with Gorilla Glass. That makes that window lighter, stronger, more optically clear. That has a value prop in a couple different places in the market: ultra-high performance vehicles, some truck vehicles, and EVs. We are getting pull from that. We are getting increased customer demand from it. The market, for exterior for windows, it's growing at a little bit slower pace than the interior pace. In interiors, there are refreshes every couple of years inside vehicles.
The outside windows, those grow at a much slower pace. As a result, the business is growing a bit slower.
Thanks, Mike. Back to Gabriel.
Hi. It's Bill Pitkin from State Street Global Advisors. Just a question on your growth targets. Really a clarification, I guess. Do they include the $1 billion sort of targeted strategic acquisitions? Also, if you could just comment about what areas those acquisitions may be focused in.
From a growth target standpoint, it's mostly on organic growth, and we're not counting a lot on acquisitions. $1 billion isn't a significant amount of money. It's certainly in that range of 6%-8% from a sales growth standpoint. Do you want to cover the priorities or?
Pardon me, say that again?
Oh, I was just going to see if Jeff wanted to cover where we were focused on.
Sure.
I can do that.
We really look at acquisitions that improve our ability to serve customers. Primarily those fall into the category of extending our market reach. I think you've seen some great examples of that in our optical communications business over the last few years. Probably the most notable is our acquisition of 3M's Communication Markets Division. Those are the types of things that we would really focus on.
Great. Maybe one more question before we head out to exhibits. We want to get out there.
Yeah, the exhibits are great.
Yes.
You totally want to see them.
You would definitely want to see that
more than listen to us.
Super. We'll close down Q&A. We mentioned exhibits. We'll see you out there, and please remember to pick up your gift on the way out. Thank you very much.